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3/25/2004
05:51 PM
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Cognos Caps Off Solid Year With Winning Quarter

Revenue and net income soared in the fourth quarter, fueled by surging sales of its recently introduced ReportNet query, reporting, and analysis software.

Business-intelligence software vendor Cognos Inc. closed out its fiscal year with fourth-quarter revenue growth of 23%, fueled by surging sales of its recently introduced ReportNet query, reporting, and analysis software.

For the fourth quarter ended Feb. 29 Cognos reported revenue of $202.1 million, up 23% from $163.7 million in the same period a year ago. Net income rose to $46.1 million, or 50 cents per share, from $29.6 million, or 33 cents per share, one year earlier.

Product license sales in the fourth quarter were $93.5 million, up 15% from last year. ReportNet, which debuted in September, generated $30 million in sales, CFO Tom Manley says. Sixty-eight percent of ReportNet sales were to existing customers and 38% to new customers. "It's quickly become the biggest-selling product in our portfolio," Manley says.

Cognos recorded 13 deals valued at $1 million or more during the quarter, compared with 10 such deals in the third quarter and just six in the year-ago quarter. Manley says that's indicative of the move among businesses to deploy business-intelligence software on a companywide basis.

For fiscal 2004, Cognos reported earnings of $100.9 million, or $1.10 per share, up 38% from the previous year's earnings of $73.1 million, or 81 cents per share. Revenue grew 24% to $683.1 million from $551.0 million.

For the current quarter, Cognos expects revenue in the range of $169 million to $171 million, with earnings of 19 to 20 cents per share. For fiscal 2005, it expects revenue of about $770 million and earnings around $1.18 per share.

Cognos also said that Ron Zambonini is retiring as CEO, effective at Cognos' stockholders' meeting June 23. Zambonini will become the company's chairman. President and chief operating officer Rob Ashe, who has been with Cognos for 20 years, will take over as CEO. The change has been expected for some time.

Zambonini joined Cognos as research and development VP in 1989, became president and chief operating officer in 1993, and was named president and CEO in 1995. The flamboyant Zambonini, who speaks with a thick Scottish accent, has achieved some notoriety for dressing up as Braveheart, Star Trek chief engineer Scotty, Zorro, and other characters to motivate employees at company conferences and sales-force meetings.

Before ReportNet's release, Zambonini vowed to conduct Cognos' third-quarter earnings call naked if the new software failed to generate $10 million in sales during the quarter. To Wall Street's relief, ReportNet sales reached $16 million.

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