RAND focuses on profit

Rand Worldwide yesterday reported fiscal 2011 revenue of $89.2 million and net income of $1.8 million. Since this is the first year of reporting after the reverse merger of Rand and Avatech, along with a change in the fiscal year-end, it is difficult to draw comparisons to prior years — but the company is pleased, saying the total exceeded their internal targets. CEO Marc Dulude characterized fiscal 2011 as a “great year for Rand Worldwide … we [continue to] add new customers in both our traditional markets as well as beyond.”

For the fourth fiscal quarter, ended June 30, Rand reported revenue of $23.3 million. Again, year over year comparisons are tricky, but we do know that the company reported revenue of $27.4 million in total revenue for the quarter ended March 31. The company says this sequential decline is typical of its historical seasonal weakness in the summer quarter.

In FQ4, 2011, revenue from product sales was $13 million, down from $16 million in FQ3; revenue from services was $5.3 million, down slightly from $5.4 million and commission revenue of $4.8 million was down sharply from $5.6 million in FQ3.

On a geographic basis, FQ4 revenue was predominantly from North America (over $29 million), but the company says that revenue from its Singapore/Malaysia and Australia operations is growing much more rapidly than from North America.

The company had noted during its June earnings call that it was starting to see weakening in its Imaginit (Autodesk resale) business, especially across the AEC and manufacturing verticals. Mr. Dulude explained that the company looks at what it calls its “transactional” business, in which deals are typically closed within 7 days of a customer contacting Rand regarding purchasing a particular product. This part of Rand’s business dropped slightly over the summer, which they believe precedes weakening in the non-transactional parts of the business. Indeed, the company reports closing fewer big deals over summer than they had expected.

One other interesting note: Rand sells training and other services to Dassault Systèmes and PTC customers (even though it does not resell PTC or DS products). Rand specializes in customizing training courses for these clients as they increasingly look for comprehensive training programs that are tailored to their work processes. This business is doing very well, and Rand is expanding its team in response to this demand.

Finally, the “beyond” that the company referred to in its remarks has to do with its new offering for digital data archiving, RAND Secure Archive, developed in partnership with Autonomy. Rand sees the archiving space as a “multiple billions of dollar market with >25% CAGR” and feels that the engineering community is underserved in this respect. The company would only say that its archiving-related business is small at this point, but has great potential.

The transitional year of the merger is now behind it and Rand really focus on growing its business. Mr. Dulude’s says that the company’s strategy is to build on the core design/engineering business while continuing to look for strategic relationships — no real change from the pre-Avatech days, except that the company now has expanded resources available to make this all happen. The September quarter (which ends this week) will finally show where and how the combined companies are succeeding — and the company’s optimism gave clear hints that things are looking positive.