ILOG Announces 2006 First Quarter Results
Announcement posted by ILOG 01 Nov 2005
ILOG(r) (NASDAQ: ILOG; Euronext: ILO,ISIN: FR0004042364) today announced results for the first fiscal quarter of 2006, ended September 30, 2005, with revenues of US$30.7 million and diluted earnings per share of US$0.11. This compared with revenues of US$29.1 million and diluted earnings per share of US$0.11 for the prior year's first quarter.
Net income for the quarter was US$2.2 million despite a charge of
US$0.7 million as the Company applied for the first time the new accounting rule SFAS 123 (revised 2004) relating to stock-based compensation. Using a non-GAAP measure excluding this new non-cash charge, net income for the first quarter 2006 would have been US$2.9 million or US$0.15 per share on a fully diluted basis, as compared to US$2.0 million, or US$0.11 per share for the same period last year.
(See "GAAP to non-GAAP Reconciliation" below for further information on our non-GAAP measure.)
"I'm pleased that we are at the high-end of our July guidance for profitability," said ILOG Chairman and CEO, Pierre Haren. "The positive trends we highlighted in past reporting have continued to gain momentum this quarter. We are seeing a growing number of Global 2000 customers who share our conviction that their organizations will greatly benefit from the adoption of service-oriented architectures (SOA), and from the increasing usage of real-time planning and scheduling tools across many industries. I'm more confident than ever that ILOG has made the right decisions to leverage these two key industry trends, which could provide a strong platform for our growth and profitability in coming quarters."
ILOG saw increased partner activity around its Business Process Management/SOA strategy, announcing relationships with Adobe, IBM and Oracle in the quarter. ILOG is the first Business Rule Management System (BRMS) vendor to support IBM WebSphere(r) Process Server version 6.0. ILOG also entered into a strategic partnership with the European company Soft Computing who will exclusively use ILOG JRules in its advanced customer relationship management (CRM) applications using predictive analytics software to discover, generate and apply business rules in real-time.
These encouraging trends did not translate into higher BRMS revenues in the quarter, which were down 4%, due, in part, to delayed purchasing decisions. BRMS deals, which continued to represent the majority of ILOG's largest engagements of the quarter and included an enterprise license agreement with America Online for an interactive call center application, the first of several rule-based applications planned by the company, and a leading Wall Street investment firm that will use ILOG JRules(tm) for a credit risk scoring application as part of its larger SOA strategy.
Optimization products experienced strong revenue growth in the quarter at 21%, with the activity mostly coming from end-user deals in the U.S.
"I am very pleased that optimization had its best quarter ever, driven both by ISV activity and several key enterprise deals" added Haren.
"This surge of interest in our optimization product line demonstrates that our recent investments aimed at putting the power of optimization into the hands of more enterprise users is well-timed to coincide with the growing need for better planning tools and on-line real-time optimization systems."
Significant ILOG optimization wins include deals with leading entertainment companies for advertisement scheduling and a global financial institution for portfolio management. The company also signed an agreement with a large U.S. semiconductor manufacturer for one of ILOG's new PowerOps(tm) supply chain management (SCM) solutions.
In July, the company announced ILOG Optimization Decision Manager(tm), which is the first optimization-based application development tool that lets business users configure and modify the applications that will drive their operational decision-making.
Another key trend in the quarter was growth of activity in Asia where revenues grew 32% year over year. Activity of key ILOG partners in the Asia Pacific region included BRMS deals with ISI in Australia and KSTEC of Korea. In China, Shanghai FirstTech deployed a JRules web service for claims processing at a leading insurance company in just three months.
Business Outlook
With a solid sales pipeline and IT trends that we believe favor ILOG products, management remains cautiously optimistic entering the second quarter of fiscal 2006. Management expects revenues between US$33 million and US$36 million and, without taking into account the impact of stock-based compensations, non-GAAP earnings per share between
US$0.05 and US$0.15, compared to revenues of US$32.2 million and earnings per share of US$0.12 in the second quarter of fiscal 2005.
Stock-based compensation is expected to amount to US$1 million in the second quarter of fiscal 2006, or US$0.05 per share.
Conference Call
ILOG management hosted a conference call on 27 October 2005 at 10 a.m.
