CDC Software Corporation (NASDAQ: CDCS), a global provider of
hybrid enterprise software applications and services, today
announced that, based on preliminary financial projections and
estimates, the company expects second quarter 2010 application
sales, which is comprised of license revenue plus new total
contract value (New Total Contract Value (NTCV) is the contract
dollar amount for the duration of the contracts for all new SaaS
contracts secured, including rental, as well as all renewal
received by end of the quarter.) for Software-as-a-Service (SaaS)
sales secured during the second quarter of 2010, to be in the range
of about $10.2 million to $10.9 million, an increase of
approximately 33 to 42 percent compared to $7.7 million in the
second quarter of 2009, primarily due to increased new logo sales
for its on-premise solutions, and expanded cloud sales as a result
of acquisitions, investments and organic growth.
CDC Software’s application sales are supported by is its
three-prong cloud strategy that includes acquisitions of SaaS
companies, Strategic Cloud Investment Program (SCIPP) and the
eventual launch of its internally developed SaaS solutions. Since
the fourth quarter of 2009, CDC Software has acquired five SaaS
companies, all of which are earnings accretive, and it plans more
acquisitions by the end of the year. Under SCIPP, CDC Software
plans to make minority investments in, and form strategic reselling
partnerships with, companies offering cloud-based or point
solutions which complement its enterprise solutions portfolio.
Since SCIPP’s inception in the second quarter of 2010, CDC Software
has invested in e-BizNET, a provider of SaaS supply chain execution
solutions, and Marketbright, a provider of SaaS marketing
automation solutions. CDC Software also announced last week that
its CDC Respond complaint management solution will be its first
cloud application developed with the Windows Azure platform.
“We are pleased to see this strong projected growth in
application sales and license revenue this quarter,” said Bruce
Cameron, president of CDC Software. “In fact, we saw a significant
increase in new logo organic sales in our Front Office and Plant
Floor on-premise solutions. New logo sales for our Front Office
solutions, for instance, is expected to report our largest
percentage quarterly increase for these solutions since 2008. Part
of the reason for these increases in new logo sales is attributed
to our sales growth in emerging markets in China and India.
“As one of the first hybrid cloud software companies that offers
enterprise solutions with on-premise and cloud deployment options,
we are very excited on our projected double digit growth in
application sales, robust new organic logo sales, and how
well-received our new model has been with customers. As part of
that strategy, we plan to develop recurring revenue streams
reaching closer to 70 percent of total revenue over the next few
years, after completion of our planned SaaS acquisitions, strategic
investments in SaaS companies, as well as organic growth.
“With the strong momentum we have been seeing from this SaaS
strategy, we believe SaaS revenue will be an important part of our
total revenue for 2010. Already, we have been seeing high SaaS
retention rates at more than 95 percent as an average for our CDC
gomembers and CDC eCommerce product lines. Our newly acquired SaaS
businesses also have seen more new revenue from both add-on on
renewals and new organic logo sales this quarter compared to
previous quarters the last couple of years in their respective
businesses. We also have identified numerous cross-sell
opportunities between CDC Software’s installed base and our new
SaaS investments in e-BizNET and Marketbright.”
Cameron added, “Another key positive trend we have seen this
year is our expanding sales pipeline, especially in cross-sell
activities. We’ve seen the second half 2010 cross-sell pipeline
grow 560 percent compared to the second half of 2009, as well as a
significant increase in our qualified pipeline. Also, while we have
had to increase our investments in research and development, sales
and marketing and integration costs as part of our SaaS strategy,
we are still expecting our earnings per share for the next two
years to be one of the highest among our peers in the hybrid
enterprise software space. With our solid business fundamentals in
place and a strong financial foundation, we believe that we are
poised to continue growth through organic and cross-sell sales
opportunities, as well as synergistic acquisitions and investments
in both the on-premise as well as SaaS models.”
About CDC
Software
CDC Software (NASDAQ: CDCS), The Customer-Driven Company™, is a
hybrid enterprise software provider of on-premise and cloud
deployments. Leveraging a service-oriented architecture (SOA), CDC
Software offers multiple delivery options for their solutions
including on-premise, hosted, cloud-based Software as a Service
(SaaS) or blended-hybrid deployment offerings. CDC Software’s
solutions include enterprise resource planning (ERP), manufacturing
operations management, enterprise manufacturing intelligence,
supply chain management (demand management, order management and
warehouse and transportation management), global trade management,
e-Commerce, human capital management, customer relationship
management (CRM), complaint management and aged care solutions.
