It's the kind of number that makes you read it twice: 578%. That's how much software maker Ariba Inc.'s third-quarter revenue has grown since the same period last year. Revenue hit $80.7 million in the period ending June 30, compared with $11.9 million in the third quarter of 1999. Nonetheless, the company reported a loss this quarter of $11.3 million, or 5 cents per share, compared with a loss of $6 million, or 11 cents per share, a year ago.
Ariba attributed its growth to strong demand for its E-procurement and business-to-business marketplace software. Ariba signed 110 new deals and earned $53.6 million in license revenue for the quarter. Ariba CEO Keith Krach says sales of online marketplace software have caught up to sales of its older line of procurement products. B-to-B marketplace customers represent half of its client base. "The success of many of our early-on customers is really whipping the winds for us," Krach says. "We've gone from the 'missionary sell' nine months ago to companies saying they really need to have E-commerce systems."
The company expects to turn profitable in a year and intends to fuel future sales for its products by selling add-on E-commerce capabilities to its exchange software. Partnering with other software vendors such as Descartes Systems, i2 Technologies, and MatrixOne, as well as financial powerhouses such as American Express and Bank of America, Ariba is integrating financial services, shipping and logistics, supply-chain coordination, and product design tools into its online marketplace platform. Revenue from services shared with those partners, as well as revenue from marketplaces and marketplace subscription fees, accounted for 19% of revenues for the quarter, "B-to-B is more than catalogs and XML orders," Krach says.
And the deals seem to keep coming. This week the company revealed an alliance with PSDI, which sells software that streamlines the supply chain for maintenance, repair, and operations-materials companies. The companies agreed to integrate PSDI's enterprise asset-maintenance software and its MRO marketplace systems with Ariba-powered marketplaces. And Ariba's expected to unveil a significant new marketplace deal in partnership with IBM and i2 this week. It's also planning to introduce an integration module that will connect users of IBM WebSphere, a sell-side E-commerce suite, with Ariba's marketplaces and procurement customers, allowing them to more easily join Ariba's network of 20,000 suppliers.-
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