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Compuware Corp. Reports Operating Results (10-Q)

February 07, 2012 | About:
10qk

10qk

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Compuware Corp. (CPWR) filed Quarterly Report for the period ended 2011-12-31.

Compuware Corp. has a market cap of $1.82 billion; its shares were traded at around $8.35 with a P/E ratio of 19 and P/S ratio of 2. Compuware Corp. had an annual average earning growth of 14.2% over the past 10 years.

Highlight of Business Operations:

Realized an increase of $6.0 million or 2.4% in revenue during the third quarter of 2012 as compared to the prior year due to a $4.2 million increase in application services revenue, a $2.2 million increase in professional services revenue and a $2.1 million increase in subscription revenue, partially offset by a $3.0 million decline in software license fees (see “Business Segment Analysis” for additional information).

Software license fees (“license fees”) decreased $3.0 million during the third quarter of 2012, which included a negative impact from foreign currency fluctuations of $95,000, and increased $13.9 million during the first nine months of 2012, which included a positive impact of foreign currency fluctuations of $4.7 million, as compared to the same periods of the prior year. Excluding the impact from foreign currency fluctuations, license fees decreased $2.9 million for the third quarter of 2012 and increased $9.2 million for the first nine months of 2012 as compared to the same periods of the prior year. The decrease for the third quarter of 2012 was due to an $8.2 million decrease in mainframe license revenue, partially offset by a $3.3 million increase in APM license revenue and a $2.0 million increase in Changepoint license revenue. The increase for the first nine months of 2012 was due primarily to additional mainframe license revenue (see the discussion within “Software Solutions by Business Segment” for more details).

Maintenance fees increased $522,000 during the third quarter of 2012, which included a positive impact from foreign currency fluctuations of $131,000, and increased $8.7 million during the first nine months of 2012, which included a positive impact from foreign currency fluctuations of $10.9 million, as compared to the same periods of the prior year. Excluding the impact from foreign currency fluctuations, maintenance fees increased $391,000 for the third quarter of 2012 and decreased $2.2 million for the first nine months of 2012 as compared to the same periods of the prior year. Although we continue to experience a high maintenance renewal rate with our current mainframe customers, the decline in mainframe license transactions during 2010 and 2011 is impacting mainframe maintenance revenue as new or growth customers are not entirely replacing the maintenance revenue loss from the non-renewed or reduced capacity mainframe maintenance arrangements. The decline was entirely offset for the third quarter of 2012 and partially offset for the first nine months of 2012 by an increase in Gomez On-premises software maintenance fees including additional maintenance revenue gained from the acquisition of dynaTrace.

Sales and marketing costs increased $20.6 million during the first nine months of 2012 as compared to the first nine months of 2011 due to the following: (1) $9.6 million in additional salary and benefits expense related to additional sales employees, salary increases and a negative impact from currency fluctuations as the U.S. Dollar weakened against non-U.S. currencies during the first nine months of 2012; (2) $3.0 million in severance charges for certain employee terminations within our European operations during the first nine months of 2012; (3) a $3.1 million increase in travel expense; (4) $3.1 million in additional commission and bonus expense due to higher target attainment; and (5) $2.3 million in additional advertising expense.

Net cash provided by operating activities during the first nine months of 2012 was $73.7 million, which represents a $37.9 million increase from the first nine months of 2011. The increase was primarily a result of a $74.7 million increase in cash received from customers due to revenue growth in all areas of the business and a $16.5 million decline in cash paid to taxing authorities but was partially offset by an increase in cash paid to employees of $39.3 million and an increase in cash paid to suppliers of $13.9 million primarily due to increased spending to support the growth of our APM and Covisint businesses. Operating cash flows are expected to be substantially higher in the fourth quarter than in the first three quarters, consistent with our normal seasonal billing and collection trends.

Read the The complete Report

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