Despite Efforts, Kofax Still Over-reliant on Big Ticket Sales

Following the tried and true PR strategy of announcing bad news on a Friday, at the end of last week, Kofax announced preliminary fiscal 2014 (year-end June 30) numbers, "which reflect software license revenue, total revenues and adjusted EBITDA levels below the guidance previously provided to the financial community." For the year, Kofax reported that total revenue will fall between $287.5 and $290.5M, which would represent an 8% gain over Kofax's fiscal 2013, but also a disappointing Q4.

By our calculations, this means fiscal Kofax's Q4 2014 revenue would come in at around $72M, which would represent a drop of approximately 7.5% from the previous year's Q4. This is very disappointing for a company that through nine months was 11.7% ahead of its 2013 pace. Kofax CEO Reynolds Bish blamed the shortfall on some large deals that fell through. On a positive note, he indicated the bulk of those deals will close very soon.

"Kofax is very disappointed with the results," Bish said on a conference call with financial analysts. "The shortfall can be primarily attributed to several seven figure software licensing transactions that slipped into future quarters. We believe we will close these deals in the first and second quarter of fiscal 2015. We expect to close $3M of sales in the next week and another $1.5M in the next two weeks."

Bish blamed Kofax's continuing reliance on seven figure deals for problems--something which Kofax has attempted to address be realigning its sales force over the past year. "In the fourth quarter, we are especially subject to this sort of result," he said. "We did increase significantly the number of six-figure deals we closed in the fourth quarter, but we only closed two seven-figure deals."

Bish said all the deals that slipped were in Europe and  North America and involved Kofax's core capture technology. "Core capture still makes up more than 70% of our sales and accounts for many of our large deals," he said. "So, that is naturally what are larger deals that slip are going to involve. I don't see any core weakness in the market, or change in the competitive environment, or increased pricing pressure. However, we are seeing procurement processes take longer.

Bish indicated that sales of Kofax TA 7 smart processing application platform are gradually ramping up. Bish added that he will issue guidance in September when Kofax publishes its official year-end results and doesn't expect any changes to the long-term numbers.

Initial Thoughts on Lexmark's Offer for ReadSoft

The buzz this morning is all about Lexmark's a bid to acquire ReadSoft.

Here are some initial thoughts:

•  It appears like a done deal, as the acquisition has been unanimously recommended by ReadSoft's board of directors and, according to ReadSoft, "shareholders representing 22.9% of the shares and 41.5% of the votes have undertaken to accept the offer."
  
• It's a fairly attractive offer for ReadSoft shareholders considering it represents a 117% premium over the shareholder value when the market closed on yesterday. (The offer is $6.11 in cash for each Series A and Series B share of ReadSoft for a price of approximately $182 million, net of cash acquired.) ReadSoft shares closed May 5 on the Stockholm exchange (where the Swedish-based company primarily trades) at less than $3 per share, a value they had basically held for the past three months - which was about half of the company's 52-week high, reached last summer,
  
•  It's not that attractive of an offer if you consider that two years ago Lexmark paid $148M to acquire Brainware, a capture ISV about a quarter the size of ReadSoft. ReadSoft reported $117M in revenue in 2013 - although it has struggled recently with growth and profitability - which likely drove the share value down over the past year.

How do you integrate Brainware with ReadSoft under Lexmark's Perceptive Software practice? This is the $100M plus question and here are some thoughts:

• ReadSoft is clearly larger and more established, but Perceptive has certainly invested a lot into Brainware.
  
• Both ReadSoft's and Brainware's strongest market has been A/P, but I'm not exactly sure that they are direct competitors. ReadSoft really only took off in the A/P space after it acquired the Ebydos SAP workflow technology, and has since added similar workflow for Oracle Financials. Brainware always touted its ability to do "straight-through" processing based on three-way matches, which theoretically eliminates the need for workflows. So, Brainware's technology always seemed like a better fit in PO heavy environments where there were not a lot of exceptions, while ReadSoft was great when there were more workflow requirements. Of course, when Perceptive acquired Brainware, it touted the ability to introduce Perceptive's ImageNow worklfow into the equation and even things out a bit. I'm not sure how much that has been a factor. The bottom line, however, is that both companies compete primarily in the same horizontal market.
  
