Iona misses forecast, expects 'better results' in Q2

24-04-2007

by Maxim Kelly

Software giant Iona said it missed its quarterly revenue expectations on Tuesday because of a "very complex transaction".

The Dublin-headquartered company reported a USD15.6 million turnover for its first financial quarter -- below its USD17 million expectation. However Iona said it had deferred recognition of USD1.6 million in revenue "associated with an isolated and very complex transaction. The transaction was completed and the customer paid [Iona] in full during the quarter."

If this transaction with an as yet unnamed Iona customer had been included, revenues would stand at USD17.2 million; slightly more than USD16.9 million recorded one year ago, but still down sequentially on revenues of USD22.8 million recorded in the final quarter of 2006.

The service oriented architecture (SOA) software business made a net loss of USD2.8 million, or USD0.08 per share. This figure fell to USD0.04 per share when a USD1.4 million share compensation scheme was included.

Nasdaq-listed Iona's chief executive Eric Zotto said the deferred revenues affected the company's profit and loss account, but cash flow was not affected. In this respect Iona equaled expectations with a cash balance of USD56 million.

Zotto had expressed disappointment with the company's performance when releasing preliminary financial results earlier this month -- a move no doubt designed to cushion the blow for Iona's understandably skittish investors. On 5 April Zotto said he expected better results for the second quarter of 2007, with total revenues to range between USD20 million and USD22 million.

The company expects total expenses for the second quarter of 2007, including cost of revenue, and operating expenses, including those related to recent acquisitions, to be in the range of USD21.2 million to USD21.7 million.

"Demand for our products is strong and continues to expand," said Zotto on Tuesday. "Iona's customers, the large IT organisations typically found in global 2000 companies, are increasingly adopting SOA and we are well positioned to help them accomplish their goals. The consistent execution of our stated strategy continues to deliver real value to our customers and our shareholders."

Zotto added that Iona's recent acquisitions of loss-making British data management firm C24 in March and, more recently, open source business integration firm LogicBlaze in April, were important strategic investments. And with USD56 million in the bank, Zotto hinted at additional acquisitions "to make the additional strategic investments required to continue to grow our business."

Iona, which was first established on the campus of Trinity College, Dublin in 1991, employs 360 people worldwide. Its offices are in Ireland and Waltham, Massachusetts. Exactly 119 staff are employed at the firm's headquarters in Dublin.

Shares in Iona were down USD0.15 at USD5.68 at close of business on Monday.