Software firm predicts good year despite profits fall

Dublin-based travel software firm Datalex anticipates a bumper year ahead despite profits plummeting by 42 per cent last year.

Datalex's 2006 preliminary results reveal that pretax profits fell from $1.9 million (€1.44 million) in 2005 to $1.1 million last year, while revenue dipped 6 per cent to $26.6 million.

However chief executive Cormac Whelan remained upbeat about the company's performance, describing 2006 as a "pivotal year" for Datalex's transition from a licence-based to a transaction-based business model.

Four customers - including United Airlines and Virgin Airlines - went live on Datalex's new transaction-based model in the last quarter of 2006, and Mr Whelan expects that this will drive double-digit growth in 2007.

"While our transaction revenue commenced later than expected in 2006, we believe the transaction model will continue the transformation of our business," Mr Whelan said.

A further five customers are due to go live in the second half of 2007, and Mr Whelan expects that 20 to 25 per cent of sales will be transaction-based this year.

Datalex launched a new product suite, known as Travel Distribution Platform (TDP), in 2006, and will continue to invest in its technology platform and release more new products this year, Mr Whelan said.

"This will enable new customer acquisition in the agency and tour operator sectors while cementing our position as industry leader for the airline sector," he added.

Although the company recorded a $1.2 million foreign exchange gain last year, this was partly offset by an increased cost base resulting from the appreciation of the euro against the dollar.

Some brokerages tentatively increased their forecasts for Datalex yesterday due to the company's projections of higher revenue.

The market reacted well to the positive outlook for the year ahead, with the company's share price gaining 4 cent, or 5.7 per cent, to close at €0.74.