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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (10567)	4/30/1998 7:13:00 PM
From: seth thomas	Read Replies (2) \| Respond to of 14631

Michelle Harris, If you really wanted to know, you could pick up the phone and call IFMX. How the heck am I supposed to know what happened to those deals, unless someone tells me what they were, how much they were for, and what the revenue recognition details were. But, just for sheer speculation -- let's say they won 25 new customers, at $500K each. Those would be pretty good sized - expecially for new customers, and they are ramping up their comitment to IFMX. Of that $500K, let's say 40% is for services, and maybe only 2/3 of the license revenue can be recognised today, for whatever reason. SO, that's $200K per deal, on average - times 25, is only $5MM. and, that's where you license revenue is. It's a momentum game. You keep your existing customers, get them to buy more each quarter, keep adding new ones, and eventually you get to a big number. Remember - database software isn't a consumable. you don't "run out of it" and need to buy more, unless you have more projects, or add more users/servers. If you have a discrete project like, say, a payroll processing system, you buy what you need for development, you buy some more at production time, and then you are pretty much done. If you are buying DB software for a customer service app, well you buy your CLFy, or SEBL, or VNTV or whatever, get your DBMS license, and you are done, except for adding some seats every so often. and usually, you buy with some growth in mind. One of the reasons I am thrilled to see any growth in the license side is that the dynamic of how DBMS software is purchased is changing. More and more licenses are being bought as part of a bigger packaged application (like SAP, Baan, PSFT, VNTV, etc.). Those licenses go out a fairly big discount when sold through the application vendor. and, the end-user customer gets it cheaper, and buys fewer "development" licenses and more "runtimes." Runtimes are cheaper, too.

To: Lizzie Tudor who wrote (10567)	4/30/1998 7:26:00 PM
From: Mo Chips	Respond to of 14631

<<Please clarify why with all these new deals we didn't see more top line growth, I'm not a financial person - are these going to hit next quarter or did we lose some this q?>> I don't know IFMX's specifics, but as a former employee of a middleware SW company, I can explain some possibilities. This is best done with an example. Let say a customer makes a large deal. This deal could have many components. Like, a development license, several deployement licenses, training, consulting, support, and maintenance. While the total 'deal' could be for a large sum, the actual revenue can only be recognized as goods and services are delivered. In a project, the first thing you would need is training and a development license. These are probably a small % of the total. But they would be delivered and correspondingly recognized as revenue. Then as the project is in development, you would then use the consulting. This could occur over many months, again, the revenue is recognized only as the services are delivered. Then, you deploy the project. This is where the big license revenue usually kicks in. Finally, you use the tech support and get upgrades from your maintenance agreement. Support and upgrades are usually for a defined period of time and can be recognized only over that period of time. The bottom line, you may sign a $1 million deal, but the amount that you recognize immediately could be small. The key to enterprise software biz is to get people developing, and then building your install base. A large install base affords you lots of deployment license, support, and maintenance revenue. Mo