Updated from 5:37 p.m. EDT
second-quarter profit slipped a bit despite an 8.4% increase in total revenue.
But the company's announcement that it will buy back approximately $200 million in stock pleased investors who promptly bid shares up by $1.68, or 5.3%, to $33.62 in after-hours trading Thursday.
Cognos also gave stronger-than-expected guidance for the rest of the fiscal year, raising its annual profit forecast by 15 cents a share on a non-GAAP basis.
The maker of business intelligence software posted a GAAP profit of $23.8 million, or 26 cents a share, compared with $24.9 million, or 27 cents a share, in the year-ago quarter.
Earlier in September, Cognos told investors that it was raising its earlier forecast of a profit of 16 cents to 20 cents a share but did not say by how much.
CFO Tom Manley said the larger-than-expected profit was a result of cost savings and sales that were larger than expected. Operating expenses were actually up year over year, but flat with the preceding quarter. Cost savings flowing from the company's 6% reduction in workforce, announced earlier this month, will kick in later in the year. The company will take a related pretax charge of $28 million in the quarter.
Revenue in the August quarter was $229.9 million vs. $212 million last year. The company had forecast sales of $228 million.
Excluding $7.4 million in charges relating to acquisitions and the expense of stock options, Cognos earned $30 million, or 33 cents a share. Analysts polled by Thomson First Call were looking for a profit of 27 cents a share on sales of $226.9 million.
License revenue, a key metric of growth, was down slightly year over year, to $78 million from $78.6 million. CEO Rob Ashe termed the license revenue figure "disappointing," but said the second-half pipeline is strong, and that the expected addition of 20 to 25 new sales reps will likely bolster sales. A new interim release of the company's flagship business intelligence product should also strengthen sales, he said on a call with analysts.
Looking to the third quarter, the company expects to earn a non-GAAP profit ranging from 40 cents to 44 cents a share on sales ranging from $237 million to $245 million. Consensus was for 40 cents a share and $239.4 million in revenue..
For the full fiscal year 2007, revenue is expected to range from $950 million to $970 million, and non-GAAP EPS will range from $1.58 to $1.65. Earlier guidance called for an EPS of $1.43 to $1.50.
The share buyback is twice as large as last year's.
There's been a good deal of speculation that Cognos or perhaps rival
will merge with a larger company or make a significant acquisitions to bulk up. Asked about the rumors, Ashe said he is interested in "snack-sized" acquisitions that would add $20 million to $50 million in annual sales, bring talented people into the organization, and add functionality to the company's product portfolio.