With all the aplomb of a wet Monday in November, SDL (news, site) (which refers to itself in a recent press release as the ominous sounding “The Group”) announced quite casually this week that it has made lots of money in the first half of this year. Net interim cash of £32.9 (US$ 56) million to be precise.
Apart from the fact that, generally speaking, trading conditions globally have been “tough,” and the fact that SDL has already completely paid off the US$ 14.7 million price tag for the acquisition of XyEnterprise at the end of June, the preliminary figure represents a 10% increase in sales growth over 1H last year.
Announcing the figures, Mark Lancaster, Chairman and CEO of SDL said that, while they have spent much of the year reigning in their cost base across the company, the positive figures reflect, on the one hand returns on investments made in 2008, and on the other “organic growth in both technology and translation services”.
Lancaster added that the company doesn’t expect any improvements in trading conditions over the second half of the year and SDL will continue its strategy of expanding the Global Information Management (GIM) client base. SDL also expects full-year profits to be in line with 1H figures.
Building Revenues On Acquisitions
Since 2007, SDL has made a number of strategic buy-outs all aimed at the development of its Global Information Management (GIM) solution.
In April of that year, it sealed an agreement with Tridion, a provider of web content management solutions for €69 (US $99.4) million, which dramatically extended the breadth and offerings of its information management solutions significantly.
The combined solution offered by SDL with this deal created the analyst-recognized Web CMS with a global content management flavor, which allowed customers to not only create, but specifically maintain multilingual web experiences.
Then in February 2008, SDL announced the acquisition of Idiom Technologies Inc for US$ 21.7 (£11.1) million. That acquisition allowed to produce content management solutions with highly efficient translation management functionality.
Not to mention the most recent acquisition of XyEnterprise allowing for deeper XML andcomponent content managementcapabilities and access to a wider global market, particularly in Europe. Additional DITA capabilities are also going to add to their solutions as is the tight integration into SDL's GIM solutions.
Extending Global Information Management
Every acquisition has been geared towards the extension of its GIM solution. The way SDL sees it, is that if an international business is present in just 10 countries, by definition 90% of the content will be in a foreign language. The cost and complexity of creating and maintaining this content to ship products into multiple regions is enormous.
And this is where SDL’s GIM comes into its own. GIM provides a solution that covers the whole translation supply chain from creation of content to the publishing of that content, that covers all functions of an enterprise and that centralizes language assets and maximises re-use of those assets.
That is what we can see in the 1H figures. In the Technology business revenues grew by 18%, even taking a decline in revenues from enterprise software licenses. Translation services grew by 6%. The company says that despite this key license sales made across a number of different industries reinforced the return on investment from using SDL Translation Management System to drive global content. Typically, SDL says, 50% of the revenue for Language Technology comes from subscription and support and maintenance an area where revenue streams remained strong.
The Web CMS arm of SDL -- SDL Tridion -- and the new SDL Tridion 2009, which was released a couple of months ago to replace the Tridion R5.3 version implemented a number of organizational changes that were reflected in revenue growth of 22% in the first half of 2009. Tridion continued to expand in the U.S. In this respect, the end-of-year figures will be interesting, as we should get a clearer view of how the continued development of its web content management system and the launch of SDL Tridion 2009 and the SDL Tridion Marketing Suite Solution , have kept revenues flowing here.
SDL Trisoft business has made progress in developing its sales base, particularly in the U.S. with business grew by almost 60% over the same period last year. It is now completely integrated into SDL and offers considerable opportunity to leverage deals with SDL’s Language technology, with around 50% of the deals being joint Language Technology and Content Management Technology.
There are a lot of other interesting insights in SDL's statement, accompanying the release of the figures, and are well worth a look, particularly if you happen to be in competition with them. And while the company underlines its expectations of a difficult H2 across the market, the company says it believes the business generally provides an “excellent opportunity” for both short-term stability with long-term growth and value creation.