Concur (CNQR) 10-Q 2009 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission file number 000-25137

Concur Technologies, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	91-1608052
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
18400 NE Union Hill Road Redmond, Washington	98052
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (425) 702-8808

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ¨  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  [Do not check if a smaller reporting company]	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Number of shares of the registrant’s common stock outstanding as of July 31, 2009: 48,654,412

CONCUR TECHNOLOGIES, INC.

FORM 10-Q

June 30, 2009

INDEX

	Page
PART I. FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
Income Statements for the Three and Nine Months Ended June 30, 2009 and 2008	3
Balance Sheets as of June 30, 2009, and September 30, 2008	4
Cash Flow Statements for the Three and Nine Months Ended June 30, 2009 and 2008	5
Notes to Financial Statements	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
ITEM 4. CONTROLS AND PROCEDURES	26
PART II. OTHER INFORMATION	26
ITEM 1. LEGAL PROCEEDINGS	26
ITEM 1A. RISK FACTORS	27
ITEM 6. EXHIBITS	37
SIGNATURE	38

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Concur Technologies, Inc.

Income Statements

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2009			2008			2009			2008
Revenues:
Subscription	$	60,915		$	53,240		$	176,294		$	150,615
Consulting and other		1,311			1,689			6,487			7,329
Total revenues		62,226			54,929			182,781			157,944
Expenses (1):
Cost of operations		19,130			17,176			55,942			50,986
Sales and marketing		17,998			15,451			53,330			42,543
Systems development and programming		5,822			5,349			18,201			17,162
General and administrative		6,839			7,937			20,820			23,041
Amortization of intangible assets		1,542			1,542			4,624			4,655
Total expenses		51,331			47,455			152,917			138,387
Operating income		10,895			7,474			29,864			19,557
Other income (expense):
Interest income		372			154			1,840			584
Interest expense		(123	)		(349	)		(373	)		(1,202	)
Other, net		175			(111	)		(392	)		(170	)
Total other income (expense), net		424			(306	)		1,075			(788	)
Income before income tax		11,319			7,168			30,939			18,769
Income tax expense		4,076			2,712			11,138			7,227
Net income	$	7,243		$	4,456		$	19,801		$	11,542
Net income per share:
Basic	$	0.15		$	0.10		$	0.41		$	0.27
Diluted		0.14			0.09			0.38			0.24
Weighted average shares used in computing net income per share:
Basic		48,560			43,136			48,603			43,554
Diluted		51,608			46,969			51,528			47,393
(1)    Includes share-based compensation as follows:
Cost of operations	$	551		$	487		$	1,261		$	1,171
Sales and marketing		1,762			1,044			3,609			2,340
Systems development and programming		481			303			1,287			757
General and administrative		824			769			2,105			1,693
Total share-based compensation	$	3,618		$	2,603		$	8,262		$	5,961

See notes to financial statements.

3

Concur Technologies, Inc.

Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

	June 30, 2009			September 30, 2008
Assets
Current assets:
Cash and cash equivalents	$	128,955		$	267,725
Short-term investments		114,570			—
Restricted cash		2,481			3,055
Accounts receivable, net of allowance of $4,166 and $5,543		38,086			38,479
Prepaid expenses		3,131			3,160
Deferred tax assets		26,405			14,289
Deferred costs and other current assets		14,011			14,104
Total current assets		327,639			340,812
Property and equipment, net		34,536			32,304
Investments		17,057			—
Deferred costs and other long-term assets		18,454			16,067
Intangible assets, net		34,485			39,108
Deferred tax assets		25,643			47,257
Goodwill		165,471			165,471
Total assets	$	623,285		$	641,019
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,326		$	4,198
Customer funding liabilities		42,760			22,470
Accrued compensation		10,035			18,308
Acquisition-related liabilities		92			2,036
Other accrued and current liabilities		8,069			8,442
Long-term debt, current portion		1,240			1,505
Deferred revenues, current portion		32,546			29,572
Total current liabilities		98,068			86,531
Long-term debt		491			1,328
Deferred rent		1,743			2,126
Deferred revenues		13,232			12,511
Non-current tax liabilities		4,594			3,985
Total liabilities		118,128			106,481
Stockholders’ equity:
Convertible preferred stock, par value $0.001 per share		—			—
Authorized shares: 5,000; No shares issued or outstanding
Common stock, $0.001 par value per share		49			50
Authorized shares: 60,000
Shares issued and outstanding: 48,633 and 50,286
Additional paid-in capital		631,930			679,526
Accumulated deficit		(125,027	)		(144,828	)
Accumulated other comprehensive loss		(1,795	)		(210	)
Total stockholders’ equity		505,157			534,538
Total liabilities and stockholders’ equity	$	623,285		$	641,019

See notes to financial statements.

4

Concur Technologies, Inc.

Cash Flow Statements

(In thousands)

(Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2009			2008			2009			2008
Operating activities:
Net income	$	7,243		$	4,456		$	19,801		$	11,542
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		1,542			1,542			4,624			4,655
Depreciation		4,143			3,793			12,283			11,191
Allowance for uncollectible accounts receivable		(513	)		108			(1,376	)		1,840
Share-based compensation expense		3,618			2,603			8,262			5,961
Deferred income taxes		3,500			2,505			9,529			6,639
Changes in operating assets and liabilities, net of effects from acquisition:
Accounts receivable		(710	)		1,602			1,661			966
Prepaid expenses and other assets		(1,202	)		(1,153	)		(4,228	)		(2,655	)
Accounts payable		(3,521	)		(78	)		(851	)		(522	)
Accrued liabilities		2,543			2,025			(7,848	)		(6,371	)
Deferred revenues		1,414			1,967			3,714			7,900
Net cash provided by operating activities		18,057			19,370			45,571			41,146
Investing activities:
Purchases of investments		(127,582	)		—			(127,582	)		—
Increase in customer funding liabilities, net of changes in restricted cash		19,656			2,193			20,855			1,465
Investments in unconsolidated affiliate		(25	)		—			(4,045	)		—
Purchases of property and equipment		(3,803	)		(4,057	)		(14,348	)		(9,731	)
Payments for acquisition, net of cash acquired		(1,706	)		(1,292	)		(1,864	)		(163,142	)
Net cash used in investing activities		(113,460	)		(3,156	)		(126,984	)		(171,408	)
Financing activities:
Payments for issuance of common stock		—			—			(2,829	)		—
Net proceeds from share-based equity award activity		1,262			2,584			2,189			5,609
Proceeds from employee stock purchase plan activity		539			263			889			846
Payments on repurchase of common stock		—			(12,875	)		(54,773	)		(43,763	)
Net (payments) proceeds from borrowings		—			(4,021	)		—			19,189
Repayments on borrowings and capital leases		(249	)		(416	)		(1,101	)		(1,247	)
Net cash provided by (used in) financing activities		1,552			(14,465	)		(55,625	)		(19,366	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		651			687			(1,732	)		699
Net (decrease) increase in cash and cash equivalents		(93,200	)		2,436			(138,770	)		(148,929	)
Cash and cash equivalents at beginning of period		222,155			17,470			267,725			168,835
Cash and cash equivalents at end of period	$	128,955		$	19,906		$	128,955		$	19,906
Supplemental cash flow information:
Cash paid for interest	$	35		$	460		$	103		$	809
Income tax payments, net		210			506			550			630

See notes to financial statements.

5

NOTES TO FINANCIAL STATEMENTS

June 30, 2009

(Unaudited)

Note 1. Description of the Company and Basis of Presentation

Throughout these financial statements Concur Technologies, Inc. is referred to as “Concur,” “we,” “us” and “our.” We report our operating results on a fiscal year basis that starts October 1 and ends September 30. We refer to our fiscal years ended September 30, 2008, 2009 and 2010, as “2008,” “2009” and “2010.” All dollar, option and share amounts (other than per share dollar amounts) are reported in thousands, unless otherwise noted.

Description of the Company

We are a leading global provider of on-demand Employee Spend Management solutions. Our integrated travel and expense software solutions enable organizations to control costs by automating the processes used to manage employee spending. Our solutions unite online travel procurement with automated expense reporting, streamline corporate event management, and optimize the process of managing vendor payments, employee check requests and direct reimbursements. Our unified approach to managing these processes provides our customers with visibility into their employee spending, which helps them analyze trends, influence budget decisions, improve forecasting, and monitor and enforce compliance with their corporate policies and external regulations, such as the Sarbanes-Oxley Act of 2002.

Our core mission is to continuously innovate to reduce the costs of employee spend management for our customers. We work closely with our customers to identify opportunities to increase the value of our solutions by streamlining the travel procurement, expense reporting and vendor payment processes, reducing operating costs, improving internal controls, enhancing the overall user experience and user adoption rates, and enabling customers to gain greater insight into their spending patterns through comprehensive analytics.

We offer our solutions through flexible delivery models that range from highly configurable to standardized. We sell our solutions primarily as subscription services. We market and sell our solutions worldwide through our direct sales organization and through indirect distribution channels such as strategic resellers.

Concur^®, Concur^® Expense, Concur^® Travel & Expense, Concur^® Cliqbook Travel, Concur^® Invoice, Concur^® Connect, and Concur^® ExpenseLink are among the registered trademarks and registered service marks of Concur or its subsidiaries, in the United States and other countries. Other parties’ marks are the property of their respective owners and should be treated as such.

Basis of Presentation

The accompanying financial statements present our results of operations, financial position and cash flows on a consolidated basis. These unaudited financial statements include the accounts of Concur and its subsidiaries. We have eliminated all intercompany accounts and transactions in these financial statements.

We have prepared the accompanying unaudited financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting. In our opinion, we have included all adjustments necessary for a fair presentation. These adjustments consist of normal recurring items. Our unaudited financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2008, filed with the Securities and Exchange Commission (“SEC”) on November 25, 2008.

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Note 2. Accounting Estimates, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Use of Estimates

We prepared these financial statements in conformity with GAAP, which require us to make estimates and assumptions affecting the amounts reported in our financial statements and accompanying notes. Changes in these estimates and assumptions may have a material impact on our financial statements and accompanying notes. Examples of estimates and assumptions include: the determination of certain provisions, including sales allowances, allowances for uncollectible accounts receivable, and product warranties; estimating useful lives of property and equipment; valuing and estimating useful lives of intangible assets; valuing assets and liabilities acquired through business combinations; deferring certain revenues and costs; estimating expected lives of customer relationships; valuing of share-based compensation; and estimating tax valuation allowances.

