JDA Software Announces Second Quarter 2011 Results

Strong Recurring Maintenance Revenue and Excellent Cash Flow Highlight the Quarter Company Reiterates Confidence in the Mid-Point of its Full Year Outlook for 2011

Scottsdale, Ariz. – July 26, 2011 – JDA^® Software Group, Inc.(NASDAQ: JDAS), The Supply Chain Company^®, today announced financial results for the second quarter ended June 30, 2011.  JDA reported second quarter revenue of $162.4 million, a 3 percent increase from $158.4 million of revenue reported in second quarter 2010.  Adjusted EBITDA was $38.9 million in second quarter 2011 compared to $41.3 million in the second quarter of 2010.  JDA also reported adjusted non-GAAP earnings per share for second quarter 2011 of $0.45, compared to $0.48 per share reported in second quarter 2010.  Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the acquisition and transition of i2Technologies, Inc. (i2).  GAAP net income attributable to common shareholders for second quarter 2011 was $10.1 million or $0.24 per diluted share, compared to $7.9 million or $0.19 per share in second quarter 2010.     
 
“Second quarter software sales did not meet our expectation, however, our outlook for the second half remains strong. In particular, we currently anticipate an unusually strong third quarter that is expected to be combined with a typically strong fourth quarter to deliver total license sales around the mid-point of our original full year outlook for 2011,” said JDA Software President and Chief Executive Officer Hamish Brewer. “We were pleased with the continued cash flow strength of the Company, as we generated over $35 million of operating cash flow in the quarter and our outlook across all revenue lines for the second half indicates solid organic growth.”
 
Software and Subscription
Software and subscription revenue was $30.8 million in the second quarter 2011 compared to $38.0 million in the second quarter 2010.  The decrease was primarily due to lower sales in North America and Asia Pacific, partially offset by continued solid results from the EMEA region.  Despite the revenue decline compared the prior year, the Company closed 67 software deals, including nine deals in excess of $1 million in the current quarter, compared to 54 deals, including six over $1 million in the year ago period.  Additionally, the average sales price for the trailing 12 months ended June 30, 2011 increased to $645,000 from $608,000 for the trailing 12 months ended June 30, 2010.    
 
Maintenance and Support Services
Maintenance revenue increased 9 percent to $66.1 million in the second quarter 2011 from $60.6 million in the second quarter 2010.  This increase was due to a continued strong retention rate of 96.7 percent and the high level of attachment of maintenance contracts to new license deals.  

Consulting Services
Consulting services revenue increased 10 percent to $65.5 million in the second quarter 2011 from $59.8 million in the second quarter 2010.  This increase was primarily due to the implementation services work associated with larger software sales.  Consulting services gross margins were 17 percent in second quarter 2011 compared to 24 percent in the second quarter 2010 due to a decline in utilization rates to 56 percent from 59 percent in the second quarter of 2010.  
 
Other Financial Data

• Operating expenses as a percent of revenue continue to show a disciplined cost-management.  Product development expenses as a percent of revenue remained constant at 12 percent in the second quarter 2011 compared to the second quarter 2010, reflecting a continued investment in our technology and solutions.  Sales and marketing expenses as a percent of revenue increased slightly to 16 percent in the second quarter 2011 compared to 15 percent in the second quarter 2010, reflecting our current year investment in the sales organization.  General and administrative expenses as a percent of revenue improved to 10 percent in the second quarter 2011 compared to 13 percent in the second quarter 2010, driven by cost containment and a reduction in legal costs. 
• Cash flow provided by operations was $35.5 million in second quarter 2011 compared to use of cash flow from operations of $2.6 million in second quarter 2010 driven by the favorable change in working capital, primarily due to favorable movements in accounts receivable and deferred revenue.
• Cash and cash equivalents, including restricted cash, increased $135.2 million to $293.2 million at June 30, 2011, from $158.0 million at June 30, 2010.  The Company’s cash position, net of debt, at June 30, 2011 was $20.3 million.

