* Income from operations grows 52 percent from Q2 last year to $41.4M * Software license fees reach $50.1M in Q2 * Market leadership drives year-over-year Vantage and Mainframe software license fee increases of 31 and 60 percent, respectively * Professional services margins nearly triple from year-ago period to 11 percent
DETROIT, Oct. 22, 2009 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR) today announced final financial results for its second quarter ended September 30, 2009.
"Compuware delivered strong operational results this quarter, positioning the business now -- more than ever -- for long-term growth in revenue and continued improvement in margins," said Compuware President and Chief Operating Officer Bob Paul. "With Vantage and our definitive agreement to acquire Gomez creating an unmatched ability to optimize application performance across the Enterprise and the Internet, with market-leading Mainframe Solutions and with future game-changers like Covisint, Compuware has structured its business to solve our customers' most significant business and technology problems today and in the years to come."
Compuware reports second quarter revenues of $217.9 million, compared to $269.8 million in Q2 last year. Second quarter earnings per share were 12 cents, compared to eight cents in Q2 last year, based upon 236.1 million and 257.6 million shares outstanding, respectively. Second quarter net income was $28.0 million compared to $21.6 million in the same period last year.
"Compared to the year-ago quarter, Compuware has divested peripheral product lines and exited unfavorable services contracts, foregoing 60 million dollars in non-optimal revenue," continued Paul. "Reducing such revenues has almost doubled the company's operating margin from 10 to 19 percent."
During the company's second quarter, software license fees were $50.1 million compared to $35.7 million (excluding divested products) and $42.3 million (as reported) in Q2 last year. Maintenance fees were $109.7 million in Q2 compared to $115.8 million (excluding divested products) and $124.7 million (as reported) in the second quarter last year. Revenue from professional services in the quarter was $58.1 million, compared to $102.9 million in the same quarter last year.
Second Quarter Fiscal Year 2010 Highlights
During the second quarter, Compuware:
* Announced that leading industry-analyst firm Gartner reported that Compuware continues to earn a dominant leadership position with the fastest growth rate in the mainframe testing tools market. According to Gartner's Dataquest report, Market Share: Application Development Software, Worldwide, 2008, Compuware took the top position with a year-over-year growth rate of 5.4 percent. The nearest competitor was at 0.9 percent. Compuware also owns a 2008 market share of 54.4 percent. * Detailed how Compuware Vantage helped New Hanover Regional Medical Center improve the performance and availability of its critical hospital systems. Additionally, New Hanover achieved 100 percent ROI in less than 18 months. * Announced that Compuware Covisint is now providing Jaguar Land Rover (JLR), a subsidiary of Tata Motors, with a solution for secure communication and collaboration between the company and its suppliers. With Covisint, JLR has launched the Jaguar Land Rover Supplier Portal to improve the sharing of information and streamline collaborative business processes with supplier partners globally. * Announced that Covisint will provide technology to Dallas-based physician organization Genesis Physicians Group. Together, Covisint and Genesis Physicians Group will improve healthcare information access, delivery, security and efficiency by leveraging Covisint's cloud-based healthcare platform. * Showcased its end-to-end application performance solutions at the Cisco Live Conference in Brisbane, Australia, demonstrating a new approach to managing application and network performance from the perspective of the end user. * Announced that Con-way, an industry leader in freight transportation and logistics services with more than 500 locations across North America and in 17 countries across five continents, would detail how end-to-end application performance management helps its IT organization monitor and measure end-user experience at the itSMF USA Fusion 2009 Conference in Grapevine, Texas on September 21. * Took center stage with Sun Microsystems to discuss the value and benefits of ITIL v3 Service Knowledge Management System (SKMS) at the itSMF USA Fusion 2009 Conference on September 22. The interactive discussion helped itSMF attendees understand the value of leading with the SKMS by adding business value to any Configuration Management Database (CMDB) effort. * Announced the release of its next generation upgrade of Xpediter/Eclipse 2.0. This latest upgrade of the industry-standard analysis and debugging tool enables new mainframe talent to support mission critical business applications more quickly using a familiar point-and-click environment.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the financial information included in and following this press release uses non-GAAP measures for revenue. The non-GAAP revenue disclosure provides information on total products commitments. Compuware management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Compuware's ongoing core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in operating and evaluating its business and as such has determined that it is important to provide this information to investors. A reconciliation of non-GAAP to GAAP information is contained in the financial statements following this press release.
