Tough Times For CRM Vendors

 
 
By Dennis Callaghan  |  Posted 2002-04-19 Print this article Print
 
 
 
 
 
 
 

CRM software vendors took it on the chin once again this week as falling revenues plagued several companies' reporting first quarter earnings.

CRM software vendors took it on the chin once again this week as falling revenues plagued several companies reporting first quarter earnings. E.piphany Inc. became the latest customer relationship management casualty Thursday, reporting that revenues for the quarter ended March 31 dropped to $22.1 million from $39.3 million in the same period a year ago. License revenues were more than cut in half, falling to $10.9 million from $22.4 million. The San Mateo, Calif., company did succeed in reducing its costs and charges across the board, allowing it to post a $17 million net loss, down from a $295.4 million loss in the same period a year ago. "In a tough quarter, we kept service margins at a healthy level and reduced total operating costs without sacrificing our ability to execute our strategy," said E.piphany CFO Kevin Yeaman, in a statement.
Still, with the long sales cycles that characterize this slow economy, not even the release of E.piphanys new J2EE-architected E.6 suite during the quarter could jumpstart sales. CEO Roger Siboni had to settle for claiming gains only in "mindshare" during the quarter.
Siboni could at least take comfort in the fact that E.piphany wasnt alone. CRM market-leader Siebel Systems Inc., also of San Mateo, continued its recent struggles. This week the company reported that last quarter revenues had plunged year-to-year for the third straight quarter, to $477.8 million from $598.8 million in the same period a year ago. Even sequentially, Siebel stumbled, with revenues down $10 million from the historically bad post-Sept. 11 fourth quarter of 2001. Siebel software license revenues took the biggest hit year-to-year, falling from $335.1 million in Q1 2001 to $246 million last quarter. Net income tumbled from $76.9 million $64.6 million. The results were doubly disappointing considering that the first quarter was the first full period for the companys Web-based Siebel 7 release. Chairman and CEO Tom Siebel had predicted that the companys sales would be returning to their normal high level this year. The results were not a good thing to happen to a company that lauds the power of its sales forecasting software. Kana Inc. continued the downward revenue trend among CRM software makers. It said that Q1 revenue dropped to $25 million from $37 million in the same period a year ago (which takes into account revenue reported by Broadbase Software Inc., before it was acquired by Kana last year). But company officials, in Menlo Park, Calif., pointed to a slight sequential revenue increase and a successful cost-containment effort that saw Kanas net loss shrink from $752.9 million in the same period a year ago to $6.8 million. The crunch continued at eGain Communications Corp., which saw revenue slump to $5.9 million from $13.4 million in the same period a year ago. The companys sales pipeline for new software nearly dried up, as license revenue fell to just $1.2 million from $5.9 million in the first quarter last year. The companys net loss fell too, though not that significantly, dropping only from $27 million to $20.6 million. EGain CEO Ashutosh Roy conceded that results were "disappointing" for the quarter. "Like many enterprise software companies we were surprised by the continued economic uncertainty and cautious decision making in the marketplace, resulting in deal slippage," he said, in a statement. "Looking ahead, however, we remain confident in the e-service market opportunity." Primus Knowledge Solutions Inc., which plays in both the e-service sector of CRM and the knowledge management software space, fared little better as its revenue plunged from $10.1 million to $6 million year-to-year, with license revenue feeling the brunt of that, falling from nearly $6 million in the first quarter last year to $2.5 million this year. The companys net loss only increased, from $3.3 million to $4.8 million. Even the more mature and stable contact center software segment of CRM wasnt untouched by the slump. Aspect Communications Corp., one of the top vendors in that space, saw Q1 revenues fall from $114.5 million to $106.2 million year-to-year with license revenues hardest hit, falling from $31.5 million to $22.9 million in that time. The company did manage to reverse its earnings fortunes though, reporting net income of $12.2 million after a $46.2 million loss in the same period a year ago. Aspect rival Concerto Software, the company formed in January from the merger of Davox Corp. and Cellit Inc., saw first-quarter revenue drop only from $24.9 million to $23.3 million year-to-year. The companys earnings suffered though. Hurt by a $2 million restructuring charge from the merger, Concerto had a net loss of $4.1 million in the first quarter, after turning a modest $332,000 profit in the same period last year.
 
 
 
 
 
 
 
 
 
 
 

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