Kofax dissapoints, issues profit-warning

Total revenue for the quarter ending December 31st declined by 9.0 per cent at Kofax, underpinned by lower than anticipated performance in licenses.

The company, which provides smart process applications to businesses, reported that its total revenue had fallen to $63.7m from $70m in the corresponding quarter in 2011.

Software license revenue for the quarter decreased by 3.6% to $123.8m. Income from operations for the quarter decreased 18.0% to $47.1m and income from operations for the quarter decreased 38.3% to $3.8m.

Reynolds Bish, Chief Executive Officer of Kofax, pointed to the performance of license business as a key reason for the decline in total revenue during the quarter.

"Our second quarter software license revenue was lower than anticipated, principally due to a mid-seven figure sale in EMEA slipping, which we now expect to close in a future quarter.

He added: "Software license revenue in the Americas was also lower than expected as we implemented significant changes in our sales organization to improve its focus, execution and productivity. The overall decline in software license revenue occurred in our legacy capture products."

Lowering guidance for FY2013"Because the growth in our professional services revenue is lower than we had previously expected . . . and the lower than expected software license revenue in the second quarter, we are therefore taking a conservative view and lowering our guidance for fiscal year 2013 to no to low single digit growth in total revenue on a constant currency basis and an adjusted EBITDA [Earnings before interest, tax, depreciation and amortisation] of approximately 10% less than that reported in fiscal year 2012."

He added: "Our new product development and acquisition strategies, coupled with the changes we've effected in our sales organization, position us to take advantage of the market expansion and growth opportunities validated in Forrester's market assessment. As a result, we believe we are now at a turning point and should begin to once again report software license and total revenue growth."

Commenting on the companys figures, this is what analysts at Investec had to say: "Kofax's second quarter results are disappointing (...) Kofax has lowered fiscal year guidance (...) This suggests a circa 15% downgrade to our estimate and is a further reminder that Kofax remains susceptible to macro pressures and quarterly volatility. We place our forecasts and target price under review pending the meeting."

Kofax' share price was down 12.34% to 280.50p at 09:53 on Monday.

MF