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Compuware Corporation Reports Third Quarter, Fiscal Year 2014 Results

Stocks in this article: CPWR

Compuware Corporation (Nasdaq: CPWR), the technology performance company, today announced financial results for its third quarter, fiscal year 2014 ended December 31, 2013.

Non-GAAP net income for the quarter was $38.0 million, or $0.17 per diluted share, compared to $32.3 million, or $0.15 per diluted share in the year-ago period. GAAP net income for the third quarter was $25.0 million, or $0.11 per diluted share, compared to $25.3 million, or $0.12 per diluted share in the year-ago period.

(Included in the financial tables is a reconciliation between non-GAAP and GAAP results.)

“The third quarter was a very productive period for the company. First and foremost, we posted another quarter of solid results, led by APM’s strong operating execution and our continued improvement in profitability, as evidenced by double-digit earnings growth both year-over-year and sequentially,” said Compuware President and CEO Bob Paul. “Our APM business continues to excel on all fronts, driving consistent growth and profitability gains. Although there is more work to do in our Mainframe business, I’m pleased with the company’s operating performance while also successfully executing on several key strategic initiatives. As a result, we are now poised to achieve greater earnings and revenue growth going forward. With our portfolio rationalization now behind us, we will continue to execute on the final steps that remain in our transformation into the ‘new’ Compuware.”

Third Quarter Fiscal Year 2014 Results

During the company’s third quarter:

  • Total revenues were approximately $250.5M, down 2.9 percent y/y and up 9.8 percent sequentially
  • Software license fees were $56.7M, down 12.6 percent y/y and up 58.8 percent sequentially
  • Maintenance fees were $101.6 million, flat y/y and up 1.1 percent sequentially
  • Subscription fees were $21.7 million, up 4.5 percent y/y and 5.2 percent sequentially
  • Professional services revenues were $46.4 million, flat y/y and sequentially
  • Application services fees were $24.1 million, up 1.1 percent y/y and down 1.7 percent sequentially

Third Quarter Fiscal Year 2014 Highlights

During the third quarter, Compuware:

  • Made changes to its Board of Directors by appointing Jeffrey J. Clarke, Managing Partner at Augusta Columbia Capital, and Jennifer J. Raab, President of Hunter College. Glenda D. Price, Ph.D., and Ralph J. Szygenda stepped down from the Board.
  • Announced that Gartner, Inc. positioned Compuware in the “Leaders” quadrant of the “ Magic Quadrant for Application Performance Monitoring (APM)” report for the fourth consecutive year. Compuware is the only vendor to consistently appear in this position since the report first published in 2010. Additionally, Compuware was once again positioned the furthest for ‘completeness of vision’ in the APM Magic Quadrant for the third consecutive year.
  • Announced that industry analyst firm International Data Corporation (IDC) ranked Compuware the world's third largest APM software vendor based on 2012 revenue. Compuware also had the highest growth rate of the top three vendors.
  • Released a new version of  Compuware APM Real User Monitoring for Mobile and Web Apps powered by dynaTrace and PurePath Technology TM.
  • Announced day-one support for IBM DB2 11 for z/OS; allowing customers who are ready to migrate their production applications to DB2 11 to immediately begin using Compuware's comprehensive suite of mainframe developer productivity solutions for DB2 including Abend-AID, File-AID, Xpediter and Strobe.
  • Announced the availability of the new  Compuware APMaaS Platform, which offers a simplified, zero-configuration user interface for quick time-to-value.
  • Announced the results of a global CIO survey on the impact of new technologies and trends on the mainframe application environment. The survey found mobile technology is increasing complexity, usage and costs of mainframe applications.
  • Revealed that it was once again positioned by Gartner Inc. in the “Magic Quadrant for Integrated IT Portfolio Analysis (IIPA) Applications.” This positioning was based on analyst evaluation of Compuware Changepoint, the company’s market-leading project and portfolio management solution.
  • Signed a strategic agreement with Cisco. Under the agreement, Cisco will embed Covisint technology within the Cisco exchange platform to provide high-value solutions to customers worldwide.

Use of Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding the Company's results as determined by U.S. generally accepted accounting principles (GAAP), the Company has also disclosed in this press release and the accompanying tables non-GAAP net income and non-GAAP diluted earnings per share. Each of these financial measures excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. These non-GAAP financial measures exclude share-based compensation expense; the amortization of acquired software and intangible assets; restructuring charges; advisory fees associated with certain shareholder actions and business transformation; and the related tax impacts of these items. Each of the non-GAAP adjustments is described in more detail below. This press release also contains a reconciliation of each of these non-GAAP measures to its most comparable GAAP financial measure.

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