• Geographically, it seems that Lexmark is counting on ReadSoft to increase it presence in Europe, where ReadSoft generated approximately 70% of its revenue in 2013. Even though Brainware's development team is in Europe, its sales and marketing were always based in the U.S. This reminds me somewhat of Perceptive's acquisition of German ECM ISV Saperion last year, which has technology similar to Perceptive's legacy ECM platform, but was acquired to give Perceptive a stronger European ECM base.
  
• Along those lines, in our latest issue we ran a brief discussing how Perceptive was going to leverage its new Evolution Hybrid Cloud environment to potentially bring its two ECM platforms together. Perhaps it will eventually do the same with its two capture software platforms.
  
• Perceptive also gains the XBOUND document capture workflow platform, which ReadSoft acquired with foxray a couple years ago. A recent conversation with ReadSoft CMO Andrew Pery indicated that the foxray sales pipeline is improving and evolving as ReadSoft has continued to productize what had historically been software geared mainly toward customized one-off type implementations. ReadSoft had been targeting the service provider and mailroom markets with XBOUND - not necessarily a strong market for Perceptive historically.

Finally, I'm looking forward to catching up with top ReadSoft (and maybe Lexmark?) executives at ReadSoft's user conference next week.

Notes from Mitek Q2 Earnings call

As I Tweeted earlier @DIREditor, capture ISV Mitek Systems, which specializes in mobile imaging technology, recently reported strong growth for its fiscal Q2 ended June 30. But the company continues to burn through cash. It's revenue for the quarter was $4.5M (40% YOY growth), but this came with a GAAP net loss of $2.2M and a non-GAAP loss of $1.3M.

Russell Clark, Mitek CFO, from the transcript of the conference call as recorded by Seeking Alpha: "Total operating expenses were $6.7 million compared to $5.6 million in the year ago period. This year-over-year increase was primarily driven by investments in sales and marketing personnel as well as litigation costs related to protecting our IP....Q2 litigation expenses were higher than previous quarters due to the timing of expert testimony moving into Q2....It's also important to note that the $1.2 million in litigation expenses in Q2 of the current year comprised almost all of the $1.3 million non-GAAP net loss in the quarter. Our non-GAAP results will be very close to breakeven if not for these expenses."

Regarding the litigation,CEO Jim DiBello said, "We have patents infringement losses against Top Image Systems and USAA, both suits are ongoing. In the USAA lawsuit the deadline to file motions for a summary judgment is mid May with the trial date set for early September."

So, maybe things are as bad as initially appear when a company's net loss is about half its revenue. Mitek still has $31.5M in assets listed on its balance sheet, including $26M in cash and short term investments. This second figure is down a little less than $3M from six months previous.

However, in that six-month period (specifically in the last three months), Mitek's stock value has certainly taken a beating. After peaking at more than $7 per share in late January, it is now trading at less than half that, with the company's market cap, falling all the way to $95M. When you consider the $26M in the bank - it's net value is around $69M - which may actually bring them into potential acquisition territory - hostile or otherwise. However, the question is, do savvy investors know something more about the USAA case than we do? Or are they just panicking? If I was a betting man...

Prepping for ReadSoft User Conference, May 14-16

Looks like I'm heading down to this year's ReadSoft User Conference, May 14-16 New Orleans.. Should be a good, fun and productive event. I'm expecting to get an overview on ReadSoft's direction through a combination of attending the sessions, one-on-one interviews with ReadSoft executives and partners, and some good ole' Nawlins networking.

I visited the ReadSoft offices almost a year ago and came away with this overview of their basically two-pronged strategy: expanding their capture and P2P practices. It will be interesting to see how that strategy has evolved over the year, under the guidance of Andrew Pery, who was working for ReadSoft as a consultant when I visited last year, and was later named the company's first CMO.

