The following table presents selected consolidated financial data as a
percentage of total net revenues:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
-------------------------
1997 1998 1999
------ ------ -----
<S> <C> <C> <C>
Revenues:
Product-related revenues:
License................................................ 1.5% 6.5% 28.5%
Services and maintenance............................... -- 17.1 25.1
------ ------ -----
Total product-related revenues....................... 1.5 23.6 53.6
Custom development services............................... 98.5 76.4 46.4
------ ------ -----
Total revenues....................................... 100.0 100.0 100.0
------ ------ -----
Cost of revenues:
License................................................... 0.6 0.6% 0.7
Product-related services and maintenance.................. -- 10.6 16.6
Custom development services............................... 111.4 29.0 31.0
------ ------ -----
Total cost of revenues............................... 112.0 40.2 48.3
------ ------ -----
Gross profit (loss)......................................... (12.0) 59.8 51.7
Operating expenses:
Sales and marketing....................................... 28.7 47.2 68.9
Research and development.................................. 12.9 28.3 28.1
General and administrative................................ 11.3 12.1 20.7
Stock-based compensation.................................. 1.6 2.3 7.6
Restructuring charge...................................... 23.8 -- 8.8
------ ------ -----
Total operating expenses............................. 78.3 89.9 134.1
------ ------ -----
Loss from operations........................................ (90.3) (30.2) (82.4)
Other expense, net.......................................... 5.7 1.0 1.8
------ ------ -----
Net loss.................................................... (96.0)% (31.2)% (84.2)%
====== ====== =====
</TABLE>
17
<PAGE> 22
COMPARISON OF FISCAL YEARS ENDED OCTOBER 31, 1999 AND 1998
Revenues. Total revenues increased $5.3 million, or 18.2%, to $34.3
million in fiscal 1999 from $29.0 million in fiscal 1998. This increase is
attributable to a 167.9% increase in product-related revenues, offset by a
planned decrease in custom development services revenues, associated with our
change in focus from providing custom development services to providing more
standardized software products.
License. License revenues increased $7.9 million, or 417.8%, to $9.8
million in fiscal 1999 from $1.9 million in fiscal 1998. License revenues
as a percentage of total revenues increased to 28.5% in fiscal 1999 from
6.5% in fiscal 1998. The increase in license revenues in absolute dollars
and as a percentage of total revenues is primarily attributable to an
increase in the number of licenses implemented at higher average selling
prices. We anticipate that license revenues will continue to grow as a
result of more license sales and increased average transaction size
resulting from increased market acceptance of our new products, a growing
customer reference base, increased marketing efforts, and increases in both
the size and productivity of our sales force.
Product service and maintenance. Product service and maintenance
revenues increased $3.6 million, or 73.0%, to $8.6 million in fiscal 1999
from $5.0 million in fiscal 1998. Product services revenues as a percentage
of total revenues increased to 25.1% in fiscal 1999 from 17.1% in fiscal
1998. The increase in absolute dollars and as a percentage of total
revenues is attributable to the increase in the number of consulting
engagements and maintenance agreements related to the increased license
sales in fiscal 1999.
Custom development services. Custom development services revenues
decreased $6.2 million, or 28.2%, to $15.9 million in fiscal 1999 from
$22.1 million in fiscal 1998. Custom development services revenues as a
percentage of total revenues decreased to 46.4% in fiscal 1999 from 76.4%
in fiscal 1998. The decrease in absolute dollars and as a percentage of
total revenues is due to the change of our strategic focus. We expect
custom development services revenues to continue to decline in absolute
dollars and as a percentage of total revenues.
|
