November 6, 2012, 11:57 AM

Demandware’s Q3 revenue increases 39%

But the e-commerce software provider reports a wider net loss.

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E-commerce platform provider Demandware Inc. today reported that revenue in the third quarter ended Sept. 30 reached $18.7 million, up 38.5% from $13.5 million for the same period last year. The company also reports a $3.6 million loss from operations in Q3, compared with a similar loss of $1.5 million in Q3 2011, it says, attributing that to increased investments for growth.

“During the quarter, we continued to invest in expanding our global sales team, enhancing our brand awareness and innovating our technology platform,” says Scott Dussault, Demandware’s chief financial officer. “We are confident that these investments will enable us to further deepen our penetration in the large, robust market for enterprise-class, cloud-based e-commerce solutions.”

For the third quarter, Demandware also reports a net loss of $3.5 million, compared with a net loss of $2.1 million in Q3 2011.

Demandware sells Internet-hosted software to e-retailers, including 16 in the Internet Retailer Top 500 Guide, for a monthly subscription fee. In Q3, subscription revenue was $16.3 million, up 45.5% year over year from $11.2 million in Q3 2011, the company says. At the end of the quarter, it says it provided software for 137 customers that operate 517 live e-commerce sites.

The rest of the company’s income comes from services, which increased 8.8% in Q3 to $2.46 million from $2.26 million in the same period last year.

Demandware went public in March, raising $91.4 million, not including underwriting expenses, it says. In the first quarter, it also reported a 39% jump in year-over-year revenue.

For the nine months ended Sept. 30 the company reports the following financial numbers, compared with a year earlier:

● Total revenue of $53.16 million, up 40.2% from approximately $37.93 million;

● Subscription revenue of $45.06 million, up 45.8% from $30.90 million;

● Services revenue of $8.10 million, up 15.2% from $7.03 million;

● Net loss of $11.35 million, up 184.5% from $3.99 million.

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