Cognos Posts 25% 3Q Revenue Gain

Despite what one executive describes as a tough selling environment, Cognos Inc. on Wednesday reported a 25% year-over-year surge in revenue for its third quarter. The vendor's financial results got a $16 million boost from its new ReportNet enterprise-reporting software that became generally available in September.

For the quarter ended Nov. 30, Cognos reported revenue of $172.2 million, up 25% from $138.1 million in the same period last year. Net income was $24.2 million, or 26 cents per share, up 22% from $19.9 million or 22 cents per share a year earlier.

The company reported closing 10 deals valued at $1 million or more during the quarter. Product license revenue, a key growth indicator, was up 17% to $72.6 million from $62.2 million one year earlier. Product support revenue was up 30% to $68.7 million and service-related revenue grew 35% to $31.0 million

ReportNet generated $16 million in sales, including $15 million in license revenue. In all, Cognos reported more than 200 contract wins for the new software with customers such as DaimlerChrysler, Tyson Foods, and Welch Foods.

The $1 million-plus deals, the most ever in a quarter for Cognos, indicates how more companies are standardizing on one or two business-intelligence software suppliers, says Robert Ashe, president and chief operating officer. A growing number of customers also are buying Cognos corporate performance-management applications, he says.

Despite the strong showing and the upturn in the economy, Ashe says markets remain tough. "The environment remains very difficult. The sign-off cycles are lengthening," he says, noting that more CFOs are involved in software buying decisions.

For the current quarter, Cognos expects revenue in the range of $191 million to $194 million and diluted earnings per share of 32 cents to 35 cents. For fiscal 2004, revenue is expected to be in the range of $672 million to $675 million, with diluted earnings per share of 92 cents to 95 cents.