MetaSolv rides revenue growth abroad in Q1

Calling his company's performance solid over the year's first quarter, MetaSolv CEO Curtis Holmes sounded a confident note about the future and still anticipates double-digit growth and operating margins for 2006 after reporting a 6% increase in revenue starting off the year.

Revenues grew to $22.6 million, thanks in part to a 20% increase in licensed revenue to $7.2 million and record revenue for the company in Europe and Asia. Sixty percent of MetaSolv's revenue now comes from outside the U.S. market. The company marketed the 13th consecutive quarter where the level was above 50%.

MetaSolv reported a net loss for the first quarter of $388,000, which was an 81% improvement from 2005 when the company lost $2.1 million in the first quarter. CFO Glenn Etherington said the loss could have been a gain had the company been able to record a key Latin American customer whose contract didn't get completed in time.

The company also improved its EBITDA performance from $488,000 in the first quarter of 2005 to $1.4 million.

During the quarter, MetaSolv got a contract extension from a Tier 1 operator in the U.K. to support its global IP VPN network and voice-over-IP. Another incumbent Tier 1 in the U.K. selected its Provisioning 5 software, while here in the U.S., South Dakota Networks chose its M6 product suite. SDN's statewide network serves as the hub for long-distance, Internet and digital TV services for 27 of South Dakota's independent telephone companies.

The quarter also included new contracts with a Tier 1 mobile operator in Greece and a license extension with a customer in the Caribbean and Latin America region. Next quarter, MetaSolv expects to bring in between $23.5 million and $25.5 million.

MetaSolv's international growth is helping to offset the potential slowdown in the North American market due to carrier consolidation.

"[North America] is the market we are most concerned about because of all the consolidation, but I believe we will continue to make progress in [there.] It's not because we are losing, but decisions do get delayed," Holmes said.

Despite strategic moves lately by competitors in the OSS space, such as Amdocs partnering with Cramer and Telcordia partnering with Accenture, Holmes is less concerned in this area.

"We don't think the competitive landscape has changed any. We're not concerned about the partnership agreement that Amdocs announced," Holmes said. "They've announced partnerships with others. System integrators have partnerships with us and with our competitors. But we think customers continue to see the value we bring to the marketplace. We just have to continue to focus and execute and we will do very well."

Holmes said MetaSolv has had a 40% increase year-over-year in its partner-assisted license revenue. "We believe that will be a key factor in our growth," he said.