With the recent news that EMC is shopping Documentum in preparation for the Dell purchase of EMC, we have had lots of activity including the post on Monday regarding our thoughts about the what would happen to Documentum after the sale. EMC announced earnings this morning which includes the ECD (Enterprise Content Division), the division that includes Documentum. This post will discuss our thoughts on the earnings announcement.
Documentum 1st Quarter 2016 Earnings – Mostly flat but not bad
Reported Results were:
- Revenues of $134 Million – Down from $156 Million in the 4th quarter but only slightly down from $138 Million in 1st quarter of 2015.
- Software Revenues of $29 Million – Down from $53 Million in the 4th quarter of 2015 but actually up from the $27 million from 1st quarter of 2015. Documentum, like other firms have always incented clients to buy at the end of the year consistent with most budgeting cycles resulting in a dip in the first quarter.
- Over the previous 3 years, 1st quarter software revenue has declined from $43 million in 2013, to $35 million in 2014 to $27 million in 2015 (worst quarter in the 3 years).
Graph of Software Revenue for Enterprise Content Division
While revenues are slightly up form Q1 2015, that was the worst quarter over the last 3 years.
Graph of Services Revenue for Enterprise Content Division
Services revenues are more consistent between quarters but have been trending lower.
Summary
Overall, the results for Q1, given the Dell purchase looming on the horizon, are better than we would have expected, particularly in software revenue. In looking at the bigger picture, overall software and services are continuing to decline, will the acquirer of Documentum be able (or want) to turn it around?
Let us know your thoughts below.
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