Significant Accounting Policies

We discuss our significant accounting policies, which include business combinations, revenue recognition, allowances for uncollectible accounts receivable, share-based compensation and income taxes, in our 2008 Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157,Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. This standard does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. We adopted SFAS 157 for financial assets and liabilities in the first quarter of 2009. Adoption of SFAS 157 had no material effect on our financial statements.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities(“SFAS 159”). SFAS 159 gives entities the option to measure eligible financial assets and financial liabilities at fair value on an instrument by instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability. Subsequent changes in fair value must be recorded in earnings. We adopted SFAS 159 in the first quarter of 2009 and did not elect the fair value option.

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007),Business Combinations (“SFAS 141R”). SFAS 141R changes the accounting for business combinations including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance. In April 2009, the FASB issued FSP FAS 141R-1 which amends SFAS 141R by establishing a model to account for certain pre-acquisition contingencies. Under the FSP, an acquirer is required to recognize at fair value an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. If the acquisition-date fair value cannot be determined, then the acquirer should follow the recognition criteria in SFAS No. 5,Accounting for Contingencies,and FASB Interpretation No. 14,Reasonable Estimation of the Amount of a Loss – an interpretation of FASB Statement No. 5.We are required to adopt SFAS No. 141R and FSP FAS 141R-1 in the first quarter of 2010. We will apply the provisions of SFAS 141R and FSP FAS 141R-1 when applicable.

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In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 requires all entities to report noncontrolling interests as equity in the financial statements. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are required to adopt SFAS 160 in the first quarter of 2010. We are evaluating the impact of adopting SFAS 160 on our financial statements.

In February 2008, the FASB issued FASB Staff Position 157-2,Effective Date of FASB Statement No. 157, which delays the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We believe the delayed items of SFAS 157 will not have a material impact on our financial statements.

In April 2008, the FASB issued FASB Staff Position No. 142-3,Determination of the Useful Life of Intangible Assets(“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142,Goodwill and Other Intangible Assets. FSP 142-3 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are required to adopt FSP 142-3 in the first quarter of 2010. We are evaluating the impact of adopting FSP 142-3 on our financial statements.

In May 2009, the FASB issued SFAS No. 165,Subsequent Events (“SFAS 165”), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The provisions of SFAS 165 are effective for interim and annual reporting periods ending after June 15, 2009. We are required to adopt SFAS 165 in the fourth quarter of 2009. Since SFAS 165 only requires additional disclosures, we do not expect the adoption to have an impact on our financial statements.

Note 3. Net Income Per Share

We calculate basic net income per share by dividing net income by the weighted-average number of shares of common stock outstanding during the period. We calculate diluted net income per share by dividing net income by the weighted-average number of shares of common stock outstanding during the period, plus any dilutive effect from share-based compensation awards and warrants outstanding during the period, under the treasury stock method. The following table presents the computation of basic and diluted net income per share:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2009		2008		2009		2008
Net income	$	7,243	$	4,456	$	19,801	$	11,542
Weighted average number of shares outstanding:
Basic		48,560		43,136		48,603		43,554
Dilutive effect of share-based equity award plans (1)		3,048		3,833		2,925		3,839
Diluted		51,608		46,969		51,528		47,393
Net income per share available to common stockholders:
Basic	$	0.15	$	0.10	$	0.41	$	0.27
Diluted		0.14		0.09		0.38		0.24

(1) For the three and nine months ended June 30, 2009 and 2008, we did not exclude any options to purchase Concur common stock from the calculations of diluted net income per share.

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Note 4. Property and Equipment

Our property and equipment consisted of the following:

	June 30, 2009			September 30, 2008
Land and building	$	5,545		$	5,490
Leasehold improvements		5,005			5,014
Computer hardware		18,223			16,170
Computer software		43,835			36,101
Furniture and equipment		1,100			1,249
Property and equipment, gross		73,708			64,024
Less: accumulated depreciation		(39,172	)		(31,720	)
Property and equipment, net	$	34,536		$	32,304

Note 5. Investments

Equity Investment in Private Company

In January 2009, we made an investment of $4.0 million, including transaction costs, in RideCharge, Inc. (“RideCharge”), a leading provider of ground travel booking that allows business travelers to book, pay and get reimbursed for ground transportation. Our investment consists of 3.2 million shares of preferred stock and warrants to purchase an additional 1.6 million shares of preferred stock at $1.25 per share.

Because our preferred stock in RideCharge does not meet all the characteristics of in-substance common stock, we have accounted for our investment under the cost method with net accumulated earnings recorded only to the extent of distributed dividends. We have not accounted for the warrants separately because they do not qualify as free standing derivatives. We have reported our investment in RideCharge in “Investments” on our balance sheet.

All Other Investments

We generally invest our excess cash in investment grade short- to intermediate-term fixed income securities and money market funds. The portion in cash and cash equivalents represents highly liquid instruments with insignificant interest rate risk and original maturities of three months or less. Investments with maturities between three and 12 months are reported in “Short-term Investments” on our balance sheet. Investments with maturities of 12 months or longer are reported in “Investments” on our balance sheet. As of June 30, 2009, our investments included $13 million of investments in commercial paper with maturities of 12 months or longer. Unrealized gains and losses related to available for sale securities are reported in “Accumulated other comprehensive income (loss)”, as disclosed in Note 10.

Note 6. Intangible Assets

Our intangible assets arise from our business acquisitions. The following table presents our intangible assets as of June 30, 2009, and September 30, 2008:

	June 30, 2009			September 30, 2008
Gross carrying amount	$	48,600		$	48,600
Accumulated amortization		(14,115	)		(9,492	)
Intangible assets, net	$	34,485		$	39,108

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The following table presents the components of our intangible assets as of June 30, 2009:

Description	Fair Value		Accumulated Amortization		Net Book Value as of June 30, 2009		Weighted Average Useful Life (in years)
Trade name and trademarks	$	200	$	200	$	—	—
Technology		12,700		6,676		6,024	4.8
Non-compete agreements		500		462		38	2.0
Customer relationships		35,200		6,777		28,423	11.0
Total	$	48,600	$	14,115	$	34,485

For the three and nine months ended June 30, 2009, we recorded amortization expense of $1.5 million and $4.6 million in our income statements, and $1.5 million and $4.7 million for the three and nine months ended June 30, 2008.

Estimated amortization expense for the remaining estimated useful life of the intangible assets is as follows as of June 30, 2009:

Years ending September 30,	Amortization of  Intangible Assets
2009 (July 1, 2009, through September 30, 2009)	$	1,541
2010		5,934
2011		5,588
2012		3,445
2013		3,213
Thereafter		14,764
Total	$	34,485

Note 7. Income Taxes

We make estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, ongoing, prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. If recovery is not likely, we record a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. Our effective tax rate of 36% varies from the statutory 35% rate due to certain nondeductible expenses and state income taxes moderated by research and development tax credits and lower foreign income tax rates.

As of June 30, 2009, we believe it is more likely than not that the amount of the deferred tax assets recorded on our balance sheet will ultimately be recovered. In the event that actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected.

Note 8. Share-based Compensation

Our 2007 Equity Incentive Plan (“Equity Plan”) provides for grants of stock options, restricted stock, stock bonuses, stock appreciation rights and restricted stock units (“RSU”). As of June 30, 2009, we had 1.8 million shares of common stock reserved for future grants under our Equity Plan, excluding shares of common stock reserved for future issue under our 2008 Employee Stock Purchase Plan.

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We have calculated an additional paid in capital (“APIC”) pool pursuant to the provisions of SFAS 123R,Share-based Payment (“SFAS 123R”). The APIC pool represents the excess tax benefits related to share-based compensation that are available to absorb future tax deficiencies. We include only those excess tax benefits that have been realized in accordance with SFAS No. 109,Accounting for Income Taxes. If the amount of future tax deficiencies is greater than the available APIC pool, we will record the excess as income tax expense in our income statements. For the three and nine months ended June 30, 2009 and 2008, we did not record any tax deficiencies against the APIC pool. Excess tax benefits or tax deficiencies are a factor in the calculation of diluted shares used in computing dilutive income per share.

Net cash proceeds from the exercise of stock options were $1.3 million and $3.4 million for the three and nine months ended June 30, 2009, and $2.6 million and $5.6 million for the three and nine months ended June 30, 2008. For the three and nine months ended June 30, 2009 and 2008, we did not realize any income tax benefit from stock option exercises. In accordance with SFAS 123R, we present excess tax benefits from the exercise of stock options, if any, as financing cash flows rather than operating cash flows.

The following table presents our stock option activity for the nine months ended June 30, 2009:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of September 30, 2008	3,563		$	7.10
Exercised	(241	)		7.72
Forfeited or expired	(2	)		12.89
Outstanding as of June 30, 2009	3,320			7.06	3.83	$	79,764
Exercisable as of June 30, 2009	3,213			6.83	3.74		77,924

The aggregate intrinsic value in the table above represents total pretax intrinsic value (i.e., the difference between our closing stock price on June 30, 2009, and the weighted average exercise price of the outstanding options, multiplied by the number of shares subject to the outstanding options) that would have been received by the option holders had all option holders exercised their options on June 30, 2009. Changes in the intrinsic value are based on fluctuations in the fair market value of our common stock. For the nine months ended June 30, 2009, the total intrinsic value of options exercised was $4.8 million.

The following table presents a summary of RSU award activity for the nine months ended June 30, 2009:

	Shares		Weighted Average Share Value
Outstanding as of September 30, 2008	772		$	27.49
Granted	791			22.45
Vested and released	(140	)		30.42
Cancelled	(8	)		26.01
Outstanding as of June 30, 2009	1,415			24.41

As of June 30, 2009, we expect $18.4 million of total unrecognized compensation costs related to non-vested stock options and RSU to be recognized over a weighted average period of 1.6 years. For the nine months ended June 30, 2009, the total fair value of options and RSU vested was $5.3 million, compared to $2.1 million for the nine months ended June 30, 2008.

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Note 9. Fair Value Measurements

SFAS 157 establishes a three-tier fair value hierarchy, categorizing the inputs used to measure fair value. The hierarchy can be described as follows: Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

We have highly liquid investments classified as cash equivalents and short-term investments included in our balance sheet. Cash equivalents consist of money market instruments and commercial paper that have original maturities of 90 days or less. We also invest in commercial paper with maturities greater than 90 days but generally mature within 270 days. Such instruments are classified within Level 2 of the fair value hierarchy. We had no financial liabilities measured at fair value on a recurring basis at June 30, 2009.

