Investor Relations Contact: | |
John Lawlor, Cognos | |
613-738-3503 | |
john.lawlor@cognos.com | |
Media Relations Contact: | |
Sean Reid, Cognos | |
613-738-1440 Ext. 3260 | |
sean.reid@cognos.com |
Cognos® Delivers Record Second Quarter Revenue and Earnings
25 Percent Growth in Business Intelligence Revenue Powers Market-Leading Position
Ottawa, ON & Burlington, MA, September 24, 2003 – Cognos Incorporated (Nasdaq: COGN; TSX: CSN – all figures in U.S. dollars), the world leader in business intelligence (BI) and corporate performance management solutions, today announced record results for its second quarter of fiscal year 2004, ended August 31, 2003.
Revenue for the quarter was $158.2 million, an increase of 23 percent from the second quarter of last year, when revenue was $129.1 million. Net income for the quarter was $18.2 million, resulting in diluted earnings per share of $0.20. This is an increase of 32 percent compared with net income of $13.7 million and diluted earnings per share of $0.15 in the second quarter of last year.
Revenue for the six months of fiscal 2004, ended August 31, 2003 was $308.7 million, an increase of 24 percent compared with revenue of $249.2 million for the first six months of last fiscal year. Net income for the first six months of this year was $30.5 million or $0.33 per share. This compares to net income of $23.7 million or $0.26 per share in the first six months of last year.
Business intelligence revenue achieved strong growth in the quarter, reaching $150.1 million. This was an increase of 25 percent compared with BI revenue of $120.6 million in the second quarter of last year. BI license revenue increased 13 percent to $59.9 million, compared with $53.0 million for the same period last year.
Cognos’ balance sheet remains strong. The Company increased cash, cash equivalents, and short-term investments by $20.5 million to $284.4 million, which included operating cash flow of $21.7 million in the quarter.
Highlights of the Quarter
• | Outstanding customer response to Cognos ReportNetTM |
• | Adaytum integration complete; Enterprise Planning drives 33 percent revenue growth for analytic applications compared with the first quarter of this year |
• | 88 contracts greater than $200,000 and 536 contracts greater than $50,000, increases of 31 percent and 32 percent, respectively, from the second quarter of last year |
• | Double-digit percentage growth for BI revenue in all three major geographies – North America, Europe, and Asia-Pacific |
• | Strong momentum with major partners throughout the world, including a new global agreement with Accenture covering Cognos’ full line of Corporate Performance Management (CPM) products |
• | Major customer wins at Biogen, DirecTV, LPL Financial Services, Southwest Airlines, State of California, StorageTek, Syngenta, Telus, U.S. Army Reserve, and Verizon Wireless |
• | Continued industry analyst recognition of Cognos’ leadership, with the Company extending its lead on the Gartner BI Magic Quadrant |
“Cognos delivered a strong quarter,” said Ron Zambonini, Cognos chief executive officer. “We extended our leadership in the enterprise BI and CPM market with the launch of Cognos ReportNet – the industry’s most powerful and innovative reporting product. The response has been simply outstanding.
“Our customers recognize the distinct value of the Cognos BI and CPM solution. We have great new products – groundbreaking solutions in enterprise scorecarding, planning, and now, enterprise reporting,” concluded Mr. Zambonini. “We are pleased with the strong performance on all fronts, in what continues to be a challenging IT purchasing environment. I believe Cognos is in its strongest position ever.”
Business Outlook
Management offers the following outlook for the third quarter of fiscal 2004, ending November 30, 2003:
• | Revenue is expected to be in the range of $170 million to $172 million; |
• | Diluted earnings per share are expected to be in the range of $0.24 to $0.25. |
Cognos will host a Webcast and conference call to present results for its second quarter of fiscal year 2004 at 5:15 p.m. Eastern Time, today, September 24, 2003. The Webcast may be accessed athttp://www.cognos.com/company/investor/events/fy04q2/index.html.The conference call may be accessed at 416-640-1907. A replay of the Webcast will also be available from the Company’s Web site, or, until October 8, 2003, by telephone at 416-640-1917, pass code 21015992#.
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
This press release contains forward-looking statements relating to, among other things, the Company’s expectations concerning future revenues and earnings, product demand and growth opportunities; business outlook and business momentum; new product introductions and customer reaction; expectations as to the performance and customer acceptance of the Cognos ReportNet product; the benefits to be derived from the integration of acquired products and technologies; market positioning and technology strategies and execution.
