Zack Bergreen - Chairman and CEO
Rick Etskovitz - CFO and Treasurer
John Tobin - President
Astea International Inc. (ATEA) 2Q 2013 Results - Earnings Call Transcript August 15, 2013 4:30 PM ET
Ladies and gentlemen, thank you for standing by. Welcome to the Astea International Incorporated second quarter 2013 financial results conference call. You are currently in listen-only mode. Later you will have the opportunity to ask questions during the question-and-answer session. (Operator Instructions)
With us today, from Astea International Incorporated, are Zack Bergreen, Chairman and Chief Executive Officer, Rick Etskovitz, Chief Financial Officer and John Tobin., President.
I would like to remind you that this conference call may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.
All statements, other than statements of historical facts included in today’s conference call are forward-looking statements, including statements regarding the company’s business strategy, plans, objectives and statements of non-historical information.
Although the company believes the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions risks and uncertainties and these expectations may prove to be incorrect. Those factors are incorporated by reference from the press release issued earlier today as well as in the section entitled risk factors as outlined in the company’s filings with the Securities and Exchange Commission.
You should not place any undue reliance on these forward-looking statements which speak only as of today, August 15, 2013. All forward-looking statements attributable to the Company or persons acting on his behalf are expressly qualified in their entirety by these factors. Other than as required by Securities Laws, the company does not assume any duty to update these forward-looking statements.
With this statement concluded, I will turn the call over to Mr. Bergreen. Please go ahead. The floor is yours.
Thank you very much. Good afternoon and thank you for joining us today to discuss our second quarter 2013 financial results. Following my overview, I will turn the call over to Rick Etskovitz, our Chief Financial Officer who will cover the details of financial results. We will then open the call for Q&A.
Astea International on today, reported financial results for the [three quarters] ending June 30, 2013, while we successfully signed a number of notable real deals this quarter we did not meet our goals of earning and profitability.
We continue to carefully manage our operating costs, reviewing our expenses on ongoing basis and making adjustment where necessary. However we are committed to maintain an organization capable of supporting growth as we execute against our expected sales pipeline.
The second quarter was marked with notable wins and in the mix of on-premise and cloud deliveries models. A global-leading barcode printing company in Japan, selected Astea's self-management platform to create a consistent and positive experience for their customers well as streamlining their overall sales processes and increasing potential productivity.
A gaming and leisure company in the UK selected Astea's alliance to establish its service platform that will provide them, with a latest in innovation technology to support their strategic initiatives for growth, with a service network growth and improved customer satisfaction.
And gaming on leisure company in U.S. selected Astea's service management and mobility solution as well as optimization and solution to take advantage of the latest service software integration to modernize their overall operation and increase service revenue and drive efficiencies in field.
A North American specialty electrical construction and technology company selected Astea's service management and mobility solutions suite to improve the level of service to customize as well as grow their service delivery in business.
An HVAC service provider in U.S. chose Astea's service management mobility solutions suite to extend their service, business support and growth strategies and achieved financial and operational improvements.
And finally the leading provider of voice, data, video, sound, and secured networks in U.S. selected Astea's solution suite to provide them with a totally good viability to aid their field operations, improved the first time [shifts] rate, and workflow [centralization] and reduced their operating costs.
We have had several roll out in this quarter, with a combination of both new implementation as well updates to existing deployments.
One of our key growth initiative has been been focus on aggressively expanding our partner ecosystem, we truly believe that increasing our partner network will lead to accelerate to growth strategy as well as expanding our geographical presence.
During the first quarter, we issued a press release announcing our strategic partnership with Capgemini. During the second quarter, I'm happy to report that we have successfully finalized a strategic partnering with Wipro, a large global technology and consulting firm. This partnership, we will have a global focus and we'll be able to work together on (Inaudible) markets and implement our pivotal service management solution.
We are aggressively on boarding this new partner and we already had initial meetings with some of the enterprise customers to discuss the capabilities of our solutions. We are very excited about this new partnership and we are confident that it will have positive impact on finding new customers.