Financial assets measured at fair value are summarized below:

	Fair value measurement using						Assets at fair value
	Level 1		Level 2		Level 3
Assets:
Money market accounts	$	17,781	$	—	$	—	$	17,781
Commercial paper		—		125,138		—		125,138
Other fixed income securities		—		42,485				42,485
Total	$	17,781	$	167,623	$	—	$	185,404

Equity Investment in Private Company

In January 2009, we made an investment in RideCharge. The valuation of investments in non-public companies requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such assets. Our investment in RideCharge was initially valued based upon the transaction price under the cost method of accounting and is classified as Level 3 in the fair value hierarchy. As of June 30, 2009, the fair value of this investment was $4.0 million and is recorded in “Investments” on our balance sheet.

The investment in RideCharge will be subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. We will record impairment charges when an investment has experienced a decline that is deemed to be other-than-temporary. The determination that a decline is other-than-temporary is, in part, subjective and influenced by many factors. Future adverse changes in market conditions or poor operating results of an investee could result in losses or an inability to recover the carrying value of our investment. When assessing our investments for other-than-temporary declines in value, we will consider many factors, including but not limited to the following: the performance of the investee in relation to its own operating targets and its business plan; the investee’s revenue and cost trends; the investee’s liquidity and cash position; and market acceptance of the investee’s products and services. From time to time, we may consider third-party evaluations. In the event an investment experiences other-than-temporary declines in value, we will record an impairment loss in “Other income (expense)” in our income statement.

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Note 10. Comprehensive Income

The following table presents the components of our comprehensive income:

	Three Months Ended June 30,					Nine Months Ended June 30,
	2009			2008		2009			2008
Net income	$	7,243		$	4,456	$	19,801		$	11,542
Other comprehensive gain (loss):
Foreign currency translation adjustment gain (loss)		691			340		(1,567	)		196
Net unrealized loss on investments		(18	)		—		(18	)		—
Total comprehensive income	$	7,916		$	4,796	$	18,216		$	11,738

Note 11. Stock Repurchase Program

Our Board of Directors has authorized a stock repurchase program that expires in January 2011. During the nine months ended June 30, 2009, we repurchased and retired 2.0 million shares of our outstanding common stock for a total cost of $54.8 million under this program. As of June 30, 2009, we remained authorized to repurchase up to an additional 2.1 million shares under this program.

Note 12. Segment Reporting

We operate in and report on one segment, which is on-demand Employee Spend Management Solutions based upon the provisions of SFAS No. 131,Disclosures about Segments of an Enterprise and Related Information.We market our services and products primarily in the United States and operate in a single industry segment. For the three and nine months ended June 30, 2009 and 2008, no single customer accounted for more than 10% of our total revenues. The following table presents our revenues by geographic region:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2009		2008		2009		2008
United States	$	56,490	$	49,654	$	165,321	$	141,454
Europe		3,050		2,771		9,645		9,380
Other		2,686		2,504		7,815		7,110
Total revenues	$	62,226	$	54,929	$	182,781	$	157,944

Note 13. Contingencies

Litigation

In July 2001, we and several of our current and former officers were named as defendants in two securities class-action lawsuits based on alleged errors and omissions concerning underwriting terms in the prospectus for our initial public offering. In April 2002, these lawsuits were consolidated with more than 300 similar pending cases filed against companies that completed initial public offerings between 1997 and 2000 and the underwriters that took them public. In July 2003, we decided to participate in a proposed settlement negotiated by representatives of a coalition of issuers named as defendants in similar actions and their insurers. Although we believe that the plaintiffs’ claims have no merit, we decided to participate in the proposed settlement to avoid the cost and distraction of continued litigation. The proposed settlement had been preliminarily approved by the district court. However, in December 2006, the court of appeals reversed the district court’s finding that six focus cases could be certified as class actions. In April 2007, the court of appeals acknowledged that the district court might certify a more limited class. At a June 2007 status conference, the district court terminated the proposed settlement as stipulated among the parties. Plaintiffs filed an amended complaint in August 2007 and a motion for class certification in six focus cases in September 2007, which was later withdrawn in October 2008. In November 2007, defendants in the six focus cases filed a motion to dismiss the complaint for failure to state a claim, which the district court denied in March 2008. Plaintiffs, the issuer defendants (including us), the underwriter defendants and the insurance carriers for the defendants have engaged in mediation and settlement negotiations. The parties have reached a settlement agreement, which was submitted to

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the district court for preliminary approval on April 2, 2009. As part of this tentative settlement, our insurance carrier has agreed to assume our entire payment obligation under the terms of the settlement. Although the parties have reached a tentative settlement agreement, there can be no guarantee that it will be finalized or receive approval from the district court. We believe that we have meritorious defenses to these claims. If the tentative settlement is not implemented and the litigation continues against us, we would continue to defend against this action vigorously. Any liability we incur in connection with this lawsuit could materially harm our business and financial position and, even if we defend ourselves successfully, there is a risk that management’s distraction in dealing with this lawsuit could harm our results.

Product Warranty and Indemnification Obligations

We provide services and software solutions to our customers under sales contracts, which usually include a limited warranty regarding product and service performance and a limited indemnification of customers against losses, expenses and liabilities from damages that may be awarded against them if our services or software are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party. The contracts generally limit the scope of and remedies for such indemnification obligations in a variety of industry-standard respects, including but not limited to time and geography-based scope limitations and a right for us to replace an infringing product. We also enter into similar limited indemnification terms in agreements with certain strategic business partners and vendors. We account for potential warranty claims in accordance with the guidance in SFAS No. 5,Accounting for Contingencies, and base our estimates on historical experience and current expectations. To date, we have experienced minimal warranty claims and have not had to reimburse any customers for any losses related to the limited indemnification described above.

Note 14. Subsequent Event

Acquisition of Etap-On-Line

On August 1, 2009, we completed the acquisition of Etap-On-Line (“Etap Acquisition”) pursuant to the Share Purchase Agreement, dated August 1, 2009, between Concur and the shareholders of Etap-On-Line (“Purchase Agreement”). Under the Purchase Agreement, we purchased all outstanding equity securities of Etap-On-Line for an aggregate consideration of up to €28 million in cash and shares of Concur common stock (in aggregate totaling approximately $40 million USD), subject to specified earn out provisions and other adjustments to be determined over a three year period ending August 1, 2012. Pro forma results of operations are not presented in this report because the effect of this acquisition was not material to our financial statements.

Etap-On-Line is a leading European provider of business travel and expense management solutions based in Paris, France. The Etap Acquisition is expected to strengthen our operations and client-base in the European market.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ThisManagement’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read in conjunction with theFinancial Statements and Notes that are included with this report. Also, the discussion ofCritical Accounting Policies and Estimates in this section is an integral part of the analysis of our results of operations and financial condition.

Throughout this MD&A, we refer to Concur Technologies, Inc. as “Concur,” “we,” “us” and “our.” We report our operating results on a fiscal year basis that starts October 1 and ends September 30. We refer to our fiscal years ended September 30, 2008, 2009 and 2010, as “2008,” “2009” and “2010.” Throughout this MD&A, where we provide discussion of the three and nine months ended June 30, 2009, and we provide data for the same periods in the prior year, we will refer to the prior period as “2008.” All dollar, option and share amounts (other than per share dollar amounts) are reported in thousands, unless otherwise noted.

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Special Note Regarding Forward-Looking Statements

This document contains forward-looking statements regarding our plans, objectives, expectations, intentions, future financial performance, future financial condition and other statements that are not historical facts, including, without limitation, statements relating to our expectations regarding our revenues and operating expenses for the remainder of 2009 and our expectations about liquidity and capital resources for the next 12 months. Forward-looking statements can be identified by our use of the future tense, or by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “estimate,” “continue,” and other similar words and phrases. These forward-looking statements involve many risks and uncertainties, which are described under “Risk Factors” and elsewhere in this report, as well as in our other filings with the United States Securities and Exchange Commission (“SEC”). In general, adverse economic or market conditions, such as the current economic downturn, may cause customers and prospects to delay or reduce purchases of our products and services or otherwise change their spending patterns in response to tighter credit and negative financial news, cause customers to reduce business travel and correspondingly reduce the use of our solutions, reduce the ability of customers, channel partners, vendors and suppliers to fulfill their obligations to us, increase volatility of our stock price and foreign exchange rate fluctuations, and otherwise adversely affect our business. The occurrence of any of these risks and uncertainties may cause our actual results to differ materially from those anticipated in our forward-looking statements, which could have a material adverse effect on our business, results of operations and financial condition. All forward-looking statements included in this report are based on information available to us as of the date of this report. Except as required by law, we assume no obligation or duty to update any such forward-looking statements.

Overview

We are a leading provider of on-demand Employee Spend Management solutions. Our integrated travel and expense software solutions enable organizations to control costs by automating the processes used to manage employee spending. Our solutions unite online travel procurement with automated expense reporting, streamline corporate event management, and optimize the process of managing vendor payments, employee check requests and direct reimbursements. Our unified approach to managing these processes provides our customers with visibility into their employee spending, which helps them analyze trends, influence budget decisions, improve forecasting, and monitor and enforce compliance with their corporate policies and external regulations, such as the Sarbanes-Oxley Act of 2002.

We generate our revenues predominantly from the delivery of subscription services, and to a much lesser degree from consulting services and other services, which includes the sale of software licenses. Our subscription services revenues are recognized over the time period we provide our services to customers, in contrast to license revenues, which typically are recognized upon software delivery to the customer.

Our strategic focus in 2009 is to continue to grow our core subscription business and to reduce our cost of deploying and operating our services as a percentage of revenue. We expect our subscription revenues to increase in 2009 compared to 2008, on both an absolute basis and as a percentage of total revenues, due to anticipated growth in demand. We expect our sales and marketing expenses to increase on both an absolute basis and as a percentage of revenues in 2009 compared to 2008, primarily reflecting our continued emphasis on growing our sales and marketing personnel to support expected demand and create additional awareness in our target market. While we observe trends of declining travel transactions, increased unemployment and business contraction generally, which tend to reduce revenue, we believe they will be outweighed by cross-selling additional services and expansion of our customer base.

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We operate in and report on one segment, which is on-demand Employee Spend Management Solutions.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2009 AND 2008

Selected Financial Data

The following table presents financial data derived from our unaudited income statements as a percentage of total revenues for the periods indicated.