Compuware Corporation
Founded in 1973, Compuware provides software, experts and best practices to ensure applications work well and deliver business value. Compuware helps CIOs optimize end-to-end application performance for leading businesses around the world, including 46 of the top 50 Fortune 500 companies. Learn more at www.compuware.com.
The Compuware logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5950
Conference Call Information
Compuware will host a conference call to discuss these results at 5:00 p.m. Eastern time (21:00 GMT) today. To join the conference call, interested parties from the United States should call 800-230-1096. For international access, the conference call number is +1-612-332-0107. No password is required.
A conference call replay will also be available. The United States replay number will be 800-475-6701, and the international replay number will be +1-320-365-3844. The replay passcode will be 115199. Additionally, investors can listen to the conference call via webcast by visiting the Compuware Corporation Investor Relations web site at http://www.compuware.com.
Certain statements in this release that are not historical facts, including those regarding the Company's future plans, objectives and expected performance, are "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially since the statements are based on our current expectations and are subject to risks and uncertainties. These risks and uncertainties are discussed in the Company's reports filed with the Securities and Exchange Commission. Readers are cautioned to consider these factors when relying on such forward-looking information. The Company does not undertake, and expressly disclaims any obligation, to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. The completion of the definitive agreement to acquire Gomez is subject to customary government approvals and the satisfaction of other routine conditions.
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
AS OF SEPTEMBER 30,
-------------------------
ASSETS
2009 2008
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 332,975 $ 161,323
Investments 10,813
Accounts receivable, net 407,645 424,718
Deferred tax asset, net 40,408 35,355
Income taxes refundable 3,357 3,472
Prepaid expenses and other current assets 24,855 29,376
---------- ----------
Total current assets 809,240 665,057
---------- ----------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 345,158 355,978
---------- ----------
CAPITALIZED SOFTWARE, LESS ACCUMULATED
AMORTIZATION 34,250 55,770
---------- ----------
OTHER:
Accounts receivable 229,078 267,389
Deferred tax asset, net 34,275 33,789
Goodwill 341,502 353,393
Other 33,522 34,435
---------- ----------
Total other assets 638,377 689,006
---------- ----------
TOTAL ASSETS $1,827,025 $1,765,811
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 23,142 $ 22,499
Accrued expenses 84,106 102,529
Income taxes payable 32,227 2,145
Deferred revenue 396,351 405,622
---------- ----------
Total current liabilities 535,826 532,795
DEFERRED REVENUE 345,534 371,220
ACCRUED EXPENSES 30,222 19,758
DEFERRED TAX LIABILITY, NET 29,845 20,992
---------- ----------
Total liabilities 941,427 944,765
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock 2,306 2,465
Additional paid-in capital 611,469 625,316
Retained earnings 273,799 182,547
Accumulated other comprehensive income
(loss) (1,976) 10,718
---------- ----------
Total shareholders' equity 885,598 821,046
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,827,025 $1,765,811
========== ==========
COMPUWARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
REVENUES:
Software license fees $ 50,110 $ 42,251 $ 90,656 $103,693
Maintenance fees 109,734 124,717 220,861 251,244
Professional services fees 58,085 102,877 120,800 213,496
