January–March 2014 (first quarter)
For 2014, IFS expects strong license growth and a significant improvement in EBIT.
Continued strong growth
Our strategy of targeting, with highly-focused solutions, markets that are expanding and investing continues to enable us to deliver strong license growth. The growth in license revenue, 24 percent in the quarter adjusted for currency, will add to the recognition we gained in 2013 for leading the ERP market in terms of license growth.
Strong performance in license sales not only has the obvious positive impact of driving our long-term maintenance and consulting revenues; but also has the additional strategic benefit of increasing interest in IFS from the partner community so enabling us to continue to grow our ecosystem. This in turn allows us to attract larger international customers and so scale up our global business.
Both maintenance and consulting revenue grew, by 13 percent and 11 percent, respectively, adjusted for currency, with an improvement of the consulting margin to 17 percent. The cost structure of our consulting business is changing in line with expectations. We now have an increased level of variable cost arising from the use, when required, of external partners together with the reduced fixed cost of having fewer permanent employed consultants. As per example, the improved revenue in the quarter has been delivered with 140 less consultants than in the same quarter last year.
The stronger revenue together with the effects from the efficiency-improvement program undertaken last year contributed to the improved EBIT for the quarter.
Companies are showing regained interest in the ERP market and those in need of consolidating their business solution or expanding its functionality are moving forward with their investments. The gradual improvement of the buying environment seen over the last couple of years is expected to continue. This leads industry analyst firms such as Gartner to anticipate the ERP market to grow in 2014 in the region of 5 to 6 percent.
The outcome for the first quarter represents a good start to the year and so underlines our outlook of strong license revenue growth and a significant improvement in EBIT for the full year.
President & CEO
Port of Dover integrates business processes using IFS Applications
Field Service USA
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