Cognos Weighs In With Strong Quarter - InformationWeek

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Cognos Weighs In With Strong Quarter

Several big contracts drive license revenue up 21%.

Business-intelligence software maker Cognos Inc. on Wednesday reported a 52% increase in net income in the second quarter, due to a significant jump in license revenue.

Earnings for the fiscal quarter ended Aug. 31 were $27.6 million, or 30 cents a share, compared with $18.2 million, or 20 cents a share for the same period a year ago, the Canadian company said. Revenue was up 17% to $185.2 million from $158.2 million.

"Certainly the revenue growth for us was significant," says CFO Tom Manley. Rapidly expanding sales of ReportNet reporting software that lets users create, modify, and distribute invoices, financial statements, or business reports, such as weekly sales and inventory, and Enterprise Planning software helped fuel revenue growth. Cognos has sold more than $100 million ReportNet licenses in the year it has been on the market.

License revenue, a key performance indicator for software companies, rose 21% to $75.4 million, from $62.2 million a year ago. New license revenue accounted for 38% of all license revenue, up from 32% in the same quarter last year. That's the result of several big contracts from customers standardizing on Cognos software, Manley says. He expects the new-license portion of total license revenue to return to a more normal 30% to 32% in coming quarters.

The company signed 109 contracts during the quarter, valued at more than $200,000, and 655 contracts greater than $50,000. Those numbers were 22% higher than a year ago.

"The outlook for Cognos is excellent," president and CEO Rob Ashe said in a statement. Company fundamentals and our competitive position are the strongest ever," New customers for the quarter included Georgia Pacific, Johnson & Johnson, J.P. Morgan Chase, Kaiser Permanente, and the U.S. Air Force.

Cognos increased cash, cash equivalents, and short-term investments by $24 million in the quarter to $440.4 million, including operating cash flow of $29.4 million.

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