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CLRS Message Board

  • mr_big_profit mr_big_profit Jun 1, 2001 3:58 PM Flag

    PSINet

    Another great CLRS alliance bites the dust..Man, who is the jerk-off from CLRS signing up these deadbeat partners..Perot Systems, PSINet, etc, etc. This is a major problem for CLRS. They have no substantive partners of note. With their high cash burn model, they need cheap distribution channels..

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    • I agree, the truth should be told. Life would be a lot simpler.

      However, Wall Street makes the rules. You've got to play the game their way. And that's what Clarus is trying to do.

    • Don't understand why management doesn't implement a policy of not surprising the markets.

      Read this and scratched my head in disbelief:

      "Despite this increase in visibility, the company lowered its revenue guidance
      for the year. We feel this represents Clarus's attempt to take advantage of
      industry-wide pessimism already factored into current valuations, to create
      expectations that can be more easily beaten going forward. We believe the
      company's true expectations are higher than the guidance provided.
      Accordingly, our new revenue forecast for 2001 is $5 Mill higher than company
      guidance."

      => Just tell them the truth. Plain and simple. Don't keep the analysts guessing.

    • From the Bears Sterns Report on 4/27/01:

      Decreasing Revenue Guidance Despite Improved Visibility
      Clarus ended the quarter with $36 Mill in on and off balance sheet backlog,
      100% of our revenue forecast for the year. This number is up from $22 Mill in
      Q3 '00 and $31 Mill at the end of last year. The company expects total backlog
      to be around $55 Mill by the end of 2001, which would represent close to 60% of
      our revenue estimate for 2002. We believe much of the growth in backlog is due
      to the traction experienced in the company's ratable recognition model. Around
      70% of contracts are already being ratably recognized and Clarus expects this
      metric to reach 90% in the next two quarters. As a result, visibility into
      Clarus's revenue stream is rapidly increasing with ratable revenues already
      accounting for 35% of license revenue in Q1. In addition, the company
      announced it had already closed 5 deals in Q2 which accounted for 50% of its
      revenue target for the quarter.

      Despite this increase in visibility, the company lowered its revenue guidance
      for the year. We feel this represents Clarus's attempt to take advantage of
      industry-wide pessimism already factored into current valuations, to create
      expectations that can be more easily beaten going forward. We believe the
      company's true expectations are higher than the guidance provided.
      Accordingly, our new revenue forecast for 2001 is $5 Mill higher than company
      guidance.

    • I though CLRS' backlog was someting like 20-25 million at the end of last quarter. CLRS communicates the backlog on quarterly con calls with analysts..

    • Good example. I failed to mention that DSO's are another meaningful metric to software companies. High DSO's mean that either the company is having trouble collecting cash or that they are writing "loose" payment terms into the contracts in order to close the business. Writing loose terms is an indication that the company might be having problems writing standard contracts because of propsects having concerns about the company.

    • The formula is:

      Accounts Receivable/Average Daily Sales=Daily Sales Outstanding

      It's a measure of how quickly sales are being collected. As Accounts receivable go up, DSO goes up; as daily sales go down, DSO goes up. So you want DSO to be headed down because as sales are increasing you want the money for those sales to be COLLECTED.

      Since Clarus switched to the ratable recognition model, the sales dropped dramatically while AR stayed on the books and DSO shot up, so in the nerm term it was important to see DSO get in line with the business model. Hope that helps.

    • Me too is much impressed with your example. (little add-note: backlog is not $1.600.000 but $1.650.000 amortized over 33 remaining months = $50K per month. Just being a dick).

      Now how typical is your example, sizewise.

      What kind of backlog in billions of $ are we talking about for CLRS?

      $2 to $ 3 billions?

      Again, thanks for the info.

      P.S. Has CLRS management ever bothered about communicating the backlog?

      Pi.

    • Mr. BP:

      Thanks for the education. Now, this whole ratable revenue model thing makes more sense.

      While you are in the instructional mood, can you or someone explain what " DSO " means. This term seems to come up during revenue/ earning / loss announcements, with what appears to be a goal of reducing this number.

      Thanks,

      Tex

    • It is how they do business. It is standard accounting practice under SOP 97-2. All software companies who account under a subscription basis do this. It is just more noticable under CLRS since their numbers are so small.

    • Agreed. That is why on the earnings con calls, we need to focus in on the bookings and cash numbers as the rest is smoke and mirrors.

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