Eastern Daylight Time or 4 p.m. European Daylight Time to discuss the contents of this release. To listen, please visit http://www.ilog.com/corporate/investor and utilize the WebCast link, or to participate, contact Cubitt Consulting. A replay of the call will be available later.
Net income for the quarter was US$2.2 million despite a charge of
US$0.7 million as the Company applied for the first time the new accounting rule SFAS 123 (revised 2004) relating to stock-based compensation. Using a non-GAAP measure excluding this new non-cash charge, net income for the first quarter 2006 would have been US$2.9 million or US$0.15 per share on a fully diluted basis, as compared to US$2.0 million, or US$0.11 per share for the same period last year.
(See "GAAP to non-GAAP Reconciliation" below for further information on our non-GAAP measure.)
"I'm pleased that we are at the high-end of our July guidance for profitability," said ILOG Chairman and CEO, Pierre Haren. "The positive trends we highlighted in past reporting have continued to gain momentum this quarter. We are seeing a growing number of Global 2000 customers who share our conviction that their organizations will greatly benefit from the adoption of service-oriented architectures (SOA), and from the increasing usage of real-time planning and scheduling tools across many industries. I'm more confident than ever that ILOG has made the right decisions to leverage these two key industry trends, which could provide a strong platform for our growth and profitability in coming quarters."
ILOG saw increased partner activity around its Business Process Management/SOA strategy, announcing relationships with Adobe, IBM and Oracle in the quarter. ILOG is the first Business Rule Management System (BRMS) vendor to support IBM WebSphere(r) Process Server version 6.0. ILOG also entered into a strategic partnership with the European company Soft Computing who will exclusively use ILOG JRules in its advanced customer relationship management (CRM) applications using predictive analytics software to discover, generate and apply business rules in real-time.
These encouraging trends did not translate into higher BRMS revenues in the quarter, which were down 4%, due, in part, to delayed purchasing decisions. BRMS deals, which continued to represent the majority of ILOG's largest engagements of the quarter and included an enterprise license agreement with America Online for an interactive call center application, the first of several rule-based applications planned by the company, and a leading Wall Street investment firm that will use ILOG JRules(tm) for a credit risk scoring application as part of its larger SOA strategy.
Optimization products experienced strong revenue growth in the quarter at 21%, with the activity mostly coming from end-user deals in the U.S.
"I am very pleased that optimization had its best quarter ever, driven both by ISV activity and several key enterprise deals" added Haren.
"This surge of interest in our optimization product line demonstrates that our recent investments aimed at putting the power of optimization into the hands of more enterprise users is well-timed to coincide with the growing need for better planning tools and on-line real-time optimization systems."
Significant ILOG optimization wins include deals with leading entertainment companies for advertisement scheduling and a global financial institution for portfolio management. The company also signed an agreement with a large U.S. semiconductor manufacturer for one of ILOG's new PowerOps(tm) supply chain management (SCM) solutions.
In July, the company announced ILOG Optimization Decision Manager(tm), which is the first optimization-based application development tool that lets business users configure and modify the applications that will drive their operational decision-making.
Another key trend in the quarter was growth of activity in Asia where revenues grew 32% year over year. Activity of key ILOG partners in the Asia Pacific region included BRMS deals with ISI in Australia and KSTEC of Korea. In China, Shanghai FirstTech deployed a JRules web service for claims processing at a leading insurance company in just three months.
Business Outlook
With a solid sales pipeline and IT trends that we believe favor ILOG products, management remains cautiously optimistic entering the second quarter of fiscal 2006. Management expects revenues between US$33 million and US$36 million and, without taking into account the impact of stock-based compensations, non-GAAP earnings per share between
US$0.05 and US$0.15, compared to revenues of US$32.2 million and earnings per share of US$0.12 in the second quarter of fiscal 2005.
Stock-based compensation is expected to amount to US$1 million in the second quarter of fiscal 2006, or US$0.05 per share.
Conference Call
ILOG management hosted a conference call on 27 October 2005 at 10 a.m.
Eastern Daylight Time or 4 p.m. European Daylight Time to discuss the contents of this release. To listen, please visit http://www.ilog.com/corporate/investor and utilize the WebCast link, or to participate, contact Cubitt Consulting. A replay of the call will be available later.