ClickSoftware Falls on Earnings - Buy Opportunity?

Clicksoftware (CKSW), the leading provider of mobile workforce management and service optimization solutions, reported earnings this morning. For Q3 ’07, total revenues were $10.1 million, which is an increase of 16% compared with $8.7 million for the parallel quarter of 2006, and a decrease of 4% compared with the previous quarter.

Its gross profit increased 16% to $6 million, compared to $5.1 million in Q3 ‘06. Its gross margin for the period remained stable at 59%.

Its cash, cash equivalents, and short and long-term investments increased to $21.3 million, up $1.1 million from $20.2 million at the end of the second quarter of 2007. Net cash provided from operating activities during the period was $0.5 million.

The stock is trading down about 10%, as it appeared that it was priced for a blowout quarter. Historically, it pays to buy Clicksoftware when it gets hammered. The business is showing strong growth, and keep in mind this is a market in its infancy.

Commenting on the results, Dr. Moshe BenBassat CEO, said,

The third quarter was another period of excellent execution as reflected in strong year-over-year growth in revenues, profits and cash flow, as well as important strategic progress,Our revenues are down slightly from the second quarter, reflecting the specific timing of several multi-million dollar deals. One of these deals, with a major telecommunications company in India, has already closed in the fourth quarter.

Dr. BenBassat continued,

We are very excited about the momentum that continues to build in our business. We are in the final stage of signing a deal with a large utility in North America. We have also been selected as the winner in another large, highly competitive deal, and are currently in final negotiations. Internationally, we have been selected by an important customer in France, and are deploying a pilot solution for one of Japan’s largest utility companies. As a result, not only we are able to confirm our full-year revenue guidance, but we are also building a nice book of orders that will make us start 2008 with comfortable backlog of contractually committed orders.

With 2008 looking good, this makes for a nice way to make some money. So, I believe Clicksoftware is a buy now on weakness.

Disclosure: The author has a position in CKSW as of October 31, 2007.