Another Tepid Quarter for BMC - Analyst Blog

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BMC Software Inc. ( BMC ) reported first quarter 2013 earnings per share of 43 cents, below the Zacks Consensus Estimate of 60 cents.

Revenue

Total revenue in the reported quarter was $504.4 million, edging up 0.4% year over year.

The company reported total ESM revenue of $308 million, almost flat with the year-ago period. Total MSM revenue inched up 1.0% year on year to $197.0 million.

License revenue in the first quarter was $171.6 million, down 9.4% from the year-ago quarter. This apart, the ESM license revenue was $97 million, down 18% on a year-over-year basis, while MSM license revenue was $75.0 million, up 5% from the year-ago period.

Maintenance revenue in the first quarter was $278.8 million, an increase of 5.4% compared with the year-ago period. ESM maintenance revenue was $157 million, up 11% and MSM maintenance revenue was $122 million, down 1% from the first quarter of fiscal 2012.

Professional services revenue, which is included in the ESM business unit, increased 11.8 year on year to $54.0 million.

Bookings

Cloud-related license bookings in the quarter nearly doubled year over year. In the quarter, BMC's SaaS solutions added roughly 70 new customers. The number of active SaaS customers jumped almost 225.0% from the prior-year quarter.

Operating Results

Operating income on a GAAP basis was $73.9 million, down 35.8% from $115.1 million in the year-ago quarter. Excluding special items such as severance costs and amortization of intangible assets but including stock-based compensation expense, non-GAAP operating income was $139.7 million in the reported quarter, up 26.5% from $110.4 million in the prior-year quarter.

Net income on a GAAP basis was $54.1 million compared with $95.7 million in the year-ago quarter. Excluding special items such as amortization and severance costs but including stock-based compensation expense, non-GAAP net income was 43 cents per share compared with 56 cents in the year-ago quarter.

Balance Sheet, Cash Flow & Share Repurchase

BMC Software generated $219.6 million in cash flow from operations in the reported quarter versus $212.9 million in the previous quarter. The company exited the quarter with cash and investments of $1.60 billion, up from $1.58 billion in the prior quarter.

During the reported quarter, BMC repurchased 3.5 million shares of the company's common stock for a total cost of $150 million.

Guidance

For fiscal 2013, BMC expects non-GAAP diluted earnings per share in the range of $3.49 to $3.59. The company also expects full-year fiscal 2013 cash flow from operations to be in the range of $785.0 million to $835.0 million, reflecting almost a 100 basis point improvement over the midpoint range of fiscal 2012.

Our Take

BMC Software is one of the leading software vendors and providers of system and service management solutions across the globe. BMC reported sluggish first quarter 2013 results, with EPS falling short of our expectation and revenue remaining flat. However, the company witnessed substantial cloud bookings and increased SaaS customers.

The company witnessed growth in most of its business segments and generated decent cash flow. However, we are a bit apprehensive about the bleak business conditions in Europe. Moreover, growing competition from big players such as IBM Inc. ( IBM ), Hewlett-Packard Company ( HPQ ), EMC Corp. ( EMC ) and CA Inc. ( CA ) will pose challenges for the company.

The company carries a Zacks #3 Rank, implying a short-term Hold rating.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BMC , CA , EMC , HPQ , IBM

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