Infor's CEO validating what I've always said. And I've been conservative saying 3.5 years...he says 2.5 years>>>
CLOUD HURTS INFOR REVENUE
The transition to the cloud held down Infor's results for the third quarter ended January 31. But that's a
shortterm
result as the company expects a longerterm
return. The company boosted net income to
$51.3 million for the most recently ended period, up 66.5 percent from $31.9 million, helped along by
$40.8 million in interest income this year, compared to $23.3 million a year earlier, spurred by currency
changes. However, revenue fell to $129.2 million, down 2.4 percent from $132.4 million in last year's
corresponding quarter. The drop in revenue stemmed from customers switching to cloud products, and
instead of receiving upfront money from license sales, the company's revenue arrives over time, CEO
Charles Phillips said in a recent earnings conference call. If new deals ""had been from perpetual
licenses, revenue would have increased in strong double digits,"" Phillips said. As it was, 19 ""significant
sales"" flipped from license deals to subscriptions. Infor estimates it takes will take about 2.5 years before
the subscription incomes exceeds what would have come from licenses. Phillips said of the top 10 deals,
five were from healthcare or the public sector, markets he said looking to avoid higher upfront expense.
Cloud sales are also driven by the fact payment comes out of the operating budget, not capital, and lower initial payments means
deals can be approved by lower levels of management. The switch to cloud also reduced services revenue, and head count was
reduced there. Phillips