After Strong Game, Logility Suffers Fourth Quarter Loss

  • Written By: Steve McVey
  • Published: June 14 2000

After Strong Game, Logility Suffers Fourth Quarter Loss
S. McVey - June 14, 2000

Event Summary

Business-to-business collaborative planning software vendor Logility, Inc. reported results for the fourth quarter of fiscal 2000. Total revenues were $6.9 million, a 21% decline compared to total revenue of $7.8 million for the quarter ended January 31, 2000. For the first time in over a year, Logility reported a net loss of $646,000 for the quarter due primarily from lower than expected license fees. Despite the fourth quarter results, the company expects to be profitable for fiscal year 2000. In addition, the overall financial condition of the company remains good, with cash and short-term investments of approximately $25 million and no debt.

Figure 1.

J. Michael Edenfield, President and CEO of Logility, attributed the poorer than expected license fee performance to purchasing delays among some key accounts. He went on to express his belief that a number of these accounts would be closed in future quarters and remains optimistic about Logility's prospects for fiscal 2001.

Market Impact

While it should report a net profit for the fiscal year ending April 30, 2000, Logility must be disappointed in its fourth quarter loss given that last quarter it earned record profits of $1.25 million. More impressive, the company maintained a positive bottom line throughout the challenging Y2K remediation period.

Logility, which sits a distant third after i2 Technologies and Manugistics within the supply chain management (SCM) market, finished fiscal 1998 with nearly $35 million in total revenue but stumbled in 1999 when declining SCM software market conditions forced it to reduce its direct sales staff and curtail spending on sales and marketing.

Its fiscal 2000 revenues should approach $32.5 million, giving it a 19% increase over 1999 revenues of $27 million. Provided that Logility can continue to sell traditional licenses and find more support for its hosted offerings, we expect it to have success in fiscal 2001. Logility has seen less demand for its i-Connection hosted applications than it expected and plans to look for leads from its ASP partners, AmQUEST and eBaseOne.

For its traditional licenses, some competitive pressures could arise from Adexa, a similarly sized SCM vendor with IPO plans later this year, although the companies focus largely on different industry verticals: Adexa for semiconductor and electronics and Logility for process manufacturing, with the only real overlap being in apparel and soft goods.

User Recommendations

Its fourth quarter stumble notwithstanding, users should look favorably on Logility's performance in fiscal 2000. It remained profitable despite the Y2K-induced market slump, restored its license revenues, and significantly improved its liquidity. Users with relatively uncomplicated business processes in process manufacturing industries, such as food & beverage, chemicals, and other consumer goods should certainly include Logility on shortlists. Users with very particular business requirements that defy simple implementation should still involve Logility in the selection, at least through the scripted scenario demonstrations, but should ask for quotes that detail additional costs raised by customization. Small to mid market companies evaluating application service providers should ask Logility for a reference from its small, but growing, list of clients who use hosted Voyager products.

Figure 2.

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