Total revenue rose year-on-year from $301.1m to $313.6m as a result of improved maintenance, but license revenue, the real arbiter or performance, fell from $95.8m to $78.3m, a drop of 17.4%. Restructuring and other charges were $74.1m. Siebel ended the quarter with a net loss of $50m, compared to a profit of $7.5m last year and a loss of $4.0m in the first quarter. It did add $45.5m to its cash pile however. A testament to the ongoing change in buying behavior, the average selling price fell from $307,000 to $266,000. In its prelims earlier this month Siebel warned that it would not meet expectations, but the results did meet the figures given on July 7, 2005.
Commenting on the results, CEO George Shaheen said: I’ve made a commitment to shareholders to improve Siebel’s financial performance over time and we are taking the necessary steps to achieve this goal. Although we’ve made some progress, we still have more work to do. While admitting he was disappointed that the company had not delivered a better license revenue number, he said he was not discouraged and is confident that Siebel will be able to achieve and exceed its goals.
He said he also recognizes that the task of turning Siebel around will take time. I am committed to doing whatever it takes to improve our revenue generation, better align our costs to our business, and increase our profitability over time, he said.
One of Siebel’s primary growth areas is its on-demand service. Although this continued to grow, with contract value up 86% compared to the preceding quarter and 249% year on year, at $20m revenue remained low compared to Siebel’s overall revenue figure. It added 6,460 new users during the quarter to bring the total number to 39,668.
The outlook for the third quarter did not provide any light as Siebel issued revenue guidance of $305m to $315m, against analyst’s expectations of $319m. Siebel said it expects license revenue to be between $75m and $85m. License revenue in the third quarter last year was $104.6m. The company will also take a $10m to $15m restructuring charge and might also be hit with a $61m tax adjustment, although it is appealing the amount.
