Compuware Profits Fall Despite Higher Revenue
DETROIT -- The Detroit software and IT services provider Compuware Corp. (Nasdaq: CPWR), Michigan's largest tech company, reported a decline in profits despite higher revenue in the fourth fiscal quarter and fiscal year ended March 31.
Net income in the quarter was $27.1 million or 12 cents a share, down from $34.8 million or 16 cents a share in the same quarter a year earlier. Revenue for the quarter was $266 million, up from $249.6 million a year earlier.
For the fiscal year, net income was $88.4 million or 40 cents a share, down from $107.4 million or 48 cents a share a year earlier. Revenue was $1.01 billion, up from $928.9 million a year earlier.
Compuware said its application performance management revenue rose 21 percent in the quarter to $80 million, and rose 17 percent for the fiscal year to $270.4 million. Its Covisint secure connectivity business saw its revenue rise 34 percent year over year to $73.7 million. Its Changepoint revenue rose 21 percent to $47.9 million.
"Compuware has aligned itself for growth, as every one of our business units produced year-over-year revenue expansion in FY '12," said Compuware CEO Bob Paul. "With nearly 40 percent of revenues now generated by our high-growth solutions -- APM, Changepoint and Covisint -- the company is positioned to deliver meaningful increases in revenue and earnings."
During the fiscal year ended March 31, 2012, software license fees were $220.9 million, up 13 percent from the prior year; maintenance fees were $427.5 million, up 2 percent from the prior year; subscription fees were $78.4 million, up 16 percent from the prior year; professional services revenues were $209.2 million, up 9 percent from the prior year; and application services fees were $73.7 million, up 34 percent from the prior year.
Compuware blamed the decrease in profitability on the financial impact of its acquisition of dynaTrace and "a number of targeted investments in its growth businesses." The company also reported $3.1 million in severance expenses in the fourth quarter.
For the fourth quarter, software license fees were $67.9 million, up 22 percent from the same quarter a year earlier; maintenance fees were $104.6 million, down 0.5 percent from a year earlier; subscription fees were $20.3 million, up 7 percent from a year earlier; professional services revenues were $51.8 million, down 1.5 percent form a year earlier; and application services fees were $21.4 million, up 24 percent from a year earlier.
The company reported that the cost of professional services jumped by nearly $2 million in the quarter despite the decline in professional services fees. There was also a $9 million-plus increase in sales and marketing expenses in the quarter vs. the year-ago level and a $30 million increase for the year.
Compuware had $99.2 million in cash on hand at the end of the year, down from $180.2 million at the beginning of the year. The company said it spent $249.3 million in cash to purchase businesses during the year, up from $18.2 million a year earlier.
The company had 4,564 employees as of March 31, down 3.3 percent from 4,722 a year earlier, but up 5.4 percent from 4,329 as of Dec. 31.
For fiscal 2013, Compuware expects total revenues of $1.07 billion to $1.08 billion and earnings of 45 to 49 cents per share. This represents growth of approximately 7 percent in revenue and 18 percent in earnings per share. The company expects cash flow from operations consistent with this year's.
Despite falling short of analyst expectations, Wall Street apparently liked the results. Compuware stock jumped 8.2 percent, or 69 cents a share, to $9.14 a share in after-hours trading. During the regular trading day, before the earnings announcement, it tacked on 15 cents to rise to $8.45.
To listen to a replay of a conference call discussing the results, call (800) 475-6701 in the United States or (320) 365-3844 elsewhere, using pass code 241515.
Additionally, investors can listen to the conference call replay in the investor relations section of www.compuware.com.
