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Kofax Announces $4 Million TA & Analytics Deal

Kofax Announces $4 Million TA & Analytics Deal

With Commentary from Ralph Gammon, Publisher of the Document Imaging Report (DIR)

Today Kofax announced it had won a $4 million contract with a Western European-based “global wealth and asset management company.” The deal includes Kofax’s Total Agility 7.0 smart processing application (SPA) platform, as well as Kofax Analytics software (which is based on software from Altosoft, which Kofax acquired last year). It breaks down into $1.25M worth of software licenses and approximately $2.75M of maintenance, professional services, and training charges. The deal closed in Kofax Q2 (ended Dec. 31) and was delivered in January.

The software is being used to “capture, classify, process, act upon and analyze more than 20 million financial documents received from customers each year.”

Commentary from Ralph Gammon, Publisher of the Document Imaging Report (DIR)

Certainly a solid deal for Kofax, especially because it includes two pieces of software that are separate from its legacy (as a capture ISV) and geared toward its future vision of serving the SPA market. That said, it’s worth noting that software licenses made up less than one-third of the total price of the deal. Is this going to be the standard SPA sales model due to the complexity of the implementations? As a comparison to Kofax’s legacy model, for the six months ended Dec. 31, software licenses made up about 40% of Kofax’s total revenue with maintenance and professional services making up the remaining 60%. In that regard, the recent SPA deal doesn’t seem like that big a departure from Kofax’s traditional revenue model – although it’s probably worth considering that the six-month period includes maintenance contracts related to more than 15 years of software sales, which should push that percentage higher than what you’d expect as related to a one-time deal. Do you know what I’m saying?

Anyhow, I guess it’s natural that as Kofax moved into more complex SPA solutions its professional services revenue should rise – as in addition to more complexity, many professional services related to capture deals have historically been managed by resellers. It will be interesting to see how this affects Kofax’s long-term profitability.