- Non-mainframe solutions revenue increases 44 percent year-over-year in Q1 excluding divested products, 12.5 percent as reported
- Total products revenue increases 8.7 percent year-over-year in Q1 excluding divested products to $150.1M, decreases one percent as reported
- Q1 Vantage license fees increase 52 percent year-over-year to $14.2M, Gomez Q1 subscription revenue reaches $13.3M as demand for Enterprise to Internet APM increases
- Changepoint license fees increase 79 percent year-over-year to $2.4M in Q1 as focus on technology companies drives new sales
- Covisint revenues increase 16 percent year-over-year to $11.2M in Q1 as both healthcare and manufacturing verticals show strength
DETROIT, July 22, 2010 (GLOBE NEWSWIRE) -- Compuware Corporation (Nasdaq:CPWR) today announced final financial results for its first quarter ended June 30, 2010.
"Compared to this time last year, Compuware has a healthier, higher-growth solution portfolio with much stronger competitive positioning," said Compuware President and COO Bob Paul. "Compuware's non-mainframe solutions' revenues are up 44 percent year-over-year, excluding divested products. Each of these growth engines delivered double digit percentage increases in year-over-year license fees or subscription revenues in Q1.
"Our planned reduction of unprofitable services engagements has almost doubled Compuware's professional services segment contribution margin year-over-year to nearly 11 percent in Q1," continued Paul. "This strategy has impacted Compuware's total Q1 revenues modestly, while positioning the services business to reach our 15 percent margin goal by Q4."
Compuware reports first quarter revenues of $206.5 million, compared to $214.4 million in Q1 last year. First quarter earnings per share were six cents, compared to 21 cents in Q1 last year, based upon 227.6 million and 242.5 million shares outstanding, respectively. During Q1 last year, Compuware EPS were positively impacted by 14 cents per share from the gain on the divestiture of the company's quality solutions business.
First quarter net income was $12.6 million compared to $51.0 million in the same period last year. During Q1 last year, Compuware net income was positively impacted by $33.8 million from the after-tax gain on the divestiture of the company's quality solutions business.
During the company's first quarter, software license fees were $33.3 million compared to $31.8 million (excluding divested products) and $40.6 million (as reported) in the first quarter last year. Maintenance and subscription fees were $116.8 million in the first quarter compared to $106.3 million (excluding divested products) and $111.1 million (as reported) in the first quarter last year. Revenue from professional services in the first quarter was $56.4 million, compared to $62.7 million in the same quarter last year.
First Quarter Fiscal Year 2011 Highlights
During the first quarter, Compuware:
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strengthened its position as the global leader in application performance by announcing that international IT services company Atos Origin has joined the Compuware Partner Network.
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showcased its solutions for managing the performance of applications across the Cisco network at Cisco Live 2010.
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improved the application performance of SafeAuto Insurance's critical customer-facing applications that span both the Enterprise and Internet by using Gomez adVantage.
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detailed how AccuWeather.com uses the Compuware Gomez mobile monitoring solution.
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released Compuware Changepoint 2010, its powerful project portfolio management and professional services automation solution.
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announced that leading industry analyst firm Gartner Inc. placed Compuware in the "leaders" quadrant of the "Magic Quadrant for IT Project and Portfolio Management."
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announced that Cable&Wireless Worldwide would offer Compuware Vantage and Gomez solutions as an enhancement for its Application Performance Management product portfolio.
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improved the efficiency and success rate for patient transfers for Michigan's Thumb Rural Health Network through the technology of Covisint. Additionally, Covisint globally offered PROSTEP AG's data transfer application, OpenDXM® GlobalX™, through Covisint ExchangeLink™.
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introduced through Compuware Gomez the industry's first solution for testing how entire websites perform and render on the Apple iPad.
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launched Uniface 9.4, which enables a very short time-to-market for rich Internet and mobile applications.
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joined Dole Food Company at the Gartner IT Infrastructure, Operations & Management Summit to highlight how Compuware's end-to-end application performance management solution is improving the performance and availability of Dole Food Company's mission-critical applications.
