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Positive order intake supports growth strategy
The result for the first quarter 2010 follows the pattern seen in past years, where the revenue is seasonally lower than in other quarters. While there are additional challenges this quarter such as currency, we are seeing the benefits of our continued focus on driving productivity and efficiency improvements coming through in our cost base. The overall outlook for the full year remains strong and we will continue to execute successfully on our communicated strategy.
Although license revenue was lower than the previous year, there were many good strategic sales wins in our target sectors during the first quarter that did not impact revenue, but will do so in the full year. The pipeline continues to develop well and there is a good level of sales activity in most regions. As we continue to pursue and win larger deals the timing of license revenue becomes less regular.
The recent strengthening of the Swedish krona against the pound sterling, the U.S. dollar, and the euro has adversely affected the reported profitability of the business in the quarter. Maintenance and support revenue increased steadily but was again especially affected by currency. Adjusted for currency, product revenue increased over the previous year.
Despite a strong demand for consulting services the revenue fell short of quarter one 2009 due to a number of factors that occurred in the quarter. Most noticeable was the delay in the start of a number of major projects. These issues are improving going forward.
Margins for both consulting and maintenance continue to improve, demonstrating a strengthening of the underlying business as is seen in the increase in adjusted EBITDA.
Industry analysts such as Forrester and IDC have made only minor changes to their projections of market development since the beginning of the year. They still expect the market to come back to a modest growth in 2010, including increasing license revenue. Although their projections differ somewhat, they expect overall ERP market growth to be 3–7% in 2010.
The outlook for the full year remains unchanged, that being that we expect moderate growth excluding the effects of acquisitions.