-------- -------- -------- --------
Total revenues 217,929 269,845 432,317 568,433
-------- -------- -------- --------
OPERATING EXPENSES:
Cost of software license
fees 3,874 6,253 7,823 12,343
Cost of maintenance fees 8,368 11,332 17,324 23,326
Cost of professional
services 51,770 98,973 110,671 202,795
Technology development and
support 21,633 22,938 43,115 45,508
Sales and marketing 50,756 58,353 103,904 119,680
Administrative and general 38,767 42,474 78,897 83,618
Restructuring costs 1,328 2,231 3,818 2,913
Gain on divestiture of
product lines (52,351)
-------- -------- -------- --------
Total operating
expenses 176,496 242,554 313,201 490,183
-------- -------- -------- --------
INCOME FROM OPERATIONS 41,433 27,291 119,116 78,250
-------- -------- -------- --------
OTHER INCOME (EXPENSES)
Interest income 1,259 3,231 2,828 6,640
Other 74 (185) (75) (373)
-------- -------- -------- --------
OTHER INCOME, NET 1,333 3,046 2,753 6,267
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 42,766 30,337 121,869 84,517
INCOME TAX PROVISION 14,780 8,755 42,836 28,203
-------- -------- -------- --------
NET INCOME $ 27,986 $ 21,582 $ 79,033 $ 56,314
======== ======== ======== ========
DILUTED EPS COMPUTATION
Numerator: Net income $ 27,986 $ 21,582 $ 79,033 $ 56,314
-------- -------- -------- --------
Denominator:
Weighted-average common
shares outstanding 234,290 252,394 237,519 256,024
Dilutive effect of stock
options 1,825 5,221 1,784 4,428
-------- -------- -------- --------
Total shares 236,115 257,615 239,303 260,452
-------- -------- -------- --------
Diluted EPS $ 0.12 $ 0.08 $ 0.33 $ 0.22
======== ======== ======== ========
COMPUWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
SIX MONTHS ENDED
SEPTEMBER 30,
-------------------------
2009 2008
---------- ----------
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net income $ 79,033 $ 56,314
Adjustments to reconcile net income to
cash provided by operations:
Gain on divestiture of product lines (52,351)
Depreciation and amortization 20,884 27,072
Property and equipment impairment 662
Acquisition tax benefits 880 2,622
Stock award compensation 9,478 7,900
Deferred income taxes 3,536 2,597
Other 12 410
Net change in assets and liabilities,
net of effects from divestiture and
currency fluctuations:
Accounts receivable 91,059 54,314
Prepaid expenses and other current
assets 17,004 18,214
Other assets (2,616) (3,992)
Accounts payable and accrued expenses (15,794) (35,600)
Deferred revenue (87,772) (61,346)
Income taxes 6,646 (2,701)
---------- ----------
Net cash provided by operating
activities 69,999 66,466
---------- ----------
CASH FLOWS PROVIDED BY INVESTING
ACTIVITIES:
Purchase of:
Property and equipment (3,674) (4,922)
Capitalized software (5,780) (6,090)
Net proceeds from divestiture of
product lines 64,992
Investment proceeds 59,402
---------- ----------
Net cash provided by investing
activities 55,538 48,390
---------- ----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from exercise of stock
options including excess tax benefits 1,702 11,163
Contribution to stock purchase plans 1,075 1,674
Repurchase of common stock (85,806) (174,186)
---------- ----------
Net cash used in financing activities (83,029) (161,349)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 12,355 (8,127)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 54,863 (54,620)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 278,112 215,943
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 332,975 $ 161,323
========== ==========
COMPUWARE CORPORATION AND SUBSIDIARIES
OPERATIONAL HIGHLIGHTS
(dollar amounts in thousands)
QUARTER ENDED QUARTER
------------------ YR - YR ENDED QTR - QTR
SEPT. 30, SEPT. 30, % JUNE 30, %
2009 2008 Change 2009 Change
-------- -------- -------- -------- ---------
