Logility
Surges on Second Quarter Earnings Announcement
S. McVey - November 24, 1999
Event
Summary
Logility, Inc. recently announced its financial results for the second
quarter and six months ended October 31, 1999. In spite of the Y2K marketplace
malaise, Logility reported increases in software license, services, and
maintenance revenues. Software license fees for the quarter were $4.0
million, a 124% increase over the second quarter of last year. Services
and maintenance revenues were $4.5 million, a 28% improvement over the
same period last year. Total revenues for the quarter of $8.6 million
or $0.07 per share represented a 60% increase over last year. In addition,
profits fell comfortably in positive territory at $0.07 per diluted share.
Logility CEO J. Michael Edenfield attributes the favorable results in
part to the successful launch of Logility's i-Commerce initiative, focusing
on internet-enabled supply chain management applications; collaborative
planning, forecasting and replenishment (CPFR); trading partner collaboration;
and application hosting services.
Market
Impact
Logility's profitable quarter reflects the success of its effective strategic
focus and marketing campaign. Within the past year, Logility redesigned
its business strategy to embrace the Internet. Its i-Commerce initiative
reflects the new direction and combines its older Value Chain Solutions
Suite with two offerings aimed squarely at the Internet: i-Connection,
its application hosting and management services, and i-Community, an on-line
network for trading partner collaboration. Announced in July, i-Commerce
is still in its early stages, although Logility has garnered two wins
in the furniture industry for its Voyager XPS collaborative planning application,
Wickes Furniture Co. and Homelife Furniture Corp. In contrast to its enthusiasm
for Voyager XPS, the market has apparently reacted coolly to i-Connection
and i-Community, and high profilee clients in these areas are conspicuously
absent. The second quarter results are a reflection more of the market's
confidence in Logility's traditional supply chain management applications
than of the vendor's success in closing deals for its new i-Commerce components.
User
Recommendations
In spite of the successful quarter, Logility's web offerings are relatively
new, and more development work will be required before the applications
can be considered safe investments. In addition, users should be wary
of Logility's reluctance to name clients who have signed on for i-Connection.
This may indicate that either customers are not impressed with the offering
or that they hesitate to entrust key applications to an external party
- the latter a hurdle that all ASP vendors will need to overcome.