Irvine-based software maker Kofax PLC saw a payoff on a strategic shift that’s been several years in the making, reaching a new high with annual sales of $244 million for the 12 months through June.
The company, which is publicly traded in London and has its executive base here, reported adjusted profits of $7.1 million, down 14% from a year ago.
Kofax makes scanning software used by businesses to get rid of paper and speed up productivity.
The software collects paper documents, forms, invoices, email and photos and organizes them into a searchable database of files.
Kofax employs about 300 people in Irvine and 1,000 companywide. It is the county’s eighth-largest software maker by revenue, according to Business Journal research.
Improving sales were buoyed by operational changes that began several years ago.
The shifts started when Chief Executive Reynolds Bish joined the company in late 2007.
Kofax only sold software through resellers at the time.
“That channel was very effective at servicing and penetrating the lower end but had not been very successful selling to government entities and corporations,” Bish said.
The company began targeting those segments with its own sales force.
Direct sales now ac-count for 40% to 50% of revenue, up from 5% before Bish’s arrival.
“We’ve seen a great deal of success in that endeavor,” he said.
Bish was brought in from San Diego-based competitor Captiva Software Corp.—a company he established in 1989. It was sold to EMC Corp. of Massachusetts in 2005.
He’s made sweeping changes that range from a simplified reporting structure at Kofax offices around the world to rebranding its software portfolio and adding several executives to the upper ranks.
More Customers
For the 12 months through June, Kofax won more than 2,100 new customers and closed 12 contracts worth $1 million or more, up from nine a year ago.
That helped the company increase its market share from 11% a year ago to 15% through June, according to Bish.
A key partnership reached earlier this year with Microsoft Corp. holds potential for more revenue gains.
In July, Kofax announced it had been selected by Microsoft to be a “managed independent software vendor.” The program includes less than 1% of all Microsoft vendors. The designation provides dedicated resources and sales support to push Microsoft’s popular SharePoint business software product and develop business within the Microsoft channel.
“Well Positoned”
“There’s been a huge migration away from those older products to SharePoint,” Bish said. “We are extremely well positioned to take advantage of that trend and drive revenue in the future.”
The company is growing revenue about 10% to 15% a year and has targeted a handful of new market segments, according to Bish.
That led to May’s buy of Massachusetts-based software maker Atalasoft Inc. Kofax paid $4.7 million for Atalasoft, with another $5.1 million possible if future benchmarks are met.
Atalasoft makes software used by software developers and technology consultants that allows documents to be viewed online.
Customers include companies in healthcare, financial services, law, government, education and manufacturing.
Growth Opportunities
Other growth opportunities include the business processing management market, and business intelligence and analytics, according to Bish.
Kofax got its start in Irvine in 1985.
The company is publicly traded in Britain, where its former holding company parent, Dicom Group PLC, was spun off earlier this year.
Kofax officially moved its headquarters to Irvine—long its operational base—in 2008.
Kofax is now considering a public offering in the U.S., according to Bish. The company’s recent earnings report said it intends to “maintain a dual listing on both a U.S. and the London Stock Exchange.”
Waiting
The report said the strong sales of the past year led to consideration of such a move. It also noted that a public offering won’t proceed amid the recent volatility in stock markets, indicating the second half of next year as the earliest likely date.
“When the financial market improves we’re in position to do it,” Bish said.
Not counting spinoffs, the last time Orange County saw a public offering was in late 2007, when Mission Viejo-based nursing home operator Ensign Group Inc. raised $64 million.
In July, Irvine-based action sports retailer Tilly’s Inc. filed documents with the Securities and Exchange Commission to raise $100 million in a public offering on the New York Stock Exchange.
Tilly’s hasn’t laid out a timetable for the offering.
