PVSW - Q2 2012 Ending 31 Dec 2011
January 28, 2012
– Comments (8) |
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Earnings Release here and Seeking Alpha's Conference Call Transcript here.
"...We executed well in the December quarter, which represents our 44th consecutive quarter of profitability," said John Farr, president and CEO, Pervasive Software. "I'm particularly pleased that our core integration products team once again grew year over year quarterly revenue, as it has now done for nine consecutive quarters, and in doing so has achieved a new record for quarterly revenue from our integration products and services in the December quarter. Integration revenue represented approximately 43% of our total revenue in the December quarter. Our balance sheet continues to be incredibly strong with over $41 million in cash and marketable securities, a new record deferred revenue balance of $8.1 million and no debt..." - John Farr, Pervasive Earnings Release
"...At a product level, our database products represented approximately 53% of our business and our integration products represented approximately 43% in Q2. While our Business Xchange, DataSolutions and DataRush products accounted for the remainder..." - Randy Jonkers, Conference Call
A couple of comments...First, John Farr's comment "Our balance sheet continues to be incredibly strong" bothers me. $41 million is not incredibly strong esp. when PVSW is not exhibiting earnings growth and their division which accounts for 53% of their revenues is a mature business with negligible market share competing against Microsoft and Oracle. This statement is a smoking gun in my opinion and says more about John Farr's insecurities and lack of confidence than it does about PVSW's financial stability.
Table I below shows PVSW product lines as a percentage of revenues from Q1 to Q2. Revenues from PVSW's products coming out of their Innovation Labs decreased from Q2 to Q1. PVSW has still failed to deliver any revenues with Big Data.
Integration looks good and the conference call also came off significantly better than Q1's. Farr sounded much more confident and passionate but, again, as cited above there are substantive inconsistencies. I am also very concerned regarding PVSW's alleged share buyback ruse, alleged epic fail with corporate governance viz-a-viz insider option issuances not based on performance, [NO] insider open-market share purchases...all noted here and here. Said actions simpy suggest PVSW insiders do not beleive the shares are undervalued enough to purchase on the open-market but they are undervalued enough when they can be acquired at no cost and not based on performance and at the expense of non-insider shareholders in the form of dilution. This is not corporate governance it is an alleged shakedown of non-insider shareholders(.)
Table I. Product line (as % of revenues)
Q1 2012 Q2 2012
Database 60% 53%
Integration 35% 43%
BD, BE, DS* 5% 4%
*Big Data (DataRush), Business Xchange, DataSolutions
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