Great Plains Reports Financial Results for the Second Quarter

Event Summary

On December 16, Great Plains Software, Inc., a leading provider of fully integrated front office/back office e-business solutions for the mid-market, announced financial results for the fiscal quarter ended November 30, 1999. Great Plains reported record second quarter revenues of $47.4 million, a 49% increase over the same period last fiscal year. Revenues from the Great Plains platform products, Dynamics and eEnterprise, grew 54% to $45.8 million in the quarter. Operating income, excluding the effect of amortization of intangibles, was $6.1 million, up 43% over the second quarter of fiscal 1999. Net income and diluted earnings per share for the second quarter, excluding the effect of amortization of intangibles, were $4.6 million and 28 cents per share, up 52% and 35%, respectively, over the same period last fiscal year. Including the effect of amortization of intangibles, operating income for the second quarter was $5.8 million, up 42% over the same period last fiscal year. Net income and diluted earnings per share were $4.4 million and 27 cents per share, representing increases of 52% and 36%, respectively, over the comparable period last fiscal year.

"Business was solid for our eleventh consecutive quarter as a public company," said Doug Burgum, chairman and CEO of Great Plains. "Our continued strong performance, coupled with the recognition we received this quarter, confirms our mid-market leadership in delivering value to our customers and partners through innovative, comprehensive solutions for front office, back office and e-business."

Market Impact

Great Plains' stellar financial performance (See Fig.1) calls into question other vendors' attempts to justify their dismal results in 1999 by attributing it solely to the market downturn due to the Y2K date resolution. We believe that the following are the factors of the company's success formula: very strong branding and penetration within the Small-to-Medium Enterprises (SME) segment of the ERP market; a uniquely developed, extensive partner channel within the industry (over 1,600 knowledgeable and experienced partners); exclusive focus on Microsoft platforms; attractive financial and e-Commerce functionality for smaller enterprises; and competitiveness in speed of implementation, feasibility of customization, total cost of ownership (TCO), and price/performance ratio. However, Great Plains is also facing resolution of the following challenges: a very low brand awareness outside of the North American market due to weak multi-national product functionality (e.g. currently available only in 9 languages); the late incorporation of discrete manufacturing and human resources modules within its product portfolio; and only a single-site capability.

User Recommendations

Great Plains should be included on any package selection short list within the Small-to-Medium Enterprises (SME) market where electronic business and financial modules are the main pillars of an enterprise application. However, any organization evaluating Great Plains should consider existing functionality only, and, in the case of final selection, should negotiate incorporation of new applications components now at negotiated license fees, in expectation of Great Plains' increase in new product introductions.

comments powered by Disqus