	Three Months Ended June 30,				Nine Months Ended June 30,
	2009		2008		2009		2008
Revenues:
Subscription	97.9	%	96.9	%	96.5	%	95.4	%
Consulting and other	2.1		3.1		3.5		4.6
Total revenues	100.0		100.0		100.0		100.0
Expenses:
Cost of operations	30.7		31.3		30.6		32.3
Sales and marketing	28.9		28.2		29.2		26.9
Systems development and programming	9.4		9.7		10.0		10.9
General and administrative	11.0		14.4		11.4		14.6
Amortization of intangible assets	2.5		2.8		2.5		2.9
Total expenses	82.5		86.4		83.7		87.6
Operating income	17.5		13.6		16.3		12.4
Other income (expense):
Interest income	0.6		0.2		1.0		0.4
Interest expense	(0.2	)	(0.6	)	(0.2	)	(0.8	)
Other, net	0.3		(0.2	)	(0.2	)	(0.1	)
Total other income (expense), net	0.7		(0.6	)	0.6		(0.5	)
Income before income tax	18.2		13.0		16.9		11.9
Income tax expense	6.6		4.9		6.1		4.6
Net income	11.6	%	8.1	%	10.8	%	7.3	%

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Results of Operations

Revenues

	Three Months Ended June 30,						Nine Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Subscription	$	60,915	$	53,240	14.4	%	$	176,294	$	150,615	17.0	%
Consulting and other		1,311		1,689	(22.4	)%		6,487		7,329	(11.5	)%
Total revenues	$	62,226	$	54,929	13.3	%	$	182,781	$	157,944	15.7	%

	Three Months Ended June 30,								Nine Months Ended June 30,
	2009		%		2008		%		2009		%		2008		%
United States	$	56,490	90.8	%	$	49,654	90.4	%	$	165,321	90.4	%	$	141,454	89.6	%
Europe		3,050	4.9	%		2,771	5.0	%		9,645	5.3	%		9,380	5.9	%
Other		2,686	4.3	%		2,504	4.6	%		7,815	4.3	%		7,110	4.5	%
Total revenues	$	62,226	100.0	%	$	54,929	100.0	%	$	182,781	100.0	%	$	157,944	100.0	%

Revenues. Subscription revenues consist of fees paid for subscription services, and to a much lesser degree the amortization of set-up fees paid to us in connection with those services, and the amortization of fees paid for software maintenance services under software license arrangements and in multiple element subscription arrangements where there is no vendor specific objective evidence of fair value for an undelivered subscription element. Subscription revenues are affected by pricing, the number of new customers, customer contract durations and our customer retention rate.

Subscription revenues increased 14.4%, or $7.7 million, for the three months ended June 30, 2009, and 17.0%, or $25.7 million, for the nine months ended June 30, 2009, compared to the same periods in 2008. The increases were primarily due to the increased number of customers for our subscription services. The growth in customers reflects increased market demand for our subscription services and high rates of retention of existing subscription customers. We believe this demand reflects the market’s growing awareness of our on-demand Employee Spend Management Solutions and the increasing acceptance of outsourced services, driven in part by limited information technology capital budgets.

We expect subscription revenues to continue to grow in 2009 as a result of the growing demand for our subscription service offerings and our planned increase in spending on sales and marketing.

Consulting revenues consist of fees for client services, which include system implementation and integration, planning, data conversion, training and documentation of procedures. We anticipate that consulting and other revenues in 2009 will fluctuate on a quarterly basis but be lower for 2009 compared to 2008 as a percentage of revenues, as fewer existing customers upgrade their on-premise license software, fewer new customers purchase on-premise licensed software, and the market continues to shift to the subscription services model.

International Revenues. Revenues from customers outside the United States represented 9% and 10% of total revenues for the three and nine months ended June 30, 2009. Fluctuations in foreign currency exchange rates have not had a material effect on our operating results. We expect our international revenues to grow in the near term, as our products and services continue to gain acceptance in international markets, due in part to the investment in our global distribution and the increased awareness of our products in the international markets.

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Expenses

	Three Months Ended June 30,						Nine Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Cost of operations	$	19,130	$	17,176	11.4	%	$	55,942	$	50,986	9.7	%
Sales and marketing		17,998		15,451	16.5	%		53,330		42,543	25.4	%
Systems development and programming		5,822		5,349	8.8	%		18,201		17,162	6.1	%
General and administrative		6,839		7,937	(13.8	)%		20,820		23,041	(9.6	)%
Amortization of intangible assets		1,542		1,542	0.0	%		4,624		4,655	(0.7	)%
Total operating expenses	$	51,331	$	47,455	8.2	%	$	152,917	$	138,387	10.5	%

Cost of Operations. Cost of operations expenses consist primarily of salaries and related expenses (including travel related expenses) and allocated overhead costs (including depreciation, occupancy, insurance, telecommunications and computer equipment expenses) associated with employees and contractors who provide our subscription and consulting services. Cost of operations expenses also include co-location and related telecommunications costs, fees paid to third parties for referrals, resale arrangements, royalties and amortization of deferred set-up costs that we incur in connection with our subscription services.

Cost of operations expenses as a percentage of total revenues decreased to 30.7% and 30.6% for the three and nine months ended June 30, 2009, compared to 31.3% and 32.3% for the same periods in 2008. Cost of operations expenses increased by 11.4%, or $2.0 million, for the three months ended June 30, 2009, and 9.7%, or $5.0 million, for the nine months ended June 30, 2009, compared to the same periods in 2008. Total salaries and related expenses increased by 9.9%, or $0.9 million, for the three months ended June 30, 2009, and 4.9%, or $1.4 million, for the nine months ended June 30, 2009, compared to the same periods in 2008. Allocated overhead costs increased by 4.0%, or $0.1 million, for the three months ended June 30, 2009, and 12.0%, or $1.2 million, for the nine months ended June 30, 2009, compared to the same periods in 2008. Initial set-up costs that we incur in connection with our subscription services increased by 20.1%, or $0.8 million, for the three months ended June 30, 2009, and 16.2%, or $1.9 million, for the nine months ended June 30, 2009, compared to the same periods in 2008. These increases were primarily due to organic growth.

We expect cost of operations expenses to continue to trend down as a percentage of total revenues as the incremental cost to deploy and support each new customer is expected to decrease due to economies of scale anticipated in our subscription service model infrastructure. We anticipate that cost of operations will increase in absolute dollars as we continue to expand our capacity to deploy and support additional new customers.

Sales and Marketing. Sales and marketing expenses consist of salaries and related expenses (including sales commissions and travel related expenses) and allocated overhead costs associated with our sales and marketing personnel and, to a lesser extent, miscellaneous sales and marketing costs, such as advertising, trade shows and other promotional activities.

Sales and marketing expenses as a percentage of total revenues increased to 28.9% and 29.2% for the three and nine months ended June 30, 2009, compared to 28.2% and 26.9% for the same periods in 2008. Sales and marketing expenses increased by 16.5%, or $2.5 million, for the three months ended June 30, 2009, and 25.4%, or $10.8 million, for the nine months ended June 30, 2009, compared to the same periods 2008. Total salaries and related expenses increased by 21.6%, or $2.4 million, for the three months ended June 30, 2009, and 27.6%, or $8.3 million, for the nine months ended June 30, 2009, compared to the same periods 2008. Initial costs that we incur in connection with our subscription services increased by 36.5%, or $0.7 million, for the three months ended June 30, 2009, and 57.4%, or $2.7 million, for the nine months ended June 30, 2009, compared to the same periods in 2008. These increases were primarily attributable to an increase in sales personnel and marketing programs.

We expect total sales and marketing expenses in 2009 to increase as a percentage of revenue and in absolute dollars compared to 2008, driven primarily by an increase in sales personnel and marketing programs globally. These increases reflect a key part of our strategic focus in 2009, which is to ensure that our sales and marketing efforts are expanded to create awareness in our target markets to support expected demand.

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Systems Development and Programming Costs. Systems development and programming costs consist of salaries and related expenses and allocated overhead costs associated with employees and contractors engaged in software engineering, program management and quality assurance.

Systems development and programming costs as a percentage of total revenues decreased to 9.4% and 10.0% for the three and nine months ended June 30, 2009, compared to 9.7% and 10.9% for the same periods in 2008. This decrease reflects our higher revenues compared to relatively stable expenses in this area. Systems development and programming costs increased 8.8%, or $0.5 million, for the three months ended June 30, 2009, and 6.1%, or $1.0 million, for the nine months ended June 30, 2009, compared to the same periods in 2008.

In response to the demand for our subscription services, the majority of our systems and development resources are focused on developing internal-use software used to provide these services to our customers. We capitalize costs for corporate software developed or obtained for internal use and amortize it over its useful life. Capitalized internal-use software costs, net of amortization, increased $1.6 million, from $14.8 million at September 30, 2008, to $16.4 million at June 30, 2009.

We anticipate that recognized systems development and programming costs in 2009 will increase in absolute dollars and remain relatively consistent as a percentage of revenue compared to 2008 as we continue to focus on product innovation and enhancement.

General and Administrative. General and administrative expenses consist of salaries and related expenses and allocated overhead costs, all associated with employees and contractors in finance, human resources, legal, information technology and facilities, and, to a lesser extent, miscellaneous costs, such as professional fees and public company regulatory compliance costs.

General and administrative expenses as a percentage of total revenues decreased to 11.0% and 11.4% for the three and nine months ended June 30, 2009, compared to 14.4% and 14.6% for the same periods in 2008. General and administrative expense decreased by 13.8%, or $1.1 million, for the three months ended June 30, 2009, and 9.6%, or $2.2 million, for the nine months ended June 30, 2009, compared to the same periods 2008. Total salaries and related expenses decreased by 14.7%, or $0.7 million, for the three months ended June 30, 2009. Total salaries and related expenses were flat for the nine months ended June 30, 2009, compared to the same period in 2008. Allocated overhead costs, professional fees, and other decreased by 15.4%, or $0.5 million, for the three months ended June 30, 2009, and 20.1%, or $1.9 million, for the nine months ended June 30, 2009, compared to the same periods 2008. These decreases were primarily the result of a $0.9 million non-recurring expense in the second quarter of 2008 to reflect state and local taxes payable.

We expect the absolute dollar amount of general and administrative expenses to remain relatively consistent in 2009 compared to 2008. However, we expect general and administrative costs as a percentage of revenue to decrease due to economies of scale.

Amortization of Intangible Assets. Amortization of intangible assets represents the amortization of the intangible assets from acquisitions, which includes Outtask, Inc. (“Outtask”) in January 2006 and Gelco in October 2007. We are amortizing our intangible assets as non-cash charges to operations for Outtask over an expected useful life of 8.2 years and for Gelco over an expected useful life of 9.6 years, which is consistent with the timing and level of expected cash flows attributed to customer relationships, use of acquired technology, trade name and trademarks, and non-compete agreements.

