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Keeping track of the telecom business is no easy task. There are a myriad of providers -- offering a myriad of services, such as DSL, cable, wireless and so on.
These telecom companies, as a result, need their own services, such as to manage customer relations and billing. Traditionally, this was done in-house. However, because of the complexity, it now makes more sense to outsource these services.
These service providers go by the acronym of CM&B (customer management and billing software). And the market is extensive, as it is expected to grow to $14 billion by 2000.
CM&B software solutions are highly complex, requiring real-time processing of massive amounts of volume, but also dealing with different types of transactions.
Its product is called Infranet. The software is built to allow telecom and Internet service providers to get to market quickly and start receiving revenues from new services in an optimal manner. Interestingly enough, Portal Software has used its prior experience as an ISP to develop technology that works.
Further, Infranet allows companies to data mine its subscribers in real time, so as to measure the success of marketing initiatives. With this information, service providers can quickly fine-tune pricing or product offerings.
The software has built-in fraud detection and credit limits. Customers can easily access their billing, thus reducing customer service costs.
The software uses an object-oriented framework that can scale to literally hundreds of millions of users -- without requiring the redesign of a company's network architecture.
The company also has another product called Infranet FreeServ, which is targeted to free ISPs. Basically, the software allows these ISPs to bill for ancillary services, as well as help capture demographic information and track user activities.
Portal Software has been smart in striking alliances with Andersen Consulting, PricewaterhouseCoopers, Cisco, Hewlett-Packard, Microsoft, Oracle and Sun Microsystems. These companies provide a great source of referrals.
The client list for Portal is impressive, including such big-names as BellSouth, Microsoft, US West, UUNet and Juno Online (in all, there are about 130 customers).
The company is also showing impressive financial results. In its second quarter, the company grew its sales by 385 percent to $20.8 million (a 375 sequential increase over the previous quarter). As for losses, these were minimal: $800,000, compared to $4.5 million for the same period a year ago.
For its software licensing revenues, Portal Software shows gross margins of a staggering 98 percent. It's hard to get any better than that.
So, it should not be very long until the company starts translating these gross margins into net profits.
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