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announced that Baptist Health System selected Compuware's EHR Service Delivery Solution—powered by Compuware Vantage—to monitor the performance and availability of its Electronic Health Record systems and ensure Service Level Agreements were being met.
- introduced a free, Compuware Gomez Multi-browser Website Performance Test that provides businesses with an instant evaluation of their website response times across multiple browsers and geographies.
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 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 solutions optimize end-to-end application performance for leading organizations around the world, including 46 of the top 50 Fortune 500 companies and 12 of the top 20 most visited U.S. web sites. Learn more at: http://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 p.m. Eastern time (21:00 GMT) today. To join the conference call, interested parties from the United States should call 800-230-1092. For international access, the conference call number is +1-612-288-0337. 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 104766. 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.
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In Thousands) | ||
| AS OF JUNE 30, | ||
| ASSETS | ||
| 2010 | 2009 | |
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $138,670 | $390,680 |
| Accounts receivable, net | 399,976 | 379,771 |
| Deferred tax asset, net | 49,410 | 41,231 |
| Income taxes refundable | 4,965 | 3,793 |
| Prepaid expenses and other current assets | 25,645 | 27,203 |
| Total current assets | 618,666 | 842,678 |
| PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION | 338,739 | 349,258 |
| CAPITALIZED SOFTWARE, LESS ACCUMULATED AMORTIZATION | 42,480 | 36,114 |
| OTHER: | ||
| Accounts receivable | 200,309 | 217,207 |
| Deferred tax asset, net | 35,293 | 32,493 |
| Goodwill | 591,455 | 341,841 |
| Other | 69,465 | 32,960 |
| Total other assets | 896,522 | 624,501 |
| TOTAL ASSETS | $1,896,407 | $1,852,551 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $14,339 | $24,101 |
| Accrued expenses | 70,944 | 74,193 |
| Income taxes payable | 23,211 | 39,927 |
| Deferred revenue | 441,068 | 398,624 |
| Total current liabilities | 549,562 | 536,845 |
| DEFERRED REVENUE | 342,273 | 351,006 |
| ACCRUED EXPENSES | 33,376 | 28,214 |
| DEFERRED TAX LIABILITY, NET | 48,989 | 28,361 |
| Total liabilities | 974,200 | 944,426 |
| SHAREHOLDERS' EQUITY: | ||
| Common stock | 2,236 | 2,378 |
| Additional paid-in capital | 609,249 | 626,421 |
| Retained earnings | 307,394 | 279,951 |
| Accumulated other comprehensive income (loss) | 3,328 | (625) |
| Total shareholders' equity | 922,207 | 908,125 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $1,896,407 | $1,852,551 |
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (In Thousands, Except Per Share Data) | ||
| THREE MONTHS ENDED | ||
| JUNE 30, | ||
| 2010 | 2009 | |
| REVENUES: | ||
| Software license fees | $33,330 | $40,546 |
| Maintenance and subscription fees | 116,759 | 111,127 |
| Professional services fees | 56,396 | 62,715 |
| Total revenues | 206,485 | 214,388 |
| OPERATING EXPENSES: | ||
| Cost of software license fees | 3,416 | 3,949 |
| Cost of maintenance and subscription fees | 13,287 | 8,956 |
| Cost of professional services | 50,713 | 58,901 |
| Technology development and support | 21,541 | 21,482 |
| Sales and marketing | 57,704 | 53,148 |
| Administrative and general | 37,437 | 40,130 |
| Restructuring costs | 2,490 | |
| Gain on divestiture of product lines | (52,351) | |
| Total operating expenses | 184,098 | 136,705 |
| INCOME FROM OPERATIONS | 22,387 | 77,683 |
