Software firm Unify is back in the black

Unify Corp. posted its strongest financial results in five years, recording a profit of $692,000 for the second fiscal quarter of 2008 as it not only sold new customers on its software but also retained old business.

It was Unify's first profitable quarter since it earned $168,000 in the fourth quarter of 2006 and the most it had made since earning $791,000 in 2002. The company posted a loss of $187,000 a year ago.

On a per-share basis, the Sacramento-based software maker reported net income of 10 cents, compared with a loss of 3 cents a year earlier.

"This was a tremendous quarter. It was surprisingly strong," said Nathan Schneiderman, an analyst at Roth Capital Partners in Newport Beach.

Revenue for the quarter increased 126 percent to $4.9 million.

Unify executives credited the strong performance to a 95 percent renewal rate for software maintenance contracts and the addition of 63 new customers. Each customer generates an average of $9,000 in initial revenue.

Unify, with 45 employees in Sacramento, produces database software and tools used by large companies, such as insurance carriers and banks, to develop custom programs.

Todd Wille, Unify's chief executive, attributed the strong quarter to updating products from Gupta Technologies, a Bay Area software company Unify acquired for $6.1 million a year ago.

"Gupta's (previous) management team wasn't doing the right things. They had good products, but they were dated," he said.

Wille said staff of the combined company worked to update Gupta software and then persuade its thousands of customers to buy the improved versions.

"The biggest thing was just basically blocking and tackling," he said.

Schneiderman, the Roth Capital analyst, said the Gupta purchase, along with Unify's sale of a poorly performing insurance software business, put the company on the right track.

"They executed on the purchase very well," he said.

While Unify will continue refining and selling its current products, Wille sees significant potential in new software that allows big companies to move complex programs written in the Lotus Notes format to Microsoft or other modern platforms.

Unify is in the early stages of a partnership with storage and software giant EMC Corp. and Microsoft Corp. to market that migration program.

"We see that market size in excess of $15 billion," Wille said.

He also said Unify was moving toward shifting its stock from trading on the OTC Bulletin Board to the more widely watched Nasdaq Stock Market.

"We meet all the listing requirements except for one," he said.

Unify reported its financial results after the close of stock trading. Its shares closed Thursday at $5.75, down 5 cents a share.

About the writer:

• Call The Bee's Clint Swett, (916) 321-1976.