UPDATE: Halogen plans growth after posting record revenue in Q3

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Ottawa-based Halogen Software (TSX:HGN) plans to keep growing its staff and building its presence outside North America, executives said during a conference call with investors after announcing quarterly earnings on Thursday.

Paul Loucks is the president and CEO of Halogen Software.

By Jacob Serebrin

“We are pleased with our strong results and continued progress during the third quarter,” said Paul Loucks, the company’s president and CEO, during the call.

The company, which makes cloud-based employee management software, had revenues of $12.3 million during its third quarter – the highest quarterly revenue for Halogen to date. Revenues were up from $9.7 million for the same period the year before and from $11.4 million the previous quarter.

Despite the increased revenue the company had a net loss of $718,000 during the three-month period ending Sept. 30. That’s down from a net loss of $1.9 million a year ago and a net loss of $2.7 million the previous quarter.

Of the company’s revenues, $10.7 million are recurring. That’s a particularly important factor for the company since its business model is based around subscriptions to its software products.

"The strong growth in our customer base over the past year contributed greatly to us generating record recurring revenue in the quarter,” said Mr. Loucks.

“We also had a record number of new customer wins in our international markets, which are an important focus for us.”

While markets outside of the United States and Canada only accounted for eight per cent of revenue during the third quarter, that’s up from six per cent the previous quarter.

And Mr. Loucks said international markets are an important part of the company’s growth plans. He said the company has spent some of the proceeds from its IPO in May to expand its Australian sales office.

According to Mr. Loucks the company is currently expanding its operations to business English markets, but plans to move into non-English markets in the near future.

The company, which has a staff of 315, also plans to continue growing its head count. Mr. Loucks said the sales team would continue to grow at around the same percentage as recurring revenue.

The increased growth is visible on the company’s balance sheet. Sales and marketing costs were up to $5.4 million during the quarter from $4.5 million the year before.

Halogen had $24.1 million in deferred revenue at the end of the quarter, according to Pete Low, the company CFO. That’s due to the way the company records subscriptions and up-sales. Customers pay for a year in advance; this revenue is then recognized on a prorated quarterly basis. That’s up from $20.5 million the year before.

The company also announced that its bringing in a new vice-president of sales. Philip Rugani, who is currently the CEO of Factonomy, a Scottish company specializing in business continuity and disaster recovery management software. Mr. Rugani will join Halogen’s management team in Ottawa later this month.

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