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Interest Income, Interest Expense and Other

	Three Months Ended June 30,								Nine Months Ended June 30,
	2009			2008			Change		2009			2008			Change
Interest income	$	372		$	154		141.6	%	$	1,840		$	584		215.1	%
Interest expense		(123	)		(349	)	(64.8	)%		(373	)		(1,202	)	(69.0	)%
Other, net		175			(111	)	(257.7	)%		(392	)		(170	)	130.6	%
Total other income (expense), net	$	424		$	(306	)	(238.6	)%	$	1,075		$	(788	)	(236.4	)%

Interest income increased for the three and nine months ended June 30, 2009, compared to 2008, which reflects higher levels of interest-earning cash, cash equivalents, and investments. We record realized gains and losses on fluctuations in exchange rates in the Other income (expense) section of the income statement.

Income Tax Expense

	Three Months Ended June 30,						Nine Months Ended June 30,
	2009		2008		Change		2009		2008		Change
Income tax expense	$	4,076	$	2,712	50.3	%	$	11,138	$	7,227	54.1	%

We make estimates and judgments in determining income tax expense for financial statement purposes. We also make estimates and judgments in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risk associated with estimates of future taxable income, ongoing, prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. If recovery is not likely, we record a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. A release of valuation allowance as a result of an acquisition is recorded as reduction of goodwill recognized rather than a tax benefit in the income statement.

Financial Condition

Our total assets decreased by 2.8%, or $17.7 million, to $623.3 million at June 30, 2009, from $641.0 million at September 30, 2008. Our cash and cash equivalents decreased by 51.8%, or $138.8 million, to $129.0 million at June 30, 2009, from $267.7 million at September 30, 2008. This decrease in cash and cash equivalents is due to our purchase of $127.6 million in investment grade short- to intermediate-term fixed income securities and money market funds. Our cash flow activity is described in more detail in the “Liquidity and Capital Resources” section below. Our accounts receivable balances were $38.1 million at June 30, 2009, and $38.5 million at September 30, 2008, representing a decrease of 1.0%, or $0.4 million.

Our total current liabilities increased by 13.3%, or $11.5 million, to $98.1 million at June 30, 2009, from $86.5 million at September 30, 2008. This was primarily due to the increase in our customer funding liabilities which was partially offset by the payment and subsequent decrease in accrued bonus and commissions.

Our additional paid in capital decreased by 7.0%, or $47.6 million, to $631.9 million at June 30, 2009, from $679.5 million at September 30, 2008. The decrease reflects $54.8 million used to repurchase shares of our outstanding common stock, partially offset by the exercise of stock options under our stock-based compensation plans, and the purchase of stock under our employee stock purchase plan.

Liquidity and Capital Resources

Our available sources of liquidity as of June 30, 2009, consisted principally of cash and cash equivalents totaling $129.0 million. Our cash and cash equivalents held at financial institutions generally are in excess of the current Federal Deposit Insurance Corporation limits of $250. In addition, we have a revolving credit facility, which is discussed in more detail below.

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Our operating cash inflows consist of payments received from our customers related to our subscription and other product offerings. Our operating cash outflows consist of employee salaries, payments to vendors directly related to subscription and license services, payments under arrangements with third parties who provide hosting infrastructure services in connection with our subscription services offerings, related sales and marketing and administrative costs, cost of operations and systems development and programming costs. Net cash provided by operating activities was $18.1 million and $45.6 million for the three and nine months ended June 30, 2009, compared to $19.4 million and $41.1 million for the same periods in 2008.

Our investing activities used $113.5 million and $127.0 million for the three and nine months ended June 30, 2009, compared to $3.2 million and $171.4 million for the same periods in 2008. Purchases of investments were $127.6 million for the three and nine months ended June 30, 2009. Investing activities for the three and nine months ended June 30, 2008, included payments of $1.3 million and $163.1 million related to our acquisition of Gelco Information Network, Inc. Investing activities included a $4.0 million payment for a purchase of an investment in RideCharge during the nine months ended June 30, 2009. Purchases of property and equipment were $3.8 million and $14.3 million for the three and nine months ended June 30, 2009, compared to $4.1 million and $9.7 million for the same periods in 2008. The increase in customer funding liabilities, net of changes in restricted cash resulted in $19.7 million and $20.9 million in cash provided for the three and nine months ended June 30, 2009 compared to $2.2 million and $1.5 million for the same periods in 2008.

Our financing activities provided $1.6 million for the three months ended June 30, 2009, compared to $14.5 million used for the same period in 2008. Financing activities used $55.6 million for nine months ended June 30, 2009, compared to $19.4 million for the same period in 2008. The exercise of stock options provided $1.3 million and $3.4 million of the three and nine months ended June 30, 2009, compared to $2.6 million and $5.6 million for the same periods in 2008. Financing activities included $54.8 million in cash used for repurchases of our common stock during the nine months ended June 30, 2009. Financing activities included $12.9 million and $43.8 million in cash used for repurchases of our common stock during the three and nine months ended June 30, 2008.

We entered into a credit agreement with a financial institution on June 1, 2007, and amended it on October 1, 2007 (“Amended Credit Agreement”). The Amended Credit Agreement provides for a revolving credit facility for up to $70 million and expires in June 2012, or such earlier date as provided in the Amended Credit Agreement. At our option, the interest rate on the revolving credit facility is equal to either (1) the greater of the Federal Funds Rate plus 0.5% and the financial institution’s publicly announced prime rate at that time, or (2) the London Interbank Offered Rate (“LIBOR”) divided by the result of 1.00 less the Federal Reserve System’s maximum reserve percentage for Eurocurrency funding. We granted security interests in substantially all of our assets as collateral for the loans under the Amended Credit Agreement. The Amended Credit Agreement requires compliance with certain covenants, which limit among other things our ability to consummate a sale of assets, make changes in our capital structure and pay out dividends.

As of June 30, 2009, and September 30, 2008, we were in compliance with all loan covenants under the terms of the Amended Credit Agreement. As of June 30, 2009, we had no outstanding borrowings under this agreement.

Our Board of Directors has authorized a stock repurchase program that expires in January 2011. During the three months ended June 30, 2009, we did not make any repurchases of our outstanding common stock under this program. As of June 30, 2009, 2.1 million shares remained eligible for repurchase under this program. Repurchases may be made from time to time in the open market based on market conditions. Any repurchases will be made at the then-current market prices and repurchased shares will be retired. During the three months ended June 30, 2008, we repurchased and retired 0.4 million shares of our outstanding common stock under this program.

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We believe our cash and cash equivalents, amounts available under existing credit arrangements, as well as expected positive operating cash flows, will be sufficient to meet our anticipated cash needs for normal business operations, working capital needs and capital expenditures for at least the next 12 months. In the longer term, or if we decide to acquire assets or businesses, we may require additional funds and may seek to raise such additional funds through private or public sales of debt or equity securities, or securities convertible or exchangeable into such securities, strategic relationships, bank debt, lease financing arrangements or other available means. There can be no assurances that any such funds will be available or, if they are available, that they will be available on acceptable terms to meet our business needs. If additional funds are raised through the issuance of equity securities, stockholders may experience dilution, or such equity securities may have rights, preferences, or privileges senior to those of the holders of our common stock.

Contractual Obligations and Commercial Commitments

The following table summarizes our outstanding contractual obligations as of June 30, 2009:

Years ending September 30,	Capital Leases		Operating Leases		Purchase Obligations
2009 (July 1, 2009, through September 30, 2009)	$	403	$	724	$	526
2010		1,129		2,651		686
2011		199		2,411		253
2012		—		2,375		—
2013		—		1,634		—
2014 and thereafter		—		454		—
Total	$	1,731	$	10,249	$	1,465

Capital Leases

We lease equipment, some of which is required to be capitalized if it meets certain criteria, with the related asset recorded in property and equipment and an offsetting amount recorded as a liability.

Operating Leases

We lease office space and equipment under non-cancelable operating leases. We lease our current headquarters in Redmond, Washington under an operating lease that expires on May 31, 2013. The lease agreement for our headquarters in Redmond, Washington provides for an eight-year term with an option to renew for an additional five years. Amounts for operating leases do not include certain operating expenses under these leases such as common area maintenance. As of June 30, 2009, we also leased office space in the United States in the states of Arizona, California, Georgia, Illinois, Minnesota, New Jersey, Texas and Virginia, and internationally in the countries of Australia, Belgium, Canada, China, Czech Republic, France, Germany and the United Kingdom.

Purchase Obligations

We have future minimum purchase obligations under arrangements with third parties who provide hosting infrastructure services in connection with the provision of our subscription service offerings.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements.

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Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances; such estimates and judgments are periodically re-evaluated. Actual results may differ materially from these estimates under different assumptions, judgments or conditions.

The estimates and judgments noted above are affected by our application of accounting policies. Our critical accounting policies are those we deem most important to the portrayal of our financial condition and results of operations, including those that require the most difficult, subjective or complex judgments. Our critical accounting policies include business combinations, revenue recognition, internal-use software, allowances for accounts receivable, share-based compensation and income taxes.

Business Combinations

We are required to allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. This valuation requires management to make significant estimates and assumptions, especially with respect to long-lived and intangible assets.

Critical estimates in valuing intangible assets include but are not limited to estimates about: future expected cash flows from customer contracts, customer lists, distribution agreements, proprietary technology and non-compete agreements; the acquired company’s brand awareness and market position, as well as assumptions about the period of time the brand will continue to be used in our product portfolio; and discount rates. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur.

Other estimates associated with the accounting for these acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

Revenue Recognition

We generate our revenues from the delivery of subscription services (which include software maintenance services), and to a much lesser degree, consulting services and the sale of software licenses. We recognize revenues in accordance with accounting standards for software and service companies.

We recognize revenue when:

• evidence of an arrangement exists;

• delivery has occurred;

• the fees are fixed or determinable; and

• collection is considered probable.

If collection is not considered probable, we recognize revenues when the fees are collected. If the fees are not fixed or determinable, we recognize revenues as payments become due from the customer. Accordingly, our judgment as to the probability of collection and determinability of fees may materially affect the timing of our revenue recognition and results of operations. If non-standard acceptance periods or non-standard performance criteria are required, we recognize revenue upon the expiration of the acceptance period or satisfaction of the acceptance/performance criteria, as applicable.

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In contractual arrangements that include the provision of multiple elements, we apply the accounting guidance most applicable to the specific arrangement to determine how contract consideration should be measured and allocated to the separate elements in the arrangement. Multiple element arrangements require the delivery or performance of multiple products, services and/or rights to use assets. Generally, separate contracts with the same customer that are entered into at or near the same time are presumed to have been negotiated together and, therefore, are accounted for as a single contractual arrangement in determining how contract consideration should be measured and allocated to the separate elements in the arrangement. Typically, we measure and allocate the total arrangement fee among each of the elements based on their fair value or, if necessary, vendor-specific objective evidence of their fair value (“VSOE”). VSOE is determined by the price charged when an element is sold separately or, in the case of an element not yet sold separately, the price set by authorized management, if it is probable that the price, once established, will not materially change prior to separate market introduction.

