I had the opportunity to meet with Allegro’s CEO, Ray Hood, and most of his senior leadership team this week for an analyst briefing in which they discussed their 2013 results and laid out their plans for 2014 and beyond. Though some of the briefing was provided confidentially, there were several interesting points that I can discuss in this forum…
2013 Revenues – Allegro booked more than $60 million in revenues in 2013, a 33% increase over their 2012 results (about $48 million). Most of the growth is reflective of seventeen net-new clients signed and an increase in consulting revenues. Given that most of their peers in the ETRM / CTRM markets experienced little organic growth or even declining revenues during the same period, these year-over-year results would appear to be at, or very near, the top of the market for that group.
Product Strategy – The company is clearly focused on advancing the technologies that underlay their product. Aditya Srivastava, Allegro’s CTO, reviewed several of their initiatives to continuously improve performance, usability and functional capabilities. Additionally, he and the team reviewed their plans and current progress in strengthening functional capabilities across the energy commodity supply chain, including new capabilities in optimization and previously announced initiatives to improve their capabilities in managing liquid hydrocarbons. While Allegro did indicate they would opportunistically pursue new non-energy capabilities (some of which they have already implemented with existing customers), the company and products clearly remain energy-centric, at least for the time being…
Sales and Marketing – Leveraging their 2013 sales successes in EMEA and Asia-Pac, Allegro will continue to enhance their geographic reach with further expansion of sales, service and product capabilities into high growth markets around the globe. Mr. Hood also noted that the company is making a concerted effort to decouple the sales process from the commercial/licensing process, essentially saying that if the product is a fit for the client, they will create a commercial agreement and deployment model (that addresses product license, implementation, services, support, maintenance, etc) that fits with that client’s needs, regardless of their size or market scope. While it may sound like a simple proposition, truly flexible pricing and deployment models can be very difficult for a software vendor to implement for a number of reasons (including surety/predictability of revenues, cost tracking and management, legal costs, technology constraints, etc.) and it will be interesting to watch as these new models develop, and to see what the market impact might be.
In all, it was a very interesting conversation. Given Allegro’s latest results, it would appear that the company has developed significant momentum and is well positioned for additional success this year and in the future. With the issues related to the previous management in the rear-view mirror, and the subsequent lawsuit decided in his favor, Mr. Hood has clearly put his stamp on the company – with a new management team fully in-place and an increasing focus on product and technology innovation, a theme that ran throughout the company’s briefing presentation and discussion.
