) reported a loss of 10 cents per share in the third quarter of
fiscal 2014, wider than a loss of 9 cents per share reported in
the year-ago quarter.
CA INC (CA): Free Stock Analysis Report
SALESFORCE.COM (CRM): Free Stock Analysis
HEWLETT PACKARD (HPQ): Free Stock Analysis
To read this article on Zacks.com click here.
Revenues jumped 1.3% from the year-ago quarter to $24.1 million.
Revenue growth was driven by the addition of new customers.
During the quarter, 42 new customer agreements were signed, out
of which 21 were with existing customers and the remaining 21
were with new ones who were added to the Covisint platform during
Subscription revenue increased 21.0% year-over-year to $17.6
million, whereas Service segment revenue decreased 30.0%
year-over-year to $6.5 million.
Gross margin for the quarter was 43.3%, down from 48.9% in the
year-ago quarter. Cost of revenue increased 12.2% on a
year-over-year basis to reach $13.7 million. The increase in cost
of revenue outpaced revenue growth. Non-GAAP gross margin for the
quarter was 50.4%, down from 54.2% reported in the year-ago
Total operating expenses as percentage of revenues were 77.7%,
much higher than 49.5% reported in the year-ago quarter. Research
& development, sales & marketing and general &
administrative expenses as percentage of revenues moved up 12.6,
7.8 and 7.8 percentage points, respectively.
Loss from operations was $8.3 million, wider than $0.15 million
reported in the year-ago quarter. Net loss (including stock-based
compensation) was $3.6 million or 10 cents per share compared
with $2.6 million or 9 cents per share in the year ago quarter.
We believe that strong demand for cloud-engagement platforms in
the U.S. and internationally will drive business for the company
in the long run. Moreover, new contract wins and increasing
customer base are also encouraging.
Moreover, the company's continuous efforts to extend its foothold
into various new spheres will help it in reporting robust growth
Additionally, since the subscription business happens to be a
higher margin one, the company has recently adopted the long term
goal of focusing more on it rather than the other segments. We
strongly believe that the aforesaid activity will enhance margins
and profitability of the company going forward.
Also, Covisint's recent partnership with Cisco is viewed in a
positive light. As per this agreement, Cisco will embed Covisint
technology within the Cisco Exchange platform to provide high
value connected industry solutions to Cisco customers worldwide.
The partnership also leverages Covisint's deep legacy in
providing hardened identify management across highly federated
operating environments that are typical in Internet of Things
The IoT is tipped for explosive growth, with Gartner predicting
that 26 billion things other than PCs or smartphones will be
connected to the Internet by 2020, up from 0.9 billion four years
ago. Going by the aforesaid data, we believe that Covisint will
be able to make steady progress.
Competition from companies such as
Hewlett Packard Co.
), however, remains a concern.