Consolidators have a reputation for buying market share and limited investment in development and this was the case with Infor for several years but over the last couple of years it has transcended its roots. Its latest results show 16% organic licence growth, which is a proof point that it can deliver growth based on its own (post-acquisition) efforts.
As a private, mid market business applications provider, Infor is not required to report so the numbers are sparse but show a positive trend. For Q2 (ending November 2011) organic license revenue was up 16%. By comparison, Oracle reported just 2% new license growth for its latest quarter which ended in November against its own expectations of 6% to 16% (see Oracle shocks, spikes wider market fears).
The ERP business delivered 25% year on year growth. Infor’s EBITDA margins moved up to 27% for the quarter. But the company did not disclose profits. The gap between Infor and Oracle will no doubt be highly satisfying for Infor CEO Charles Phillips given his previous tenure as president at Oracle.
Infor is pulling in new customers and support subscriptions, which is testament to the work it has done on its ION middleware platform, and vertical market developments, as part of the strategic and management change plan it put into action a year ago (see Infor prioritises products). However, we would like to see more in the way of a cloud strategy because (like other enterprise software suppliers) it will not be able to sustain growth based on the ‘old’ license/maintenance revenue model.
Infor says its Q2 license growth was organic, so was the 17% license growth it achieved over the past 12 months. That begs the question of the value of the c$2bn acquisition of Lawson Software, and suggests it is not delivering new license revenue. That would be a blow especially as the Lawson products have deep vertical industry capability which is something Infor is building up across its portfolio. There is still work to be done within Infor.
