Vignette's Year on Year Income Falls 73.5%

Vignette is not having a good year. The company released its Q2 2008 financial results, and they’re not pretty. The revenue is down (again), GAAP net loss is substantial, non-GAAP net income is 73.5% down compared to the same period last year. The company says that sales and marketing efforts need improvement. But is it really so?

Vignette’s expectations to hit the revenue mark of between US$ 45 million and US$ 50 million were delivered at its lowest range, as the total revenue for Q2 2008 was mere US$ 45.8 million, a decrease of 4.7% from the second quarter of 2007. GAAP net loss (which was a profit of US$ 4.0 million in the same period last year) is US$ 0.9 million. EPS for the quarter was in the negative, too: US$ (0.04) versus US$ 0.14 last year.

License revenue for the quarter dropped to US$ 9.9 million versus US$ 14.6 million in the same time period last year. At the very least, this is not as bad as Vignette's Q3 2007 license revenues being down 50% compared to the same quarter a year earlier. As Mike Aviles, president and CEO of Vignette said before, “Our business remains volatile on a quarter by quarter basis.” Well, this seems to be a persistent tendency with Vignette.

Pat Kelly, Vignette’s CFO, said during the earning call that the average sales price in Q2 was US$ 211,000 - quite a drop from Q1 2008 ASP of US$ 249,000.

Support and professional services revenue, on the other side, is going strong with US$ 35.8 million and 78% of the total – an increase of 7.3% over Q2 of last year.

While some customers are abandoning Vignette in favor of other WCM products (Sitecore, SDL Tridion and the likes), license revenues — especially in North America — are decreasing. So, is it only about poor sales and marketing efforts, or do we need to take a holistic approach to the product as a whole?

The solution proposed by the company is to stay focused around key sales and marketing initiatives, which also means changing up the team. Vignette has been doing the latter a lot lately. Most of the senior executive and managerial team is new since a major re-org from 2006 to early 2008 following the departures of several VPs. The initiative expands into the sales and marketing departments, where new GMs and VPs pop up like mushrooms after a good rain. It doesn’t take a genius to assume that severance and headcount costs contributed to the not so impressive bottom line.

At the same time, Vignette has been acquiring other companies, like a video publishing shop Vidavee, in an effort to improve its value proposition and customer experience. The acquisition and falling interest rates are blamed for lower cash balances.

New and enhanced products that are part of the Vignette platform now include:

• Vignette Video Services - a hosted video management solution
• Vignette Case Manager - a tool for automation and tracking of customer transactions
• Vignette Collaboration - helps organizations to improve productivity and business processes that require interaction and collaboration
• Vignette QuickSite - a service offering a simplified version of the Vignette WCM
• Vignette Rich Media Services – an integrated video module for management of RIAs and video assets

Being on the cautious side, Vignette is now lowering its expectations for Q3 2008, as the company anticipates hitting the revenue target of between US$ 43 million and US$ 48 million.

Full webcast of the Q2 2008 earnings call, is available until August 24, 2008. More details can be found on Vignette’s web site.

Related Enterprise CMS Articles

• KnowledgeTree Spreads Its ECM Through Open Tech Channel
• The 6 Hidden Costs of Running a DAM System
• Eclipse Plug ins Help Build Apps for the Oracle Fusion Middleware Platform
• Adobe Launches LiveCycle ES2 into the Amazon EC2 Cloud
• Open Text Reports Good Q2, Vignette Contributes to YoY Spike
• GRC Roll-up: Companies Driven to Compliance, CIOs Prepare for Risk
• IBM Bolsters Information Management Offering for Healthcare, Gov IT

From our Job Board  View all jobs | Jobs RSS feed | Post a job right now

• UI Developer at DotNetNuke
• Web Dev Badass at InterWorks
• Front-end Engineer at isocket
• Platform Architect at MyWire
• IT Business Development Manager / Sales Executive at ISIS Papyrus
• Product Support Engineer at Digitech Systems
• UI Designer at Mochi Media
• SharePoint Developer at Metalogix

Featured Events  View all events | Events RSS feed | Add your event

• Feb 17, 2010 – Webinar: 4 Essential Strategies for Advancing Your Website's Business Impact
• Feb 26, 2010 – Intelligent Content 2010
• Apr 21, 2010 – Drupalcon San Francisco 2010
• May 5, 2010 – CMS Expo 2010 (Evanston)
• Oct 7, 2010 – HartmanEVENT 2010 - Social Media & Mobile Usability