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Compuware (CPWR)

Q4 2011 Earnings Call

May 24, 2011 5:00 pm ET


Robert Paul - President, Chief Operating Officer and Director

Lisa Elkin - Investor Relations

Laura Fournier - Chief Financial Officer, Chief Accounting Officer, Executive Vice President and Treasurer


S. Kirk Materne - Evercore Partners Inc.

James Wood - Susquehanna Financial Group, LLLP

Ian Kell - Northland Securities Inc.

Gary Spivak - Noble Financial Group, Inc.



Hello and welcome to the Compuware Corporation Q4 and Year-End results. At the request of Compuware, this conference is being recorded for instant replay purposes. At this time, I'd like to turn the conference over to Ms. Lisa Elkin, Vice President of Communications and Investor Relations for Compuware Corporation. Ms. Elkin, you may begin.

Lisa Elkin

Thank you very much, Doug, and good afternoon, ladies and gentlemen. With me this afternoon are Bob Paul, President and Chief Operating Officer; and Laura Fournier, Executive Vice President and Chief Financial Officer.

Certain statements made during this conference call that are not historical facts, including those regarding the company's future plans, objectives and expected performance are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this conference call. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially since the statements are based on our current expectations and are subject to risks and uncertainties. These risks and uncertainties are discussed in the company's reports filed with the Securities and Exchange Commission. You should refer to and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

For those of you who do not have a copy, I will begin by summarizing the press release. Bob and Laura will then provide details about the quarter and other Compuware business activities. We will then open the call to your questions.

Compuware growth drivers' outperformance is clear in '11, poised for continued acceleration in fiscal year '12. Compuware earned $0.48 per share in the fiscal year '11, $0.16 per share in Q4. Fiscal year '11 APM license and subscription fees skyrocket 91.7% year-over-year on a GAAP basis to $145.5 million. License and subscription fees up 34.1% on a pro forma basis. Fiscal year '11 Covisint revenues leaped 36% year-over-year to $55 million. Final Q4 results, APM license fees and subscriptions up 54%, Covisint revenue up 65.6%, Uniface license fees up 76.7%, Changepoint license fees up 14.3% year-over-year, Professional Services segment contribution margin over 15%.

Fiscal year '12 guidance predicts ongoing revenue growth, increased EPS and strong cash flow. Compuware Corporation, the technology performance company, today announced financial results for its fourth quarter and fiscal year ended March 31, 2011.

During the fiscal year ended March 31, 2011, Compuware increased its total revenues, software license fees, maintenance and subscription fees and professional services fees year-over-year. Maintenance and subscription fees were $487 million, up from $456.3 million in the previous year. Software license fees were $194.7 million compared to $194.5 million in the previous year. Professional Services fees were $247.2 million, up from $241.3 million in the previous year.

Fiscal year 2011 revenues were $928.9 million, up from $892.2 million in the previous year. GAAP net income was $107.4 million in fiscal year 2011 compared to $140.8 million GAAP and $93.7 million pro forma in fiscal year 2010. GAAP earnings per share were $0.48 in fiscal year '11 compared to $0.60 GAAP and $0.40 pro forma in fiscal year '10, based upon 226.1 million and 234.6 million shares outstanding, respectively.

Fiscal year 2010 net income and earnings per share benefited from a nonrecurring $52.4 million gain from the divestiture of certain product lines and $20.7 million in other income related to a legal settlement.

During the company's fourth quarter, software license fees were $55.7 million, up from $51.8 million in the fourth quarter last year. Maintenance and subscription fees were $124 million in the fourth quarter, up from $117.9 million in the fourth quarter last year. Revenue from Professional Services in the fourth quarter was $69.9 million, up from $60.3 million in the same quarter last year. During the fourth quarter, total revenues were $249.6 million, up from $230 million in the fourth quarter last year. Net income was $34.8 million compared to $37.4 million in the fourth quarter last year. Earnings per share were $0.16 compared to $0.16 last year, based upon 224.4 million and 228.7 million shares outstanding, respectively.

I would now like to turn the call over to Bob.

Robert Paul

Thanks, Lisa. With strong performances by our growth drivers leading the way, Compuware produced a positive fiscal year 2011. We met or exceeded our yearly guidance for EPS for growth in our APM business, for increased Covisint revenue and from improvements in Professional Service margins. In addition, both Uniface and Changepoint solutions showed increases in year-over-year license fees, while Professional Services returned to year-over-year revenue growth in Q4. In the year ahead, we expect accelerated growth by our APM and Covisint business units, as well as ongoing strong profitability and revenue growth from Professional Services, Uniface and Changepoint solutions. We also see a more positive mainframe environment in fiscal year '12.

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