CDC Software’s recent acquisitions are part of its “acquire,
integrate, innovate and grow” strategy. Fueling the success of this
strategy is the company’s global scalable business and
technology infrastructure featuring multiple complementary
applications and services, domain expertise in vertical markets,
cost effective product engineering centers in India and China, a
highly collaborative and fast product development process utilizing
Agile methodologies, and a worldwide network of direct sales and
channel operations. This strategy has helped CDC Software deliver
innovative and industry-specific solutions to 8,000 customers
worldwide within the manufacturing, distribution, transportation,
retail, government, real estate, financial services, health care,
and not-for-profit industries. For more information, please visit
www.cdcsoftware.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements regarding our beliefs about Q2 2010 application sales,
NTCV, license revenue and SaaS revenue as well as total recurring
non-GAAP revenue, our beliefs regarding total contract value for
new SaaS contracts secured in the second quarter of 2010, our
beliefs and expectations regarding projected increases in the
number of enterprise and SaaS deals in the second quarter of 2010
and the geographic distribution thereof, our beliefs regarding
earnings per share for any future periods, our strategy and goals
with respect to recurring revenue streams and our expectations for
total maintenance and SaaS revenues, our beliefs and plans
regarding the completion of additional SaaS acquisitions and
strategic investments and our progress with respect thereto, our
expectations regarding the completion of any future acquisitions,
our beliefs regarding the potential amounts of recurring revenue we
may achieve and the timelines for achieving our goals, our beliefs
regarding certain trends we have noticed with respect to sales
pipelines, our beliefs regarding progress we have made in emerging
countries, our beliefs regarding our cash position, continuation of
our R&D investments and our position to take advantage of
growth in emerging markets, our beliefs regarding our ability to
continue our growth through organic and cross-sell sales, as well
as synergistic acquisitions, our beliefs regarding new logo sales,
our beliefs regarding momentum from our SaaS strategy and retention
rates, our beliefs regarding cross-sell opportunities, and other
statements that are not historical fact, the achievement of which
involve risks, uncertainties and assumptions. If any such risks or
uncertainties materialize or if any of the assumptions proves
incorrect, our results could differ materially from the results
expressed or implied by the forward-looking statements we make.
These statements are based on management's current expectations and
are subject to risks and uncertainties and changes in
circumstances. There are important factors that could cause actual
results to differ materially from those anticipated in the forward
looking statements, including the following: (a) the ability to
realize strategic objectives by taking advantage of market
opportunities in targeted geographic markets; (b) the ability to
make changes in business strategy, development plans and product
offerings to respond to the needs of current, new and potential
customers, suppliers and strategic partners; (c) the effects of
restructurings and rationalization of operations; (d) the ability
to address technological changes and developments including the
development and enhancement of products; (e) the entry of new
competitors and their technological advances; (f) the need to
develop, integrate and deploy enterprise software applications to
meet customer's requirements; (g) the possibility of development or
deployment difficulties or delays; (h) the dependence on customer
satisfaction with the company's software products and services; (i)
continued commitment to the deployment of the enterprise software
solutions; (j) risks involved in developing software solutions and
integrating them with third-party software and services; (k) the
continued ability of the company's enterprise software solutions to
address client-specific requirements; (l) demand for and market
acceptance of new and existing enterprise software and services,
the positioning of the company's and its partners’ solutions, as
well as the success of any of our strategies; (m) the ability of
staff to operate the enterprise software and extract and utilize
information from the company's enterprise software solutions; (n)
the continued cooperation of our strategic and business partners;
(o) risks relating to economic conditions and other matters beyond
our control; (p) the ability to complete and integrate any
acquisitions we may undertake; (q) the risk that the preliminary
financial results provided herein could differ from our actual
results. Further information on risks or other factors that could
cause results to differ is detailed in our filings or submissions
with the United States Securities and Exchange Commission,
including our Annual Report on form 20-F for the year ended
December 31, 2009, filed with the SEC on June 1, 2010, and those of
our ultimate parent company, CDC Corporation, located at
www.sec.gov. All forward-looking statements included in this press
release are based upon information available to management as of
the date of the press release, and you are cautioned not to place
undue reliance on any forward looking statements which speak only
as of the date of this press release. All estimates contained
herein regarding Q2 2010 performance and other periods, are based
upon preliminary financial projections, beliefs and estimates. The
company assumes no obligation to update or alter the forward
looking statements whether as a result of new information, future
events or otherwise. Historical results are not indicative of
future performance.
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