Useful Tidbits From Verticalnet's Q2 Results

Thanks to the strength of its products and financial wizardry of its management, Verticalnet continues to chug along, refusing to succumb to a balance sheet that would have doomed most public companies long ago. I won't dwell on the vendor's overall financials – you can read my recent post on the subject here – but I will spend a minute or two calling out and analyzing some of the more insightful disclosures in the earnings announcement. In no particular order:

1) "Customer demand shifting from single module negotiation subscriptions to multiple module or suite subscriptions with a particularly notable trend towards buyers seeking spend analysis in conjunction with negotiation, a focus which prevents many competitors who have a limited offering from competing." Spend Matters Comment: I agree 100% on the first point, and it's a good sign for the overall market. But the second is simply untrue. Both Emptoris and Ariba have similar capabilities -- and some might argue better -- when it comes to bridging the sourcing and visibility gap.

2) "Continued customer acceptance of on-demand software and support as the delivery model of choice for supply management solutions. Verticalnet's win rate in large multiple module suite deals has improved as customers seek true on-demand solutions and recognize that despite claims, Verticalnet's largest competitors have failed to deliver broad on-demand solutions to date." Spend Matters Comment: Again, there's some truth on the first point, and other vendors would agree that On-Demand is even gaining adherents among top performers -- not just the Spend Management masses. But I question the competitive bashing in the second point, and again, could point to a number of vendors -- even SAP -- who have a decent on-Demand footprint. If Verticalnet was as far ahead as they claim, their numbers would speak for themselves, and there would be no need for this misleading rhetoric.

3) "Success in Europe has continued to improve with four new software customers added in the United Kingdom since the end of the first quarter and the addition of our first German and Spanish customers to our client list." Spend Matters Comment: A great sign, and one that Verticalnet's competitors would probably agree with as well. The fact that Europe is finally starting to adopt Spend Management in a much broader way bodes well for the entire market.

Jason Busch

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