JD Edwards & Company returned revenue of $247m against net profits of $37m for its fourth quarter ended October 31. The figures compare to revenue of $241m and net profits of $18m in the same quarter a year ago. License fees for the quarter grew 35% to $74m, while services continued to dominate with $173m of revenue. The latest quarter results include a $14m income tax benefit due to a change in tax codes that allowed the company to book tax gains from previous losses.
For the full fiscal year, total revenue was $904m, up 12% from the $894m recorded in the previous year. Overall net income for the year stood at $46m (which included a tax benefit of $13m), compared to the net loss of $180m in 2001 (which included an income tax provision of $131m).
JD Edwards’ chairman, president and CEO, Bob Dutkowsky commented on three metrics – software growth, earnings growth and cash generation – as key indicators of a healthy business. First is our sequential license fee growth of 35% for the fourth quarter; second our pro forma earnings per share growth of over 70% for the year; and third is the $140 million in cash flow we generated from operations over the course of the year. Dutkowsky also pointed to an expanded 10-year relationship with Wal-Mart Stores Inc, to provide additional enterprise software systems and services for the US retail giant. Specifically, Wal-Mart will implement real-estate job costs and enterprise asset management software from JD Edwards 5 suite. Wal-Mart has been a heavy JD Edwards user since 1995.
However, the edge was taken off JD Edwards’ positive year-end results by a warning from CFO Rick Allen, that license revenue for the first quarter of fiscal 2003 would be flat, while services revenue would rise a modest 5%. There’s not a lot of low-hanging fruit out there, said Allen. JD Edwards has remained vulnerable to the slow US economy and that two third of its clients are from the manufacturing and distribution sectors, both of which have been hit hard. As a result the company has been working hard to reduce its reliance on the manufacturing sector and broaden its focus during the fourth quarter with limited success thus far.