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Selectica Inc. Reports Operating Results (10-Q)

November 16, 2009 | About:
10qk

10qk

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Selectica Inc. (SLTC) filed Quarterly Report for the period ended 2009-09-30.

Selectica Inc. is a leading provider of Internet selling system software and services that enable companies to sell products and services over intranets, which are networks of computers that are internal to companies and use Internet technologies, extranets, which are intranets that outsiders, such as suppliers and customers, are allowed to access. The Internet selling system solution allows companies to use the Internet platform to deploy a selling application to many points of contact, including personal computers, in-store kiosks and mobile devices. Selectica Inc. has a market cap of $17.75 million; its shares were traded at around $0.319 with and P/S ratio of 1.08.

Highlight of Business Operations:

For the three months ended September 30, 2009, our revenues were approximately $3.7 million with license revenues representing 26% and services revenues representing 74% of total revenues. In addition, approximately 40% of our quarterly revenues came from three customers. License margins for the quarter were 96% and services margins were 54%. Net loss for the quarter was approximately $1.1 million or $(0.02) per share. For the three months ended September 30, 2008, our revenues were approximately $3.1 million with license revenues representing 5% and services revenues representing 95% of total revenues. In addition, approximately 49% of our quarterly revenues came from three customers. License margins for the quarter were 67% and services margins were 61%. Net loss for the quarter was approximately $3.0 million or $(0.10) per share.

Services. Services revenues are comprised of fees from consulting, maintenance, hosting, training, subscription revenues and out-of-pocket reimbursements. During the three months ended September 30, 2009, services revenues decreased $0.2 million compared to the three months ended September 30, 2008 primarily due to the lower level of consulting services delivered by our CM segment. During the six months ended September 30, 2009, services revenues decreased $0.5 million compared to the six months ended September 30, 2008 primarily due to the lower level of consulting services delivered by both our CM and SCS segments. Maintenance revenues represented 52% and 45% of total services revenues for the three months ended September 30, 2009 and September 30, 2008, respectively, and 52% and 46% of total services revenues for the six months ended September 30, 2009 and September 30, 2008, respectively.

Cost of Services Revenues. Cost of services revenues is comprised mainly of salaries and related expenses of our services organization, our data center costs, plus certain allocated expenses. During the three and six months ended September 30, 2009, these costs increased 8% and 13%, respectively, compared to the same periods in 2008 primarily due to an increase of approximately $0.2 million and $0.8 million in the CM business unit during the three and six months ended September 30, 2009 due to the hiring of additional headcount and the use of outside contractors.

Gross Margin Services. During the three and six months ending September 30, 2009, gross margins from services declined to 54% and 52%, respectively, as compared to 61% for both the three and six months ending September 30, 2008. This decline was largely due to the ongoing shift made to our CM business, which typically has lower gross margins than our SCS business.

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10qk
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