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Symyx’s Buy of MDL Helped Q4 Revenue Rise 22 Percent; Profitability Seen for ‘08

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Symyx this week reported that higher-than-expected revenues from the MDL Information Systems business it acquired last fall helped total fourth-quarter revenue grow 22 percent.
 
Revenues from the MDL unit contributed around 19 percent to Symyx’s top line in the quarter, and CEO Isy Goldwasser said he expects the acquired business — and the nearly 1,000 new customers it gained in the acquisition — to help Symyx become profitable this year.
 
“The success of our strategy lies in our ability to penetrate our newly expanded installed base of customers,” Goldwasser said during a conference call this week. “This will drive the growth of our company and ensure enhanced revenue diversification.”
 
Symyx reported total revenues of $48.5 million for the quarter ended Dec. 31, 2007, compared to $39.9 million in the fourth quarter of 2006.
 
Most of that growth was due to the MDL acquisition, which it completed during the quarter: the MDL business contributed $9.2 million to fourth-quarter revenues, nearly 60 percent of the company’s total software revenues of $15.9 million. The company’s Symyx Tools division, meantime, generated $19.3 million in revenues, an 11-percent increase over $17.3 million in the prior-year period, while revenues in the Symyx Research business declined 15 percent to $11.9 million from $14.1 million in the fourth quarter of 2006.
 
For full-year 2007, total revenues were nearly flat at $125.1 million compared to $125 million in 2006. MDL generated $58.4 million in the first nine months of the year as a stand-alone company and $9.2 million in its first quarter under Symyx. However, despite MDL’s contribution, the group’s total revenue in 2007 declined 21 percent to $67.6 million from 81.9 million.
 

“The success of our strategy lies in our ability to penetrate our newly expanded installed base of customers.”

Company officials said during the conference call that they have completed integrating MDL, which resulted in the layoff of around 18 percent of the company’s staff in the fourth quarter [BioInform 10-26-07]. As a result, they said, they will no longer break out MDL revenues from the rest of the company’s software business.
 
Symyx reported a $3.3 million net loss for the quarter compared to a $4.8 million profit in the fourth quarter of 2006. For the year, the company’s profit rose to $18.8 million from $8.3 million in 2006, though the 2007 figure includes a one-time gain of $40.8 million related to the sale of equity in biotech firm Ilypsa.
 
Symyx is projecting full-year 2008 revenues in the range of $165 million to $175 million — an increase of up to 40 percent over 2007 revenues. Officials said that this forecast is based on the extension of existing agreements with a number of large customers, including Dow Chemical and ExxonMobil, which are each projected to contribute around $25 million in annual revenues in 2008.
 
In addition to these large customers in the chemistry space, Goldwasser said that the company is seeing healthy adoption of its legacy electronic laboratory notebook technology and the MDL software in the life science market.
 
During the quarter, he said the company signed agreements with two undisclosed top-10 pharmaceutical companies. In one agreement, “we are working on a major software project to meet FDA guidelines,” and in the other, “we are developing and deploying ELN software to the various groups within the discovery and development functions.”
 

Other recent wins include “a major life sciences Isentris customer in Japan and several large pharmaceutical companies expanding ELN deployments,” he said. 

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