Seagull Software Announces Financial Results for
Year Ended 30 April 2006
DORDRECHT, THE NETHERLANDS – 22 June 2006
Seagull Software (AEX: SEAGULL), a leading provider of software products for transforming legacy applications into Web services for service-oriented architecture, today reported financial results for the financial year ended 30 April 2006 (FY 2006).
For the full financial year, total revenue was $27.7 million, an increase of 19% as compared with total revenue of $23.4 million for the previous year. The Company reported a pro forma profit of $121K. This compares with a pro forma loss of $908k in FY2005.
“We are very pleased to report strong growth in revenues as well as a pro forma profit,” said Seagull Software CEO and President Don Addington. “License, consulting and maintenance revenues grew, and we won significant new business from important telecommunications and financial enterprises in our target market.”
License revenue for the year was $11.7 million and increase of 21% as compared with $9.7 million in FY 2005. Maintenance and service revenues grew from $13.7 million in to $16.1 million in FY 2006.
“This is our strongest performance in the past three years,” continued Mr. Addington. “Revenue is up in all geographies, the three acquisitions we completed since April 2005 are materially contributing to our performance, and the company’s SOA strategy is right on target with customer requirements.”
Total gross margin for FY 2006 was $22.2 million or 80% of revenues, as compared with $18 million (77% of revenue) for the previous year. Gross margin on license revenue was $11.6 million (FY 2005 $9.6 million). Maintenance and service gross margin was $10.6 million as compared with $8.4 million in FY 2005.
On an International Financial Reporting Standards (IFRS) basis, net loss after amortization of intellectual property and expense related to stock options for FY2006 was $937K as compared with a net loss of $963K for FY 2005.
Net loss for FY 2006 was $0.11 per share as compared with a net loss per share of $0.12 in the previous financial year. On a fully diluted basis, the FY 2006 net loss per share was $0.10 as compared with a net loss per share of $0.11 in the previous year.
Geographically, the Americas region contributed 70% of total revenues in FY 2006 with the remaining 30% generated by Europe and Asia Pacific, in line with results from the previous year.
Total operating expenses were $23.4 million, an increase of 10% as compared with total operating expense of $21.2 million in FY 2005. Sales and marketing expenses were $13.6 million (FY 2005: $11.3 million). Research and development expenses increased from $4.5 million to $5.6 million, mainly due to additional headcount and amortization of intellectual property related to the acquisitions completed in the year. General and Administrative expenses including the finance, IT, maintenance renewal, HR, and administration departments as well as legal and accounting fees were $4.2 million (FY 2005: $4.3 million).
Total cash balance at the end of FY06 was $5.5 million as compared with $6.9 million on 30 April 2005. Days Sales Outstanding (DSO) on 30 April 2006 was 45 days, comparing very favorably with industry averages of more than 60 days.
“We continue to experience outstanding DSO, reflecting customer satisfaction with our products and services,” said Mory Motabar, Chief Financial Officer for Seagull Software.
Business Highlights
Global Expansion of Enterprise Account Customer Base
During the year, Seagull Software continued to expand its customer base in its target market of enterprise accounts across a variety of vertical segments including retail, financial services, government, telecommunications, transportation and utilities; growing the customer base by 146 new accounts as compared to 129 for FY 2005. Seagull Software closed new and follow-on business with the Dutch Police, Atlanta Gas Light, LiquidLogic, Federated Systems, Kabel Baden, Hydron Flevoland, JDA Software, iesy Hiessen and Legal and General.
Acquisitions
In July 2005 Seagull Software completed the acquisition of Oak Grove Systems, Inc., a privately-held software company that specializes in business process management (BPM) technology. In addition to intellectual property, the Company gained over 60 new customers including SAS, Sybase, Plumtree Software, Macnica, Empolis GmbH (Bertelsmann MOHN Media Group), Intentia International and the U.S. Navy.
In April 2006 Seagull Software completed acquisition of the assets of privately-held Farabi Technology Corporation, a Canadian software company that specializes in software products to connect .NET environments to legacy applications. All of Farabi's intellectual property and HostFront software products are included in the asset purchase. Seagull Software gained 200 new customers including fifty Fortune 1000 companies. New customers in North America include Synovis Financial, American Express, Continental Airlines, Sears Canada and Banque Nationale du Canada. Customers in the Middle East include Saudi Airlines, Egypt Air, National Bank of Egypt and the Ministries of Interior and Finance in Kuwait.
