Document imaging software and now business process management (BPM) provider Kofax has really let the wind out of its sails since missing its FY11 targets and then warning on Q112 (see here and here). For the Q2 and H1 period to 31 December, profits slumped 31% and 41% respectively to $3.8m and $6.5m. Q2 revenues meanwhile were down 0.3% on an organic constant currency (OCC) basis to $70m, and flat (OCC) at $128.5m for H112 overall.
Headline revenue however was up 3.7% on the quarter and up 5.2% in H1, which was largely down to the recent acquisitions of Atalasoft last May (see Kofax acquires web imaging specialist) and most recently of Northern Ireland HQ’ed BPM vendor Singularity Limited in December (see Kofax pays high price for strategic acquisition). Atalasoft apparently produced ‘strong’ results in Q2 and H1, and Singularity performed ‘better than expected’ since the deal closed. So a thumbs up for its recent M&A activity at least.
Kofax’s strategy is to look ‘beyond the traditional capture market’, where it would seem growth prospects are now pretty limited - hence its decision to expand into areas such as BPM, web imaging and mobile capture through its recent partnership with Mobiflex (see Kofax in mobile tie-up). It also recently launched a vertical packaged application for mortgage processing, which streamlines business processes for mortgage lenders. Seeking lateral moves into higher growth areas is the right approach, but how well Kofax manages to knit these various strands together will be the key to its success.
For now at least, Kofax is struggling to keep pace with the rapid changes taking shape across the wider business process services (BPS) market.