Business-intelligence software vendor Cognos Inc. continues to buck the trend of sluggish IT spending. The company Thursday reported solid sales and earnings growth in its first quarter ended May 31. Net income reached $9.9 million, or 11 cents per share, compared with a net loss of $2.1 million (excluding special charges) for the same period one year ago. Revenue increased 11% to $120.1 million from $108.0 million last year.

"It continues to be a tough market," says Robert Ashe, president and chief operating officer. "The sales cycle continues to be challenging. It's not that people aren't buying. Customers are very ROI-focused. They just have to justify [purchases] more. But we had very good revenue performance and we believe our competitive situation has never been stronger."

Business intelligence license sales, a key indicator of future growth, grew 16% to $48 million. Cognos snagged contracts greater than $1 million from Hewitt Associates, Mattel, Starbucks, and the U.S. Army Reserve during the quarter. Two other categories--contracts valued at more than $200,000 and more than $50,000--also increased from last year. Ashe says new business accounts for about 30% of the company's total revenue.