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Compuware (CPWR)

Q1 2012 Earnings Call

July 21, 2011 5:00 pm ET


Robert Paul - Chief Executive 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.

Mike Latimore - Northland Securities Inc.

Gary Spivak - Noble Financial Group, Inc.



Hello, and welcome to Compuware Corporation First Quarter Results Teleconference. 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, Chief Executive Officer; Joe Angileri, President and Chief Operating Officer; Laura Fournier, Executive Vice President and Chief Financial Officer; and Pat Stayer, Executive Vice President, Worldwide Solutions.

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 earned $0.08 per share in Q1. Total revenues increased 11.4% year-over-year to $230 million, up 6.5% in constant currency. Earnings per share increased 33% from Q1 last year. APM subscription fees increase 40.6% year-over-year to $18.7 million. Covisint application services fees increase 43.8% year-over-year to $16.2 million. Mainframe license fees jumped 28.3% year-over-year to $18.6 million. Professional Services fees rise 18.6% year-over-year to $53.6 million. Professional Services achieves 15.8% contribution margin, up from 10% -- 10.9% last Q1.

During the company's first quarter, software license fees were $34.1 million, up from $33.3 million in the first quarter of last year. Maintenance and subscription fees were $126.1 million in the first quarter, up from $116.8 million in the first quarter last year. Revenue from Professional Services in the first quarter was $69.8 million, up from $56.4 million in the same quarter last year.

During the first quarter, total revenues were $230 million, up from $206.5 million in the first quarter last year. Net income was $17 million compared to $12.6 million in the first quarter last year. Earnings per share were $0.08 compared to $0.06 last year based upon 222.9 million and 227.6 million shares outstanding respectively. I would now like to turn the call over to Bob. Bob?

Robert Paul

Thanks, Lisa. Compuware's new business unit structure gives us much better visibility and control over the business. This drives greater agility, which is especially important in quickly changing market conditions. It also means our management team and our investors can easily evaluate the execution of each part of the business and quickly understand its overall contribution to Compuware's success. To extend this transparency we will now use a consistent format on these calls to discuss quarterly business results.

First, we'll offer our perspective on the total numbers for the quarter. Next, we'll discuss the performance of this business unit, including revenues, margin, key achievements and important trends. Following the business unit discussion, we'll cover onetime issues and we'll close with guidance. This format, consistent with Compuware's new organizational structure, will provide the most information for our investors in the clearest way possible, and we welcome your feedback. Furthermore, for each of our business units, we are completing detailed 3-year financial on solution-based business plans. This process is a next natural step of the transformation we embarked upon 3 years ago.

Joe Angileri, who recently joined us as President and COO and brings decades of financial and business consulting experience, will help drive this effort. Joe is working with me and our leadership team to complete it by our October board meeting. We look forward to sharing these plans with you on a detailed Investor Day in New York on November 10th. I believe the 3-year plans will provide you with the insight to clearly evaluate our performance, which includes delivering long-term and consistent increases in revenues and margins. We will update these plans as a continuous process and will use them as a backbone from which to measure the impact of any onetime events or changing market conditions. I look forward to Joe contributing in future earnings calls on this project, and it'll be exciting to have him accelerate our journey towards operational excellence.

For it's first quarter ended June 30th, Compuware posted positive results with total revenues up 11.4% from Q1 last year to $230 million. Net income was $17 million, up 34.3% from Q1 last year. Earnings per share were $0.08, up from $0.06 per share in Q1 last year.

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