CDC Software Corporation (NASDAQ: CDCS), a global provider of
enterprise software applications and services, today announced it
signed binding term sheets to acquire two additional software as a
service (SaaS) enterprise solution businesses as part of its
previously announced strategy to expand its offering in the growing
on-demand software market.
Two key recent acquisitions that are at the center of CDC
Software’s SaaS expansion strategy are: CDC gomembers, a provider
of SaaS enterprise solutions for the Not-For-Profit (NFP) and
Non-Governmental Organizations (NGO) market and Truition, an on
demand e-Commerce platform provider for retailers and brand
manufacturers. CDC Software has adopted an acquire, integrate and
grow strategy that is fueled by its global scalable business and
technology platform that features an infrastructure of multiple
complementary applications and services, domain expertise in
vertical markets, cost effective product engineering centers in
India and China and a worldwide network of direct sales and channel
operations. By leveraging this platform, CDC Software has achieved
a successful track record of integrating software companies that
typically match a subscale profile and fit synergistically, as well
as add new functionality within the company’s product roadmap. CDC
Software’s business and technology platform also help integrate its
acquisitions by driving more cross-sell synergy to its 6,000
customers globally, eliminating redundant expenses, streamlining
efficiencies and positioning these businesses for organic growth
and profitability.
As testament to CDC Software’s growth and profitability, CDC
Software recently announced it projects 37 percent growth in
quarterly license revenue over the average for the first three
quarters of 2009 and 30 percent growth in organic license revenue
for its Q4 2009 results, and estimates an increase in Adjusted
EBITDA margin to about 27 percent in 2009, an improvement over 2008
and 2007.
The acquisitions announced today are expected to be integrated
into the CDC gomembers product line. Both are privately held and
include venture-financed technologies that CDC Software believes
complement the gomembers’ enterprise suite. The first potential
transaction includes association management software with
integrated web modules and web collaboration tools that automate
processes including membership, events services, communications and
financials. The second potential acquisition provides enterprise
resource planning and financial management for state and local
governments, as well as donor and member-based NFPs, in North
America. The state and local government offering is expected to
allow the gomembers enterprise solution to expand into a large
market within the NFP space that CDC Software believes is typically
a good fit for SaaS solutions. According to market research from
INPUT, local government spending for software is expected to grow
from $6.9 billion in 2009 to $9.1 billion by 2014. This company’s
customers range from small communities and villages to national
governments, as well as donor and member-based NFPs, in the U.S.
and in the Pacific region.
“Based upon our analysis performed to date, these acquisitions
are expected to be earnings accretive immediately, fit our strict
acquisition criteria and we believe will be excellent additions to
the CDC gomembers product line,” said Bruce Cameron, president of
CDC Software. “Our acquisition strategy, along with our other
growth initiatives that include geographic expansion through
resellers and partners, and increased cross-selling, as well as our
ongoing programs to drive operational cost efficiencies, are part
of our continuing plans to promote long-term growth and
profitability for CDC Software. We believe these growth and cost
efficiency strategies are effective since we already have announced
that we expect to see an estimated 37 percent growth in quarterly
license revenue over the average for the first three quarters, 30
percent increase in organic license revenues, and an increase in
profitability for the fourth quarter of 2009. Furthermore, we
believe that gomembers is one of the market leaders in their space
that can become a dominant SaaS player in this underpenetrated
market place and these latest acquisitions could serve as a key
enabler for this strategy.”
According to Paul Plaia, president, CDC gomembers, “These
potential acquisitions further advance our previously announced
strategy to add SaaS companies to our CDC gomembers on demand
platform for the NFP space. Specifically, we believe these targeted
acquisitions are extremely synergistic in a number of areas
including employees, customers, technology, markets and overall
product offering. One business brings additional functionality and
web-based technology to the CDC gomembers’ enterprise suite, while
the other brings ERP and specific processing functionality for the
needs of state and local governments and NFPs. We also believe the
growing state and local government market sectors offer significant
opportunity for gomembers.”
Plaia added, “CDC Software is excited on the prospect of adding
these two new businesses and we expect to continue seeking to
acquire more companies like these as we build scale and expand
globally in the key vertical market of NFP/NGO. The solid
performance of CDC Software’s recently acquired companies
(Activplant, Truition and gomembers) have resulted in fourth
quarter projections of $1.0 million in software as a service (SaaS)
bookings closed in the last month of the fourth quarter in 2009.
With this annualized $1.0 million run rate, our recurring revenue
base, which we define as SaaS revenues plus maintenance revenues,
is estimated to expand by approximately 12 percent As a result, we
expect the majority of CDC Software’s revenue to continue to come
from recurring sources considering our recent SaaS acquisitions
plus our other acquisitions of companies with maintenance revenue.