Subscription Revenues

Our subscription revenues are typically recognized monthly as the service is provided to the customer and consist of:

• monthly fees paid for subscription services;

• amortization of related set-up fees;

• amortization of fees paid for software maintenance services under software license arrangements; and

Set-up fees paid by customers in connection with subscription services, as well as the associated direct and incremental costs, such as labor and commissions, are deferred and recognized ratably over the longer of the contractual lives, or the expected lives of the customer relationships, which generally range from two to five years. For those subscription service offerings that have been commercially available for only a short period of time, the contractual lives are used as the best estimate of the expected lives of the customer relationships. We continue to evaluate and adjust the length of these amortization periods as we gain more experience with customer contract renewals and contract cancellations. It is possible that, in the future, the estimates of expected customer lives may change and, if so, the periods over which such subscription set-up fees and costs are amortized will be adjusted. Any such change in estimated expected customer lives will affect our future results of operations.

Software maintenance services include technical support and the right to receive unspecified upgrades and enhancements on a when-and-if available basis. Fees for software maintenance services are typically billed annually in advance of performance of the services with provisions for subsequent automatic annual renewals. We defer the related revenues and recognize them ratably over the respective maintenance terms, which typically are one year.

Subscription revenues are adjusted for estimated sales allowances, which are based on our historical experience, including a review of our experience related to price adjustments and sales credits issued.

Consulting and Other Revenues

Consulting revenues consist of fees for professional services, which relate to system implementation and integration, planning, data conversion, training and documentation of procedures. Consulting service fees are typically billed and recognized as revenue on a time-and-materials basis. In some instances, we sell consulting services under milestone or fixed-fee contracts and, in such cases, recognize consulting revenues on a percentage-of-completion basis. Consulting revenues are adjusted for estimated sales allowances, which are based on our historical experience, including a review of our experience related to price adjustments and sales credits issued.

Other revenues consist of fees earned from, and allocable to, grants of licenses to use our software products. We recognize license revenues when evidence of a license arrangement exists, we have delivered the software, the amount of the transaction is fixed or determinable, collection is probable and VSOE exists for any undelivered elements of the arrangement. Elements included in our multiple-element software arrangements consist of various licensed software products and services such as software maintenance services, consulting services and subscription services.

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Portions of our revenues are generated from sales made through our reseller partners. When we assume a majority of the business risks associated with performance of the contractual obligations, we record the revenues on a gross basis and amounts paid to our reseller partners are recognized as cost of operations. Our assumption of such business risks is evidenced when, among other things, we take responsibility for delivery of the product or service, establish pricing of the arrangement and are the primary obligor in the arrangement. When our reseller partner assumes the majority of the business risks associated with the performance of the contractual obligations, we record the associated revenues net of the amounts paid to our reseller partner. Our judgment as to whether we have assumed the majority of the business risks associated with performance of the contractual obligations materially affects how we report revenues and cost of operations.

Accounts Receivable Allowances

We record provisions for estimated sales allowances against subscription and consulting revenues in the period in which the related revenues are recorded. We record our sales allowances based on historical experience, including a review of our experience related to price adjustments and sales credits issued.

We make judgments as to our ability to collect outstanding receivables, and we provide an allowance for doubtful accounts, included in general and administrative expenses. In estimating allowances for doubtful accounts, we consider specific receivables when collection is doubtful, as well as an analysis of our historical bad debt experience and the current economic environment. If the data used to estimate the allowance provided for doubtful accounts does not adequately reflect our future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and future results of operations could be materially affected.

Income Taxes

We make estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. If recovery is not likely, we record a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. A release of valuation allowance as a result of an acquisition is recorded as reduction of goodwill recognized in the acquisition rather than a tax benefit in the income statement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks include primarily interest rate and foreign exchange risks.

Interest Rate Risk. We have borrowing arrangements with variable rates of interest. We also maintain cash in highly liquid investment vehicles including money market accounts, which bear interest at variable overnight or short term rates. Variable interest rate investment and debt exposes us to differences in future cash flows resulting from changes in market interest rates. Variable interest rate risk can be quantified by estimating the change in cash flows resulting from a hypothetical 100 basis point increase in interest rates.

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Our revolving credit facility bears interest at floating rates we select under the terms of our credit agreement with a financial institution. As of June 30, 2009, we had no outstanding indebtedness under this credit facility. The revolving credit facility is not hedged with an interest rate swap.

Foreign Currency Risk. We conduct business in international markets, primarily in Australia, Canada and the United Kingdom. Because we operate in international markets, we have exposure to different economic climates, political arenas, tax systems and regulations that could affect foreign exchange rates. Changes in exchange rates between the U.S. dollar and these other currencies will result in transaction gains or losses, which we recognize in our income statements.

Derivatives. We do not use derivative financial instruments.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on our management’s evaluation (with the participation of our Chief Executive Officer and Chief Financial Officer), our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the three months ended June 30, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitation on Effectiveness of Controls

It should be noted that any system of controls, including disclosure controls and procedures and internal controls over financial reporting, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. The design of any control system is based, in part, upon the benefits of the control system relative to its costs. Our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and the actual effectiveness of our disclosure controls and procedures is described above.

Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In July 2001, we and several of our current and former officers were named as defendants in two securities class-action lawsuits based on alleged errors and omissions concerning underwriting terms in the prospectus for our initial public offering. In April 2002, these lawsuits were consolidated with more than 300 similar pending cases filed against companies that completed initial public offerings between 1997 and 2000 and the underwriters that took them public. In July 2003, we decided to participate in a proposed settlement negotiated by representatives of a coalition of issuers named as defendants in similar actions and their insurers. Although we believe that the plaintiffs’ claims have no merit, we decided

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to participate in the proposed settlement to avoid the cost and distraction of continued litigation. The proposed settlement had been preliminarily approved by the district court. However, in December 2006, the court of appeals reversed the district court’s finding that six focus cases could be certified as class actions. In April 2007, the court of appeals acknowledged that the district court might certify a more limited class. At a June 2007 status conference, the district court terminated the proposed settlement as stipulated among the parties. Plaintiffs filed an amended complaint in August 2007 and a motion for class certification in six focus cases in September 2007, which was later withdrawn in October 2008. In November 2007, defendants in the six focus cases filed a motion to dismiss the complaint for failure to state a claim, which the district court denied in March 2008. Plaintiffs, the issuer defendants (including us), the underwriter defendants and the insurance carriers for the defendants have engaged in mediation and settlement negotiations. The parties have reached a settlement agreement, which was submitted to the district court for preliminary approval on April 2, 2009. As part of this tentative settlement, our insurance carrier has agreed to assume our entire payment obligation under the terms of the settlement. Although the parties have reached a tentative settlement agreement, there can be no guarantee that it will be finalized or receive approval from the district court. We believe that we have meritorious defenses to these claims. If the tentative settlement is not implemented and the litigation continues against us, we would continue to defend against this action vigorously. Any liability we incur in connection with this lawsuit could materially harm our business and financial position and, even if we defend ourselves successfully, there is a risk that management’s distraction in dealing with this lawsuit could harm our results.

ITEM 1A. RISK FACTORS

We operate in a dynamic and rapidly changing business environment that involves substantial risk and uncertainty. The following discussion addresses the risks and uncertainties that could cause, or contribute to causing, actual results to differ materially from expectations. In evaluating our business, investors should pay particular attention to the risks and uncertainties described below and in other sections of this report and in our subsequent filings with the SEC.

Because we depend on sales of a relatively small number of our solutions, decreases in demand for any of those solutions could substantially harm our results of operations.

We generated 95% of our total revenues for the nine months ended June 30, 2009, from four solutions — Concur Travel & Expense, Concur Expense, Concur ExpenseLink and Concur Cliqbook Travel. We expect these solutions to continue to constitute a similar percentage of our total revenues for the foreseeable future. Our future financial performance and revenue growth are dependent upon continued market acceptance of these solutions. Our revenues would decline significantly if our customers reduce or cancel their subscriptions for our products due to current economic conditions or if competing products achieve greater market acceptance, either because our competitors (some of which have substantially greater resources than we do) develop new offerings, or we do not keep up with technological advancements in services and software platforms, delivery models or product features. There can be no assurance that our solutions will continue to maintain widespread market penetration or that we will continue to derive significant revenues from sales of these solutions in the future.

Our future performance and revenue growth will depend on the growth of our subscription services.

We anticipate that our future financial performance and revenue growth will depend upon the growth of our subscription services. Subscription revenues represented 97% of our total revenues for the nine months ended June 30, 2009. We expect subscription revenues to represent a large majority of our total revenues for the foreseeable future and that our future financial performance and revenue growth will depend, in large part, upon the growth in customer demand for our services. As a result, we have invested significantly in infrastructure, operations and strategic relationships to support on-demand subscription services, which represent a significant departure from traditional software delivery strategies.

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If our subscription services business does not grow sufficiently, our cost of revenues may exceed such revenues, which would harm our operating results. Our costs of providing subscription services are relatively fixed in the short term, so we may not be able to adjust our expenses quickly enough to offset any potential slowdown in subscription sales. In addition, any delays in deployment may prevent us from recognizing subscription revenue for indeterminate periods of time, even when we have already incurred costs relating to the deployment of our subscription services. Further, we may experience unanticipated increases in costs associated with providing our subscription services and software maintenance services to customers over the term of our customer contracts as a result of inaccurate internal cost projections or other factors, which may harm our operating results. If our customers cannot make payments or gain access to credit to make payments, they may be forced to cancel existing subscriptions for our products and services. Some of our subscription services contracts contain cancellation provisions and, if cancelled, could result in us recognizing substantially less revenue than the aggregate value of those contracts over their terms. If a customer cancels or otherwise seeks to terminate a subscription or maintenance agreement prior to the end of its term, or if we are unable to renew such an agreement at the end of its term, our operating results in future periods could be substantially harmed.

Adverse economic conditions may affect our business, operating results and financial condition.

Our operations and financial performance depend on the state of the economy, which has deteriorated recently due to, among other things, the effects of the credit and housing markets crises, impaired consumer confidence, lower economic activity and increases in the rates of unemployment, default and bankruptcy. Unfavorable economic conditions may result in fewer travel and expense transactions, lower information technology spending and deceased revenue for us. Customers may delay, reduce, or curtail purchasing decisions due to, among others, difficulty in assessing and forecasting future business activity and impaired ability to pay for our products and services. Customers may go out of business or be acquired by other companies. The economic downturn may also result in increased expenses for us for labor, energy, equipment and facilities, as well as increased volatility of our stock price and foreign exchange rates, and impairment of goodwill and other assets. If the current economic downturn continues or worsens, our business, operating results and financial condition could be materially and adversely affected.

