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Enterprise software may not be sexy but it can nonetheless be highly profitable -- despite the economic environment. If you want an example of this, check out JDA Software Group (NASDAQ: JDAS), which develops supply chain management solutions.
In Q2, the company reported an 8% increase in revenues to $99.5 million. In fact, new software sales came to $27.6 million, which was a record.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came to $28.7 million (another record). Yes, JDA is on track to produce more than $100 million in EBITDA for the full-year.
As a sign of the strength of the company's offerings, there were five deals with license revenues of $1 million or more during the quarter.
OK, why the growth in the current rough environment? It certainly helps that JDA has bolstered its platform via acquisitions. But, at the same time, the company has software that actually helps customers deal with the recession by lowering costs and improving operating margins.
And, Wall Street definitely likes what's going on. In today's trading, the shares of JDA spiked 35% to $22.31.
Tom Taulli is the author of various books, including The Complete M&A Handbook, You can reach him at his personal blog.
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