In fact, we expect recurring sources to grow as a percentage of our
total revenue over time as we acquire more SaaS companies in fast
growth vertical markets such as ecommerce and NFP/NGO.”
About CDC
Software
CDC Software (NASDAQ: CDCS), The Customer-Driven Company™, is a
provider of enterprise software applications and services designed
to help organizations deliver a superior customer experience, while
increasing efficiencies and profitability. CDC Software provides
customers with maximum flexibility in their solutions through
multiple deployment options which best fit their business needs.
Leveraging a service-oriented architecture (SOA), CDC Software
offers multiple delivery options for their solutions such as
on-premise, cloud-based or hybrid (blending of the two options)
deployment offerings. CDC Software's product suite includes: CDC
Factory (manufacturing operations management), Activplant
(enterprise manufacturing intelligence), CDC Ross ERP (enterprise
resource planning), CDC Supply Chain (supply chain management ,
warehouse management and order management),CDC xAlerts (real-time
supply chain event management), CDC Power (discrete ERP), CDC
eCommerce, CDC gomembers (not-for-profit/ non-governmental
organizations), PeoplePoint (aged care), CDC Pivotal CRM and
Saratoga CRM (customer relationship management), CDC Respond
(customer complaint and feedback management), c360 CRM add-on
products, industry solutions and development tools for the
Microsoft Dynamics CRM platform, CDC HRM (human resources) and
business analytics solutions.
These industry-specific solutions are used by more than 6,000
customers worldwide within the manufacturing, food and beverage,
consumer packaged goods(CPG), financial services, NFP/NGO, health
care, aged care, home building, real estate, wholesale and retail
distribution industries. The company completes its offerings with a
full continuum of services that span the life cycle of technology
and software applications, including implementation, project
consulting, technical support and IT consulting. For more
information, please visit www.cdcsoftware.com.
About CDC Corporation
The CDC family of companies includes CDC Software (NASDAQ: CDCS)
focused on enterprise software applications and services, CDC
Global Services focused on IT consulting services, and outsourced
R&D and application development, CDC Games focused on online
games, and China.com China.com, Inc. (HKGEM:8006) focused on
portals for the greater China markets. For more information about
CDC Corporation (NASDAQ: CHINA), please visit
www.cdccorporation.net.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995, including statements relating to our
expectations for completing these acquisitions and the terms
thereof, if at all, our expectations regarding the potential
benefits of acquiring these business, including potential
synergies, our beliefs about the competitive and market position of
these businesses, our beliefs regarding technology and products,
and the integration thereof, our expectations regarding our ability
to attain future expansion and success with these businesses’
customers and in the NFP/NGO market segment, our beliefs regarding
the earnings accretive nature of these transactions, our beliefs
regarding Q4 2009 performance and the reasons thereof, our beliefs,
regarding our current and future competitive market position, our
beliefs regarding the timing and availability for any products
developed, our beliefs regarding company’s products, and other
statements that are not historical fact, the achievement of which
involve risks, uncertainties or assumptions. These statements are
based on management's current expectations and are subject to risks
and uncertainties and changes in circumstances. There are important
factors that could cause actual results to differ materially from
those anticipated in the forward looking statements including,
among others: the conditions of the SaaS and NFP/NGO markets, the
ability of CDC Software and these businesses’ products to address
the business requirements of the market, demand for and market
acceptance of these businesses’ technology, as well as: (a) the
ability to realize strategic objectives by taking advantage of
market opportunities; (b) the ability to make changes in business
strategy, development plans and product offerings to respond to the
needs of current, new and potential customers, suppliers and
strategic partners; (c) the effects of restructurings and
rationalization of operations in our companies; (d) the ability to
address technological changes and developments including the
development and enhancement of products; (e) the ability to develop
and market successful products and services; (f) the entry of new
competitors and their technological advances; (g) the need to
develop, integrate and deploy enterprise software applications to
meet customer's requirements; and (h) the possibility of
development or deployment difficulties or delays; If any such risks
or uncertainties materialize or if any of the assumptions proves
incorrect, our results could differ materially from the results
expressed or implied by the forward-looking statements we make.
Also, the results and benefits experienced by customers and users
set forth in this press release may differ from those of other
users and customers. Further information on risks or other factors
that could cause results to differ is detailed in our filings or
submissions with the United States Securities and Exchange
Commission, and those of our ultimate parent company, CDC
Corporation, located at www.sec.gov. All forward-looking statements
included in this press release are based upon information available
to management as of the date of the press release, and you are
cautioned not to place undue reliance on any forward looking
statements which speak only as of the date of this press release.
The company assumes no obligation to update or alter the forward
looking statements whether as a result of new information, future
events or otherwise. Historical results are not indicative of
future performance.
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