Event Summary
On August 24, IFS AB (XSSE:IFS), a Swedish mid-market enterprise applications vendor, reported upbeat results for the second quarter of fiscal 2001 amidst a prevailing gloom within the Tier 2 & 3 vendors. After four consecutive losing quarters, IFS was pleased to report Q2 2001 profits of ~$2 million after net financial items, compared with a loss of ~$10 million for the corresponding period in 2000 (See Figure 1). Total revenue increased by 62% to ~$84 million, compared with ~$52 million for Q2 2000. License revenue was up a whopping 82% to ~$40 million, compared with ~$22 million a year ago.
Figure 1.
This positions IFS as the fifth largest ERP provider during the second quarter in terms of license sales, while the company occupied the first position in terms of the fastest total and license revenue growth, stealing thereby the thunder from recently ebullient SAP and PeopleSoft. More important, the growth has been almost completely organic, as no significant acquisitions were made during the past 12 months.
Furthermore, IFS North America reported earnings of ~$2 million and is now IFS' largest market with 35% of total sales. The contract won from General Electric was the largest in the company's history and was of multifaceted paramount importance. GE Engine Services (GEES) has selected IFS software to run its 60 worldwide Maintenance, Repair, and Overhaul (MRO) facilities. GE will also market the application to airline and independent MRO providers. The multi-million dollar agreement will start with a deployment for 4,500 users. GE will then market the application to commercial airline maintenance facilities.
Also recently, an agreement has been signed concerning deeper technological and commercial collaboration with ABB. ABB has also acquired 3.7% of IFS, which represents 1.8% of the voting rights, through a direct share issue valued at roughly $10 million. The investment by ABB New Ventures strengthens an existing technical and commercial alliance between ABB and IFS. For more than a year, IFS has been developing ways to integrate its business software with ABB's Industrial IT platform. ABB signed an agreement with IFS in January to resell IFS Applications components. In the long term, cross licensing of system components between the companies might decrease research and development costs for both partners.
Bengt Nilsson, president and CEO of IFS, said, "The positive earnings trend is a result of strong license sales, especially during the second quarter. The market for business applications has grown 10%. Thanks to a strong product, we have succeeded in taking market share and increasing sales despite tight cost controls and fewer personnel. The orders from General Electric and General Dynamics and the partnership alliance agreements with General Electric and ABB are vital steps in our strategy to become a market leader in selected segments and thereby improve margins in the long term. We are pleased by the confidence shown in IFS and by the help from our partners in increasing our market share."
Towards the end of 2000, IFS initiated an action plan to strengthen the board, management, financing, profitability, and cash flow, which has been implemented. It is expected to have positive effects in the form of cost reduction in excess of ~$18 million during the current year compared with the cost level during the fourth quarter of 2000. However, the measures to reduce costs and improve cash flow have yet to produce their full effect and will be intensified and scrutinized during the remainder of the year. In its outlook for the rest of the year, IFS expects continued cost containment rationalization coupled with further growth to result in improved earnings for the rest of 2001. To that end, the product development will be more sharply focused on refining functionality, particularly within specific industry segments that are of strategic interest for IFS and its premium partners.
source
http://www.technologyevaluation.com/research/articles/ifs-glows-amidst-the-mid-market-gloom-16481/
On August 24, IFS AB (XSSE:IFS), a Swedish mid-market enterprise applications vendor, reported upbeat results for the second quarter of fiscal 2001 amidst a prevailing gloom within the Tier 2 & 3 vendors. After four consecutive losing quarters, IFS was pleased to report Q2 2001 profits of ~$2 million after net financial items, compared with a loss of ~$10 million for the corresponding period in 2000 (See Figure 1). Total revenue increased by 62% to ~$84 million, compared with ~$52 million for Q2 2000. License revenue was up a whopping 82% to ~$40 million, compared with ~$22 million a year ago.
Figure 1.
This positions IFS as the fifth largest ERP provider during the second quarter in terms of license sales, while the company occupied the first position in terms of the fastest total and license revenue growth, stealing thereby the thunder from recently ebullient SAP and PeopleSoft. More important, the growth has been almost completely organic, as no significant acquisitions were made during the past 12 months.
Furthermore, IFS North America reported earnings of ~$2 million and is now IFS' largest market with 35% of total sales. The contract won from General Electric was the largest in the company's history and was of multifaceted paramount importance. GE Engine Services (GEES) has selected IFS software to run its 60 worldwide Maintenance, Repair, and Overhaul (MRO) facilities. GE will also market the application to airline and independent MRO providers. The multi-million dollar agreement will start with a deployment for 4,500 users. GE will then market the application to commercial airline maintenance facilities.
Also recently, an agreement has been signed concerning deeper technological and commercial collaboration with ABB. ABB has also acquired 3.7% of IFS, which represents 1.8% of the voting rights, through a direct share issue valued at roughly $10 million. The investment by ABB New Ventures strengthens an existing technical and commercial alliance between ABB and IFS. For more than a year, IFS has been developing ways to integrate its business software with ABB's Industrial IT platform. ABB signed an agreement with IFS in January to resell IFS Applications components. In the long term, cross licensing of system components between the companies might decrease research and development costs for both partners.
Bengt Nilsson, president and CEO of IFS, said, "The positive earnings trend is a result of strong license sales, especially during the second quarter. The market for business applications has grown 10%. Thanks to a strong product, we have succeeded in taking market share and increasing sales despite tight cost controls and fewer personnel. The orders from General Electric and General Dynamics and the partnership alliance agreements with General Electric and ABB are vital steps in our strategy to become a market leader in selected segments and thereby improve margins in the long term. We are pleased by the confidence shown in IFS and by the help from our partners in increasing our market share."
Towards the end of 2000, IFS initiated an action plan to strengthen the board, management, financing, profitability, and cash flow, which has been implemented. It is expected to have positive effects in the form of cost reduction in excess of ~$18 million during the current year compared with the cost level during the fourth quarter of 2000. However, the measures to reduce costs and improve cash flow have yet to produce their full effect and will be intensified and scrutinized during the remainder of the year. In its outlook for the rest of the year, IFS expects continued cost containment rationalization coupled with further growth to result in improved earnings for the rest of 2001. To that end, the product development will be more sharply focused on refining functionality, particularly within specific industry segments that are of strategic interest for IFS and its premium partners.
source
http://www.technologyevaluation.com/research/articles/ifs-glows-amidst-the-mid-market-gloom-16481/
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