Astea International Inc. Q3 2008 Earnings Call Transcript

Astea International Inc. (ATEA)

Q3 2008 Earnings Call Transcript

November 14, 2008 11:00 am ET

Executives

Zack Bergreen – Chairman and CEO

Rick Etskovitz – CFO and Treasurer

Presentation

Operator

Welcome to Astea International's Earnings Conference Call. You're currently in listen-only mode. There will be a question-and-answer session following the introductory comments by Astea's management.

This conference call may contain statements that are forward-looking within the meaning of applicable Federal Securities Law and are based on Astea's current expectations and assumptions, which are subject to number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ from those anticipated are detailed in the Company's Securities and Exchange Commission filings.

With us today from Astea International's are Zack Bergreen, Chairman and Chief Executive Officer, and Rick Etskovitz, Chief Financial Officer. Go ahead Mr. Bergreen.

Zack Bergreen

Thank you. Good morning, and thank you for joining us today to discuss our third quarter 2008 results. Following my overview, I will turn the call over to Rick Etskovitz, our Chief Financial Officer, who will discuss our financial results with you. We will then open the call for Q&A.

As indicated in our press release, Astea finished the quarter with $5.4 million in revenue. Like most companies we too have been affected by the general economic slowdown. The economy has caused many of our prospects to delay their technology purchasing decision until they feel more confident with the economy. Unfortunately, because of uncertain economic climate, we are experiencing a prolonged sales cycle, and this quarter were more challenging than we originally have expected. A number of opportunities that we anticipated closing slipped out of the quarter, negatively affecting our results.

Even in today's challenging environment, we're encouraged by strong level of interest that we have and continue to receive from organization looking to improve their service operations with technology. More and more organization are recognizing that acquiring new customers maybe challenging in today's economy, so they are looking to maximize customer retention and containing costs in order to survive during these turbulent times.

Our solution helps organizations to reduce their service delivery cost, optimize resources and ultimately increase revenue, customer satisfaction and retention. We remain dedicated and focus on helping these organizations, understand and quantify the key areas that we can positively impact to ensure that we'll bring some of our existing pipeline opportunities forward to closure.

We recently issued a press release announcing that we have signed a strategic partnership agreement with L&T Infotech. L&T Infotech is a global IT service solution provider. It is a division of Larsen & Toubro technology, engineering, manufacturing and construction conglomerate with the global operations.

To-date we have already held multiple training and education sessions, and we are very excited about the momentum that is building between our companies. In addition to leveraging their implementation and integration expertise, we'll also be actively working together to uncover opportunities.

When it comes to our product development, Astea continues to build a new and exciting solution to further drive financial and operational benefits to organizations that are focused on service.

We have recently released a version 4.5 of our FieldCentrix Enterprise solution. With this latest release, we are delivering major technology update to our FX Mobile solution, as well as incorporating many of the features that both our existing customers as well as (inaudible) prospects have told us they want.

Additionally, we have increased support for more languages, as more and more of our customers go globally and expand their deployment internationally to derive consistent level of service around the world.

We are gradually working on our next major product release for Astea Alliance, and are very excited as we have new functionalities that will enable us to pursue an untapped market target for Astea and increase the market opportunities. Additionally, this release will provide competitive differentiative from both technology and functional advantages.

Our professional services organization continued to be very busy and we have substantial backlog that keeps us very, very busy for the foreseeable future. I am pleased to see the level of professional services activity elevated in all of our worldwide regions. There are a combination of both new implementation as well as upgrade that has kept our services professionals busy and are making positive impact on our financial performance.

And now, I would like to turn the call over to Rick Etskovitz, our CFO for a financial review with you.

Rick Etskovitz

Thank you, Zack. For the third quarter ended September 30, 2008, Astea reported revenues of $5.4 million, compared to revenues of $7.2 million for the same period in 2007. Net loss for the third quarter was $976,000 or $0.27 per share, compared to a net profit of $192,000 or $0.05 per share for the same period in 2007. License revenues were $141,000, compared to $2.1 million in 2007. Total service and maintenance revenues were $5.3 million compared to $5 million in 2007.

During this quarter, we announced receiving $3 million of capital investments which we concluded a private placement of 826,446 shares of newly designated Series A Convertible Preferred Stock to the Chairman, Founder, and Chief Executive Officer of Astea International.

As we continue to build on our long history of accomplishments in this market, it is critical we are able to make investments for ongoing growth. This investment is perfectly timed, enabling us to enhance sales and marketing, customer support and product development efforts as we, in parallel, continue to maintain our steadfast focus on cost containment activities.

We have implemented and continue to monitor and adjust our cost containment initiatives to ensure that our operating cost and resources are better aligned with the current market conditions.

I'll now turn things back over to Zack.

Zack Bergreen

Thank you, Rick. Clearly, none of us feel satisfied with these financial results. The economy has made many buyers very cautious. We remain focused on closing the existing opportunities as well as diligently uncovering and pursuing new opportunities.

We are also aggressively focusing on small and medium size companies as there is a heightened interest from this market segment for robust proven [ph] and affordable service management and mobility solutions. This will help us offset delays with some of our larger enterprise opportunities.

That concludes my comments, and now I would like to open the call for Q&A.

Question-and-Answer Session

Operator

At this time, the officers of the company would like to open the forum to any questions that you may have. (Operator instructions) There are no questions in queue. I would like to turn the call back over to the management for closing comments.

Zack Bergreen

Thank you, everybody, for joining us today. And hopefully, we'll see you at our next conference. Thanks.

Operator

Ladies and gentlemen, this does conclude today's teleconference. If you would like to listen to the replay of this event, please dial 1-877-660-6853, and access the account for today. The account number is 286. And ladies and gentlemen, the replay will be available until November 29th. Thank you. Ladies and gentlemen, please disconnect your lines at this time.

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