Two of the mid-range ERP vendors have again demonstrated that a focus on verticals and lower seat prices has enabled them to grow at a much faster rate than the industry leaders.
While SAP’s revenue is currently shrinking and Oracle continues its pursuit of PeopleSoft to boost its market share, Geac Computer and QAD have enjoyed strong organic growth as they add functionality to their product lines.
Markham, Ontario-based Geac, whose survival appeared in doubt in 2000, increased income by 20.2% to $14.4m in its third quarter to January 31 on revenue 13.2% higher at $116.2m. The company has been boosted by its $52m acquisition of BI provider Comshare in August 2003 and the $47m purchase in September 2002 of Extensity, which had one million seats worldwide for its automated employee-based finance processes.
With $79m cash in hand, Geac says it has the resources to develop new applications and look for further acquisitions. An encouraging feature of the figures is a 49.9% growth in license revenue in the quarter to $18.7m. Even this increase still leaves license revenue as a modest 16.1% of the total. Increasingly Geac looks like a services outfit, using software to hook new clients, with 77% of its revenue coming from support and services. Though declining in size, hardware sales provided $7.9m of revenue in the last quarter.
Geac is cautious about the future. CEO Charles Jones said that in the quarter it benefited from many parts of its business performing well at the same time, though market conditions continued to be intensely challenging. He warns that there will be volatility in revenue from quarter to quarter.
Carpinteria, California-based QAD concentrates on the manufacturing sector and hoisted net income from $1.7m to $6.3m in its final quarter to January 31 on revenue 9.6% higher at $62.6m. This capped a successful year for the company when it recorded net income of $16.3m, up from a loss of $7.6m on revenue 18.1% higher at $230.6m.
License revenue grew 23% in the year to $69m and represented 29% of the total. QAD expects revenue for its first quarter to be in the $57m to $59m range, compared with the $56.3m achieved at the same time last year. Chief executive Karl Lopker sees the company’s strength as its ability to provide manufacturing companies with applications that address the specific needs of their vertical industries. He said it is continuing to allocate resources to develop innovative functionality to its customers that would provide a platform for growth.
This article is based on material originally published by ComputerWire