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August 27, 1998


By CBR Staff Writer

Nearly a year after floating on Nasdaq, J D Edwards & Co, the Denver, Colorado-based business software vendor, says the higher profile and increased customer awareness afforded by the IPO has helped generate one of its strongest quarters of license growth ever. Net profits for the third quarter to July 31 rose by 150% to $18.1m, while total revenues were up 47% at $239.6m. Breaking down the total for the quarter shows license revenues up by an impressive 66% to $98m, while service revenues grew a more modest 37% to $142m. Estimates vary, but as a general figure, analysts say the market for Enterprise Resource Planning (ERP) software is growing at around 35%-40% annually, putting J D Edwards well ahead of the pack. Chief financial officer, Rick Allen, said the day-to-day focus of the company had been changed very little by going public. Difficult issues, such as adoption of SOP 97-2, the complex revenue recognition standard for public software companies, had been addressed well before flotation: We’re in good shape in that regard…it doesn’t keep us awake at night, he said. Baan Co NV, one of J D Edwards closest rivals in the ERP business, recently fell foul of the new SOP and was forced to restate its results, generating huge amounts of adverse publicity for the Dutch company. Traditionally tied to IBM Corp’s AS/400 platform, J D Edwards is gradually penetrating the open systems market which now constitutes 20% of license sales, verses 11% for last year’s third quarter. Allen says the company is finding this market tough, and it has resorted to partnerships with the big consulting firms to boost sales. Ernst and Young Technologies has been signed as the first of these consulting sales partners. The simplified nature of the AS/400 platform means external consultants find it hard to add value, says Allen. But with the emergence of Unix and Windows NT as significant revenue streams for the company, J D Edwards is being forced to seek these external consultancy partnerships like everybody else. At the end of the third quarter, J D Edwards said it had over 4,700 customers.


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