ReadSoft is coming on an improved first quarter that included 27% YOY growth in software license sales and a 9% increase in overall revenue. ReadSoft's EBITDA was improved, but the ISV still lost money. According to President & CEO Per Åkerberg CEO, as quoted in the press release on the Q1 financials, "Our EBITDA result and our margins have taken clear s teps in the right direction....A gradual change in the reporting of our revenues from our support and maintenance agreements has affected this quarter’s result negatively compared to first quarter last year. This effect means no lost revenue but only a time delay in the reporting of these revenues."

Strong SaaS and Mobile Revenue Highlights TIS 'Q4/Year-End Financials

Some highlights from Top Image Systems 4th quarter/year-end 2013 financials that were announced today:

• Fourth quarter revenue of $8M, up from 7.35M for Q4 '12.
• Year-end revenue of $29M for '13, down from $31.3M in 2012
• In 2013, mobile technology revenue accounted for10% of total and exceeded forecasts in this area by 100%
• SaaS revenue for Q4 was $360,000

Michael Schrader, COO, from the press release, “In 2013 we have reinforced our transition strategy, investing significantly in cloud and mobility and expanding our hybrid business model to gradually grow our SaaS subscription-based operations while maintaining our existing on-premise business....Current investments in our cloud-based solutions will further promote SaaS sales. In 2013 we reinforced our mobile and cloud-directed product development strategy with powerful channel and technology partnerships, product launches, patent filings and key organizational changes to drive US market growth.  We are confident that our business model transition and clear focus on our cloud, SaaS and mobile solution strategies in 2013 will drive us to maximum revenue growth.”

Kofax Announces $4 Million TA & Analytics Deal

Today Kofax announced it had won a $4 million contract with a Western European-based "global wealth and asset management company." The deal includes Kofax's Total Agility 7.0 smart processing application (SPA) platform, as well as Kofax Analytics software (which is based on software from Altosoft, which Kofax acquired last year). It breaks down into $1.25M worth of software licenses and approximately $2.75M of maintenance, professional services, and training charges. The deal closed in Kofax Q2 (ended Dec. 31) and was delivered in January.

The software is being used to "capture, classify, process, act upon and analyze more than 20 million financial documents received from customers each year."

Certainly a solid deal for Kofax, especially because it includes two pieces of software that are separate from its legacy (as a capture ISV) and geared toward its future vision of serving the SPA market. That said, it's worth noting that software licenses made up less than one-third of the total price of the deal. Is this going to be the standard SPA sales model due to the complexity of the implementations? As a comparison to Kofax's legacy model, for the six months ended Dec. 31, software licenses made up about 40% of Kofax's total revenue with maintenance and professional services making up the remaining 60%. In that regard, the recent SPA deal doesn't seem like that big a departure from Kofax's traditional revenue model - although it's probably worth considering that the six-month period includes maintenance contracts related to more than 15 years of software sales, which should push that percentage higher than what you'd expect as related to a one-time deal. Do you know what I'm saying?

Anyhow, I guess it's natural that as Kofax moved into more complex SPA solutions its professional services revenue should rise - as in addition to more complexity, many professional services related to capture deals have historically been managed by resellers. It will be interesting to see how this affects Kofax's long-term profitability.

ReadSoft 2013 Revenue Growth Flat; Recurring Revenue Percentage up 6%

ReadSoft announced its Q4 2013 and year-end numbers on Friday. Some highlights:

• 2013 revenue was $118 million, which was basically flat, when considered in local currencies, compared to 2012.
• License sales, when considered in local currencies, grew 1% to $38 million, or about a third of total revenue.
• Recurring revenue, which includes both maintenance and subscription software and hosted software sales grew to $55 million, or 47% of total sales, up from 40.4% in 2012.
• "U.S. and rest of the world" sales were basically flat in 2013 - at $35.5 million.

