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ClickSoftware Technologies, Ltd. (CKSW)
Q2 2008 Earnings Call
July 23, 2008 9:30 am ET
Moshe Benbassat – Chief Executive Officer
Shmuel Arvats – Chief Financial Officer
Nick Pajwani - Roth Capital Partners LLC
Matthew Weiss - Maxim Group Inc.
Jack Spears - Capstone Investments
Michael Martin – Small Cap Report
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I would like to remind you that during the course of the conference call, the Company will be making expressed or implied forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934.
These forward-looking statements include but are not limited to those statements regarding future results of operations, visibility into future periods, growth and rates of growth, and expectations regarding future closing of the contracts, receipts of orders, recognition of revenues and deferred revenues.
Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. Achievement of these results by ClickSoftware may be affected by many factors including but not limited to risks and uncertainties regarding the general economic outlook. The length of or changes in ClickSoftware's sales cycle, ClickSoftware's ability to close sales to potential customers in a timely manner and maintain or strengthen relationship with strategic partners, the timing of revenue recognition, foreign currency exchange rate fluctuations, and ClickSoftware's ability to maintain or increase its sales’ pipeline.
The forward-looking statements contained in the press release are subject to other risks and uncertainties including those discussed in the risk factors section and elsewhere in ClickSoftware's annual report on Form 20-F for the year ended December 31, 2007 and in subsequent filings with the securities and exchange commission.
ClickSoftware is under no obligation to and expressly disclaims any such obligation to update or alter its forward-looking statements, whether, as a result of new information, future events, or otherwise.
I would now like to turn the conference over to Dr. Moshe BenBassat, Chief Executive Officer. Please go ahead, sir.
Thank you. Good morning, everyone, and thank you for joining ClickSoftware's earnings call for the second quarter of 2008. As usual, I shall start with a brief overview of the financial results and then proceed to describe some of our significant operational achievements.
Shmuel Arvats, our Chief Financial Officer, will then provide you with the details of the financial results for the quarter. We shall then give guidance and summary comments and finally take your questions.
Let me start with highlights of the Q results. Our revenues in the second quarter were $11 million representing 5% year-over-year growth and 4% sequential decline. As we state in the earnings press release while the timing of certain transactions was pushed forward into the third quarter and therefore impacted our second quarter financials. We shall recognize those revenues in the second part of the year.
Together with the $11.5 million we generated in Q1 of 2008, we have a total of $22.5 million for the first half of 2008 which is roughly 45% of the full year target of $48 million or 47% if we look into the opposite, 45% if we look into the $50 million target or the lower range, 47% for the $48 million. This is well within the range of midyear results that will enable us to get to the targeted annual revenues of $48 million to $50 million.
In terms of operating expenses, we broke even and naturally this is a direct result of the lower revenues. The weak US dollar also had a negative impact. Our cash position declined slightly and we finished the quarter with $24.9 million compared to $25.9 million at the end of the last quarter.
In terms of backlog, the second quarter was quite productive in terms of booking specifically in the area of new booking as opposed to repeat orders. Order bookings from new customers were twice as high relative to the first quarter of 2008, and almost three times higher than the amount we booked in the same period last year. This resulted in an increase of $1.7 million to our backlog and deferred revenues at the end of the second quarter for a total amount of $19.4 million.
I shall now proceed to provide details on key transactions of the second quarter which were quite productive in terms of signing new deals, as I said before.
The first is Downer EDI Engineering, a subsidiary of the Downer EDI, a top 100 company in Australia. Downer EDI Engineering provides comprehensive engineering and infrastructure management services across Australia, New Zealand, Asia Pacific, and into the United Kingdom. This order is for deploying the ClickSoftware solutions for several hundred engineers in its telecommunications business in New Zealand.
In North America, ClickSoftware has won a large insurance company. The Company's subsidiaries is licensed to provide property and casualty insurance along with related services to drivers, homeowners, and small and midsized businesses in all of 50 states in the United States. The goal of this project is to automate the scheduling of field examiners and independent shops to service policyholders who suffered an accident or loss on their insured vehicles.
In addition to ClickSchedule and ClickAnalyze, these customers will also be deploying ClickMobile as well as ClickLocate for location-based services and another nice win for our unique concept of the real-time service enterprise.
In Europe, ClickSoftware signed Scottish Water for software licenses for the 800 member field workforce. Scottish Water is the largest clean and wastewater services company in Scotland and fourth largest such company in the United Kingdom. Having conducted an extensive review process under the official journal of the European Union, ClickSoftware was selected as the best partner to deliver into the transformation program.
Our channel program was also quite productive selling its ClickIMRS product, and one example is one of the nation's largest financial holding companies that operate when extensive banking network primarily in the East and Midwest. The core business of this bank is commercial and retail banking, mortgage and financing and services, and consumer finance and asset management. The bank purchased ClickIMRS with ClickMobile to be used with their internal IT department to schedule and manage the IT service organization.
Other winners and repeat orders from our installed base include the following: Konica Minolta Norway, so building on the success of the deployment by Konica Minolta in both Germany and the United Kingdom. Konica Minolta Norway invested in Click with the intent to deploy nationally for its copier IMR Service Force using the Sintenel template we developed in Germany.
SSE offering boiler and other gas and electricity residential installation and maintenance in England and the Wales continued to grow in the reduction of our products and ordered a few more services.