SHANGHAI, ATLANTA, SYDNEY - 14 June, 2010 — CDC Software Corporation (NASDAQ: CDCS), a global provider of hybrid enterprise software applications and services, today announced that, based on preliminary financial projections and estimates, the company expects second quarter 2010 application sales, which is comprised of license revenue plus new total contract value
(New Total Contract Value (NTCV) is the contract dollar amount for the duration of the contracts for all new SaaS contracts secured, including rental, as well as all renewal received by end of the quarter.) for Software-as-a-Service (SaaS) sales secured during the second quarter of 2010, to be in the range of about $10.2 million to $10.9 million, an increase of approximately 33 to 42 percent compared to $7.7 million in the second quarter of 2009, primarily due to increased new logo sales for its on-premise solutions, and expanded cloud sales as a result of acquisitions, investments and organic growth.
CDC Software’s application sales are supported by is its three-prong cloud strategy that includes acquisitions of SaaS companies, Strategic Cloud Investment Program (SCIPP) and the eventual launch of its internally developed SaaS solutions. Since the fourth quarter of 2009, CDC Software has acquired five SaaS companies, all of which are earnings accretive, and it plans more acquisitions by the end of the year. Under SCIPP, CDC Software plans to make minority investments in, and form strategic reselling partnerships with, companies offering cloud-based or point solutions which complement its enterprise solutions portfolio. Since SCIPP’s inception in the second quarter of 2010, CDC Software has invested in e-BizNET, a provider of SaaS supply chain execution solutions, and Marketbright, a provider of SaaS marketing automation solutions. CDC Software also announced last week that its CDC Respond complaint management solution will be its first cloud application developed with the Windows Azure platform.
“We are pleased to see this strong projected growth in application sales and license revenue this quarter,” said Bruce Cameron, president of CDC Software. “In fact, we saw a significant increase in new logo organic sales in our Front Office and Plant Floor on-premise solutions. New logo sales for our Front Office solutions, for instance, is expected to report our largest percentage quarterly increase for these solutions since 2008. Part of the reason for these increases in new logo sales is attributed to our sales growth in emerging markets in China and India.
“As one of the first hybrid cloud software companies that offers enterprise solutions with on-premise and cloud deployment options, we are very excited on our projected double digit growth in application sales, robust new organic logo sales, and how well-received our new model has been with customers. As part of that strategy, we plan to develop recurring revenue streams reaching closer to 70 percent of total revenue over the next few years, after completion of our planned SaaS acquisitions, strategic investments in SaaS companies, as well as organic growth.
“With the strong momentum we have been seeing from this SaaS strategy, we believe SaaS revenue will be an important part of our total revenue for 2010. Already, we have been seeing high SaaS retention rates at more than 95 percent as an average for our CDC gomembers and CDC eCommerce product lines. Our newly acquired SaaS businesses also have seen more new revenue from both add-on on renewals and new organic logo sales this quarter compared to previous quarters the last couple of years in their respective businesses. We also have identified numerous cross-sell opportunities between CDC Software’s installed base and our new SaaS investments in e-BizNET and Marketbright.”
Cameron added, “Another key positive trend we have seen this year is our expanding sales pipeline, especially in cross-sell activities. We’ve seen the second half 2010 cross-sell pipeline grow 560 percent compared to the second half of 2009, as well as a significant increase in our qualified pipeline. Also, while we have had to increase our investments in research and development, sales and marketing and integration costs as part of our SaaS strategy, we are still expecting our earnings per share for the next two years to be one of the highest among our peers in the hybrid enterprise software space. With our solid business fundamentals in place and a strong financial foundation, we believe that we are poised to continue growth through organic and cross-sell sales opportunities, as well as synergistic acquisitions and investments in both the on-premise as well as SaaS models.”