Service-oriented architecture software provider TIBCO Software Inc. yesterday reported second-quarter financial results in which year-over-year revenue was up, but income dropped sharply.
While the company's total revenue of $130.5 million for the quarter ended June 3 was up 8% year over year from $121.2 million, net income in the quarter was $9.2 million, or $0.04 per diluted share, compared with $24.5 million, or $0.11 per diluted share, in the comparable period in 2006. TIBCO said net income for the second quarter of fiscal year 2006 included a benefit of $9.9 million, or $0.05 per share, "related to the release of valuation allowance that had previously been recorded against our deferred tax assets."
The company also said total operating expenses for the most recent quarter grew to $83 million, from $74.1 million.
Software license revenue in the quarter was $54.9 million, representing approximately 42% of total revenue, and within the company's guidance range of $52 million to $60 million. Total revenue also hit close to the mid-point of the expected range of $126 million to $136 million.
In discussing the quarterly results yesterday on a conference call with analysts, TIBCO Chairman and CEO Vivek Ranadivé and Executive Vice President and CFO Murray Rode remained optimistic in their guidance for the company's full-year performance.
"Although I feel our execution has been solid, I believe we can and will do better," Ranadivé said. "I'm finding that our core competencies in messaging, event-driven systems, and real-time solutions continue to be critical to customers and central to the success of our offerings in BPM and SOA."
Highlights in the quarter included the closing of 73 deals valued at more than $100,000 in license revenue, and 12 deals worth more than $1 million. In addition, the company added 49 new customers to its total base of approximately 3,000.
North American business represented 46% of total revenue; Europe, 39%; and Asia-Pacific, 15%. In North America, revenue was down 1% year over year while growth in the international segments was in the double digits. TIBCO attributed the lower North American results to softness in the financial services and government sectors, as well as to turnover in its sales organization.
Manufacturing industries account for approximately 5% of TIBCO's customer base. The company also serves financial services, government, telecom, energy, and transportation/logistics companies.
Rode said that increasing numbers of existing customers are evaluating TIBCO's new service virtualization platform, ActiveMatrix, but that the company's revenue expectations from the platform for the rest of the year remain low. The first products in the ActiveMatrix family were released late last year, with a second set of releases planned for later this year.
TIBCO's overall revenue growth target for the year is 12% to 15%, or $580 million to $595 million. Expected total revenue in the third quarter is $136 million to $142 million, officials said, with license revenue expected to be in the range of $58 million to $63 million.
Ranadivé and Rode spent a good portion of the call answering analysts' questions about TIBCO's acquisition of business intelligence software provider Spotfire, which closed earlier this month.
Ranadivé said Spotfire's BI offerings fit squarely with TIBCO's aim to support the eventual business landscape in which real-time information will enable companies to identify trends as they occur, as opposed to analyzing information and events after the fact.
"We have said that analytics would be a major focus area for TIBCO, and with this acquisition, we've taken a significant step toward realizing our vision of predictive business," he said.
Officials estimated that Spotfire's contribution would be $12 million to $18 million in the second half of the year, with roughly two-thirds realized during the fourth quarter. They noted, however, that TIBCO has yet to determine the amount of Spotfire's total deferred license and maintenance revenue that will carry over from the acquisition.
Ranadivé said TIBCO plans to keep Spotfire operating as a separate business and will "leverage it gradually" from a sales perspective, while the company works on integrating Spotfire technology into its SOA offerings.