CDC Software, a provider of enterprise customer relationship management or "CRM" solutions, announced it expects double digit growth in second quarter 2010 application sales based on preliminary financial projections and estimates.

The growth is comprised of license revenue plus new total contract value for Software-as-a-Service or "SaaS (News - Alert)" sales secured during the second quarter of 2010, the company said.

As a result of increased new logo sales for its on-premise solutions and expanded cloud sales the company expects double digit growth in second quarter 2010 application sales compared to second quarter of 2009 which did not include SaaS sales. 

CDC Software (News - Alert) is focusing on expanding higher margin recurring revenue stream, such as SaaS revenue, and expect this will gradually increase gross margin.  

The company is moving from lower margin Professional Services work to its implementations partners expecting that it will increase the gross margin, as well as the percent of recurring revenue from maintenance and from SaaS recurring revenue.

CDC Software has been executing a three-prong SaaS strategy that includes acquisitions of SaaS companies, its Strategic Cloud Investment Program and the future launch of its internally developed SaaS solutions. CDC Software plans to make minority investments in, and form strategic reselling partnerships with, companies offering cloud-based or point solutions which complement its enterprise solutions portfolio.

The company announced last week that its CDC Respond complaint management solution will be its first cloud application developed on the Windows Azure platform.

CDC Software is one of the first enterprise software companies with a SaaS rollup strategy. The company is pleased with the progress of its newly acquired companies. Officials at CDC Software said they plan to continue making more acquisitions by the end of the year that fit within the valuation criteria.

"Our guidance reflects our move to a hybrid model and our focus on generating more SaaS business. As a result, we believe that we will recognize less revenue up front compared to our traditional license model, and will also be realizing more expenses in R&D, sales and marketing and other integration-related costs as we ramp up our SaaS business," Bruce Cameron, president of CDC Software, said. "Nonetheless, we believe our 2010 and 2011 EPS forecast may be one of the highest compared to our hybrid enterprise software peer groups.'

Based on preliminary financial projections and estimates, CDC Software is providing its first guidance as a hybrid enterprise software company, and expects 2010 Non-GAAP earnings per share to be in a range of $1.15 to $1.25 and Non-GAAP revenue to be in the range of $220 to $230 million.

The company's current projections and estimates indicate that total annualized recurring revenue is also expected to be approximately 55 percent of total revenue by the end of 2010 and approximately 60 percent by the end of 2011. SaaS revenue is expected to be about $18.9 million for 2010 and $48 million for 2011. 

Total contract value is expected to be about $50 million by December 31, 2010 and close to $100 million by the end of 2011. Total contract value plus CDC Software's approximately $100 million maintenance revenue, CDC's Total Contracted Recurring revenue is expected to be close to $200 million by 2011. 

Back in April CDC Software announced it signed a reciprocal original equipment manufacturer agreement with Servicepower Business Solutions, a provider of outsourced service and field management solutions, to sell their solutions, TMCnet reported.

As part of this agreement CDC expects to add field management functionality to its eCommerce product offering.