These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements. Factors that may cause such differences include, but are not limited to: the Company’s ability to maintain revenue growth or to anticipate a decline in revenue from any of its products or services; the Company’s ability to develop and introduce new products and enhancements that respond to customer requirements and rapid technological change; new product introductions and enhancements by competitors; the Company’s ability to compete in an intensely competitive market; the Company’s ability to select and implement appropriate business models and strategies; fluctuations in its quarterly and annual operating results based on historical patterns; the impact of global economic conditions on the Company’s business; unauthorized use of the Company’s intellectual property; claims by third parties that the Company’s software infringes their intellectual property; the risks inherent in international operations, such as currency exchange rate fluctuations; the Company’s ability to identify, hire, train, motivate, and retain highly qualified management and other key personnel; and the Company’s ability to identify, pursue, and complete acquisitions with desired business results; as well as the risk factors discussed in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the United States Securities and Exchange Commission. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company disclaims any obligation to publicly update or revise any such statement to reflect any change in its expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.
Cognos may provide pro forma or non-GAAP measures as defined by SEC Regulation G to provide greater comparability regarding Cognos’ ongoing operating performance. If discussed, these measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States (“U.S. GAAP”). These pro forma measures are unlikely to be comparable to pro forma information provided by other issuers. In accordance with SEC Regulation G, if such pro forma or non-GAAP measures are provided, a reconciliation of the Cognos U.S. GAAP information to the pro forma information will be provided in the table attached. We will also make available on the investor relations page of our web site atwww.cognos.com this press release, a replay of the Webcast, slides used in the Webcast, non-GAAP financial measures that may be discussed on the Webcast, as well as the most directly comparable GAAP financial measures and a reconciliation of the difference between the GAAP and non-GAAP financial measures.
About Cognos
Cognos, the world leader in business intelligence and corporate performance management, delivers software that helps companies drive, monitor and understand corporate performance.
Cognos delivers the next level of competitive advantage – Corporate Performance Management (CPM) – achieved through the strategic application of BI on an enterprise scale. Our integrated CPM solution helps customers drive performance through planning; monitor performance through scorecarding; and understand performance through business intelligence.
Cognos serves more than 22,000 customers in over 135 countries. Cognos enterprise business intelligence solutions and services are also available from more than 3,000 worldwide partners and resellers. For more information, visit the Cognos Web site at http://www.cognos.com.
Cognos and the Cognos logo are trademarks or registered trademarks of Cognos Incorporated in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.
SUPPLEMENTARY INFORMATION (Unaudited):
FY2003 | FY2004 | ||||
Q2 | Q3 | Q4 | Q1 | Q2 | |
Revenue Statistics ($000s) | |||||
BI | 120,576 | 130,299 | 155,265 | 143,684 | 150,143 |
Application development tools | 8,528 | 7,775 | 8,463 | 6,879 | 8,038 |
BI License | 52,988 | 60,346 | 77,281 | 56,683 | 59,862 |
North America | 80,768 | 83,952 | 95,362 | 90,117 | 96,168 |
Europe | 39,255 | 43,750 | 56,634 | 47,043 | 47,459 |
Asia/Pacific | 9,081 | 10,372 | 11,732 | 13,403 | 14,554 |
Year-Over-Year Revenue Growth Statistics | |||||
BI | 13% | 14% | 16% | 29% | 25% |
Application development tools | (11%) | (23%) | (8%) | (19%) | (6%) |
BI License | 10% | 7% | 6% | 18% | 13% |
North America | 11% | 9% | 9% | 14% | 19% |
Europe | 10% | 14% | 25% | 40% | 21% |
Asia/Pacific | 18% | 21% | 18% | 79% | 60% |
Other Statistics | |||||
