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Cognos Tops Estimates

The company boosts its full-year guidance.
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Updated from 4:46 p.m. EDT




beat the Street's second-quarter expectations Thursday and raised full-year guidance.

The Ottawa-based business software company said revenue was $252.4 million, up 10%, from $229.9 million in the same quarter of the prior year. Analysts had expected revenue of $250.8 million, according to Thomson Financial.

EPS was 31 cents, on net income of $26.5 million, vs. EPS of 26 cents on a bottom line of $23.8 million in the year-ago period.

Excluding items, EPS was 40 cents, or two cents better than analysts' expectations.

Shares of Cognos were recently down $2.03, or 4.8% to $40.42 in after-hours trading.

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EPS is up about 4 cents due to stock buybacks during the most recent quarter, CFO Tom Manley said in an interview. The company bought back 5.7 million shares valued at $231 million during the period. The company ended the quarter with 83.2 million shares, 7 million fewer shares than the average number of shares out during same quarter of the previous year.

Cognos had double-digit license and revenue growth for three of the past four quarters, Manley said. License revenue grew 12% year over year during the quarter. The momentum of growth is largely "organic," he added.

Operating cash flow for the quarter was $22.3 million. The company expects a strong cash inflow in the second half of the year, Manley said.

Foreign exchange diluted the operating margin by 160 basis points, Manley said. Excluding items, operating margin was 14.6%, a full percentage point improvement year on year.

The company projected third-quarter revenue in the range of $270 million to $285 million and EPS, less items, of 45 cents to 53 cents. Analysts were expecting earnings of 52 cents a share on revenue $270.8 million.

For the full year, revenue should fall within the range of $1.075 billion and $1.1 billion, according to the company. EPS, excluding items, is projected to be $2 to $2.10.

Analysts had expected revenue of $1.075 billion and EPS of $2.03.

The company had previously said revenue would range between $1.06 billion and $1.08 billion, with EPS projected at $1.98 to $2.05.

Manley said the new guidance is a result of both a strong performance in the second quarter and a beneficial exchange-rate climate between the American and Canadian dollars.

Cognos also said it would buy back up to $200 million of its stock over the next year.