| OTHER INCOME (EXPENSES) | ||
| Interest income | 909 | 1,569 |
| Other | (44) | (149) |
| OTHER INCOME, NET | 865 | 1,420 |
| INCOME BEFORE INCOME TAXES | 23,252 | 79,103 |
| INCOME TAX PROVISION | 10,607 | 28,056 |
| NET INCOME | $12,645 | $51,047 |
| DILUTED EPS COMPUTATION | ||
| Numerator: Net income | $12,645 | $51,047 |
| Denominator: | ||
| Weighted-average common shares outstanding | 224,538 | 240,784 |
| Dilutive effect of stock options | 3,037 | 1,764 |
| Total shares | 227,575 | 242,548 |
| Diluted EPS | $0.06 | $0.21 |
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (In Thousands) | ||
| THREE MONTHS ENDED | ||
| JUNE 30, | ||
| 2010 | 2009 | |
| CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: | ||
| Net income | $12,645 | $51,047 |
| Adjustments to reconcile net income to cash provided by operations: | ||
| Gain on divestiture of product lines | (52,351) | |
| Depreciation and amortization | 12,213 | 10,378 |
| Stock award compensation | 5,304 | 5,637 |
| Deferred income taxes | (6,079) | 1,017 |
| Other | 336 | 870 |
| Net change in assets and liabilities, net of effects from divestiture and currency fluctuations: | ||
| Accounts receivable | 62,573 | 119,957 |
| Prepaid expenses and other current assets | 19,659 | 14,521 |
| Other assets | 1,452 | (2,339) |
| Accounts payable and accrued expenses | (35,066) | (23,061) |
| Deferred revenue | (64,919) | (64,745) |
| Income taxes | 8,024 | 13,972 |
| Net cash provided by operating activities | 16,142 | 74,903 |
| CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: | ||
| Purchase of: | ||
| Property and equipment | (4,268) | (1,674) |
| Capitalized software | (4,506) | (4,034) |
| Net proceeds from divestiture of product lines | 64,992 | |
| Net cash provided by (used in) investing activities | (8,774) | 59,284 |
| CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
| Net proceeds from exercise of stock options including excess tax benefits | 2,227 | 1,628 |
| Employee contribution to common stock purchase plans | 719 | 579 |
| Repurchase of common stock | (16,160) | (32,305) |
| Net cash used in financing activities | (13,214) | (30,098) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (5,381) | 8,479 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (11,227) | 112,568 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 149,897 | 278,112 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $138,670 | $390,680 |
| COMPUWARE CORPORATION AND SUBSIDIARIES | |||||
| OPERATIONAL HIGHLIGHTS | |||||
| (dollar amounts in thousands) | |||||
| QUARTER | QUARTER | ||||
| ENDED | ENDED | ||||
| JUN 30, | YR - YR | MAR 31, | QTR - QTR | ||
| 2010 | 2009 | % Chg | 2010 | % Chg | |
| Products: | |||||
| Software License Fees excluding Divested Products: | |||||
| Distributed License Fees: | |||||
| Vantage | $ 14,232 | $ 9,358 | 52.1% | $ 16,988 | (16.2%) |
| Changepoint | 2,352 | 1,316 | 78.7% | 2,695 | (12.7%) |
| Uniface | 2,038 | 1,474 | 38.3% | 2,713 | (24.9%) |
| Other | 187 | 481 | (61.1%) | 590 | (68.3%) |
| Distributed License Fees excluding Divested Products | 18,809 | 12,629 | 48.9% | 22,986 | (18.2%) |
| Mainframe License Fees | 14,521 | 19,193 | (24.3%) | 28,839 | (49.6%) |
| Total Software License Fees excluding Divested Products | 33,330 | 31,822 | 4.7% | 51,825 | (35.7%) |
| Maintenance and Subscription Fees excluding Divested Products: | |||||
| Distributed Products | 26,127 | 25,896 | 0.9% | 26,819 | (2.6%) |
| Mainframe Products | 77,360 | 80,392 | (3.8%) | 79,993 | (3.3%) |
| Subscription - Gomez | 13,272 | -- | N/A | 11,087 | 19.7% |
| Total Maintenance and Subscription Fees excluding Divested Products | 116,759 | 106,288 | 9.9% | 117,899 | (1.0%) |
