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CEOCFO CEOCFO Monthly Analyst |
Optika, Inc. – showing a profit and helping other companies increase bottom line efficiency with their Acorde™ software
Technology Bio of CEO, Products: Acorde Process -
Provides sophisticated workflow functionality for automating processes and delivering
business transaction information, within organizations and over the web to external users.
Acorde Resolve -
Allows businesses to build web resolutions hubs, which deliver collaborative tools in a
virtual office environment for resolving transaction discrepancies internally and with
partners and customers. Acorde Integration Tools
- Seamless integrations with leading ERP and LOB applications that enable
businesses to leverage existing strategic investments. CEOCFOinterviews: What would you say is your most recent and exciting news? Mr. Ruport: “We recently announced our fourth quarter 2001 financial results on January 23rd. In the fourth quarter we turned the corner of profitability and posted EPS of three cents a share. We had been profitable a few years ago, but we went on a course of developing a whole new set of products aimed at leveraging the Web and reducing cycle times for major corporations. That was a joint development agreement that we entered into with The Home Depot in 1997, and we delivered those products in 1999. We have been working the last couple of years to get the products to marketplace and on our goal of getting back to profitability, which we just achieved.” CEOCFOinterviews: How has your partnership with Home Depot been going? Mr. Ruport: “Our partnership is very good. The Home Depot is an excellent joint development partner, and in the agreement, they have the right to use our products throughout Home Depot. As a partner, they will help us test all the products and decide what function goes into the products so that they benefit the general market place.” CEOCFOinterviews: Please tell us about the milestones that you wanted to achieve, and if you have achieved them? Mr. Ruport: “The milestones for last year were first and foremost to become profitable in the fourth quarter, to protect our balance sheet and our cash position and to increase the stability, quality, and performance of our products. We beat our cash usage plan substantially this year, to the point where we should be cash flow positive next year. We did deliver a quarter of a million dollars or 3 cents a share profitability in the fourth quarter and we expect to be profitable for fiscal 2002. In 2001 we greatly enhanced the quality, stability and performance of our products to the point that the majority of our large customers, like The Home Depot, Costco, and Merrill Lynch, have all upgraded to our newest product offering.” CEOCFOinterviews: What is your newest product offering? Mr. Ruport: “The name of our product is Acorde which, means agreement. The Acorde product has three components, the first is Acorde Context, which allows us to content enable ERP systems. The second is Acorde Process, which allows us to automate the process and flow of transactions in and around those ERP systems and the third is Acorde Resolve, which allows our customers to use the web to collaborate real time to address any accounting issues.” CEOCFOinterviews: How big is the market for your product? Mr. Ruport: “The market is very large. We have entered a joint partnership agreement with JD Edwards, an agreement with Oracle and we are also working towards one with People Soft to integrate our products. Our market is very large because there are ERP systems everywhere.” CEOCFOinterviews: Can you give us a picture of your competition and how you maintain an edge? Mr. Ruport: “We have competitors on the high-end and on the low-end. We differentiate ourselves against the high-end competitors by having a lower cost of ownership, being easier to implement and providing a faster return on investment. We differentiate ourselves from the lower part of the market by having a much more scaleable solution, so as they grow their company or expand through other divisions, they don't have to worry about the products capacity to handle the growth. We can implement a system on a single server for 10 users or on multiple servers for an organization as large as the Home Depot. It is all exactly the same source code.” CEOCFOinterviews: How do people that need your product find out that you exist? Mr. Ruport: “There are three primary ways. First, we have a sales staff and a direct sales organization plus a reseller organization. In North America, we have about 50 resellers and we are looking to increase that by about 50% this year. We also have a direct sales team. The second way is through our partnerships, we actively participate in JD Edwards’ user group meetings and other events that they have. We will do the same with other ERP systems. The third way is through our own market lead generation that drives people to our web. We just had a web-cast two days ago where The Home Depot was the featured speaker, with about 40 companies on the line listening to how they implemented our products and what the benefits are. Those three things drive the lead development.” CEOCFOinterviews: How many customers do you currently have on maintenance? Mr. Ruport: “We have about 1,500 customers on maintenance today.” CEOCFOinterviews: How
many clients do you look to add over the next year? Mr. Ruport: “At
the enterprise level we have three components of our revenue model, the first is the
license revenue. We sell licenses as we did in the fourth quarter to Waste Management. The second is services revenue, which is
equivalent to license revenue on a larger sale. Therefore, if our average direct sale is
about 175 thousand dollars in software, it would be about 175 thousand dollars of services
to implement, which gives us about 350 thousand dollars for the average initial system. Of
course, we have some that are much bigger and some that are smaller but that is the
average. CEOCFOinterviews: What generates the largest revenue for you? Mr. Ruport: “The license revenue will be the largest in 2002, and then maintenance revenue and then services.” CEOCFOinterviews: Do you see that trend continuing? Mr. Ruport: “We see our license revenue accelerating, this quarter our license revenue grew about 37% and our top line grew about 19%, and if we keep that acceleration you will see the licensing revenue continuing to be the dominant part of our revenue stream.” CEOCFOinterviews: Will you further expand out side of the United States? Mr. Ruport: “Currently we have an office in London and an office in Rio de Janeiro, Brazil. We have partnerships in both locations, but our offices are small, with about five people supporting those partnerships. We won't expand outside of that right now except through distribution agreements. We have distribution agreements in Asia and the Middle East, and our product is ready to aggressively expand through a number of international distribution agreements that we have.” CEOCFOinterviews: Where do you see your greatest growth rate coming from? Mr. Ruport: “We are going to continue to focus primarily on North America for 2002, and put together the agreements for the rest of the world, so what I think you will see is in 2003-2004 the international revenue will start to climb as a total percentage of revenue. Right now, the international revenue is about 14% of our total revenue.” CEOCFOinterviews: If you didn’t add any more partners or sales, would you continue to be profitable? Mr. Ruport: “Yes but marginally so, because after a period of time your partners’ ability to deliver increasing revenue begins to wane, and you have to continually keep on adding some new partners into the mix. We would definitely be profitable but we would not have set the ground for increased growth in 2003-2004.” CEOCFOinterviews: What do you need to do to continue increasing growth? Mr. Ruport: “Our focus this year has been on building the business, and we have a couple of initiatives to do that. First, is the leverage that we talked about, getting additional resellers throughout the world, introducing our products to international markets where distributors can translate them, then continuing to shift resources from development and other parts of the company into sales in order to get the leverage that we are looking for.” CEOCFOinterviews: What are your financial goals? Mr. Ruport: “We expect to grow top-line revenue by 20-25%, and we will be profitable and cash-flow positive for the year, with operating margins around 5%.” CEOCFOinterviews: That would be a good cash and credit position for you to be in. Mr. Ruport: “Yes, we’ve worked really hard on maintaining our balance sheet because one of the things that companies want to know before making a decision about a system is whether the company is viable and whether they are going to be around. Making sure that the balance sheet is clean and that you only give good business, has really become an important focus for the company and that has worked well for us.” CEOCFOinterviews: Companies want to know that you are going to be around to support your product. Mr. Ruport: “Definitely, and with most of the applications that we work on with companies, they intend on using for 3, 4 or 5 and sometimes 10 years, so it's really important that they have a lot of trust in the vendor.” CEOCFOinterviews: How long does it usually take to make a sale? Mr. Ruport: “The
average sale cycle is about 9 months. We have
some that have gone for as long as 1-2 years and some 3 months but the average is about 9
months.” |
