Dennis Howlett gives a nice summary of SuccessFactors’ Q308 results. SuccessFactors revenue grew 77% Y/Y and it raised its guidance for Q4 and 2008. On the surface, this would seem to support that HCM and Talent Management software, in particular, are weathering the current economic crisis well. Taleo also reported earnings yesterday and its total revenue grew 39% Y/Y. Taleo did report a loss due to restructuring charges and amortization expense related to the Vurv acquisition. Kenexa also posted its Q3 results. Revenues grew modestly compared to SuccessFactors and Taleo (15% Y/Y). In addition, it cited the current economic climate as a reason to reduce its headcount by 11-12%. Kenexa’s stock price has taken a big hit (down more than 25% today).
These are definitely mixed results. In a tough economic climate, the strong tend to get stronger (in terms of market position) as the weak struggle to hang on. Vendors that have little cash (and/or even worse are burning through cash in a way that gives them a "short runway") have little margin for error. Some of these vendors will be purchased at discount prices. Others may fail altogether. All of this plays well to the stronger vendors in the market that have the capital and resources not only to weather the storm, but also to continue to expand their business and grow market share. However, as Kenexa’s results show, the current economic conditions can impact even a relatively strong vendor.
How do you interpret these results? Will talent management software vendors be negatively impacted by the current economic crisis? Who do you think will be the winners and losers?
2 responses so far ↓
1 John Holt // Nov 16, 2008 at 1:48 am
2 cents worth from a vendor Jim – firstly it seems to me that no one gets away without some negative impact from current conditions !
Second, having recently had the luxury of getting the “vibe” from the industry all in one place at the HR Technology Conference and Exhibition it seems clear that some vendors are in a better space than others.
It seemed to me that several are doing very very well and the rest are fair to middling with all having a predominant focus and reliance on the US market which could makes things interesting.
To your point in regards M & A there still seems to be quite a bit of cash around for the right deals and I think there is definitely going to be consolidation and some players falling over in the next 6 – 12 months.
I’m slower to blame the economy entirely for those that don’t make it might speed up the demise but looking through the stands a few weeks ago there just seems to be a bunch of players in the “middle” with old technology.
TIme will tell !
2 081117 Talent Management Links (Nov 17, 2008) | johnsumser.com: Recruiting News and Views // Nov 17, 2008 at 12:32 am
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