Wednesday, November 09, 2011

Top Image Turns in Solid Numbers

Well, in the wake of Kofax's recent quarterly earnings report, we've been eagerly awaiting Top Image Systems (TIS) third-quarter results, which were released today. That's because TIS sells primarily in Eurpoe, which is where Kofax cited weakness that caused its quarterly numbers to fall short. Granted, TIS is probably one-ninth the size of Kofax, but still, its strong third-quarter number indicate TIS is not seeing any weakness in EMEA.

For the quarter, TIS reported a 32% increase in revenue compared to the previous year's Q3 and a 64% increase in operating income. This is pretty much in-line with the increases TIS reported in the first two quarters of the year. TIS CEO Ido Schechter gave no indication that the EMEA market was weakening and increased 2011 revenue guidance from $26 million - $27 million to $27.5 - $28.5 million. “This quarter we saw continued progress in our new growth geographies such as the UK and Asia Pacific, in addition to our traditional stronghold in Europe," said Schechter in a press release announcing the results.

So, there is certainly debate as to whether there is any significant weakness in Europe, especially to the level where it would force Kofax to lay off 60 people. There are certainly a number of people who view the weakness as a Kofax problem moreso than a market problem.

Michael Ziegler, a former managing director of Kofax EMEA who is currently working as a consultant and has co-founded the Docville group, acknowledged that whereas there may be some weakness in southern Europe due to macroeconomic conditions, the rest of the European market, including Turkey, seems very strong to him for document capture technologies. Ziegler blames Kofax's mismanagement of its formidable European channel for the company's current weakness in EMEA and said that ISVs like TIS and others have had success recently in recruiting Kofax resellers.

We'll have more on this discussion in our upcoming premium issue.

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