It’s become somewhat of a regular thing on Spend Matters to track Ariba’s quarterly performance as both a proxy for the overall market as well as to see how this specific procurement/Spend Management bellwether organization is performing overall. Yet I sometimes worry in these analyses that I’m not providing much new information each time. I also share the concern, as some Spend Matters readers have raised, that I give the venerable Spend Management vendor too much play on these pages relative to smaller organizations and the ERPs. Yet like it or not, Ariba is still such a critical central force in this market, and I think it’s important to continue on with these analyses, adding in some related observations based on what I’m hearing directly from Ariba customers and prospects as well as channels — not to mention alternative providers for prospects and customer to evaluate in addition to Ariba as well.
In this edition of my quarterly mini-series looking at Ariba’s progress, I’ll divide my posts into three parts focused first on the financial — and related user implications — of the quarterly results. Second, I’ll tackle the market and competitive perspective including competitive observations that go unreported or unanswered in the earnings call and related materials. And third, look at the results specifically from a customer perspective and explain what growth and related metrics can tell us, as well as double-clicking on related customer observations I’ve seen of late. Let’s begin with the numbers.
From a growth perspective, revenue numbers were strong — $93.2 million to be exact, a number ahead of expectations. Of that, roughly two thirds ($60.8 million) came from subscription and maintenance revenue. And to be more specific, “Subscription software revenue [i.e., SaaS or Cloud stuff] came in at $44 million … up 16% year-over-year.” Ariba’s cash stash continues to grow, befitting an organization increasingly pushing the “working capital” mantra into its customer base. Specifically, the vendor generated $21.6MM in cash for the quarter prior to its “lease loss payment.”
Network revenue growth appears solid, even ahead of the Ariba network fee increases beginning this fall (which will materially impact network revenue in the coming quarters and years). Specifically, “yearly network revenue growth” should climb 25% and overall network “volumes are up double-digits year-over-year.” Yet if we dig below the numbers, I’d guess that the largest number of the highest revenue generating chargeable relationships…