CRM provider Sedona attributed a $170,000 revenue drop in part to a change in how it books revenue. For financial results and a look at its new revenue recognition, click here:
Sedona Corp., which provides customer relationship management service to small- and mid-sized businesses, generated $309,000 during its second quarter, down from $470,000 in second-quarter 2008. The company’s net loss grew from $572,000 a year ago to $1.3 million for the quarter ended June 30.
The company’s quarterly revenue decline was partly due to a shift in its revenue model. According to Sedona, “clients are shifting from purchasing direct product licenses to favoring SAAS [software as a service] deployments which are multi-year subscription-based license fees.”
Under this model, revenue is recognized over the life of the contract. During the first half of 2009 revenue from SAAS deployments increased 56%, while revenue from services fees slipped from $426,000 during the first half of 2008 to $415,000 over the first six months of 2009.
The company’s cost of sales jumped from $39,000, or 19% of sales, during second-quarter 2008 to $115,000, or 55% of sales, during the most recent quarter. Sedona attributed the increase in sales costs to upgrading and supporting its recent roll-out of a new version of its CRM software.
But total operating expenses dropped from $841,000 in second-quarter 2008 to $552,000 for the quarter just ended.
The quarter also saw David Vey installed as acting president and CEO, replacing former interim president and CEO Scott Edelman.
The Bean-Counter’s Take: You can pretty much throw out any quarter-over-quarter analysis for the next year: Only full quarters that reflect the new structure will provide true comparisons. Still, it’s interesting to note that the subscription model, which isn’t quite as good at locking in revenue streams as licensing agreements are, is apparently what Sedona clients are turning to. Do fallow economic times give marketers fear of commitment?