| Total Products Revenue excluding Divested Products: | |||||
| Distributed Products | 44,936 | 38,525 | 16.6% | 49,805 | (9.8%) |
| Mainframe Products | 91,881 | 99,585 | (7.7%) | 108,832 | (15.6%) |
| Subscription - Gomez | 13,272 | -- | N/A | 11,087 | 19.7% |
| Total Products Revenue excluding Divested Products | 150,089 | 138,110 | 8.7% | 169,724 | (11.6%) |
| Divested Products: | |||||
| License Fees | -- | 8,724 | (100.0%) | -- | |
| Maintenance Fees | -- | 4,839 | (100.0%) | -- | |
| Total Products Revenue Divested Products | -- | 13,563 | (100.0%) | -- | |
| Total Product Revenue | $ 150,089 | $ 151,673 | (1.0%) | $ 169,724 | (11.6%) |
| Total Product Revenue by Geography | |||||
| North America | $ 83,951 | $ 80,608 | 4.1% | $ 91,417 | (8.2%) |
| International | $ 66,138 | $ 71,065 | (6.9%) | $ 78,307 | (15.5%) |
| Total Cost of Product Revenue (excluding Gain on Divestiture) | $ 95,948 | $ 87,535 | 9.6% | $ 102,940 | (6.8%) |
| Deferred License Fees | |||||
| Current | $ 46,168 | $ 55,961 | (17.5%) | $ 50,514 | (8.6%) |
| Long-term | $ 36,424 | $ 47,323 | (23.0%) | $ 43,350 | (16.0%) |
| Deferred During Quarter | $ 7,000 | $ 10,679 | (34.5%) | $ 7,729 | (9.4%) |
| Recognized During Quarter | $ 15,271 | $ 24,385 | (37.4%) | $ 18,342 | (16.7%) |
| Professional Services: | |||||
| Professional Services Segment Fees | $ 45,157 | $ 53,045 | (14.9%) | $ 49,858 | (9.4%) |
| Application Services Segment Fees | 11,239 | 9,670 | 16.2% | 10,416 | 7.9% |
| Total Professional Services Fees | $ 56,396 | $ 62,715 | (10.1%) | $ 60,274 | (6.4%) |
| Professional Services Segment Contribution Margin | 10.9% | 5.5% | 14.7% | ||
| Application Services Segment Contribution Margin | 6.8% | 9.1% | 1.2% | ||
| Total Professional Services Fees Contribution Margin | 10.1% | 6.1% | 12.4% | ||
| Billable Professional Services Segment Headcount | 1,171 | 1,391 | (15.8%) | 1,218 | (3.9%) |
| Application Services Segment Headcount | 309 | 259 | 19.3% | 305 | 1.3% |
| Other: | |||||
| Total Company Headcount | 4,256 | 4,275 | (0.4%) | 4,336 | (1.8%) |
| Total DSO (Billed) | 64.3 | 58.4 | 75.2 | ||
| Total DSO | 174.3 | 159.4 | 178.6 | ||
| COMPUWARE CORPORATION AND SUBSIDIARIES | ||
| PRODUCT COMMITMENTS | ||
| (In Thousands) | ||
| QUARTER ENDED | ||
| JUNE 30, | JUNE 30, | |
| 2010 | 2009 | |
| License fees | $ 33,330 | $ 40,546 |
| License fees - divested products * | (8,724) | |
| License fees excluding divested products | 33,330 | 31,822 |
| Change in deferred license fees excluding divested products * | (8,271) | (6,669) |
| License contracts entered into during period excluding divested products | 25,059 | 25,153 |
| Maintenance and subscription fees | 116,759 | 111,127 |
| Maintenance fees - divested products * | (4,839) | |
| Maintenance and subscription fees excluding divested products | 116,759 | 106,288 |
| Change in deferred maintenance and subscription fees excluding divested products * | (57,515) | (47,887) |
| Maintenance and subscription contracts & renewals entered into during period excluding divested products | 59,244 | 58,401 |
| Total products commitments during period excluding divested products | $ 84,303 | $ 83,554 |
| * The company divested its Quality and DevPartner product lines during the quarter ended June 30, 2009. 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. | ||
| A significant portion of the company's product software revenue is recognized ratably over the contractual term of the arrangement. Therefore, to supplement the understanding of Compuware's software business, we believe it is important to also consider the amount of product commitments, which represents the full contractual value of each product software arrangement entered into during the reporting period. | ||