Cognos Inc., a developer of business intelligence software, said that its fiscal 2006 second-quarter earnings inched up 4% on a 14% revenue increase.
The Ottawa, Ontario-based company said that net income for the fiscal second quarter ended August 31 was $28.7 million, compared with $27.6 million in the like quarter last year. Second-quarter revenue advanced to $212 million, from $185.2 million.
For the first six months, revenue grew 15% to $412.1 million, compared with $358.8 million, while net income rose 10% to $52.5 million, from $47.7 million (results are in accordance with U.S. GAAP).
In a conference call with financial analysts, Cognos president and CEO Rob Ashe said that he was not happy with software license growth in the second quarter, but that he did not feel that the quarter's performance reflected any serious problems with the company's ability to execute. Ashe attributed the license performance to "isolated operational weakness" in a couple of geographic areas that has since been remedied.
Based on the launch earlier this month of Cognos 8 Business Intelligence, the latest generation of Cognos's software suite, Ashe said he was optimistic about Cognos's prospects in coming quarters.
"The 4% growth doesn't reflect the opportunity," Ashe said. "I'm not accepting the license performance in the first half. I feel very good about our pipeline. I know Wall Street has concerns about sequential revenue, but I feel pretty good."
The optimism stems from the company's formal launch on September 14 of Cognos 8, which Ashe described on the conference call as "the most significant product in the history of Cognos. It is a paradigm shift in the BI market."
Cognos 8 combines reporting, analysis, dashboarding, scorecarding and event management in to a single product based on what Cognos said was a service-oriented architecture first introduced with the company's ReportNet product in 2003.
Ashe said Cognos 8 reflects a "paradigm shift" because companies are now beginning to evolve their thinking about business intelligence as a departmental application to one much more broadly based throughout a company. To align with this more expansive view about the applicability of BI within a company, Ashe said, the more appropriate architecture for a BI product is one that combines all of the key functions of BI on one architectural base, not a set of individual products integrated into a product suite.
"Companies are extending BI across the enterprise, from a departmental solution to a strategic solution," he said.
In an interview, Paul Hoy, Cognos's director of manufacturing industry solutions, added that one of the key trends within manufacturing, as well as other sectors, is a greater desire for standardization. Hoy said that manufacturers want to reduce the number of planning and analytics products they have as well as the number of technology suppliers they are dealing with. In addition, they also want a more homogeneous IT infrastructure.
"Companies are recognizing that corporate performance management requires one tool -- one set of metadata, one interface, one data warehouse," Hoy said.
Cognos 8 is the company's answer to these requirements. As a result, Ashe said that Cognos 8 would provide "a significant contribution to revenue" in the company's third quarter.
In a statement of its business outlook for that quarter, Cognos said it expects revenue to be in the range of $230 million to $237 million and diluted earnings per share in the range of $0.36 to $0.39. For the full year ended February 28, 2006, Cognos said it expects revenue to be in the range of $915 million to $930 million and diluted EPS at $1.52 to $1.58.
Cognos 8 is currently in controlled release. The software will be generally available beginning in November.