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Edgewater's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Timothy Oakes

All right. Thank you, Shirley, and good morning, everyone. Total revenue for the second quarter was $27.2 million, compared to $27.4 million in the second quarter of 2011. Although total revenue was down slightly year-over-year, we think it's important to note that we're comping against the second quarter of 2011, which included $2.2 million in royalty revenues in connection with Fullscope's pre-acquisition sale of Microsoft Dynamics AX related discrete in process manufacturing software modules that occurred in June of 2009.

Royalty and service revenues earned in connection with the process related contracts expired in June of 2011; as such we will not be comping against them on a go-forward basis. Excluding the process-related royalties total revenues actually increased 8% in the second quarter of 2012 compared to the second quarter of 2011.

Service revenue was $21.6 million during the second quarter, growing 16% compared to the year ago quarter. As Shirley mentioned this growth was entirely organic and which primarily driven by demand for Oracle and Microsoft products-based consulting service offerings.

Software revenue which includes related maintenance revenue was $3.6 million during the second quarter, compared to $4.7 million during the second quarter of 2011, our quarterly software revenue primarily consists resales of Microsoft Dynamics AX software and maintenance.

The comparative decrease in quarterly software revenue, reflects the fact that we were not able to successfully bring closure to several deals that we're in process at the end of the quarter. While the future closure of these deals remain uncertain at this time, we continue to actively pursue a healthy amount of software deals as we enter the third quarter.

As we always do, we would like to remind you that quarterly software revenue is volatile and it's subject to customer demand and that respective quarters – typically the strongest software quarter for us as it coincides with Microsoft fiscal yearend.

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