eLoyalty Corp. (ELOY, Financial) filed Quarterly Report for the period ended 2009-06-27.
eLoyalty has developed management consulting and technology capabilities in an effort to lead the development of and stay at the forefront of customer relationship management. eLoyalty Corp. has a market cap of $124.4 million; its shares were traded at around $8.78 with and P/S ratio of 1.3. eLoyalty Corp. had an annual average earning growth of 24.4% over the past 5 years.
Within the Integrated Contact Solutions Service Line, Consulting services, Managed services, and the resale of Product may be sold and delivered together. In arrangements that include the resale of software, SOP 97-2 requires determination of VSOE for each of the individual elements. If VSOE does not exist for the allocation of revenue to the various elements of the arrangement, then all revenue from the arrangement is deferred until all elements of the arrangement without VSOE have been delivered to the client. If the remaining undelivered elements are PCS or other deliverables with similar attribution periods, then the arrangement revenue is recognized ratably over the remaining service period. Revenue of $0.2 million and $0.4 million has been deferred as of June 27, 2009 and December 27, 2008, respectively, due to the lack of VSOE for elements within these arrangements. This revenue will be recognized when the elements without VSOE are delivered to the client or will be recognized ratably over the remaining service period.
As a result of the strategic and long-term nature of Managed services revenue, we believe it is appropriate to monitor the level of backlog associated with these agreements. The Managed services backlog was $108.9 million as of June 27, 2009 and $73.9 million as of December 27, 2008. The increase in backlog is primarily due to the signing of several Behavioral Analytics Service agreements and several Integrated Contact Solutions support agreements in the first six months of 2009. The Company anticipates the Managed services backlog will increase in 2009 compared to 2008. Of the June 27, 2009 backlog, 72% is related to the Behavioral Analytics Service, 22% is related to our Integrated Contact Solutions offerings, and the remaining balance is related to other Managed services.
The Company uses the term backlog to reflect the estimated future amount of Managed services revenue related to its Managed services contracts. The value of these contracts is based on anticipated usage volumes over the anticipated term of the agreement. The anticipated term of the agreement is based on the contractually agreed fixed term of the contract, plus agreed upon, but optional extension periods. Anticipated volumes may be greater or less than anticipated. In addition, these contracts typically are cancellable without cause based on the customer making a substantial early termination payment or forfeiture of prepaid contract amounts. The reported backlog is expected to be recognized as follows: $23.8 million in 2009; $34.3 million in 2010; $24.3 million in 2011; and $26.5 million in 2012 and thereafter.
Revenue from Managed services was $11.6 million in the second quarter of 2009, an increase of $2.2 million, or 23%, from $9.4 million in the second quarter of 2008. The increase in revenue from Managed services resulted from the continued growth of support and maintenance revenue from new and existing clients in our Integrated Contact Solutions Service Line and the impact of several Behavioral Analytics Service arrangements transitioning to the subscription phase, which was partially offset by a
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eLoyalty has developed management consulting and technology capabilities in an effort to lead the development of and stay at the forefront of customer relationship management. eLoyalty Corp. has a market cap of $124.4 million; its shares were traded at around $8.78 with and P/S ratio of 1.3. eLoyalty Corp. had an annual average earning growth of 24.4% over the past 5 years.
Highlight of Business Operations:
Managed services revenue included in the Behavioral Analytics Service Line consists of planning, deployment, training, and subscription fees. Planning, deployment, and training fees, which are considered to be installation fees related to long-term subscription contracts, are deferred until an installation is complete and are then recognized over the term of the applicable subscription contract. The terms of these subscription contracts generally range from three to five years. As of June 27, 2009 and December 27, 2008, deferred revenue totaled $7.9 million and $6.4 million, respectively. Installation costs incurred are deferred up to an amount not to exceed the amount of deferred installation revenue and additional amounts that are recoverable based on the contractual arrangement. Such costs are amortized over the term of the subscription contract. Costs in excess of the foregoing revenue amount are expensed in the period incurred. As of June 27, 2009 and December 27, 2008, the Company had deferred costs totaling $5.1 million and $4.9 million, respectively.Within the Integrated Contact Solutions Service Line, Consulting services, Managed services, and the resale of Product may be sold and delivered together. In arrangements that include the resale of software, SOP 97-2 requires determination of VSOE for each of the individual elements. If VSOE does not exist for the allocation of revenue to the various elements of the arrangement, then all revenue from the arrangement is deferred until all elements of the arrangement without VSOE have been delivered to the client. If the remaining undelivered elements are PCS or other deliverables with similar attribution periods, then the arrangement revenue is recognized ratably over the remaining service period. Revenue of $0.2 million and $0.4 million has been deferred as of June 27, 2009 and December 27, 2008, respectively, due to the lack of VSOE for elements within these arrangements. This revenue will be recognized when the elements without VSOE are delivered to the client or will be recognized ratably over the remaining service period.
As a result of the strategic and long-term nature of Managed services revenue, we believe it is appropriate to monitor the level of backlog associated with these agreements. The Managed services backlog was $108.9 million as of June 27, 2009 and $73.9 million as of December 27, 2008. The increase in backlog is primarily due to the signing of several Behavioral Analytics Service agreements and several Integrated Contact Solutions support agreements in the first six months of 2009. The Company anticipates the Managed services backlog will increase in 2009 compared to 2008. Of the June 27, 2009 backlog, 72% is related to the Behavioral Analytics Service, 22% is related to our Integrated Contact Solutions offerings, and the remaining balance is related to other Managed services.
The Company uses the term backlog to reflect the estimated future amount of Managed services revenue related to its Managed services contracts. The value of these contracts is based on anticipated usage volumes over the anticipated term of the agreement. The anticipated term of the agreement is based on the contractually agreed fixed term of the contract, plus agreed upon, but optional extension periods. Anticipated volumes may be greater or less than anticipated. In addition, these contracts typically are cancellable without cause based on the customer making a substantial early termination payment or forfeiture of prepaid contract amounts. The reported backlog is expected to be recognized as follows: $23.8 million in 2009; $34.3 million in 2010; $24.3 million in 2011; and $26.5 million in 2012 and thereafter.
Revenue from Managed services was $11.6 million in the second quarter of 2009, an increase of $2.2 million, or 23%, from $9.4 million in the second quarter of 2008. The increase in revenue from Managed services resulted from the continued growth of support and maintenance revenue from new and existing clients in our Integrated Contact Solutions Service Line and the impact of several Behavioral Analytics Service arrangements transitioning to the subscription phase, which was partially offset by a
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