Other Accomplishments
- The Technology Association of Georgia (TAG) announced Seagull Software as one of the Top 40 Innovative Technology Companies in Georgia for 2006. The Top 40 candidates are outstanding examples of the breadth of exciting technologies that are being developed and commercialized in Georgia. The Innovators were chosen based on degree of innovation; scope and financial impact of innovation; likelihood of success; and promotion of Georgia's innovative efforts nationally and internationally.
- In January 2006 Seagull Software announced that LegaSuite® achieved IBM ServerProven validation, joining previously–validated products BlueZone™ terminal emulator and J Walk® and WinJa® (now known as LegaSuite GUI). LegaSuite Integration Engine runs on IBM eServer zSeries, xSeries and iSeries systems. The IBM ServerProven status requires verification from customers that LegaSuite Integration Engine is in production use on IBM platforms. Our customers use LegaSuite Integration Engine on all three IBM eServer platforms to transform legacy applications into Web services for SOA.
- In December 2005 the industry's most flexible and comprehensive solution for transforming CICS applications into SOA assets was announced. Among its many unique features, LegaSuite for CICS supports multiple run-time architectures from one development effort and offers integrated Business Process Management (BPM) workflow capabilities. Customers can implement LegaSuite with no changes to their CICS applications, and with little or no coding.
- Seagull Software was again included in the Software 500, Software Magazine’s list of the world’s foremost software companies.
Throughout the year, Seagull Software and its employees continued their commitment to philanthropic and community events, including proactive fund-raising for the United Way, Habitat for Humanity and the American Red Cross.
Use of Pro Forma Financial Information
In order to enhance overall understanding of the company's current financial performance Seagull Software provides pro forma information. Pro forma information reflects adjustments to IFRS results to exclude non-cash stock-based compensation expenses and amortization of acquired intangible assets related to acquisitions. The presentation of this pro forma financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with IFRS.
Financial Statements - 
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Forward-Looking Information: All statements in this press release which address operating performance, events or developments that we expect or anticipate will occur in the future, including statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. These forward-looking statements are, and will be, based on management's then-current views and assumptions regarding future events and operating performance. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to management's ability to manage growth, and hire and retain qualified employees; unpredictable customer demand; intense competition; rapid technological change; unpredictable market acceptance of new products; and market instability and/or reduction in software purchasing caused by exceptional circumstances.
About Seagull Software
Seagull Software specializes in technology that transforms "legacy" applications into SOA-compliant Web services, helping enterprises achieve exponentially faster IT support for business change, governance and compliance. Our LegaSuite® software platform includes integration, GUI, workflow and terminal emulation technology. With LegaSuite, customers connect legacy applications on IBM mainframe, VME mainframe, System i, OpenVMS and UNIX-VT and Windows client/server platforms to the Web, to other middleware and to newer-generations of applications such as portals, CRM and SCM. LegaSuite is based on open standards including Web services, XML, J2EE and .NET. Powerful and innovative tools require no coding, which means rapid results, reduced risk and no maintenance burden. Committed to providing the best customer experience in the industry, Seagull Software’s technology is in use in more than 10,000 business and government organizations worldwide, and by millions of end users. Seagull Software has direct operations in the United States, Canada, the Netherlands, UK, France, and Germany, supplemented by distributors serving approximately 30 additional countries. The company was acquired by Rocket Software (www.rs.com) in 2007. For more information, visit www.seagullsoftware.com.
NOTE TO EDITORS: The correct usage of our company name is Seagull Software.
Forward-Looking Information: All statements in this press release which
address operating performance, events or developments that we expect or anticipate
will occur in the future, including statements expressing general optimism about
future operating results and non-historical information, are forward-looking
statements. These forward-looking statements are, and will be, based on management’s
then-current views and assumptions regarding future events and operating performance.
Forward-looking statements are subject to certain risks and uncertainties that could
cause actual results to differ materially, including, but not necessarily limited to
management’s ability to manage growth, and hire and retain qualified employees;
unpredictable customer demand; intense competition; rapid technological change;
unpredictable market acceptance of new products; and market instability and/or
reduction in software purchasing caused by exceptional circumstances.
