Infinium Ends Its Most Challenging Year
Written By: Predrag Jakovljevic
Published On: December 11 2000
Infinium Ends Its Most Challenging Year
On November 2, Infinium Software, Inc. (NASDAQ: INFM) announced
financial results for the fourth quarter and fiscal year ended 30 September
revenues for the fourth quarter of fiscal year 2000 were $25.0 million,
compared to $31.3 million for the same quarter of the prior year. The
quarterly loss was $14.1 million compared to a loss of $4.4 million for
the same quarter of the prior year. Software license fees for the fourth
quarter of fiscal year 2000 were $7.0 million, compared to $7.1 million
for the same quarter of the prior year, and increased 37% over the previous
quarter. Consulting and maintenance revenues for the fourth quarter of
fiscal year 2000 were $18.1 million, compared to $23.2 million for the
same quarter of the prior year (See Figure 1).
revenues for fiscal year 2000 were $93.0 million, compared to $122.0 million
for fiscal year 1999. The fiscal year 2000 loss, inclusive of all items,
was $27.0 million, compared to $2.4 million loss for fiscal year 1999
(See Figure 2).
ASP business to-date totals $5.9 million in three-year contract value.
In the fourth quarter of fiscal year 2000, Infinium billed ASP
customers $1.3 million while recognizing $238,000 in monthly recurring
revenue (MRR), compared to $21,000 in recognized MRR for the previous
a result of the balanced and growing demand for our full-service enterprise
ASP offerings and our fully-integrated CRM to ERP and e-Business solutions,
we exceeded expected operating results this quarter," said Bob Pemberton,
CEO of Infinium. "In the fourth quarter of fiscal year 2000 we made substantial
progress in completing our revenue acceleration and cost rollback plan.
We decreased our expenses, reduced our sales cycles, and signed larger
deals. We've gained momentum toward profitability, and we're now better
positioned to grow our business, and shareholder value."
Infinium, like most of its competitors, has experienced the plight of
tackling ambitious product development in a sluggish but rapidly changing
market. Fiscal 2000 was indisputably challenging and put the company through
a number of dilemmas and tough decisions that involved new focus and new
product introductions, significant management team reshuffling, and a
company-wide restructuring. To that end, during 2000, the company has
refurbished much of its product suite, and refocused itself on an e-business
strategy built upon its solid ERP foundation. Company founder Bob Pemberton
came back from retirement to pick up the torch and has gathered an almost
completely new team. The company has been reorganized to focus on three
key initiatives: customer relationship management (CRM), e-business applications,
and the ASP business. To deliver these, Infinium has taken a flexible
approach involving acquisition, internal development, and partnerships.
Infinium will continue to enhance its core enterprise business applications,
the real focus has apparently shifted. It has been demonstrated through
a number of announcements throughout 2000: a new customer relationship
management (CRM) product (through the acquisition of Netherlands-based
CRM vendor Dexton Information Systems in January 2000); a slew of Web-enabled
business components (HRMS being one of the first in April 2000); and a
strategy for new e-business and extended ERP solutions such as e-procurement,
digital marketplaces, self-service, and analytics (for more information,
Putting its Cards on the Table, and Infinium
and Elcom Walk Down ASP Aisle). Possibly differentiating from its
competitors was the company's "bite-the-bullet" approach in tackling the
nascent ASP opportunity. Namely, the company's ASP strategy is to provide
a holistic, turnkey solution under the mantra "Let Infinium manage your
IT infrastructure for you, while you focus on what you do best". To that
end, Infinium opened a spacious ASP data center in Marlboro, MA, USA in
mid 2000. Owning all elements of ASP business, and exhibiting readiness
to accommodate customizations, may enable the company to alleviate customers'
initial reticence to venture into the uncertain land of ASP.
regard the company's recent e-business initiatives favorably; they are
in tune with the market trends and customers' requirements. Infinium had
no choice but to extend the traction in its mid-market ERP market niche,
filling gaps and diversifying its product portfolio. The much broader
scope and flexibility of its product offering as well as the size of its
existing customer base should provide it with recurring revenue for some
time to come.
the above-mentioned moves, bundled with ongoing market malaise and increased
competition, have depressed Infinium's recent financial performance (See
Figures 1 and 2). One possibly encouraging sign is a notable recent increase
in license revenue, but heavy losses have not been curbed yet. The company
has posted its fifth consecutive loss, which may give its shareholders
serious concern . The company's cash and stockholders equity values have
more than halved during the last 12 months. The task of curbing costs
with a newly revitalized license growth and still only a moderate acceptance
of its ASP value proposition remains daunting despite the company's determination
to address it.
Infinium's customers should certainly consider the new product offering,
but should avoid selecting it without looking at what the other vendors
have to offer. We encourage users to familiarize themselves with the company's
ambitious new product offerings and their availability, at least to better
leverage their negotiating position with other vendors involved in a particular
for potential customers, Infinium should be included in a long list of
an enterprise application selection for mid-market and low-end Tier 1
companies (with $100M-$2B in revenue) as well as for divisions of Fortune
1000 companies within the following industries: hospitality & gaming,
transportation, healthcare, retail, process manufacturing, and financial
services. Infinium should be included on any package selection short list
within the above markets where financial, human resources/payroll, and
process manufacturing are the main pillars of an enterprise application.
from industries not mentioned above may benefit from evaluating some of
Infinium's stand-alone product components (e.g., CRM, HR, and BIAS - Infinium's
business intelligence application suite) on an opportunity-by-opportunity
basis and as leverage against other vendors in the selection exercise.
Organizations seeking a Web-based solution and out-of-box functionality
with some customizing effort may benefit from evaluating Infinium's ASP
offering. Support, connectivity, ease of use, security, acceptance, and
scalability are only a few regular considerations.
and potential users may want to inquire about the company's plans regarding
Internet marketplaces in their respective industries: Which specific market
places does (or will) Infinium connect with? What methodology does (or
will) the company subscribe to? Due consideration should be given to the
product availability and endorsement of "web standards." Should a different
XML standard be adopted on an industry wide basis after installation,
identify who will be responsible for accommodating the change and what
measures have been engineered into the application to support evolving
clients are also advised to request the company's written commitment to
promised functionality, general availability date, price, length of implementation,
and seamless future upgrades. Given the fact that some products have been
only recently released, each component should be put through its paces
using a well-documented set of requirements, scripted scenario demonstrations
and rigorous reference checking. As for the newly added and/or anticipated
functionality through product alliances, users are advised to ask for
firm assurances on the availability and timeframes of future upgrades,
and more detailed scope of combined product functionality.
a deeper analysis of Infinium, see Infinium
Software Inc.: Having All the Right Cards?