From CEO Per Åkerberg's comments:

•  The global roll-out of XBOUND during 2013 took longer than expected and consequently we didn’t reach our full sales potential for this area
• Although our 2013 results are not where we ought to be, we believe the investments we made and actions we took in acquisitions, employees, products and organization are essential to our long -term growth, results and margins
• It is very gratifying to see that all the hard work on increasing our recurring revenues is continuing to pay off. This will have a very positive impact on ReadSoft’s future profitability. Our cash flow from operating activities remains strong. 
• During the fourth quarter our markets in North America, Asia and South Africa have shown the way with good growth and profitability. 

Perceptive Software Shows Significant YOY Profit Improvement

From Lexmark's year-end/Q4 2013 report:

For 2013: Perceptive Software revenue was $224 million. Perceptive Software revenue, excluding acquisition-related adjustments of $16 million, was a record $239 million and grew 48% compared to 2012.

For Q4 2013: Perceptive Software revenue growth of 60% in quarter (70% non-GAAP, 15% organic growth), 43% in full year (48% non-GAAP).

From transcript of conference call (on SeekingAlpha.com):

"We delivered strong year-to-year improvement in Perceptive Software's profitability for the quarter and the year, and we expect continued Perceptive Software operating margin expansion in 2014 and beyond."

"Perceptive Software, delivered significant year-to-year improvement in profitability this quarter, up $9 million, driven by the 2 factors we've been focused on. First, we delivered solid Perceptive Software growth year-to-year, including good license revenue growth. Second, with the actions we started to take last year, we've been able to reduce Perceptive Software's organic cost and expense growth without negatively impacting revenue growth. And for the full year 2014, we expect to achieve double-digit software revenue growth and remain committed to delivering a positive and expanded software operating income margin."

FY2013:
"Perceptive Software had a slight operating loss of $2 million, an improvement of $23 million versus 2012. We expect continued substantial improvement in Perceptive Software operating income in 2014."

For 2014: "Perceptive will grow a bit faster than 15%, MPS a little less than that."

Bish's Nasdaq plans for Kofax

An excerpt from a story on Kofax' Transform appearing in this week's premium edition of DIR:

Kofax CEO Reynolds Bish believes a listing on the Nasdaq could have positive affects. “It has taken us quite a bit of work to prepare the information required by the SEC to list on the Nasdaq,” Bish told DIR. “Now that that has all been completed, we want to move ahead with our listing. Previously, I said I’d like to get it done by June 30, but that will likely be delayed due to a poor second quarter (ended Dec. 31). I’m thinking we will still file in the current calendar year, but not until we’ve demonstrated that we’ve turned around our business and built some momentum.”

Bish’s plan is to list Kofax on the Nasdaq through the provisions of the JOBS (Jumpstart Our Business Startups) Act, which was passed last year. According to Bish, listing through JOBS is an easier process than following the traditional listing route, which requires compliance with Sarbanes-Oxley. “Our plan is to make available on the Nasdaq the minimum number of shares we are allowed,” said Bish. “The Nasdaq listing will enable all our shares to be traded on both exchanges [Kofax is currently traded on the London Stock Exchange (LSE)], and eventually, we expect the majority of our trading will move over to the Nasdaq. This will be a positive because historically companies like ours are valued at a 30% premium on the Nasdaq compared to the LSE.”

TIS Projects Strong Growth for 2013

As it pre-announced in early January, Top Image Systems' 2012 fourth quarter numbers were somewhat disappointing. For the the three months ended Dec. 31, 2012, TIS reported just a 1% increase in revenue to $7.4 million. This brought its year-end total $31.3 million - still a 9% increase over its 2012 revenue.

TIS CEO Ido Schechter seemed optimistic about the capture ISV's prospects for 2012. He is quoted in the financials press release, "For 2013, we are providing guidance of revenue growth between 13% and 20%, indicating revenues of between $35.3 million and $37.7 million. We expect non-GAAP operating income in the range of $4.6 million to $4.9 million."

As we reported, earlier this month, TIS has re-organized its sales force to better sell its entire set of solutions on the global level. In addition to its document capture software, which is popular in digital mailroom, invoice capture, census, and other types of forms processing applications, TIS recently introduced a suite of capture products for mobile devices.

