Concur Technologies (CNQR) Q3 2012 Earnings Call August 01, 2012 5:00 pm ET Executives John Torrey - Executive Vice President of Corporate Development S. Steven Singh - Chairman and Chief Executive Officer Rajeev Singh - Co-Founder, President, Chief Operating Officer and Director Francis J. Pelzer - Chief Financial Officer and Principal Accounting Officer Analysts David M. Hilal - FBR Capital Markets & Co., Research Division Laura Lederman - William Blair & Company L.L.C., Research Division Brent Thill - UBS Investment Bank, Research Division Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division Michael B. Nemeroff - Crédit Suisse AG, Research Division Marc Fuller Ross MacMillan - Jefferies & Company, Inc., Research Division Presentation Operator
We are now on Slide 1. Our speakers for the call today are Steve Singh, our Chairman and Chief Executive Officer; Rajeev Singh, our President and Chief Operating Officer; and Frank Pelzer, our Chief Financial Officer. After our prepared statements today, we will host a brief question-and-answer session.Please now advance to Slide 2. Before we get started, we want to remind you that during the course of this conference call, we will discuss our business outlook and make other forward-looking statements regarding our current expectations of future events and the future financial performance of the company. These forward-looking statements are based on information available to us as of today's date and are subject to risk and uncertainty. We encourage you to review the details on the Slide 2 and our filings with the Securities and Exchange Commission, which are available at sec.gov, for additional information on risk factors that could cause actual results to differ materially from our current expectations and the forward-looking statements expressed or implied during this conference call. We assume no duty or obligation to update these forward-looking statements even though our situation may change in the future. Please now advance to Slide 3. At this time, I'd like to turn the call over to Steve Singh. Steve? S. Steven Singh Thanks, John. Good afternoon, everyone. Before we get started, I wanted to share a small milestone. 19 years ago today, Mike Hilton, Raj Singh and I started Concur. So it gives me great pleasure to report that we had an incredible quarter. Revenue, earnings, operating margin, as well as operating and free cash flow were well ahead of our expectations. New customer growth continues to be very strong as we signed more than 1,000 new customers in the quarter. We also signed what we believe to be the largest enterprise cloud applications contract ever awarded, a $1.4 billion, 15-year contract with the GSA.
Consistently strong execution is the hallmark of any great and enduring company. And we'll spend a great deal more time detailing Q3 results during this call. But as happy as we are with the quarter-in/quarter-out execution by the more than 2,300 Concur employees around the world, we're focused on a goal much bigger than what we are today.With our entry into the unmanaged travel market 18 months ago and our expansion into the public sector market, validated by this past quarter's ETS2 award, we have BBB addressable market than we have been previously serving, creating the opportunity for the perfect trip for all travelers. But we're not content with merely automating the front end of an increasingly ubiquitous business process. Through the Concur T&E Cloud, we can constructively disrupt and drive efficiency into the entire corporate travel supply chain for the benefit of the business traveler, the companies that they work for and the suppliers that serve them. We are committed to truly and fundamentally improving the experience and value delivered across the entire corporate supply chain, and this commitment is the foundation of a long-term company that's woven into the fabric of how global commerce is conducted. We fully expect to become that company. Before we expand upon our strategy and recent business highlights, let me discuss our Q3 operating results. Please turn to Slide #4. In Q3, we exceeded our expectations across every core metric. We delivered $113.2 million in revenue, up 26.5% year-over-year. Revenue outperformance was driven by a number of factors, deployments were ahead of schedule, travels transaction volume was modestly ahead of expectations, and we're starting to see early returns on our investments in new markets, such as the SMB market and the unmanaged travel market. We are pleased with our revenue and customer growth rates on top of what's already the second highest revenue scale in the software-as-a-service sector, once again reflecting the profit discipline we have long enforced on the business. Non-GAAP EPS was $0.34 and non-GAAP operating margin was 19%, both ahead of our targets as revenue outperformance dropped straight to the bottom line, and cash flow from operations and free cash flow were well ahead of our expectations. Read the rest of this transcript for free on seekingalpha.com