This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kronos Reaches $1B In Revenue Amid Subscription Push

NEW YORK (TheStreet) - Kronos Incorporated said on Wednesday the company has reached $1 billion in annual revenue, a milestone for the company after taking on Blackstone Group (BX - Get Report) and Singaporean sovereign wealth fund GIC as investors earlier in 2014.

Private Equity Owners Not Ready to Punch Out of Kronos

The Kronos's revenue milestone comes as the company is working to convert its customers from software licenses to a subscription model, while expanding its cloud HR offerings. "It gives us confidence in our strategy," CEO Aron Aid said of the revenue mark, in a telephone interview with TheStreet.

He also said that Kronos has seen no signs of an economic slowdown in United States and cited strong trends among the company's automotive, pharmaceutical, energy and healthcare customers. Many of those sectors are either rebounding from a sharp downturn from the Great Recession, or are in the grips of cyclical tailwinds created by new technologies or government policy.

Must Read: Why Millennials Aren't 'Cutting The Cord' Yet

"We actually don't notice any negative trends in the economy," Ain said. "Our retail customers seem to be doing well, our hospitality customers are doing well," he added.

New Investors

Earlier in 2014, Kronos agreed to a recapitalization of the company through a $750 million equity investment by Blackstone Group and GIC. The minority equity investment by Blackstone and GIC will allow Kronos's long-time investors, PE firms Hellman & Friedman and JMI Equity, to maintain a controlling interest in the company.

Chelmsford, Mass.-based Kronos, during its time in private equity hands, has effectuated a shift in its business towards cloud-based solutions. That transformation is driving top-line growth at Kronos and strong operating margins for the company at a time when IT giants such as Oracle (ORCL), IBM (IBM) and Hewlett-Packard (HPQ) are working to boost their cloud offerings.

The recapitalization of Kronos valued the company at about $4.5 billion when counting its debt. Blackstone and GIC purchased a stake worth approximately 44% of the company from Hellman & Friedman and JMI Equity.

A Subscription Push

Kronos CEO Ain said in interview earlier in the year the company is now able to offer its HR services on the premises of its clients or through its Kronos Cloud because it had broken its offering into components such as license and subscription, or hosted and un-hosted offerings. That flexibility has allowed Kronos to retain customers as they move toward the cloud, and it has helped the company pick up market share from vertically integrated players like Oracle.

Stock market investors have seen similar transformation to subscriptions at Adobe (ADBE) in recent years, and Microsoft (MSFT) also appears to be focusing on a similar strategy under newly appointed CEO Satya Nadella.

Ain joined Kronos more than 30 years ago, when the company was pioneering computer-based time clocks to record employee hours, adding innovation to a specialty business that had been invented by IBM in the early 1900's. Kronos was founded by Mark S. Ain in 1977. Mark turned over the CEO role the company over to his brother Aron in 2005, though Mark remains chairman.

On Wednesday, CEO Ain said he was optimistic Kronos's new private equity partners Blackstone Group and GIC could help the company further grow its sales. Both Blackstone and GIC have helped put Kronos in touch with executives of some of their other portfolio companies. Meanwhile, Kronos has also begun to see a benefit from being a part of Blackstone's global purchasing organization.

Ain said that in the long-run an initial public offering remains a possibility, though that decision will come in the future. For now, the company appears intent on trying to grow beyond $1 billion in revenue.

-- Written by Antoine Gara in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BX $27.44 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs