Rise in License Fees Propels Group 1's Revenue

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Group 1 Software Inc. is producing the type of results most firms only dream of during the current economic downturn.


The company posted record revenue of $25 million, up from $22.3 million in the prior year's second fiscal quarter. The revenue increase, announced Oct. 29, sparked a rise in the stock price from $16.45 on Oct. 28 to $26.90 Nov. 25, a 63.52 percent increase. The company also announced a 2-for-1 split Nov. 5.


Group 1 Software, Lanham, MD, provides software solutions for data quality, customer communications management and direct marketing applications. Corporate communications manager David Peikin said the company has more than 2,000 installed customers, "and that might be up 5 or 10 percent" from a year ago.


"We have a very high renewal rate," he said. "We start off with a solid base every quarter, and the market is increasingly receptive to technologies that have proven benefits to the bottom line."


Peikin cited Lands' End, L.L. Bean, Charles Schwab and Wal-Mart as among the companies using the core direct marketing applications and address verification solution the company provides.


License fee revenue rose 38 percent to $11.3 million from $8.2 million in the same quarter of the prior year. License fees in the Enterprise Solutions division, the operating segment that includes Group 1's DM applications, were $7.8 million, up 75 percent from $4.5 million a year ago.


For the first six months of its fiscal year, Group 1 posted revenue of $48.4 million, up 12 percent from $43.1 million the previous year. Net income available to common stockholders in the six months nearly tripled, from $1 million to $2.9 million.


"People are beginning to place a value on positive earnings, positive cash flow and license fee growth that you did not see during the Internet bubble," Peikin said, adding that the company's stock "doesn't trade much" since there are only 6.7 million shares outstanding.


In other news reported last month:


· Hanover Direct Inc. notified the American Stock Exchange that it will submit a plan by Dec. 11 to maintain the listing of the company's common stock on the exchange. The company closed at 21 cents Nov. 25. The plan will be evaluated, and it will be determined in about 45 days whether Hanover Direct has shown an ability to regain compliance with continued listing standards by Dec. 28, 2003.


· Delia's Corp. said Nov. 12 that it received a notice from Nasdaq advising that the company's closing bid price fell below the $1 minimum requirement. It has been given until Feb. 10 to regain compliance, during which time its common stock will continue to trade on the Nasdaq market.


· ADC Telecommunications said it expects to be removed from the Nasdaq 100 Index this month because of the decline in its market capitalization, according to a Reuters report, a move that would trigger the sale of 25.5 million ADC shares. The telecommunications equipment maker, hit by the severe slump in spending by phone companies, said it expects the Nasdaq to announce the decision Dec. 13.


· Gemstar-TV Guide changed its ticker symbol from GMST to GMSTE.


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