Total revenue for the first quarter was $69.4 million, an increase of 11% from the first quarter of 2007. License revenue for the first quarter was $17.0 million, a decrease of 14% from the prior year period, while consulting services revenue increased 31% to $24.3 million, and maintenance and support revenue increased 17% to $28.1 million.
GAAP net income for the first quarter of 2008 was $4.0 million, or $0.09 per diluted share, compared to $5.1 million, or $0.12 per diluted share, in the first quarter of 2007. Non-cash stock-based compensation expenses increased $1.4 million from the prior year period and were a significant contributor to the decrease in Q1 2008 GAAP net income from the prior year.
Non-GAAP net income for the first quarter of 2008 was $6.1 million, or $0.14 per diluted share, compared to $6.5 million, or $0.16 per diluted share, in the first quarter of 2007. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets and New Mountain Capital fees.
“While we were pleased with our strong consulting services and maintenance revenues and our ability to deliver strong non-GAAP operating income, our Q1 license revenue was below our expectations,” said Kevin Parker, president and CEO of Deltek. “Although our overall government contracting business met our objectives for the quarter, the changing U.S. macroeconomic environment resulted in purchasing delays and elongated sales cycles with our A&E and professional services customers as the quarter ended. We also experienced some execution challenges that adversely impacted our license revenue during the quarter.”
“We are actively managing the execution issues and our outlook for the remainder of 2008 remains optimistic. We believe our license revenue will be positively impacted by our new reseller partners, the implementation of Vision incentive programs and our continued momentum in the government contracting market.”
Key Developments
- Since the beginning of the year, Deltek has added more than 20 new reseller business partners as we continue to grow our reseller partner network in order to expand our market presence. New partnership agreements include: Aktion Associates, Banks-Hill Systems, Bredet Services, Clifton Gunderson Solutions, FCA Technologies, The Fitzgerald Group, Forepoint, Anglin, Reichmann, Snellgrove & Armstrong, PD Enterprises, RICA Consulting Services Corporation, Tech BizSolutions, Rose Financial Services, Saggar & Rosenberg, Incorporating Technology, The Progressive Group, Information Systems Management, Noryan Consulting Services, RSM McGladrey, Software Link, Solution Strategists, SouthTech Solutions, Strategies Group and Synergy Plus Solutions.
- In Q1, Deltek announced two significant wins in the European market with RMJM, one of the world's largest architectural practices, and Buro Four, a rapidly growing property and construction project management consultancy. RMJM will implement Deltek's Vision product across fifteen locations in Europe, Asia, the Middle East and the US – replacing all current systems. Buro Four is utilizing Vision to gain real-time access to project data and cash flow information, so that it can better manage project risk and facilitate its plans for continued rapid expansion.
- In the first quarter, Deltek released the newest versions of its Costpoint product family - Costpoint 6.1, Time & Expense 8.0 and GovWin 5.1 - to further strengthen its industry-leading solution designed for complex project-driven organizations. New functionality added to the Costpoint product family includes multi-currency enhancements, improved management of performance based award fees, out-of-the-box credit card expense imports and automation of the processes for the pursuit of new business. In addition to offering new functionality, these new releases will help project-focused organizations drive compliance, increase profitability, improve decision making and win new business.
- Deltek also recently announced the Consulting Edition of Vision, which contains new features and capabilities designed specifically for the unique project-focused needs of consulting firms. This product was developed by utilizing Deltek’s more than 25 years of experience and gathering extensive input from hundreds of consulting services firms. The Consulting Edition of Vision brings to market mission-critical functionality for the consulting industry by adding new resource planning capabilities, workforce optimization solutions and industry specific analytical capabilities to its broad suite of products.
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