It's been an awful year for Saba's (NASDAQ:SABA) shareholders. After the stock reached $7.68 in late February, the company in June announced soft guidance on fiscal fourth-quarter results and the stock fell 8%. As I mentioned in a recent article, management is facing lots of challenges in its transition to an on-demand approach.

Saba develops so-called "human capital management" software, which helps to improve employee productivity and education. Its roster of marquee customers includes Dell (NASDAQ:DELL), Home Depot (NYSE:HD), IBM (NYSE:IBM), and Intel (NASDAQ:INTC).

On Thursday, Saba reported that its Q4 revenues increased 11% to $25.6 million and that it suffered a net loss of $3.1 million, or $0.11 per share. The company added 27 new customers and struck key strategic alliances, such as with Hitachi and HCL Technologies, an Indian IT-services firm.

Also during the quarter, license revenues fell 18% to $5 million. That dip was inevitable, being caused by Saba's move to a subscription-based revenue model, which also requires re-educating the sales force and building new systems to manage things. The process is far from easy, as seen with other companies, such as Concur Technologies (NASDAQ:CNQR), that have undergone the transition.

At current levels, Saba's shares are trading at 1.4 times revenues, and that's fairly reasonable for an enterprise software company. But with its focus on changing its business model and the volatility in its financials, it's probably still advisable for Foolish investors to stay on the sidelines for now.

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Home Depot, Dell, and Intel are all recommendations of our Inside Value newsletter service. Dell is also a Stock Advisor pick.

Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 3,203 out of more than 60,000 investors in Motley Fool CAPS.

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