Part of the reason for TIS' optimistic revenue projections certainly has to do with the potential of the market related to mobile transactions. From their financials press release, "Gartner estimated that the mobile transaction market was approximately $170 billion in 2012 with 200 million mobile payment users, and estimates it will grow on average 40% per year to approximately $600 billion in 2016 with 400 million users. The pipeline of deals, variety of viable, revenue-generating use cases and market potential we are seeing for mobile capture is enormous.”

Harvey Spencer Associates has also projected low double-digit growth for the document capture market annually through 2016. These two markets combined should put TIS in a good position to realize its 13-20% growth projections for 2013.

A Closer look at Kofax's half-year numbers

Lot of interesting stuff in Kofax's report regarding its half year numbers .

First off, the Irvine, CA-based ISV's numbers were down fairly significantly:

• total revenue for the quarter was $63.7 million, which represented a decline of approximately 8% in constant currency from the previous year's second quarter (Kofax fiscal year ends on June 30, so its 2013 Q2 ended Dec. 31)
• software license sales were down significantly  - 24% - compared to the Q2 numbers for fiscal 2012. For Q2 2013, license revenue was just $25 million.

As usual, Kofax had plenty of reasons for this shortfall:

•  Apparently 2012 fiscal first half was unusually strong. CEO Reynolds Bish. "We noted that the prior year period had a very significant record. So the revenues for the first half of last fiscal year were significantly ahead of anything we had reported for that period in the past."
• That said, Bish gave two reasons why Q2 2013 revenue was lower than anticipated:

1. "We had a very large mid-seven-figure transaction slip out of the quarter into a future quarter. We still expect to close that at some point, but are not able to accurately forecast that."
2. "Our software license revenues in the Americas was also lower than we anticipated, principally because of all the changes that we began implementing in our overall sales organization during October."

Okay, so that's most of the bad news. Kofax EBITDA was also down almost 40%, but the company still managed to generate $15 million in cash through the first half of the year and has $87 million in cash in the bank.

Lot more interesting stuff that we'll get into some more details on in our upcoming issue of DIR, but basically Kofax hired Forrester to double-check some of Harvey Spencer Associates' numbers of the capture market. While Forrester's market size number were actually slightly larger than HSA's, their growth figures for capture were somewhat lower. And Bish blamed the Q2 software license decline squarely on Kofax's traditional capture business, while in the meantime spinning Kofax's future direction toward the newly defined SPA (smart process application) market.

SPA basically combines mobile and traditional capture with BPM and analytics to create high-end vertical applications. Forrester listed SPA as just a $600 million market in 2012, but with CAGR of close to 60% through 2016 - a much higher growth figure than it has for the individual capture and BPM spaces.

Bish concluded that he is optimistic in Kofax's immediate prospects for improving results, in part due to a revamped sales structure (we'll get into more detail in DIR), as well as, well, less than stellar Q3 2012 results that will be easy to improve on: "So, we certainly expect to report relatively significant year-over-year growth during the current quarter, expect that to continue into the half-year, and as a result of that, we have a pretty high level of confidence of returning to reporting more consistent software license and total revenue growth."

At last check, Kofax stock was trading at less than two and three-quarters British pounds per share on the London Stock Exchange, a drop of about 15% from what it was trading previous to the half year results being announced.

Bish Puts Positive Spin on Kofax Results

Kofax's Q1 fiscal 2013 results were announced today. Certainly not great numbers by any means. Total revenue of $60.1 million, which represented slight (2.8%) net growth, but a .8% decline when measured in organic constant currency. Software license sales and professional services numbers were down with only increasing maintenance revenue preventing a more serious dip in revenue. And, historically, relying on increasing maintenance to drive revenue growth has not been a good sign for an ISV.

Here's an article from a U.K.-based tech Web site that does a nice job summing up Kofax's performance. Although the company is now headquartered in Irvine, CA, it still trades publicly on the London Stock Exchange.

It is worth noting that Kofax's adjusted EBITDA for the quarter was pretty much the same as last year and the company still generated $11 million in cash, ending the quarter with $90 million in the bank.

