Most encouraging was healthy growth in license revenue for the customer-relationship-management software vendor, particularly in the communications, financial-services, life-sciences, and public sectors. Overall, license revenue was $126.8 million, up 13% from the first quarter of 2003, boosted by a list of 109 new customers that included Bayer, Bristol-Myers Squibb, Ford, Kraft Foods, and the U.S. Census Bureau. The rise in license revenue was especially surprising given the strong demand company executives said they've seen for Siebel's hosted CRM product, which debuted in late 2003 and doesn't require the purchase of software licenses. The company claimed 229 customer wins for the hosted offering, with deals as large as 525 seats.
Despite the upbeat results, CEO Tom Siebel remained cautious in discussing his expectations for future quarters during a conference call with financial analysts, in part because of other indicators such as an 8% year-to-year drop-off in service and maintenance revenue, to $202.5 million from $220.7 million. "It's very clear that the IT recovery we're seeing is very fragile," Siebel said. "There's quite a bit of uncertainty out there." He said he'll feel more comfortable about a recovery once Siebel has posted five to eight strong quarters in a row. Still, he referred to the company's current technology as "the most functionally rich product line we have ever delivered to market."
For the quarter ended March 31, Siebel Systems posted a profit of $31.7 million on revenue of $329.3 million, compared with a profit of $4.6 million on revenue of $332.8 million a year earlier. The company expects second-quarter revenue to be as much as $365 million. Additionally, Siebel reduced its quarterly expenses by $44 million from the previous year, and it saw its cash and cash equivalents rise by $110 million, to $2.1 billion.