We face significant competition from companies that have longer operating histories and greater resources than we do, and our business will suffer if we fail to compete effectively.

The market for our solutions is intensely competitive and rapidly changing, so the competitive landscape is complex. Our principal direct competition comes from independent vendors of corporate travel and/or expense management software and services, as well as financial institutions and enterprise resource planning software vendors that sell products similar to ours along with their suites of other products and services. Many of our competitors have longer operating histories; greater financial, technical, marketing and other resources; greater name recognition and a larger total number of customers for their products and services than we do. Some of our competitors, particularly major financial institutions and enterprise resource planning software vendors, have well-established relationships with our current and potential customers, as well as with systems integrators and other vendors and service providers. These competitors may also be able to respond more quickly to new or emerging technologies and changes in customer requirements, devote greater resources to the development, promotion and sale of their products, or better withstand economic downturns. We also face indirect competition from potential customers’ internal development efforts and, at times, have to overcome their reluctance to move away from existing paper-based systems. In addition, we anticipate the entrance of new competitors in the future. Increased competition may result in price reductions, reduced gross margins and change in market share and could have a material adverse effect on our business, financial condition and results of operations.

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Because we depend upon strategic relationships with third parties, including American Express Travel Related Services Company, Inc., our revenues will decline if we do not sustain and develop these relationships.

We depend on strategic reseller and referral relationships to offer products and services to a larger customer base than we can reach through direct sales, telesales and internal marketing efforts. Some of our strategic relationships are in early stages of operation and, accordingly, it is uncertain whether these third parties will be able to market our products and services successfully or provide the volume and quality of orders and lead referrals that we currently expect. For example, in 2008 we entered into a strategic referral relationship with American Express Travel Related Services Company, Inc., through which we expect to expand our market presence and broaden our distribution capacity. In addition, the global economic downturn may negatively affect our strategic partners, making them less effective or causing them to modify or cancel their relationships with us.

Our success depends in part on the ultimate success of our strategic reseller and referral partners and their ability to market our products and services successfully. Some of these third parties have entered, and may continue to enter, into strategic relationships with our competitors. Further, many of our strategic partners have multiple strategic relationships and they may not regard us as significant for their businesses. Our strategic partners may terminate their respective relationships with us, pursue other partnerships or relationships, or attempt to develop or acquire products or services that compete with our products or services. Our strategic partners also may interfere with our ability to enter into other desirable strategic relationships.

If we are unable to maintain our existing strategic relationships or enter into new ones, we would have to devote substantially more resources to the distribution, sales and marketing of our products and services, which would increase our costs and decrease our revenues.

We depend on our relationships with travel suppliers, so any adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

An important component of our business success is our ability to maintain and develop relationships with travel suppliers. Adverse changes in existing relationships, including any impact of the economic recession on the businesses of those suppliers, could reduce the amount, quality and breadth of attractively priced travel products and services that we are able to offer, which could adversely affect our business, financial condition and results of operations.

If our customers have concerns over the scalability or security of our products, they might discontinue buying them and our revenues will decline.

If customers determine that our subscription services offerings are not sufficiently scalable, do not provide adequate security for the dissemination of information over the Internet or corporate extranets, or are otherwise inadequate for Internet or extranet use or if, for any other reason, our customers decide not to accept our subscription services for use, our business will be harmed. As part of our subscription services, we receive credit card, travel booking, employee, purchasing, supplier and other financial and accounting data, through the Internet or extranets and there can be no assurance that this information will not be subject to computer break-ins, theft and other improper activity that could jeopardize the security of information handled by our products. Any such lapse in security could expose us to litigation, loss of customers, damage to our reputation, or otherwise harm our business.

In addition, any person who is able to circumvent our security measures could misappropriate proprietary or confidential customer information or cause interruptions in our operations. We may be required to incur significant costs to protect against security breaches or to alleviate problems caused by breaches. Any general concern regarding security in the marketplace could deter customers or prospects from using the Internet to conduct transactions that involve transmitting confidential information. Our failure to prevent security breaches, or well-publicized security breaches affecting the Internet in general, could significantly harm our business, operating results and financial condition.

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Privacy concerns are increasing, which could result in regulatory changes that may harm our business.

Personal privacy has become a significant issue in the United States and many other countries in which we operate. The United States and various other countries have imposed restrictions and requirements on the use of personal information by those collecting such information. Any new or existing privacy laws, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information. If such privacy laws were deemed to apply to us, we may be required to change our activities and revise or eliminate our services, which could significantly harm our business.

Interruption of our operations could prevent us from delivering our products and services to our customers, which could significantly harm our business.

Significant portions of our operations depend on our ability to protect our computer equipment and the information stored in our computer equipment, offices and hosting facilities against damage from earthquake, floods, fires, power loss, telecommunications failures, unauthorized intrusion and other events. We back up software and related data files regularly and store the back-up files at various off-site locations. However, there can be no assurance that our disaster preparedness will eliminate the risk of extended interruption of our operations.

We have engaged third-party hosting facility providers to provide the hosting facilities and related infrastructure for our subscription services. We do not control the operation of these hosting facilities. Our service to customers could be interrupted in the event of the occurrence of a natural disaster, the decision by a hosting provider to close a facility without adequately notifying us, termination of operations by a hosting provider, or other unanticipated problems. We also retain third-party telecommunications providers to provide Internet and direct telecommunications connections for our services. Any of these third-party providers may fail to perform their obligations adequately. Any damage to, or failure of, our systems could result in interruptions in our service and/or litigation. Interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates. Our business will be harmed if our customers and potential customers believe our service is unreliable.

Our acquisitions of, and investments in, other companies, products, or technologies may not yield expected benefits.

We have acquired and invested in other companies in the past. In the future, we may acquire or make investments in other companies, products, or technologies. We may not realize the anticipated benefits of those acquisitions or investments to the extent that we anticipate, or at all. We may have to incur additional debt or issue additional equity securities to pay for future acquisitions or investments, the issuance of which could be dilutive to our existing stockholders. If any acquisition or investment is not perceived as improving our earnings per share, our stock price may decline. In addition, we may incur non-cash amortization charges from acquisitions, which could harm our operating results. Any completed acquisitions would also require significant integration efforts, diverting our attention from our business operations and strategy. The value of our acquisitions or investments may decline as a result of changes in market conditions or the acquired company business, as a result of factors such as the performance of the business relative to its business plan, revenue and cost trends of the business, its liquidity and cash position, and market acceptance of its products.

The growth of the international component of our business subjects us to additional risks associated with foreign operations.

Our international operations, which are subject to risks associated with operating outside of the United States, are becoming an increasingly important component of our business. Revenues from customers outside the United States represented 10% of total revenues for the nine months ended June 30, 2009. These international operations are subject to many difficulties and incremental costs, including:

• costs of customizing products for foreign countries;

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• laws and business practices favoring local competitors;

• uncertain regulation of electronic commerce;

• compliance with multiple, conflicting and changing governmental laws and regulations;

• longer sales cycles;

• greater difficulty in collecting accounts receivable;

• import and export restrictions and tariffs;

• potentially weaker protection for our intellectual property than in the United States and practical difficulties in enforcing such rights abroad;

• difficulties staffing and managing foreign operations; and

• political and economic instability.

Our international operations also face foreign currency-related risks. To date, most of our revenues have been denominated in United States dollars, but we believe that an increasing portion of our revenues will be denominated in foreign currencies. The current economic downturn has been accompanied by increased foreign currency exchange rate volatility. We currently do not engage in foreign exchange hedging activities and, therefore, our international revenues and expenses are currently subject to the risks of foreign currency fluctuations. In addition, our ability to expand into international markets will depend on our ability to develop and support services and products that incorporate the tax laws, accounting practices and currencies of applicable countries.

Our international operations also increase our exposure to international laws and regulations. If we are unable to comply with foreign laws and regulations, which are often complex and subject to variation and unexpected changes, we could incur unexpected costs and potential litigation. For example, the governments of foreign countries might attempt to regulate our services and products or levy sales or other taxes relating to our activities. In addition, foreign countries might impose tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers, any of which could make it more difficult for us to conduct our business in international markets.

We intend to continue to expand our global sales and marketing activities and enter into relationships with additional international distribution partners. We are in the early stages of developing our indirect distribution channels in markets outside the United States. We may not be able to attract and retain distribution partners that will be able to market our products effectively.

Our quarterly revenues and operating results may fluctuate in future periods, we may fail to meet expectations of investors and public market analysts or we may be affected by other adverse factors, which could cause the market price of our common stock to be volatile or to decline.

Our revenues and operating results may fluctuate significantly from quarter to quarter. If quarterly revenues or operating results fall below the expectations of investors or public market analysts, the price of our common stock could decline substantially. Factors that might cause quarterly fluctuations in our operating results include:

• general economic and market conditions;

• the evolving demand for our services and software;

• spending decisions by our customers and prospective customers;

• our ability to manage expenses;

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• the timing of new product releases;

• changes in our pricing policies or those of our competitors;

• the timing of large contracts;

• changes in mix of our services and software offerings;

• the mix of sales channels through which our services and software are sold;

• costs of developing new products and enhancements;

• our ability to adequately provide services and software; and

• global political conditions.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

Accounting principles generally accepted in the U.S. are subject to interpretation and change over time. A change in these principles or different interpretation of an existing principle could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change. For example, revenue recognition rules are complex and require significant interpretation by us. Changes in circumstances, interpretations, or accounting principles or guidance may require us to modify our revenue recognition policies. Such modifications could impact the timing of revenue recognition and our operating results. SeeManagement’s Discussion And Analysis Of Financial Condition And Results Of Operations regarding our critical revenue recognition policies.

If our internal controls are not effective, there may be errors in our financial information that could require a restatement or delay our SEC filings, and investors may lose confidence in our reported financial information, which could lead to a decline in our stock price.

At the end of 2006 we determined that we had a material weakness in our internal controls, which pertained to controls over changes in accounting principles. At the end of 2007, our auditors determined that we have adequately remediated this weakness. However, it is possible that we may discover other significant deficiencies or material weaknesses in our internal control over financial reporting in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could cause us to fail to meet our periodic reporting obligations, or result in material misstatements in our financial information. Any such delays or restatements could cause investors to lose confidence in our reported financial information and lead to a decline in our stock price.

