) reported first quarter fiscal 2015 earnings of 3 cents per share,
which were at par with the Zacks Consensus Estimate. Non-GAAP
earnings (including stock based compensation) however declined
46.0% from the year-ago quarter.
Shares of Compuware were up 1.41% ($0.13) following the earnings
Revenues decreased 2.9% from the year-ago quarter to $164.5 million
in the reported quarter and missed the Zacks Consensus Estimate of
$165.0 million by a whisker.
Segment-wise, APM increased 3.1% on a year-over-year basis to $77.4
million in the fourth quarter. Mainframe and Covisint, on the other
hand, decreased 8.5% and 10.4% from the year-ago quarter to $65.5
million and $71.6 million, respectively in the reported quarter.
Management stated that dynaTrace continues to be the fastest
growing APM product in the market. It provides significant
competition to similar solutions from the likes of CA Technologies
) and Hewlett-Packard (
With a win rate of greater than 70% against all competitors, new
and old alike, it is expected that dynaTrace will continue to be
Compuware's flagship APM solution in fiscal year 2015 and beyond.
Further, increased investment and go-to market strategies are
expected to drive DCRUM and APMaaS growth going forward.
Compuware's top-line also gained from robust performance of other
APM products namely Gomez Performance Network and Data Center
Real-User Monitoring solution.
Sourcewise, software license fees (16.2% of revenues) declined
15.2% on a year-over- year basis to $26.7 million in the first
quarter. Maintenance fees (53.8% of revenues) and Service fees
(5.3% of revenues) increased 1.5% and 9.7% on a year-over-year
basis to $88.5 million and $8.4 million, respectively.
Subscription fees (11.8% of revenues) and Application Service fees
(13.1% of revenues) declined 3.8% and 10.8% from the year ago
quarter to 19.4 million and $21.6 million, respectively in the
All four geographic locations where the company operates namely,
North America, EMEA, APAC and Latin America, experienced
year-over-year bookings growth for the quarter.
In the quarter, Compuware introduced new capabilities to its Data
Center Real-User Monitoring (DCRUM) solution. During the quarter,
the company formed a partnership with Emulex Corporation, a leader
in network visibility, to announce the availability of the Endace
Fusion Connector for Compuware APM's DC Rum Solution.
The company is exploring the feasibility of separating its APM and
Mainframe operations, which it believes would allow these very
distinct businesses competing in diverse market categories to build
on their leadership positions and thrive as independent entities.
Operating expenses as a percentage of revenues declined 150 basis
points (bps) from the year-ago quarter to 66.9% in the reported
quarter. Operating expenses exclude restructuring expenses,
amortization of purchased software, and amortization of acquired
intangible assets but include stock-based compensation.
The company reported an operating loss of $3.3 million in the first
quarter compared to an operating profit of $3.0 million in the
Adjusted net income (excluding all one-time items but including
stock based compensation) was $6.0 million or 3 cents per share
compared to $10.9 million or 5 cents per share reported in the
Compuware Corporation - Earnings Surprise |
At the end of the first quarter of fiscal 2015, cash and cash
equivalents amounted to $275.5 million, down from $300.1 million in
the previous quarter. Long-term debt was nil in the reported
For fiscal 2015, Compuware expects revenues in the range of $720.0
million to $735.0 million. The Zacks Consensus Estimate for the
same is pegged at $764.0 million, which is much higher than the
management guided range
Management reiterated its non-GAAP earnings outlook in the range of
41 cents - 45 cents per share. However, the Zacks Consensus
Estimate for the same is pegged lower at 34 cents per share.
Management expects cash flow from operations to be in the range of
$105.0 million to $110.0 million.
Although the Mainframe business reported a year-over-year decline
in the fourth quarter, management believes it is stabilizing and
has significant growth opportunities going forward.
Compuware reported decent fourth quarter results. The bottom line
was in line with the Zacks Consensus Estimate while the top line
missed the same. Management provided a lower revenue guidance.
Compuware operates in an intensely competitive landscape and
competes with the likes of International Business Machines Corp (
) with respect to one or more offerings.
Nevertheless, we believe that Compuware's innovative product
pipeline, initiatives to reduce costs and new program wins will
boost profitability going forward. Moreover, the recent
recognitions by analyst firms including Gartner and IDC for being a
force to reckon with are a major positive.
Currently, Compuware has a Zacks Rank #3 (Hold).
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