Revenue for the first three months of 2009 was down over the same period in 2008, as anticipated due to the hiring of a new sales team that was focused on building customer prospects during the first quarter. First quarter of 2009 (Q1 09) expenses, including cost of sales, was higher than in first quarter of 2008 (Q1 08), as the company recruited experienced and talented personnel for the sales, marketing and development teams.
The increase in expenses also includes one-time costs associated with the relocation of the customer data centre facility, recruitment expenses for the sales and development teams, and restructuring expenses. The relocation of the customer data centre facility was completed early in second quarter of 2009.
Quarterly results will fluctuate due in part to the timing of customer decisions and the date of contract execution. As well, with a new sales and marketing team recruited, the focus in Q1 09 was on development of a customer opportunity pipeline. Although no new license revenues were generated in Q1 09, recurring revenues increased over Q1 08, through higher maintenance and support contract revenue.
A large portion of services revenue is driven by new license sales, as new customer implementations usually involve business analysis and consulting. Services revenue has decreased from the same period in 2008, when a significant amount of services revenue was earned on 2007 new license sales.
Q1 09 total expenses increased over the same period in 2008, as the company executed on its strategic objective to develop first-class sales, marketing and development teams. The company anticipates that investments in these areas will result in identification of customer opportunities, a faster sales cycle, and a stronger product offering, all resulting in a higher revenue stream.
In addition, expenses in Q1 09 included several one-time expenses. During the quarter, the company continued its plan to restructure its workforce, and expensed about CAD148,000 in restructuring expenses and incurred additional recruiting expenses as part of this initiative.
“Decision Dynamics Technology now has the funding to pursue many of the opportunities we see for our OncoreTM business. Divestment of the Wellcore business has allowed us to shift our organizational focus to building an effective sales organization in a well defined market space with superior products.
The company’s sales pipeline grew significantly during the first quarter of 2009. Early in the second quarter we closed a number of opportunities that will provide us revenue over the next two years of at least CAD1.4 million. With the resulting license and services business that the company closed, we expect to be profitable during the second quarter of 2009. In the current economic environment we see this as significant progress for the company,” said Justin Zinke, Decision Dynamics Technology chief executive officer.
