Ariba Back in Black

By Renee Boucher Ferguson  |  Posted 2002-04-25

Unexpectedly beating analysts expectations by a penny and moving into the black for its second quarter, Ariba Inc. today posted a pro forma net income of $1.1 million, or 0 cents per share.

Ariba was expected to lose 1 cent a share on sales of $55.3 million, according to Thomson Financial/First Call forecasts.

License revenues were reported at $57,192 for the quarter, versus $90,031 for the same quarter last year.

The company posted a net loss on a GAAP basis of $154 million, or a loss of 60 cents per share. Thats compared to a net loss of $1.8 billion, or $7.60 per share for the same quarter last year.

"Despite a challenging market environment, I am pleased with Aribas performance during the March quarter," said Bob Calderoni, president and CEO of Ariba, in Pleasanton, Calif. "Ariba beat expectations once again, strengthened revenues, improved pro forma earnings per share and demonstrated stability across the income statement and balance sheet."

Ariba has met or surpassed Wall Street expectations for the past several quarters.

Calderoni said he expects pro forma earnings per share to increase when the market for IT spending expands.

He did not speculate when that expansion might occur.

In regard to pro forma earnings for the upcoming quarter, Calderoni said he expects the company to break even or remain there within plus or minus one cent.

"We will show profitability when the market improves," said Calderoni. "[For now] our management team can spend time on…products and customers. Thats where spend management comes in."

Ariba announced its Enterprise Spend Management suite seven months ago, which allows companies to manage spend lifecycles from planning to payment. Its also a big push for the company moving forward – one that moves Ariba further away from its e-marketplace platform provider roots.

The message is resonating to some degree.

"Whats really nice about spend management is its a very simple, straight forward message," said Pierre Mitchell, vice president of research with AMR Research in Boston. "Rather than talking about a lot of complexities around supply chain, theyre talking about money. In terms of what they name it, its nothing new – we call it sourcing and procurement."

AMR recently evaluated 17 vendors, across 200 different metrics in the sourcing area. While Ariba was not the best in class from a sourcing standpoint, it is "certainly a contender" that is making it into the final evaluations of companies looking for e-sourcing applications, according to Mitchell.

"So theyre not at the top of the heap, but theyre not at the bottom either," said Mitchell.

According to Calderoni, Aribas spend management philosophy is resonating with customers. Last quarter about 30 percent of sales came from new products.

"That number has gone up this quarter, [new product sales] are now more than a third of our business," he said.

Ariba will highlight Enterprise Spend Management at its Live 2002 Anaheim User Conference next week.

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