Here was CEO Reynolds Bish's spin on the numbers, "Our first quarter produced seasonally weak software license and professional service revenues and continuing growth in maintenance service revenues due to increasing renewal rates with total revenues being consistent with historical trends. This was accomplished during a quarter in which we changed our head of global sales and services in order to strengthen leadership in those areas and began implementing initiatives to gradually improve sales execution and productivity. We’re therefore pleased to report essentially the same EBITDA as that realized in the prior year period and strong cash generated from operations."

Bish also reaffirmed his guidance for the whole fiscal 2013, "which is for mid to high single digit total revenue growth on a constant currency basis and an adjusted EBITDA margin of at least that reported in fiscal year 2012."

It's my opinion that capture market conditions are changing and although Kofax is pushing forward with more cutting edge products like Mobile Capture and Web Capture, which are both highlighted in the press release on the financials, Koafx still has a large legacy traditional client/server-based business to support. Not that the market for client/server capture is dead by any means. But, trying to support this quarterly $50-million-plus  legacy business, while ramping up in new areas that might be influenced by subscription-based pricing - well, it's a bit of a conundrum. We kind of agree with Bish that the profitability number is impressive, especially (and he doesn't mention this, at least in the press release [haven't listened to the conference call  yet])  when you consider the investments Kofax is making in its new products lines and potentially new business models.

Percetive Growth Still Not Fast Enough for Lexmark

This week's issue of the DIR newsletter features a cover story on the re-branding that is underway at Perceptive Software. Perceptive was an ECM vendor that was acquired by Lexmark in 2010 and is now operates as the Enterprise Software Group within Lexmark. Its ECM suite has been fleshed out by a series of software acquisitions that Lexmark completed in 2011-2012. These include capture, search, and BPM technology, as well as vertical market specialist ISV. The details of how these products are being integrated, as well as still taken to market separately, are in the DIR article.

This week Lexmark reported its third-quarter results, and Perceptive's quarterly revenue came in at $41 million, which represented 88% growth from the previous year's third quarter. A good bit of that was due to the aforementioned acquisitions, but organic growth was still 22%. This is no doubt above market growth rates, but, it is apparently significantly below what Lexmark had budgeted.

According to Rooke (as quoted in a transcript of Lexmark's recent conference call to discuss quarterly results, "While Perceptive Software's revenue was up strongly year-to-year, it was less than we expected, driving a larger-than-expected operating income loss as we continue to invest for growth. Now for the next several quarters, we plan to limit Perceptive Software's expense levels to allow expected revenue growth to catch up and deliver positive operating margins in 2013."

Unfortunately, despite Perceptive's growth, Lexmark reported that its segment operating income was negative $8 million. This begs the question: What kind of growth is Lexmark expecting?

Lexmark certainly paid a good premium for Perceptive and some of the complementary ECM technology it bought, so it obviously was expecting some significant returns. But, to tell the truth, a lot of people I talked with thought an MFP hardware vendor like Lexmark could not successfully run an ECM software operation like Perceptive. But, to date, it seems that Lexmark has done everything it can to nurture Perceptive's business, buy acquiring complementary technology, while also allowing it to operate fairly autonomously. And this has worked to the tune of 22% organic growth - which certainly seems like a far cry from failure. Let's hope that unrealistic expectations don't spoil this success and that limiting expenses doesn't end up limiting Perceptive's success.

 
Rooke added that Perceptive's growth reflects, "slower growth in EMEA than expected and the delay in the closure of a number of large transactions in North America. With regards to EMEA, we continued to make progress, although slower than expected, and are making changes in sales leadership that we believe will accelerate growth. In North America, although we are disappointed that several large transactions did not close in the quarter, the majority of them, we believe, were deferred and not lost, and we expect them to close over the next several quarters."

Kofax Q4 Details

As expected, Kofax has posted a strong Q4 for its fiscal 2012. This included 17.2% growth in terms of organic constant currency for applications software-the company's core business. Applications software generated $30.2 million for the quarter and software licensing overall was about 50% of Kofax's overall revenue of $75.3 million. To give you an idea of what positive trend this is, for the fiscal year 2012 (including Q4), software licensing made up just 45% of overall revenue.

