Logility FY 2001 Comes In Like a Lamb
Business-to-business collaborative planning software vendor Logility,
Inc. announced its financial results for the first quarter of fiscal 2001.
License revenue fell 57% from the comparable quarter of last year to $1.9
million, a 44% improvement over the previous quarter's license revenue
of $1.3 million. License revenue for the fourth quarter of fiscal 2000
was itself a disappointment attributed at the time to delayed purchasing
decisions among several key accounts.
offered no details to explain the current quarter's difficulties, although
the company assured their public that changes are underway. "While we
are disappointed in our license fee performance during the quarter, we
are positioning the company for success by improving the direct and indirect
sales channels," said J. Michael Edenfield, president and chief executive
officer of Logility. "Additionally, we have taken action to improve sales
execution including the addition of new management leading our direct
sales team, the formation of an e-Business unit and continued expansion
of our alliance programs."
20% increase in services revenue counteracted the shortfall in licenses
from a total revenue perspective and total revenues increased slightly
over last quarter, but fell 16% in comparison with the first quarter one
year ago. The fall in revenues combined with unchanged operating expenses
contributed to a net loss of $760,000 for the quarter. Despite these results,
the overall financial condition of the company remains good, with cash
and short-term investments of approximately $23 million and negligible
hinted that other activities during the quarter may have diverted company
attention from sales execution goals. "This past quarter, Logility extended
its market reach through an exciting new partnership with Great Plains,
an organization with tremendous expertise in solving the business needs
of the midmarket. Great Plains will market and sell Logility products
to new accounts as well as their own significant customer base of approximately
7,000 through a network of over 2,000 business partners." Clearly, Logility
is optimistic about prospects for the remainder of 2000 and beyond.
Its weak revenues in the last two quarters stem largely from a loss of
focus in Logility's sales organization. This is not unexpected as the
company's small direct sales personnel have been assimilating their revised
role supporting an OEM agreement with Great Plains Software. In the deal,
some of Logility's products will be branded and sold as Great Plains'
Supply Chain Series. The first modules to be offered are Logility's warehouse
management system, WarehousePRO and its logistics execution application,
Transportation Management. Great Plains plans to incorporate more applications
in the future, including Logility's collaborative planning products, Voyager
XPS and Voyager XES.
boundaries are drawn and the two organizations are working together in
tandem, we see excellent potential for the partnership and little chance
of conflict. Provided Great Plains resists following the example of SAP
and Oracle and does not develop its own supply chain suite, the OEM agreement
should eventually afford Logility a healthy flow of indirect revenue.
Great Plains has established very strong branding and penetration within
the Small-to-Medium Enterprises (SME) segment of the ERP market and enjoys
an extensive partner channel with over 1,600 experienced partners.
Flagging revenues might cause day traders to panic and throw all their
money into i2 stock, but cooler heads (and current customers) should not
be overly concerned about Logility's current difficulties. 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.
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.