Cognos' Net Income Nearly Doubles In Second Quarter - InformationWeek

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Cognos' Net Income Nearly Doubles In Second Quarter

Sales increase and better operating economies fuel earnings jump.

Business-intelligence software supplier Cognos Inc. reported Thursday that net income nearly doubled in its second quarter ended Aug. 31. A solid increase in sales and improved operating efficiencies resulted in quarterly earnings of $13.7 million, or 15 cents per share, compared with $7.1 million, or 8 cents per share, in the same period one year ago.

Revenue for the quarter was $129.1 million, up 11%, from $116.3 million, in the year-ago quarter. Product license revenue, a key growth indicator, was up almost 9%, to $55.0 million, at a time when many software vendors are reporting declining license sales. Sales to new customers accounted for 42% of business, up from a typical 30%, says Rob Ashe, president and chief operating officer. Average deal sizes also increased, and the company landed seven contracts worth more than $1 million.

Ashe attributes the sales increase to higher demand for the vendor's Series 7 business-intelligence applications, its balanced scorecard software used to measure business performance, and a 60% increase in Cognos' relatively new analytical applications. "That was a very positive surprise," Ashe says.

"We're operating the business more efficiently than we were one year ago," Ashe says, explaining the big jump in earnings. The 11% sales increase, for example, was achieved with a staff of 295 sales representatives--just five more than last year, Ashe says.

Cognos projects revenue of $138 million and earnings of 19 cents in the current quarter. For the fiscal year, the company projects earnings of 71 to 73 cents, a 3-cent increase from earlier projections, and sales of $542 million to $548 million.

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