We maintain a Neutral recommendation on
Concur Technologies Inc.
The company reported a strong second-quarter fiscal 2012,
outperforming its expectations. Revenue increased 28% year over
year, above its previous expectation of 25%. Concur benefits from a
significant increase in travel transaction volume and quick returns
on investments in new markets, such as the SMB market and the
unmanaged travel market. Based on the outperformance in the
quarter, Concur raised its revenue, operating margin, earnings and
free cash flow expectations for fiscal 2012.
Valuable long-term drivers for the company include its
investment in the emerging markets, its geographic expansion and
customer retention (in which Concur leads the industry in client
satisfaction). Over the long term, the company expects to benefit
from its investment in content aggregation and delivery, big data
and mobile computing. Through this, the company expects to build a
strong position in the $1 trillion corporate travel market. The
company plans to double its distribution capacity by the end of
fiscal 2013 through significant increase in investment across its
However, the uncertain macroeconomic environment remains a
matter of concern. Furthermore, the company is heavily dependent on
sales of a smaller number of solutions. An important component of
its business success depends on its ability to maintain and develop
relationships with travel suppliers. Adverse changes in the
existing relationships, or an inability to enter into new
arrangements with these parties on favorable terms, could reduce
the amount, quality and breadth of attractively-priced travel
products and services.
Concur Technologies is a provider of business services that
automate the processes involved in the management of corporate
expense. The company's revenue is primarily generated from four
solutions, Concur Travel & Expense, Concur Expense, Concur
ExpenseLink and Concur Cliqbook Travel. Major competitors of Concur
Concur Technologies currently has a Zacks #3 Rank (Hold
recommendation) over the next one-to-three months.
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