From a procurement solution perspective, we’ve always been fans of what Hubwoo has been able to achieve in building surround strategies for customers to get more from ERP and P2P procurement investments, especially in the area of basic and complex e-invoicing scenarios. But as a company, Hubwoo has faced challenge after challenge, virtually none of which is the current leadership’s doing. From inheriting a small-cap French listing (public company) that adds costs and puts its financials in the headlines and would make an acquisition or outside investment difficult to SAP acquiring Ariba at a time that coincided with further investment by the firm centered on delivering cloud-based SRM, Hubwoo has been hit by a lot.
All we can say is: “I laughed, I cried! It was better than SRM! I’m going to see it again and again!”
OK, joke’s over.
But if we feel for any company that honestly means well for its customers and has real technology, we feel for Greg Mark and his management team. Yet our bias isn’t necessarily helping overcome any of the financial hurdles the company faces that have manifested in the now cloud-centric vendor still trading at nearly two-thirds trailing revenue on an enterprise value basis (that’s right – its market capitalization is less than its revenue).
According to its 2014 Annual Results, “Over the year, revenue declined by 11% compared to 2013. As previously indicated, the improved level of orders in 2014 has allowed a significant increase in Revenue in the fourth quarter (+9%) in comparison to Q3 2014.” Yet as Reuters observes, Hubwoo reported a “FY net loss … of 15.8 million euros ($17.05 million) vs. a profit of 0.1 million euros a year ago … FY revenue of 27.5 million euros vs. 30.8 million euros a year ago [and] says it performed its annual test of goodwill which resulted in an impairment of 15 million euros, bringing this value down to 32.5 million euros as of December 31, 2014.”
After reading the report, we’re left with a number of questions:
- Why is there no break-out of the recurring revenue component of its declining revenue?
- Where are the new deals and customers?
- What is Hubwoo actually selling? We know that if Hubwoo had greater exposure for its network-based e-invoicing capabilities and was a more frequent shortlist candidate, it would come out well in many selections.
- What verticals/industries is Hubwoo selling into? How is it customizing its solution for these markets (which we know it is capable of doing in impressive ways)?
- How is Hubwoo partnering with application and ERP providers besides SAP? It would seem a logical fit for Hubwoo to work with a range of vendors for both basic and complex e-invoicing through an open network infrastructure (especially considering how the leadership is “partner-friendly” in our view, despite having been sent from the proverbial executive dining room in the Waldorf to the outside compost heap in a matter of quarters following the Ariba deal).
To this last point, Hubwoo noted in its announcement that it faced “delays in attaining market traction with new commercial and technological partnerships, established in place in 2013 and 2014, in the third-party applications world, in order to support growth in the context of the transition mentioned above.” It would be useful to explore how Hubwoo is working with Microsoft and GEP – both previously announced partnerships – in a customer context.
We already used our “Cats” analogy up in this post, but we’ll leave you with one more below.
That’s Hubwoo for you.
(Cross-posted @ Spend Matters)