On the heels of an acquisition announcement, Cognos Inc., a purveyor of business intelligence and performance management software, announced a stellar second quarter that portends a strong end to its fiscal year.
For its second quarter of fiscal year 2008, ended August 31, 2007, Cognos reported net income (on U.S.GAAP basis) of $26.5 million on revenue of $252.4 million. That represents an increase of 12% and 10%, respectively, over the year ago quarter in which the company reported a net income of $23.8 million on revenue of $229.9 million.
Licensing revenue for the quarter was $87 million, a 12% increase over the $78 million reported in Q2 2007. And, earnings per diluted share on a U.S. GAAP basis were $0.31, an increase of 19% over the $0.26 reported in the year ago quarter.
On a conference call with financial analysts yesterday, company executives highlighted four key developments that contributed to the quarter. The company sealed 9 deals greater than $1 million in value, one of which came in around $5 million; Cognos rolled out industry-specific performance blueprints for pharmaceutical and financial services sectors; inked a worldwide reseller agreement with data quality company Informatica; and, over the last year, added 45 new sales professionals, upping headcount to 411 people, the largest sales staff in the company's history.
In addition, Cognos has been strengthening its partnerships with service organizations, like Accenture and BearingPoint, officials said. And, Cognos is in the midst of a strategic acquisition. Earlier this month, Cognos announced it will acquire Applix Inc., in a cash tender offer that equates to about $339 million. Once the acquisition is complete, the Applix analytics software will complement the Cognos 8 performance management and business intelligence products, giving customers enhanced capabilities to analyze and optimize financial performance. Within the Applix application, for example, there is a strong finance self-service capability that includes business rules management.
This latest acquisition will help Cognos grow within its existing customer base by broadening its appeal to the financial user, says AMR Research analyst David Kasabian.
"Over the last few years we have seen a bit less focus on the performance management space by Cognos," noted Kasabian in an e-mail to Managing Automation. "However, as evident by their intent to acquire Applix, we can expect that going forward Cognos will be putting significant effort on selling to the office of the CFO with what they call Financial Performance Management (FPM) applications."
According to Cognos, 68% of its licensing revenue for the quarter came from existing customers. "Given that ... the continued expansion of their performance management product offerings makes sense. Cognos has focused recent releases on strengthening their Cognos 8 platform and they expect those investments to pay dividends in streamlining their ability to develop new products or integrated acquired products into the platform," Kasabian noted.
Currently, the company is beta testing version 8.3 of its Cognos 8 platform, which includes enhanced systems management through a new administrative console, the ability to create intuitive reports quickly, and a new scorecard capability, to name a few new features.
The expanding product portfolio and emphasis on consulting services puts Cognos in a good competitive spot, officials said.
"We feel good about our position going into the second half of the year," said Cognos COO Les Rechan, during the analyst briefing. "Our ability to serve customers and to close business in partnership mode ... gives us the ability to go out and compete well against Oracle or Business Objects."
The company's outlook — given no significant changes in the economy — includes revenue of $270 million to $285 million for the third quarter and $1.07 billion to $1.1 billion in revenue for the full fiscal year. Cognos reported revenue of $979.3 million in fiscal 2007.