By looking to the Web, Centive broke free of market limits

Maker of sales commission software is growing, expects to see profit this year

Michael L. Torto, president and chief executive officer, said Centive is now reaping the benefits of its restructuring. (Joanne Rathe/Globe Staff)

BURLINGTON - Since the end of 2003, Centive Inc. of Burlington has been reinventing itself as a provider of software that automates the payment of sales commissions.

Because of major product changes, the 11-year-old company is only now seeing the financial benefits of its restructuring, said chief executive Michael L. Torto. "We grew by 100 percent last year," he said.

Centive has 55 employees and is expected to report profits this year. But it has been a tough road back, Torto said.

Annual revenues are currently under $20 million, or about the level when he was appointed chief executive in 2003, Torto said. "But our losses then were probably $26 million."

That was due to the privately held company's focusing on sales of complex software systems, selling for between $1 million and $5 million, to very large companies like AIG, the insurance giant, Torto, 45, said in an interview last week.

"The problem was that there were only so many big companies to go after," he said. "We then realized that there was a much larger sales-compensation marketplace, made up of companies of all sizes. Fortunately, we had good roots and could make the turnaround."

A web-based system was put in place, and in September 2006, the old product was sold, for an undisclosed amount, to Berggruen Holdings of New York City, he said.

"Today's product can be seen and used by everyone in a company, so it's a good workforce management tool," he said. Fees are $50 a month for each sales representative using the product, he said.

One of the newest of Centive's 110 corporate customers is the Computer Merchant Ltd., an information technology staffing firm based in Norwell.

"The Centive product is great because it is web-based, making it easy to use, particularly for thoroughly tracking all commission payments," said Angela Powell, Computer Merchant's chief financial officer.

In another move to boost revenues, Centive signed an agreement last September with ADP, the huge compensation specialist. "They're private labeling our product, and we'll get a 30 percent cut from each deal," Torto said. Two deals already have been struck, and many more are expected by the end of this year, he added.

At the same time, Centive will be competitive with ADP, he said. "Our sales people are still very much motivated to pick up their own accounts."

Centive is also programmed to move in other directions.

Next month, the company will relocate to 25,000-square-foot quarters at the Cross Point office complex in Lowell, where Torto lives. And plans are to acquire other companies in the next few years, before undertaking an initial public offering, Torto said.

Polaris Venture Partners of Waltham has backed Centive since the company's inception in 1997. Its total investments are between $25 million and $30 million, Torto said.

Polaris executive John Gannon could not be reached for comment last week.

Liz Cobb, who has a background in compensation systems design, founded the company as Incentives Systems. The name was changed to Centive in 2002. She left the company in February 2003.

"I needed to take some time off," Cobb, 54, said in a phone interview last weeks. Four years ago, she started another venture, Makana Solutions Inc. of Lexington, which, she said, helps clients design compensation systems software.

"I'm excited about the whole [compensation] market, which is healthy," said Cobb, who still has an equity position in Centive.

Cobb "had great vision" about the potential of sales commission software and helped craft the first product for large financial services firms, retailers, and others, Torto said.

Torto joined Centive as a consultant in March 2003. In August of that year, he was named chief executive. Previously, he had been chief executive of Incert Software Inc. of Cambridge.

As a student at Emerson College, from which he graduated magna cum laude in 1986, Torto dreamed of becoming a filmmaker. "I thought of becoming the next Steven Spielberg, but then I chickened out and began thinking more about a business career," he said.

But he said he hasn't forgotten about his earlier dream and has established a filmmaking scholarship for promising Emerson students.