License Fees:
Distributed
Product License
Fees
Vantage $ 12,308 $ 9,415 30.7% $ 9,358 31.5%
Changepoint 1,647 2,359 (30.2%) 1,316 25.2%
Quality and
DevPartner 155 6,793 (97.7%) 9,205 (98.3%)
Uniface 1,771 2,253 (21.4%) 1,474 20.1%
-------- -------- --------
Total Distributed
Product License
Fees 15,881 20,820 (23.7%) 21,353 (25.6%)
Mainframe Product
License Fees 34,229 21,431 59.7% 19,193 78.3%
-------- -------- --------
Total License Fees 50,110 42,251 18.6% 40,546 23.6%
Maintenance Fees 109,734 124,717 (12.0%) 111,127 (1.3%)
-------- -------- --------
Total Products
Revenue $159,844 $166,968 (4.3%) $151,673 5.4%
======== ======== ========
Total Mainframe
Products Revenue $117,288 $108,801 7.8% $ 99,585 17.8%
Total Distributed
Products Revenue $ 42,556 $ 58,167 (26.8%) $ 52,088 (18.3%)
Distributed Product
License Fees
excluding Divested
Products $ 15,881 $ 14,289 11.1% $ 12,629 25.8%
Maintenance Fees
excluding Divested
Products $109,734 $115,769 (5.2%) $106,288 3.2%
Total Product
Revenue excluding
Divested Products $159,844 $151,489 5.5% $138,110 15.7%
Total Products
Revenue by Geography
North America $ 88,285 $ 85,460 3.3% $ 80,608 9.5%
International $ 71,559 $ 81,508 (12.2%) $ 71,065 0.7%
Product Releases
Mainframe 8 3 166.7% 4 100.0%
Distributed 0 7 (100.0%) 7 (100.0%)
Total Costs of
Software Products $ 84,631 $ 98,876 (14.4%) $ 87,535 (3.3%)
Deferred license
fees
Current $ 52,637 $ 57,808 (8.9%) $ 55,961 (5.9%)
Long-term $ 47,027 $ 51,615 (8.9%) $ 47,323 (0.6%)
Deferred during
quarter $ 12,155 $ 14,618 (16.8%) $ 10,679 13.8%
Recognized during
quarter $ 18,631 $ 20,081 (7.2%) $ 24,385 (23.6%)
Professional Services
Professional
Services Revenue $ 58,085 $102,877 (43.5%) $ 62,715 (7.4%)
Contribution
Margin 10.9% 3.8% 6.1%
Billable Headcount 1,557 2,916 (46.6%) 1,650 (5.6%)
Total Company
Headcount 4,151 6,012 (31.0%) 4,275 (2.9%)
Total DSO 168.3 141.7 159.4
Total DSO (Billed) 63.3 56.8 58.4
COMPUWARE CORPORATION AND SUBSIDIARIES
PRODUCTS COMMITMENTS
(In Thousands)
QUARTER ENDED
---------------------------------
SEPT. 30, JUNE 30, SEPT. 30,
2009 2009 2008
--------- --------- ---------
License fees $ 50,110 $ 40,546 $ 42,251
License fees - divested
products * (8,724) (6,531)
--------- --------- ---------
License fees excluding
divested products 50,110 31,822 35,720
Change in deferred license
fees excluding divested
products * (6,476) (6,669) (4,017)
--------- --------- ---------
License contracts entered
into during period
excluding divested products 43,634 25,153 31,703
--------- --------- ---------
Maintenance fees 109,734 111,127 124,717
Maintenance fees -
divested products * (4,839) (8,948)
--------- --------- ---------
Maintenance fees excluding
divested products 109,734 106,288 115,769
Change in deferred
maintenance fees
excluding divested
products * (16,656) (47,887) (32,080)
--------- --------- ---------
Maintenance contracts &
renewals entered into
during period excluding
divested products 93,078 58,401 83,689
--------- --------- ---------
Total products commitments
during period excluding
divested products $ 136,712 $ 83,554 $ 115,392
========= ========= =========
* Compuware divested its Quality and DevPartner product lines
during the first quarter of fiscal 2010. For comparison purposes,
the Products Commitments schedule excludes Quality and DevPartner
license revenue, maintenance revenue and product commitments from
the quarter ended June 30, 2009 and September 30, 2008 periods.
As Compuware continues to emphasize solution selling, deals are
becoming more complex, increasing the likelihood that software
transactions will be recognized ratably over the maintenance
term. Therefore to understand the health of Compuware's software
business, we believe it is important to also consider the amount
of product commitments during the reported periods.