Concur this month completed its acquisition of U.K.-based GlobalExpense, "a fantastic expense management company with a particular expertise in receipt validation, value-added tax and income tax compliance and U.K. tax legislation," Concur chairman and CEO Steve Singh told analysts Wednesday as he reported third-quarter earnings.
Concur's June quarter revenues rose 19 percent to $89.5 million while profits declined 46 percent to $2.3 million, both from year-ago levels. The drop in profits was "primarily driven by the accounting impacts of the TripIt acquisition," according to a prepared statement.
"Even while we ramp investments at an unprecedented level for us, earnings were exactly as planned, but perhaps most important, new customer growth was significantly ahead of our expectations," Singh said.
Concur CFO Frank Pelzer forecast "Q4 revenue to grow approximately 22 percent, the highest year-over-year growth rate we have experienced since the beginning of the recession." Officials said the company's last fiscal quarter is typically its strongest.
With the GlobalExpense acquisition, Concur added about 100 people and expects to add nearly $500,000 in revenue next quarter and nearly $5 million next year. Company officials said GlobalExpense would continue to focus on the U.K. market, but "with time, we will extend those services to other local markets in Europe."
While Concur continues to generate most of its revenues today in the United States and Europe, Singh reiterated that "our objective over the next five years is to become the market-leading provider of travel and expense management services in each major economy" and "build out our local distribution, development and service capacity in each of these major markets" over the next three years. Toward that end, Concur this year established Concur Japan and Concur India and invested in "Australia, Singapore, Hong Kong, France, Germany and the U.K. as our transaction volume with local customer wins continues to grow substantively in each market," Singh said.
Expansion to new geographies and industries, to new segments of the managed travel market and into unmanaged travel are among six growth objectives over the next three to five years, Singh said.
In unmanaged travel, Concur invested $5 million in Yapta and became "one of its largest shareholders. Our objective with TripIt and TripIt Pro, and so this is not exclusive to Yapta, is to keep driving the innovation or the value we're delivering." Adding Yapta's price-checking service to TripIt Pro makes it "really invaluable and indispensable to any business traveler."
The objective is to grow TripIt's user base to 10 million, an "interesting scale that you can start commoditizing," Singh said. TripIt had about 2 million users when Concur acquired the company in January after adding 500,000 users in each of the last two years and is "on track to double the TripIt user base" by the end of Concur's fiscal year in September.
In the managed market, "new customer growth was significantly ahead of our expectations," Singh told analysts. "We expect the new customer momentum we saw in Q3 to continue into Q4, driven by demand from all customer segments and geographies, with notably strong demand across large, global organizations."
Concur "continues to see rapid adoption of the Concur Connect Platform" to integrate its technology into that of others. It recently announced a new partnership with U.K. online rail retailer thetrainline.com and joined a NetSuite developer network to integrate Concur with NetSuite's accounts payable and general ledger products.
Government travel is also an area in which Concur is investing as it vies for part of the U.S. General Services Administration's ETS2 contract, estimated at roughly $1.5 billion. The award to one or two vendors is expected next spring, Singh said.
"Most of the tech providers of ETS1 are not bidding on ETS2," Singh said. "Obviously we've ramped our investments over the last couple quarters and will ramp them even further," to garner the GSA award.
"We believe we're in a strong position to receive either a single award or a joint award and are investing to win as much of the award as possible over the 15-year term," Singh said. "We've taken a very thoughtful and measured approach to servicing government organizations and believe that if we execute exceptionally well, Concur's Government business could generate more than $100 million per year in revenue," across federal and regional markets around the globe.
"Over the next several years, we see a significant new opportunity to serve government entities at the federal and regional level across North American and Western Europe," he continued.
Singh said Concur already is the "largest provider of travel and expense services in the French government, serving the Ministry of Education, Agriculture, Interior and Ministry of Justice, as well as the Cabinet of the Prime Minister." In the United States, Concur counts the U.S. Postal Service and state of Georgia, as well as a number of state and local agencies, in its customer base.
In terms of distribution, Concur in May changed its ADP partnership to a referral, instead of reseller, agreement. "Deal flow increased substantively" in June, Singh noted.