We're also in the midst of finalizing another agreement and addition to region in Europe with a global system integrator that will be implementing application we (Inaudible) after initial (Inaudible).
We see the great potential on this relationship and truly believe that we'll also extend into other geographies thereby providing a small comprehensive presence in the global market.
[As brought forth] our development initiatives, we are very enthusiastic about our new upcoming next generation product release which we'll be announcing within the next month. It will be highly feature rich version containing a number of significant integration, that will deliver substantial benefit to our customers as well as continuing to improve compelling, on service management solution.
We truly expect with our differentiated offering and ongoing commitment to innovation will keep driving up market share and gains position us to capitalize on more opportunities that ever before.
With that I will now turn the call over to Ric to cover our financial review of our second quarter results I will then make some additional closing remarks after that we finish with --. Ric?
Thank you, Zack. For the quarter ended June 30, 2013 Astea reported revenues of 5.3 million compared to revenues of 8.1 million for the same period in 2012. Net loss for the second quarter was 1 million or $0.29 per share compared to net income of 1 million or $0.25 per share for the same period in 2012. Software license revenues were 0.9 million compared to 2.4 million for the same period in 2012. Service and maintenance revenues were 4.4 million when compared to revenues of 5.7 million for the same period in 2012.
As part of our ongoing process of reviewing our operating cost, we made a number of cost cutting measures at the end of the quarter and into the third quarter. These reductions consisted of headcount adjustments in certain non-revenue generating positions, as well as reducing operating cost and also taking advantage of a soft commercial rental market to renegotiating these agreements. Overall we have reduced our overall cost of operations so that in future period we are better positioned to be profitable.
I also wanted to take a minute to describe our accounting for subscription based agreements. Generally subscription based agreements all include hosting service, the revenue is recognized ratably early in the life of the contract typically three years. In addition professional services usually consisting of implementation, consulting, prior customization and training also occur. Based on accounting rules, because these services are typically needed to use the software and they have little value if not used in connection with our software and they are most effectively provided under the direct or indirect guidance of the CA; the services are considered as bundles with the software and hosting arrangements.
Therefore, implementation costs are not recognized until the hosted solution goes wide in order to match the use of services by the customer with the revenue they generate, even through payment may have been received months before they go-live. At go-live, revenues from professional services are recognized ratably over the remaining life of the customer contract. Through the second quarter, most of our subscription based revenue has been deferred as the implementation projects are still in process. The revenue that we have been able to recognize has been included in our reported services and maintenance revenue.
We expect certain of our hosted projects to go live within Q3 and Q4. At go-live, we will be able to start recognizing that revenue. At that time, we will start reporting subscription revenue as a separate revenue element in our financial reports. This concludes my remarks. And I'll turn the call back over to Zack.
Thank you, Rick. Our product line today continues a number of very attractive large scale opportunities that require complete and robust end to end set of (inaudible) solution. We're making every effort to ensure that we self execute and flawlessly in order to end these extremities. As we mentioned during our last quarter conference call, we're seeing an increase shift towards customers wanting software as a service delivering model.
We have actively managed and adopted our infrastructure to support our business model as it impacts all operational areas of the company, as we shift away we see some traditional sole representation to a perfect model. With our streamlined operational cost and our upcoming new generation of products, we will be positioned well for growth and encouraged by the positive chance and activities we’ve seen across the globe.
Thank you very much for taking the time to attend to this call and let’s now we open the call for Q&A.
At this time, the officers of the company would like to open the form to any questions that you may have. (Operator Instructions). It appears we have no questions at this time but I would like to everyone an additional opportunity. (Operator Instructions).
Well, I want to thank you all for joining us at today’s conference call. I hope to see all of you at the next event. Thanks again.
Thank you gentlemen, today’s program will be available for replay through August 22, 2013. You may access the replay by dialing 1-800-723-5782 or 402-220-2663 and entering pass-code 84526. Again you may access the replay by dialing 1-800-723-5782 or 402-220-2663 and entering pass-code 84526.
Ladies and gentlemen, that concludes our conference for today. Thank you all for participating and have a nice day. All parties may disconnect now.
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