Compliance with public company corporate governance and reporting regulations is uncertain and expensive.

Many new laws, regulations and standards, notably those adopted by the SEC and the NASDAQ Stock Market in connection with the Sarbanes-Oxley Act of 2002, impose significant obligations on public companies such as us. Additional regulatory and compliance requirements may be adopted in the future. The new laws and regulations have increased the scope, complexity and cost of corporate governance, reporting and disclosure practices and have created uncertainty for companies such as us. These new laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Our compliance with these reforms and enhanced new disclosures has resulted in and will likely continue to result in general and administrative expenses and a significant diversion of management time and attention from revenue-generating or cost-reduction activities to compliance activities. If we are not able to prepare for and implement the reforms required by new laws, regulations and standards, our business, operating results and financial condition could be harmed. Further, these laws, regulations and standards may make it more difficult for us to attract and retain qualified members to serve on our board of directors and to attract and retain qualified executive officers, which could harm our business.

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Our lengthy sales cycle could adversely affect our financial results.

Because of the high costs involved over a significant period of time, our customers typically commit significant resources to an evaluation of available alternatives and require us to expend substantial time, effort and money educating them about the value of our offerings. Our sales cycle, which is the time between initial contact with a potential customer and the ultimate sale, is often lengthy and unpredictable. As a result, we have limited ability to forecast the timing and size of specific sales. In addition, customers may delay their purchases from a given quarter to another as they elect to wait for new product enhancements. Due to unfavorable economic conditions, customers may delay their purchases for even longer periods due to their inability to assess and forecast future business activity, impaired purchasing ability or other economic factors. Any delay in completing, or failure to complete, sales in a particular quarter or year could harm our business and could cause our operating results to vary significantly.

We may not successfully develop or introduce new products or enhancements to existing products, or successfully integrate acquired products and services with our offerings and, as a result, we may lose existing customers or fail to attract new customers and our revenues may suffer.

Our future financial performance and revenue growth will depend, in part, upon the successful development, introduction and customer acceptance of new and enhanced versions of our products and services and on our ability to integrate the products and services we acquire into our existing and future products and services. Our business could be harmed if we fail to deliver enhancements to our current and future products and services that our customers desire, or fail to integrate acquired products and services into our existing and future products. From time to time, we experience delays in the planned release dates of enhancements to our products and services and we have discovered errors in new releases after their introduction. New product versions or upgrades may not be released according to schedule, or may contain errors when released. Either situation could result in adverse publicity, loss of sales, delay in market acceptance of our products and services, or customer claims, including, among other things, warranty claims against us, any of which could harm our business. If we do not deliver new product versions, upgrades, or other enhancements to existing products and services on a timely and cost-effective basis, our business will be harmed. We are also continually seeking to develop new offerings. However, we remain subject to all of the risks inherent in product development, including, without limitation, unanticipated technical or other development problems, which could result in material delays in product introduction and acceptance or significantly increased costs. There can be no assurance that we will be able to successfully develop new services or products, or to introduce in a timely manner and gain acceptance of such new products or services in the marketplace.

If our products and services do not keep pace with technological change, our sales could decline and our business could be harmed.

We must continually modify and enhance our services and products to keep pace with changes in hardware and software platforms, database technology, electronic commerce technical standards and other items. As a result, uncertainties related to the timing and nature of new product announcements or introductions, or modifications by vendors of operating systems, back-office applications and browsers and other Internet-related applications, could harm our business.

We rely on third-party software and services that may be difficult to replace.

We license or purchase software and services provided by third parties in order to offer some of our services and software offerings. Such third-party software and services may not continue to be available on commercially reasonable terms, if at all. The loss or inability to maintain our rights to use any of these software or services could result in delays in the sale of our services or software offerings until equivalent technology is either developed by us, or, if available, is identified, licensed and integrated, which could harm our business.

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Our stock price has experienced high volatility, may continue to be volatile and may decline.

The trading price of our common stock has fluctuated widely in the past and may do so in the future, as a result of a number of factors. In particular, the stock market as a whole recently has experienced extreme price and volume fluctuations that have affected the market price of many technology companies in ways that may have been unrelated to those companies’ operating performance. Factors that could cause our stock price to fluctuate include:

• general and industry-specific business, economic and market conditions;

• the announcement of a merger or acquisition;

• variations in our actual and anticipated operating results;

• changes in our earnings estimates by analysts;

• failure to achieve earnings expectations;

• the volatility inherent in stock prices within the emerging sector within which we conduct business;

• adverse publicity; and

• the volume of trading in our common stock, including sales upon exercise of outstanding options.

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Securities class action litigation has often been brought against companies that experience periods of volatility in the market prices of their securities. Securities class action litigation could result in substantial costs and a diversion of our management’s attention and resources. In July 2001, we and several of our current and former officers were named as defendants in two securities class-action lawsuits based on alleged errors and omissions concerning underwriting terms in the prospectus for our initial public offering. In April 2002, these lawsuits were consolidated with more than 300 similar pending cases filed against companies that completed initial public offerings between 1997 and 2000 and the underwriters that took them public. In July 2003, we decided to participate in a proposed settlement negotiated by representatives of a coalition of issuers named as defendants in similar actions and their insurers. Although we believe that the plaintiffs’ claims have no merit, we decided to participate in the proposed settlement to avoid the cost and distraction of continued litigation. The proposed settlement had been preliminarily approved by the district court. However, in December 2006, the court of appeals reversed the district court’s finding that six focus cases could be certified as class actions. In April 2007, the court of appeals acknowledged that the district court might certify a more limited class. At a June 2007 status conference, the district court terminated the proposed settlement as stipulated among the parties. Plaintiffs filed an amended complaint in August 2007 and a motion for class certification in six focus cases in September 2007, which was later withdrawn in October 2008. In November 2007, defendants in the six focus cases filed a motion to dismiss the complaint for failure to state a claim, which the district court denied in March 2008. Plaintiffs, the issuer defendants (including us), the underwriter defendants and the insurance carriers for the defendants have engaged in mediation and settlement negotiations. The parties have reached a settlement agreement, which was submitted to the district court for preliminary approval on April 2, 2009. As part of this tentative settlement, our insurance carrier has agreed to assume our entire payment obligation under the terms of the settlement. Although the parties have reached a tentative settlement agreement, there can be no guarantee that it will be finalized or receive approval from the district court. We believe that we have meritorious defenses to these claims. If the tentative settlement is not implemented and the litigation continues against us, we would continue to defend against this action vigorously. Any liability we incur in connection with this lawsuit could materially harm our business and financial position and, even if we defend ourselves successfully, there is a risk that management’s distraction in dealing with this lawsuit could harm our results.

If we fail to attract and retain qualified personnel, our business could be harmed.

Our success depends in large part on our ability to attract, motivate and retain highly qualified personnel, including personnel added through our acquisition of Gelco. Competition for such personnel is intense and there can be no assurance that we will be successful in attracting, motivating and retaining key personnel. Many of our competitors have greater financial and other resources than us for attracting experienced personnel. We also compete for personnel with other software vendors and consulting and professional services companies. Further, changes in applicable stock exchange listing standards relating to obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant options to employees in the future. We rely on our direct sales force to sell our services and software in the marketplace. We anticipate increasing our direct sales force. There is significant competition for direct sales personnel with the advanced sales skills and technical knowledge we need. If we were unable to hire or retain competent sales personnel our business would suffer. In addition, by relying primarily on a direct sales model, we may miss sales opportunities that might be available through other sales channels, such as domestic and international resellers and strategic referral arrangements. Any inability to hire and retain salespeople or any other qualified personnel, or any loss of the services of key personnel, would harm our business.

Our ability to protect our intellectual property is limited and our products may be subject to infringement claims by third parties.

Our success depends, in part, upon our proprietary technology, processes, trade secrets and other proprietary information and our ability to protect this information from unauthorized disclosure and use. We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures, contractual provisions and other similar measures to protect our proprietary information. Although we have six patent applications pending in various countries, we do not own any issued patents.

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Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary and third parties may attempt to develop similar technology independently. We provide our licensed customers with access to object code versions of our software and to other proprietary information underlying our software. Policing unauthorized use of our products is difficult, particularly because the global nature of the Internet makes it difficult to control the ultimate destination or security of software or other data transmitted. While we are unable to determine the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the United States and we expect that it will become more difficult to monitor use of our products as we increase our international presence. There can be no assurance that our means of protecting our proprietary rights will be adequate, or that our competitors will not independently develop similar technology. In addition, there can be no assurance that third parties will not claim infringement by us with respect to current or future products or other intellectual property rights. Any such claims could have a material adverse effect on our business, results of operations and financial condition. In addition, over the past several years, we have made numerous changes in our product names. Although we own registered trademarks in the United States and have filed trademark applications in the United States and in certain other countries, we do not have assurance that our strategy with respect to our trademark portfolio will be adequate to secure or protect all necessary intellectual property.

Anti-takeover effects of our rights agreement, charter documents and Delaware law could discourage or prevent a change in control of Concur.

We have a shareholder rights agreement in place, under which our stockholders have special rights, in the form of additional voting and beneficial ownership, in the event that a person or group not approved by the board of directors were to acquire, or to announce the intention to acquire 15% or more of our outstanding shares (or 15.2% with respect to American Express Travel Related Services Company, Inc.). This plan is designed to have the effect of discouraging, delaying or rendering more difficult an acquisition of us that has not been approved by our Board of Directors.

In addition, there are provisions in our certificate of incorporation and bylaws, as well as provisions in the Delaware General Corporation Law, that may discourage, delay or prevent a change of control. For example:

• our Board of Directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;

• our stockholders do not have cumulative voting rights and, therefore, each of our directors can only be elected by holders of a majority of our outstanding common stock;

• a special meeting of stockholders may only be called by a majority of our Board of Directors, the Chairman of our Board of Directors, or our Chief Executive Officer;

• our stockholders may not take action by written consent;

• our Board of Directors is divided into three classes, only one of which is elected each year; and

• we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

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ITEM 6. EXHIBITS

(a) The following exhibits are filed as a part of this report:

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Date of First Filing	Exhibit Number	Provided Herewith
31.01	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).	—	—	—	—	X
31.02	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).	—	—	—	—	X
32.01	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*	—	—	—	—	X
32.02	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*	—	—	—	—	X

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Concur specifically incorporates it by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 6, 2009

CONCUR TECHNOLOGIES, INC.
By	/s/    John F. Adair
	John F. Adair
	Chief Financial Officer
	principal financial officer and duly         authorized signatory

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EXHIBIT INDEX

31.01	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
31.02	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
32.01	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*
32.02	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).*

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Concur specifically incorporates it by reference.

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