Second quarter 2011 Highlights
The following presents a high-level summary of JDA’s regional software sales performance:

• JDA reported $20.8 million in software license and subscription revenues in its Americas region during second quarter 2011, compared to $27.1 million in second quarter 2010. Companies signing new software licenses in second quarter 2011 include: Butterball LLC, Constellation Brands, Inc., Coty Inc., General Atomics Aeronautical Systems, MC Sports, Por Distincion S.A. DE C.V., Price Chopper, P&G, Sodimac Chile S.A., TBB Global Logistics, and Time Warner Cable, Inc.
• Software license and subscription revenues in the Europe, Middle East and Africa (EMEA) region increased to $7.4 million in second quarter 2011 from $4.8 million in second quarter 2010. New software deals in the EMEA region include: Infineon Technologies Austria AG, Koninklijke Ahold NV, and Tata Steel in Europe.
• JDA’s Asia-Pacific region posted software license and subscription revenues of $2.6 million in second quarter 2011 compared to $6.1 million in second quarter 2010. Wins in this region include: Accordia Golf Co. Ltd., Coles Supermarkets, Test Rite Retail Co., Ltd. and Woolworths Limited.

Six Months Ended June 30, 2011 Results 

• Revenue for the six months ended June 30, 2011 increased 12 percent to $326.0 million from $290.0 million for the six months ended June 30, 2010. Adjusted EBITDA increased to $76.7 million for the first six months of June 30, 2011 from $72.7 million in the first six months of 2010.
• Adjusted non-GAAP earnings per share for the six months ended June 30, 2011 was $0.91 compared to $0.87 per share for the six months ended June 30, 2010. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the acquisition and transition of i2.  Adjusted non-GAAP earnings for the six months ended June 30, 2011 also exclude a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case against Oracle Corporation. 
• The GAAP net income applicable to common shareholders for the six months ended June 30, 2011 was $55.6 million or $1.30 per share, compared to net income of $3.6 million or $0.09 per share for the six months ended June 30, 2010. Results for the six months ended June 30, 2011 include a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case against Oracle Corporation. Results for six months ended June 30, 2010 include the completion of the acquisition of i2 as of January 28, 2010.
• Cash flow from operations was $94.2 million for the six months ended June 30, 2011 compared to cash flow from operations of $9.6 million for the six months ended June 30, 2010. The increase in operating cash flow in the current period was due to increased net income, partially due the $37.5 million settlement received from a patent litigation settlement, and improvements in the change in deferred revenue. 

 Conference Call Information
JDA Software Group, Inc. will host a conference call at 4:45 p.m. Eastern time today to discuss earnings results for its second quarter ended June 30, 2011. To participate in the call, dial 1-877-941-2068 (United States) or 1-480-629-9712 (International) and ask the operator for the JDA Software Group, Inc. Second quarter 2011 Earnings Conference Call.  A live audio webcast of the conference call and detailed slide deck can be accessed by logging onto www.jda.com in the Investor Relations section.

A replay of the conference call will begin on July 26, 2011 at 8:00 p.m. Eastern time and will end on August 26, 2011. To hear a replay of the call over the Internet, access JDA’s website at www.jda.com.

About JDA Software Group, Inc.
JDA^® Software Group, Inc.(NASDAQ: JDAS), The Supply Chain Company^®, is a leading global provider of innovative supply chain management, merchandising and pricing excellence solutions. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail, and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies^®, Manugistics^®, E3^®, Intactix^® and Arthur^®. JDA’s multiple service options, delivered via the JDA^® Private Cloud, provide customers with flexible configurations, rapid time-to-value, lower total cost of ownership and 24/7 functional and technical support and expertise. To learn more, visit www.jda.com or e-mail info@jda.com.
 
JDA Investor Relations Contact:
Mike Burnett, GVP, Treasury and Investor Relations
mike.burnett@jda.com
480-308-3392
 
JDA Corporate Communications Contact:
Beth Elkin, Sr. Director, Corporate Communications
beth.elkin@jda.com
469-357-4225