JDA Software Earnings Beat

JDA Software Group Inc. (JDAS - Snapshot Report) posted third-quarter results after the closing bell on Monday.

The company reported a GAAP net loss of $2.3 million, which included a payment of $8.6 million related to repurchase of preferred stock, compared to a GAAP net income of $8.2 million in the year-ago quarter. Excluding the preferred stock payment and other special items, pro forma earnings per share came in at 37 cents, which topped the Zacks Consensus Estimate by 4 cents.

JDA Software is a leading provider of enterprise solutions designed to enable planning, optimization and execution of supply chain processes. The company offers its solutions to its worldwide customer base of more than 5,800 retailers, manufacturers, wholesaler-distributors and services industries companies.

The Scottsdale, AZ-based company said total revenue dipped 2.6% to $95.9 million, compared with $98.4 million in the year-ago period. Product revenue declined 10.3% year over year to $62.3 million primarily due to sluggish software sales caused by timing of deals and softer-than-expected revenue from the Asia-Pacific region. Services revenue recorded a much better performance and grew 15.7% year over year to $33.6 million driven by higher consulting revenue.

Operating income fell 40.7% year over year to $9.5 million, while operating margin reduced by 630 basis points (bps) to 9.9%. The decline was caused by lower revenue coupled with increased operating expenses primarily related to higher incentive compensation, legal and accounting fees, and bad debt expenses.

During the quarter, JDA generated $20 million of cash from operations and about $9.9 million from issuance of common stock. The company deployed $30.1 million towards redemption of the remaining convertible preferred stock owned by Thoma Bravo LLC. The company also deployed $4.1 million towards capital expenditure and ended the quarter with cash and equivalents of $85.5 million with no debt outstanding in its books.

Looking ahead, management expects a strong fourth quarter driven by expected closure of large deals. The company said that a solid performance in software sales during the fourth quarter will enable it to either meet or beat the previously announced second-half adjusted EPS guidance of 84 cents to 86 cents per share.

This guidance calculates to fourth-quarter earnings of about 47 to 49 cents per share and full-year earnings of about $1.37 to $1.39 per share. The Zacks Consensus Estimate, derived from 4 covering analysts, currently stands at 44 cents per share for the quarter and at $1.46 per share for the full year.