MICROS Systems Inc.
) reported adjusted earnings (excluding the effect of
amortization of Torex intangibles but including stock-based
compensation expenses) on a proportionate tax basis of 58 cents
per share for the second-quarter of fiscal 2014, missing the
Zacks Consensus Estimate by a penny. However, on a year over year
basis earnings increased 11.4%.
Revenues of $345.6 million increased 6.5% year over year and came
above the Zacks Consensus Estimate of $329.0 million.
Year-over-year improvement in revenues was primarily attributed
to improving macro condition across all its business segments
specially software revenues and strong sales implementation.
Also, the year-over-year expansion was driven by strong growth in
terms of geography and verticals.
Segment wise, Service revenues came in at $229.7 million, up 5.1%
from the year-ago quarter. Hardware revenues came in at $71.1
million, increasing 5.7% from the year-ago quarter. Software
revenues increased 15.5% from the year-ago quarter to $44.7
Geographically, international revenues grew 6.7% from the
year-ago-quarter to $211.2 million. Revenues from the U.S. &
Canada increased 6.2% from the year-ago period to $134.4 million.
Adjusted gross margin was 52.7%, down 31 basis points (bps) from
the year-ago quarter, primarily due to higher cost and expenses
related to services.
Adjusted operating expenses increased 7.7% on a year-over-year
basis to $117.3 million due to increases in both selling, general
and administrative expenses and research and development
expenses. Moreover, as a percentage of revenues, operating
expenses increased 38 basis points from the year-ago quarter to
33.9%.This in turn impacted MICROS' operating performance.
Adjusted operating income increased 2.8% from the year-ago
quarter to $64.9 million while margins contracted 69 bps to
Adjusted net income (excluding the effect of amortization of
Torex intangibles but including stock-based compensation
expenses) came in at $44.5 million or 58 cents versus adjusted
net income of $42.3 million or 52 cents in the year-ago quarter.
Balance Sheet and Cash Flow
MICROS ended the quarter with cash and cash equivalents and
short-term investments of $627.3 million versus $595.6 million at
the end of the previous quarter. Accounts receivable were $221.8
million. The company did not have any long-term debt on its
The company reported cash flow from operations of $101.2 million
for the year ended Dec 31, 2013. Free cash flow came in at $76.6
MICROS repurchased 395.0 million shares for $19.7 million
during the quarter. The board of directors also approved the
repurchase of an additional $200.0 million worth of shares.
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The company expects its fiscal 2014 revenues to be in the range
of $1.320 billion to $1.345 (previously $1.295 billion and $1.320
billion) billion, while non-GAAP earnings per share are expected
to be in the range of $2.46 to $2.50.
MICROS' second-quarter fiscal 2014 results were a mixed bag with
the top line beating the Zacks Consensus Estimate and increasing
on a year-over-year basis but the bottom line missing the same.
The company is expected to take care of its margins and control
expenses. The company also increased its fiscal 2014 revenue
Moreover, recent collaborations with companies like
), Dell and
) are expected to boost MICROS' financial performance, going
forward. Also, the recent acquisitions will give the company a
major competitive edge and strengthen its market position.
On the flip side, the company is facing competition from the
likes of Square, Revel,
) and NCR Corp., which provide mobile and tablet-based offerings
for the hospitality sector and cannibalize the legacy POS
Hence, MICROS being a hardware-based POS solutions provider will
lose out on market share. Moreover, the company's European
exposure and a sluggish macro-economic environment are the other
headwinds, going forward.
Currently, MICROS has a Zacks Rank #4 (Sell).