Commented CEO Reynolds Bish in a press release, "“Our fourth quarter produced strong results, with software license revenues, service revenues and revenues in all geographic regions, our core capture business and acquired businesses being equal to or greater than our expectations. This allowed us to meet the guidance we had provided and realize record total revenues and Adjusted EBITDA for the fiscal year. In light of our transition from focusing on EBITA to Adjusted EBITDA and for purposes of clarity, during fiscal year 2012 we achieved an EBITA of $42.0 million compared to $40.2 million in fiscal year 2011.”

Good stuff.

For fiscal 2013 Bish is projecting "mid to high single digit total revenue growth on a constant currency basis and an adjusted EBITDA margin of at least that reported in fiscal year 2012."

Two geographic notes:
1. EMEA saw the strongest growth in Q4 with a 53.2% growth in software licenses contributing to $30 million in total revenue.
2. Kofax continues to struggle to gain a foothold in Asia-Pac, generating just $5.4 million in revenue for the quarter - a decline of 27% over fiscal Q4 2011.

For the second half of FY2012, Kofax reported 56% of application software license sales came through channel partners, which is pretty close the mix Bish envisioned when he took over the company.

Kofax released its results on Monday (a holiday here in the States) and its stock share price seemed to dip slightly before recovering today.

New Tweets: ReadSoft Hire, DocuWare Move

If you're not following us on Twitter @DIREditor, please do. As I wrote in a recent e-mailer, it's a great way for me to quickly and efficiently distribute links to relevant news stories, like these two the moved today:

• Former Kodak, Kofax, and Cranel sales executive Todd LeVeque has been named director of channel sales at ReadSoft. According to Bob Fresneda, president of ReadSoft North America, LeVeque will be spearheading ReadSoft's recently launched  cloud/SaaS efforts in the U.S.
• DocuWare has moved into a larger U.S. headquarters located at Stewart International Airport in Orange County, New York. The location is not far from DocuWare's former U.S. offices in Newburgh, but, according the press release offers "a new, larger, state-of-the-art office space." With a focus on selling ECM software through MFP dealers DocuWare has experienced an average growth rate of about 20% year over year for the past several years. The German-based company also recently took on some funding, which is being used to help it increase its sales staff and accelerate its growth. 

ReadSoft Reports $29 Million Quarter

The numbers for ReadSoft's first full quarter with foxray as part of the business are in. For Q2, the Swedish capture and workflow ISV reported the equivalent of around $29 million in U.S. dollars. This represented 25% overall growth from Q2 2011, 13% of which was organic. ReadSoft's operating profit was down slightly, to approximately $2.5 million.

Said CEO Per Åkerberg in a press release, "Our strong growth takes us back to black figures with regard to our EBITDA result, both for the quarter and the half-year. We are still not where we want to be in terms of results, but we believe that the investments we make in connection with the acquisition of foxray and in new product generations ensure good long-term growth. We have continued to work intensively with the integration of foxray and this is now essentially complete."

ReadSoft showed growth in all three of its major geographical markets, with the non-Nordic European market leading the way, thanks likely to foxray's established business in Germany.

ECM valuations on the rise

It looks like Open Text's stock value is up is up like 25%, based on a very strong finacial report. Open Text's income grew like 75%, after the company apparently successfully digested rival Hummingbird, which it acquired last year, which apparently has surprised some people. Vignette and EMC are also pretty close to their 52-week high. Of pulically traded ECM companies, only Interwoven, seems to be struggling a bit. This is interesting of course, when contrasted to capture vendors like Dicom and ReadSoft, who as we noted in our last post, are struggling a bit with their valuations. Of course, Belgian OCR/ICR/capture specialist I.R.I.S. is doing well, as is Nuance. Take it all for what it's worth, but to us it seems ECM is up, basic capture is down, transactional capture is up (This view is of course, based on much more than these stock prices - in fact, it's a lot based on stuff that's appeared in DIR over the past few months.)

Cheers.

Ralph