Ariba results impress

Ariba announced their second quarter results last Thursday – and pretty impressive they were too.

"Subscription revenue of $89.2 million, up 32% year-over-year, network revenue of $45.4 million, up 59% year-over-year, total revenue of $131.5 million, up 21% year-over-year...[and] net cash flow from continuing operations of $38.7 million for the three months ended March 31, 2012."

Profit sometimes seems to be less of an issue for growing US firms, whose accounts are often confused by one-time issues, restructuring costs, and stock options to managers. So it’s hard for a simple procurement person to understand just how profitable the firm really is when you get statements like this.

“Earnings of $0.02 per share from continuing operations; non-GAAP EPS of $0.25 from continuing operations, up 34% year-over-year”..

I think we can take that as “things are getting better and the firm is profitable but not hugely..”  And the figures certainly show strong growth, particularly in network related revenues.

Anyway, Jason Busch at Spend Matters US has written a more detailed analysis here – he points out for instance that the Quadrem acquisition last year is looking like a bit of a masterstroke – “an acquisition that could very well go down as one of the most successfully executed revenue/valuation arbitrage moves in B2B history”.

Jason has also picked up on four key themes for the future strategic development at the firm; usability improvements (in the core P2P product), pricing (including network pricing), partnerships, and M&A. The usability issue is interesting; it’s clear that Ariba are picking up on the trend for a more user-friendly, B2C type experience (being pioneered by Coupa, Wax Digital, Rollstream and others) and are looking to catch up with the leaders in that area.

I’ve been through the presentation material from the announcement, and I can’t see anything in terms of geographic area related figures. It would be interesting to see that – Quadrem, headquartered in the Netherlands was / is strong in Europe and the southern hemisphere,  but my perception is that Ariba do face perhaps stronger competition in Europe than the US in what was (pre their single-minded “network” focus) their core P2P / eSourcing areas. For instance, in Germany they come up against strong local providers such as Pool4Tool and Onventis (as well as BravoSolution, Emptoris etc. in some of those functional areas at least, and of course SAP).

Do read Jason’s full piece for further insight and information...

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First Voice

  1. Kevin:

    I would agree strongly If at all poissble, select a sourcing suite that has, or is about to have, supplier (self) management capabilities .we insisted on this component when we specified our ExpediSource suite two years ago. The industry as a whole has overlooked the value of this very basic feature (not Iasta in particular, as they have a great product suite and are well ahead in other areas). Our customers and prospects are more attracted to this single feature than we initially imagined.

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