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Accelrys Sees 14 Percent Growth in Q2 Revenues Despite Decline in Overseas Sales

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Accelrys reported a 14 percent rise in Q2 revenues in spite of “disappointing” overseas sales, company officials said this week.

While the company did not provide specifics on the sales decline, officials said the Europe, Middle East, and Africa region saw a year-over-year decline and did not meet sales forecasts.

During a call to discuss the company's second-quarter financial results, Accelrys CEO Max Carnecchia, said the firm believes that a combination of “European macroeconomic conditions” as well as internal “execution challenges” contributed to the decline in orders for the quarter.

Responding to an analyst’s question about factors contributing to the dip in orders for EMEA, Carnecchia explained that the firm is seeing European customers’ purse strings tighten as a result of austerity measures.

“As businesses are under more pressure, they start to institute more controls and something that required a vice president’s signature to get approved now requires a senior vice president’s signature for the same spending level,” he said.

As a result, Accelrys has made “execution adjustments,” which involve being “more disciplined and more controlling about understanding signature paths and what level, for given thresholds of spend, are required,” he said.

Carnecchia pointed that Q2 is historically the company's “second smallest quarter from an orders-intake perspective” and said that he is “pleased” with the company’s performance and “encouraged” by positive results from its activities in Asia Pacific and North America.

He also noted that the company made “solid progress” during the quarter on its strategy to deliver “organic and inorganic product investments” as well as expand its partner ecosystem.

This includes a new release of Discovery Studio, the company’s modeling and simulation software for small- and large-molecule life sciences research and development (BI 6/22/2012); a partnership that allows its customers to access to life sciences content available from Thomson Reuters' Cortellis for Informatics (GWDN 5/21/2012); and its purchase of Scynexis' web-based Hit Explorer Operating System, or HEOS (GWDN 5/18/2012), a product that Accelrys began marketing last October under a reseller agreement as part of its cheminformatics offering (BI 10/14/2011).

Overall, orders for the quarter were up compared to same period a year ago.

CFO Michael Piraino said that orders for the company’s data management and informatics products dipped 21 percent while orders for its workflow automation and analytics business were flat compared to the same quarter last year.

Meanwhile, sales of its modeling and simulation products and its enterprise lab management portfolio were up 2 percent and 71 percent, respectively, compared to the same period a year ago.

The San Diego-based firm brought in GAAP revenues of $38.4 million for the quarter ended June 30, compared to $33.7 million for the same period last year. On a non-GAAP basis, which adds in a deferred revenue fair value adjustment related to its merger with Symyx and acquisitions of Contur and VelQuest, its revenue was $41.6 million, up 13 percent from $36.7 million.

The firm posted a GAAP net loss of $0.5 million, or $.01 per share, compared to a loss of $4.5 million, or $.08 per share, for Q2 2011. On a non-GAAP basis, it had a profit of $4.1 million, or $.07 per share, compared to net earnings of $4.4 million, or $.08 per share in the previous year.

Revenue breakout for the quarter by geography was relatively unchanged over the comparable period of 2011, at 29 percent for EMEA; 49 percent for North America, and 22 percent for Asia-Pacific.

Accelrys finished the quarter with $167 million in cash, cash equivalents, and marketable securities.

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