Software company Compuware Corp. (CPWR: Quote) reported Tuesday a profit for the third quarter that increased from last year, reflecting improved margins and revenue growth amid strong momentum from its growth businesses. Both earnings per share and quarterly revenues topped analysts’ expectations.
“Our results reflect the progress we are making in our business transformation, as our two growth businesses experienced year-over-year revenue growth and margin improvement. We have stabilized the Mainframe business and continue to generate significant revenue and cash flow to fund investments and innovation in our growth businesses,” CEO Bob Paul said in a statement.
The Detroit, Michigan-based technology performance company reported net income of $25.34 million or $0.12 per share for the third quarter, higher than $21.59 million or $0.10 per share in the prior-year quarter.
On average, 5 analysts polled by Thomson Reuters expected earnings of $0.11 per share for the quarter. Analysts’ estimates typically exclude special items.
Total revenues for the quarter edged up to $257.87 million from $253.06 million in the same quarter last year, and topped five Wall Street analysts’ consensus estimate of $253.58 million by a whisker.
Software license fees grew 13.5 percent to $64.83 million, while maintenance fees declined 4.2 percent to $102.34 million from last year.
Subscription fees increased 4.3 percent to $20.79 million, while professional services fees dropped 9 percent to $46.05 million from the year-ago quarter. Application services fees or Covisint revenues grew 28 percent to $23.85 million from the year ago.
Operating margin for the quarter expanded 250 basis points to 15.4 percent from last year’s 12.9 percent.
“We remain focused on optimizing each of our business units through prudent capital allocation and improved efficiencies and are also pursuing specific shareholder value creation strategies such as the IPO of Covisint, for which we filed a registration statement with the SEC during the quarter,” Paul added.
Paul also noted that its board is in the process of carefully reviewing the $11.00 per share acquisition offer made by activist investment company Elliott Management Corp.. He added that the Board will be meeting later this week to conclude its review and plans to respond very shortly to the proposal.
CPWR closed Tuesday’s regular trading session at $11.06, up $0.06 or 0.55% on a volume of 1.27 million shares. The stock gained a further $0.29 or 2.62% in after-hours trading.
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by RTT Staff Writer
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