The panic after close was fantastic to watch, with the per share price briefly touching $5.
Although, certainly, the latest press release from the company was not positive, it was overall in line with the expectations that the company's operating results would continue to be adversely affected until sometime next year. So, no news there, I think.
What I can't easily "decode" is the following statement: "Overall the number of new on-premise customers we signed in the first nine months of 2013 also increased considerably by 62% compared to last year."
Frankly, I have been tossing and turning, thinking about this statement, so I throw it out to the general populace for comments.
Here is some input:
1. Given what we know about service/maintenance (SM) vs. license (LIC) revenue composition (80/20,) does this mean that this year's LIC are up +50% compared to last year? If so, how can the top-line advance only modestly, if at all (did the SM portion sink?)
2. Or... did the booking size of the on premises (OP) deals fall tremendously compared to last year?
3. If both the number of OP orders and the number of SaaS orders increased between 50% and a 100% compared to the last year, how could the overall revenue possibly sink?
4. With a growth in bookings of between 50% and 100% and the trailing nature of revenues (both SaaS and OP revenues trail bookings for up to a year,) is it possible to prognosticate or extrapolate on the revenues for next year (will revenues, for instance, grow between 25% and 50%?)
5. If ClickSoftware had simply (and only) announced that its net new OP business grew +50% and its net new SaaS business grew 100%, I would automatically expect the revenue number to go up dramatically -- if not immediately, then "soonish" (I would not have a problem with the "bad" net income number since this could be impacted by a range of factors.)
6. Did ClickSoftware lose large existing customers?
If you read the transcript of the last CC you will see moshe talking about doing more deals but the deals are smaller. Kind of like slicing a pizza. If you aren't that hungry just cut it into four slices instead of eight. Four slices is easier to eat than eight. That's how moshe is spinning the cloud. The information moshe shares is next to worthless in that it cant be easily analyzed. Saying click increased its cloud customers 100 percent is meaningless without sales numbers. Telling analysts you don't report cloud revenue when you are basing your business on an SAAS model and switching over is dumb unless you want to keep people from figuring out the SAAS model isn't working that well. At some point analysts are gong to demand answers.
The release raises more questions than it answers... but there are two facts that are clear... Revs and EPS have declined significantly this Qtr and someone was willing to buy 200k+ shares today at more than 6 bucks... Why?
So whatever the mix was between deal size and numbers of deals the net result was a lower total number. Deal size decrease was expected as they moved to the SaaS model but as you have pointed out, how could perpetual deals have increased 60+% and it not have supported higher Revs...
I have no idea but the support today was impressive given the report... it didn't hurt that it came out on a day when the dow was up 300+pts... I can only speculate that someone has better information or perhaps one of the big boys just doesn't want this thing to tank, at least not right away... just hope they stick around for awhile...
I agree with your assessment. You forgot to mention the 170K and up yesterday where most techs were down.
Maybe Moshe finally realized it's beyond him to take Click to the next level and decided to cash out?
I don't think today's huge up market has anything to do with Click holding above $6.
As I said many times, we may see sell on the rumor and buy on the news. In the past, Click crashed while the market was marching up. Look at Citrixtoday, it fell big while the market was up 2%.
I just hope Moshe scales back to huge growth in personnel, from 400 to 600 employees, while revenues failed to growth at the same rate. Cloud requires less SEs and you don't need a sales force of 50 people to sell 100M a year.
If he can trim back to 400 employees and generate revenues of 120M next year, Click will be able to make $1 in net profit.
I truly hope during Click Connect he had conversations with top partners such as IBM, SAP etc to unload the company....
Cloud is less
Hi Per-Great question. I had the same puzzled reaction to the release when I read it. Several thoughts that came to mind:
- Why would they provide a 9 month comp rather than focus on what you are preannouncing which is current quarter?
- If new customers ordering were up Y/Y for both lic and subs segment there is a trend that will be negative within the numbers when they are finally announced.
Some of the possibilities if license revenues were down with this kind of new customer growth.:
- Price declined significantly on license deals
- Number of seats sold per new customer was much lower
- Breadth of business offerings sold per new customer was very different that PY
- PY included a large amount of backlog orders shipping that was related to customers signed in PY.
If license revs were up and subs were down:
- Internal definition of "recurring" is different that expected
- Customers are either churning or resigning accts to create headwind.
- Possible product mix?
Or I just don't know their business well enough which is puzzling in and of itself.
Until Moshe decides to let the little mushroom have some light, your questions can only be speculated on the way scientists speculate about life on other planets. We know there is cloud and click has an SAAS model. What we don't know is how its doing. His comments on 100 percent increase in cloud customers or 62 percent increase are meaningless without hard numbers. What is very irritating is that moshe refuses to disclose what cloud revenue is. This would be so simple if he would just tell us what the damn revenue number is. The only reason not to is because its NOT performing as envisioned just like the back half didn't turn out. How many more quarters of declining performance are you going to give them??? If by second quarter next year revs are still not growing are you going to still be here??? I think that's moshes hoped for time frame. I guess I could verify that just by looking when his options vest.