Tag Archives: earnings

Was August good for Ektron?


ektron-logoUS-based Web CMS vendor Ektron recently announced that August 2009 was a record-breaking month for them. It is quite unusual for CMS vendors to release news about monthly performance, but Ektron did post a 96% increase in sales. Ektron must have felt that this story was too good to keep to themselves. Let us examine it bit closer - from the perspective of the practitioner.

To understand the numbers better, I had a brief conversation earlier this week with Ektron CEO Bill Rogers. Ektron has grown to having 210 employees with several offices outside the US, including Canada, the UK and Australia. About 75% of revenue is still US-based and outside the US, the UK office leads in terms of revenue. According to Rogers, the international offices are growing rapidly and the UK office has got over 10 employees.

To provide some perspective, we estimate Ektron to be roughly twice the size of Sitecore, which had revenues of about €12 million in their latest fiscal year. Ektron did make it to our Web CMS Shortlist 2009 and has been growing rapidly for quite a while. However, this is not unique: many vendors have had happy days thus far in 2009, including Day Software, IBM and Sitecore.

According to Rogers, Ektron has a few "technology game changers" which help Ektron win deals, most notably their PageBuilder for rich text editing and eSync for site synchronization. If you consider that enterprise licenses start at around €50k, a few additional deals could literally make a huge amount of difference and create a bumper month. It could also simply be that August 2008 was a weak month, thus making it easier to impress in August 2009.

As a privately-held vendor, Ektron has opted for increased transparency, but is still very secretive about their financial results. Unlike other vendors they don't release numbers about revenue or profit. They did put out a press release about Q1 growth earlier this year claimed 26% revenue growth. I’ve followed Ektron since the late 90’s, when their main product was as a rich text editor called eWebEditPro. Today the CMS represents the vast majority of the company revenue, with the editor counting for less than 5 % of revenue.

To me, it seems like Ektron is adopting a defensive one-way approach to transparency. They decide and control what gets shared with the general public. This might be comforting for investors or the less critical buyers. In my view transparency is not about control, but a process where stakeholders, e.g.  customers, are treated with openness and insights.

At my last Ektron briefing in May, they expected the release of version 8, the next major version in August. We are now in late September and version 8 is still not out.

What should you really look for in financial numbers? I would say that profit is more interesting than growth. Also, does it really matter much whether August was good or bad when the next major release has been delayed?

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Day Software returns to profitability


Day logoEarlier this week Swiss CMS vendor Day Software released financial results for the last 6 months (1H 2009) which showed a return to profitability, revenue growth and actual cash growth.

Revenue was up 33 % and license revenue accounted for 42 % of revenue, maintenance and support (M&S) revenue for 32 % and services for the remaining 26 %. A few months ago, Michael Marth, a friendly Day engineer, shared an interesting insight into Day's customer retention success when he documented the lifetime of a CMS installation to be more than 6 years for Day customers. This certainly helps in relation to the M&S revenue.

While Day has been known to continuously invest in research & development (R&D), a closer look at the operating expenses reveal that R&D costs are down roughly 5 %. Sales and marketing costs are up more than 10 % and general and administrative costs are up more than 20 %. Perhaps Day is hoping that the increased spend on sales and marketing will translate technical leadership into market leadership?

After Day released what analyst Kas Thomas at CMS Watch characterized as not-so-sunny financial results in February, quite a few of our community of practice members have asked us to keep a watchful eye on the Swiss CMS vendor. Interestingly, CMS Wire had a more positive take in a story titled Bright and Sunny 2008 Financial Results. Irrespective of your interpretation of the numbers, Day deserves recognition for being transparent and more open about numbers than most competing vendors.

With software sales at €4,7 million for the 6 months, Day has quite a global footprint with dual headquarters (in Switzerland and the US), 4 regional offices in Europe and 1 in Singapore. Based on software revenue, Day is a slightly smaller than Sitecore, which has experienced rapid growth and Day is significantly smaller than FatWire, which recently reported a profitable year and revenue increase. If you look at the recent and (too) influential Forrester Wave for WCM vendors, Day was indeed the smallest dot on the chart.

Many potential buyers, particularly in Scandinavia, have so far been reluctant to consider Day, mostly due to the lack of local experienced partners. According to Kevin Cochrane, Chief Marketing Officer at Day, who I recently interviewed, a revamped partner program will soon be introduced in order to win new system integrators and agencies in regions where Day has historically been weak.

Cochrane also reflected briefly on the management changes that Day experienced in 2008 with a new CEO and a new CFO. He saw this as a very positive change for the company and he mentioned that there had been no change in R&D, even with the cost reduction. According to Cochrane, the number of engineers actually went up as Day had some quite extraordinary costs related to the CQ5 launch in late 2008.

As always, great financial results from a vendor is not necessarily an indicator that the company's products fit the specific requirements of your organisation. When evaluating vendors, ensure you compare features as well as intangibles, e.g. roadmap, community, partners and finances. If you are very close to a decision, consider doing reference calls to some of the 27 new customers to check in on their progress.

Disclaimer: I’m no financial analyst, but the financial standing of a vendor is important when evaluating. So remember to look beyond the product features.

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