On yesterday's third-quarter earnings conference call, Agile Software (NASDAQ:AGIL) CEO Jay Fulcher said his strategy remains "unchanged" and that he is "encouraged." Shareholders may disagree with his rosy outlook. Agile's stock has treaded water for the past few years, and the most recent quarterly report looks anything but encouraging.

Agile develops product lifecycle management (PLM) software, helping customers design, plan, sell and service products. With more than 11,000 customers, the company already controls a big chunk of the market, a mature category that grows less than 10% a year.

That sluggishness is apparent in Agile's earnings results. Revenues inched up from $32.8 million to $33.2 million, but license revenues ominously declined from $13.4 million to $11.5 million. License revenue is a key metric for software companies, because it often leads to ongoing service and maintenance fees.

Agile posted a net loss of $5.8 million, or $0.10 per share, compared to a net loss of $4.1 million, or $0.08 per share, in the year-ago period. Despite the red ink, Fulcher said his company has a lean cost structure.

PLM has always been a competitive space, but it's now getting even tougher. Over the past year, Dassault Systemes (NASDAQ:DASTY) purchased MatrixOne, and Siemens AG (NYSE:SI) acquired UGS. IBM (NYSE:IBM) is also ramping up its PLM offerings.

Don't assume that Agile will fall to pieces, though. A strong product line and loyal customers should help buoy the company.

The competition mainly serves to limit Agile's growth, having plagued it with sluggishness for the past five years. For all his public optimism, unless Fulcher changes his strategy, or even sells the company, shareholders should expect little action from the stock.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 1,590 out of 24,619 in Motley Fool CAPS.