Compuware Management Discusses F2Q2011 Results - Earnings Call Transcript

Compuware Management Discusses F2Q2011 Results - Earnings Call Transcript
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Compuware Corporation (



F2Q2011 (Qtr End 09/30/10) Earnings Conference Call

October 21, 2010 5 PM ET


Lisa Elkin - VP, Communications and IR

Bob Paul - President and COO

Laura Fournier - EVP, CFO and Treasurer


Kirk Materne – Evercore Partners Inc.

Aaron Schwartz – MKM Partners

Mike Latimore – Northland Capital Markets

Gabe Lowy – Mizuho Securities

David Rudow – Thrivent Financial



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Hello, and welcome to the Compuware Corporation Second 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, President and Chief Operating Officer; Laura Fournier, Executive Vice President and Chief Financial Officer; and Pat Stayer, Senior Vice President Worldwide Sales.

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 those 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 $0.12 per share in Q2 as growth business has continued to soar. Non-mainframe solutions revenue up 53% year-over-year in Q2.

Q2 total revenue increase 3.6% year-over-year, total products revenue increases nearly 5% year-over-year to $167.6 million in Q2. Total APM revenue reaches $51.4 in Q2 up nearly 26% on a pro forma basis year-over-year.

Covisint revenues reached $12.2 million up 27% from Q2 last year.

Professional services segment contribution margins reaches 12.5%.

Compuware reports second quarter revenues of $225.9 million up 3.6% from $217.9 million in Q2 last year. Second quarter earnings per share were $0.12 based upon $224.4 million shares outstanding.

Second quarter net income was $26 million.

During the company’s second quarter, software license fees were $45.6 million.

Maintenance and subscription fees were $122 million in the second quarter up 11.2% from $109.7 million in the second quarter of last year.

Revenue from professional services in the second quarter was $58.3 million, compared to $58.1 million in the same quarter last year.

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

Bob Paul

Thanks, Lisa. Last quarter, the evolution of Compuware’s business into a next generation software and services provider started to become numerically clear. This quarter provides additional clarity around the business as we increase year-over-year total revenues as our growth engines delivered outstanding results and as we exceeded Wall Street consensus for EPS.

As one of our analyst noted this quarter, signs of the dust has settled will be a victory and we believe that dust has settled. The rapid growth our application performance management and secure collaboration businesses diversify the company’s revenue mix adding recurrent revenue and additional visibility while protecting Compuware from market fluctuations in our more mature businesses. This revenue shift to more distributed and subscription base revenue will continue for the foreseeable future.

Total APM revenues, which consist of our Vantage and Gomez solutions, are up 25.8% on a pro forma basis, from the year ago period to $51.4 million. Vantage license fees are up 48.1% and Gomez subscription fees up 29.6% on a pro forma basis year-over-year. This clearly places Gomez as the largest and fastest web performance management solution on the world.

This growth is simply based on a differentiated and disruptive solution and a rapidly growing that analyst have predicted will be worth over $18 billion annually by 2013. Here’s why – virtually, every strategic application being written today in the world is web-based. These applications deliver revenue growth, improve market share and increase brand awareness.

The C [ph] Suite simply can’t fly blind with applications of this importance and Compuware is the only company that can offer an integrated view of applications performance across the entire applications delivery chain from the enterprise to the internet and through the cloud.

Whether a CEO of a large health system is delivering mission critical apps to physicians to become an accountable care organization or a CEO at a global bank needs to protect transaction revenue and improve regional market share by making sure their online banking systems are working well in every city, executives know that poorly performing applications create crisis. So, effectively, all companies is starting to leverage cloud strategies and there are many, are in the dark without our solutions.

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