Support Group

This stock finds its niche in the growing customer support software market.
Magazine Contributor
3 min read

This story appears in the October 1997 issue of Entrepreneur. Subscribe »

The company: Based in Emeryville, California, Scopus Technology Inc. develops customer information management software.

The markets: Scopus offers five primary software applications that can be integrated or stand alone: SupportTeam, SalesTeam, WebTeam, ServiceTeam and SmartScript, covering everything from automated product design changes to customer support management. The need for customer and business information management extends to all industries, so Scopus' clients are diverse and growing.

The sizzle: Scopus is a leader in its young industry, which is focused primarily on customer support. By January 1997, the company had more than 350 clients, up from 200 in 1996.

Market analysts expect Scopus' industry to keep growing 22 percent annually for the rest of the decade, while International Data Corp. expects customer support software sales to grow threefold in the same period. Scopus has been profitable since its 1991 inception and has lately seen rising margins. Analysts also expect Scopus to grow 45 percent annually over the next five years and predict a 52 percent earnings growth this fiscal year.

The risks: The customer support software market is relatively new, and competition is keen. And Scopus derives 70 percent of revenues from selling software licenses to businesses; one or two large contracts could impact a quarter and lead to sporadic growth or a slower quarter to follow.

Scopus has topped earnings estimates in the past, but if it fails to do so in the future, the stock would likely be punished. The stocks of Scopus' peers have been cut in half on news of weaker earnings. Scopus is priced such that any slip could send the stock significantly lower in the near term.

Historical financial performance: The company has increased net sales at a compounded annual growth rate of 120 percent over the past three years. Revenues climbed from $2.7 million in 1993 to $28.6 million in 1996--and then jumped to $63.1 million in fiscal 1997, which ended on March 31. Earnings have increased from $0.03 per share in 1993 to $0.42 per share in fiscal 1997, and net profit margins first rose above 11 percent last year. Scopus has no long-term debt, $79 million in cash and equivalents, and no one customer has accounted for more than 10 percent of revenues over the past three fiscal years.

Projected financial performance: Current estimates call for Scopus to reach $0.64 in earnings per share this fiscal year, putting the $22 stock at 34 times forward estimates; the company is also expected to grow earnings by more than 50 percent. Leading software companies usually trade at multiples close to their growth rates, and if Scopus can continue to improve margins while growing the business as expected, its growth rate may continue to exceed expectations.

With 20 million shares outstanding, Scopus has a market capitalization of $440 million, or seven times sales. To keep trading at its current growth rate, Scopus would need to rise 45 percent to $32 by April, assuming estimates were met.

The Outlook

Past and projected sales and earnings.

Fiscal Year 1996 1997 1998

  • 1999

Revenues ($M) $28.5 $63.1 $95.7 $129

Net income ($M) $1.9 $8.4 $12.7 $17.0

Earnings per share $0.12 $0.42 $0.64 $0.86

Shares outstanding ($M) 16.4 20 20 N/A

  • estimated
  • Not available

At A Glance

Name: Scopus Technology Inc.

Recent price: $22

Price/earnings ratio: 52

Market: Nasdaq

Symbol: SCOP

Figures are as of June 30

Contact Sources

Scopus Technology Inc., (510) 597-5800,

The Motley Fool can be found on the Web at and on A0L at keyword: FOOL. Jeff Fischer contributed to this article. The above opinions are those of the authors and not of Entrepreneur. Past performance is no guarantee of future results.

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.