Cash, cash equivalents, and short-term investments ($000s) | 331,261 | 338,103 | 242,258 | 263,896 | 284,442 |
Days sales outstanding | 59 | 67 | 76 | 63 | 62 |
Total employees | 2,684 | 2,714 | 2,989 | 3,016 | 3,011 |
COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(US$000s except share amounts, U.S. GAAP)
(Unaudited)
Three months ended August 31, | Six months ended August 31, | |||
2003 | 2002 | 2003 | 2002 | |
Revenue | ||||
Product license | $ 62,234 | $ 55,039 | $120,035 | $104,874 |
Product support | 66,162 | 51,237 | 130,289 | 99,416 |
Services | 29,785 | 22,828 | 58,420 | 44,944 |
Total revenue | 158,181 | 129,104 | 308,744 | 249,234 |
Cost of revenue | ||||
Cost of product license | 1,106 | 714 | 2,217 | 1,448 |
Cost of product support | 6,887 | 5,029 | 13,742 | 9,442 |
Cost of services | 21,503 | 17,073 | 42,362 | 32,620 |
Total cost of revenue | 29,496 | 22,816 | 58,321 | 43,510 |
Gross margin | 128,685 | 106,288 | 250,423 | 205,724 |
Operating expenses | ||||
Selling, general, and administrative | 81,578 | 67,767 | 162,014 | 133,608 |
Research and development | 21,714 | 19,029 | 45,008 | 38,727 |
Amortization of intangible assets | 1,908 | 722 | 3,815 | 1,599 |
Total operating expenses | 105,200 | 87,518 | 210,837 | 173,934 |
Operating income | 23,485 | 18,770 | 39,586 | 31,790 |
Interest expense | (154) | (185) | (325) | (231) |
Interest income | 1,543 | 1,619 | 2,587 | 3,220 |
Income before taxes | 24,874 | 20,204 | 41,848 | 34,779 |
Income tax provision | 6,716 | 6,465 | 11,299 | 11,129 |
Net income | $ 18,158 | $ 13,739 | $ 30,549 | $ 23,650 |
Net income per share | ||||
Basic | $0.20 | $0.16 | $0.34 | $0.27 |
Diluted | $0.20 | $0.15 | $0.33 | $0.26 |
Weighted average number of shares (000s) | ||||
Basic | 89,181 | 87,902 | 88,854 | 87,951 |
Diluted | 91,806 | 90,046 | 91,365 | 90,788 |
COGNOS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(US$000s, U.S. GAAP)
August 31, 2003 | February 28, 2003 | |
Assets | (Unaudited) | |
Current assets | ||
Cash and cash equivalents | $186,182 | $162,588 |
Short-term investments | 98,260 | 79,670 |
Accounts receivable | 108,574 | 139,116 |
Prepaid expenses and other current assets | 13,297 | 8,884 |
Deferred tax assets | 4,258 | 5,427 |
410,571 | 395,685 | |
Fixed assets | 67,890 | 63,467 |
Intangible assets | 25,593 | 29,408 |
Goodwill | 170,221 | 169,991 |
$674,275 | $658,551 | |
Liabilities | ||
Current liabilities | ||
Accounts payable | $ 23,183 | $ 33,310 |
Accrued charges | 28,160 | 34,192 |
Salaries, commissions, and related items | 36,668 | 48,916 |
Income taxes payable | 4,244 | 4,395 |
Deferred revenue | 132,195 | 146,008 |
224,250 | 266,821 | |
Long-term liabilities | - | 1,647 |
Deferred income taxes | 18,483 | 13,561 |
242,933 | 282,029 | |
Stockholders' Equity | ||
Capital stock | ||
Common shares and additional paid-in capital (August 31, 2003 - 89,350,642; February 28, 2003 - 88,124,914) | 191,704 | 173,363 |
Treasury shares (August 31, 2003 - 43,500; February 28, 2003 - 22,500) | (1,065) | (501) |
Deferred stock-based compensation | (1,085) | (1,243) |
Retained earnings | 244,076 | 213,527 |
Accumulated other comprehensive loss | (2,288) | (8,624) |
431,342 | 376,522 | |
$674,275 | $658,551 | |
COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, U.S. GAAP)
(Unaudited)
Three months ended August 31, | Six months ended August 31, | |||
2003 | 2002 | 2003 | 2002 | |
Cash flows from operating activities | ||||
Net income | $ 18,158 | $ 13,739 | $ 30,549 | $ 23,650 |
Non-cash items | ||||
Depreciation and amortization | 7,318 | 5,306 | 14,466 | 10,005 |
Amortization of deferred stock-based compensation | 221 | 185 | 390 | 370 |
Amortization of other deferred compensation | 62 | 148 | 124 | 296 |
Deferred income taxes | 7,007 | (178) | 4,053 | (730) |
Loss on disposal of fixed assets | 9 | 4 | 463 | 101 |
32,775 | 19,204 | 50,045 | 33,692 | |
Change in non-cash working capital | ||||
Decrease (increase) in accounts receivable | (5,109) | (2,791) | 31,897 | 33,799 |
Increase in prepaid expenses and other current assets | (772) | (585) | (3,860) | (832) |
Decrease in accounts payable | (2,153) | (2,046) | (10,778) | (8,717) |
Decrease in accrued charges | (1,263) | (7,332) | (7,072) | (9,400) |
Increase (decrease) in salaries, commissions, and related items | 2,005 | 2,651 | (13,788) | (2,455) |
Increase (decrease) in income taxes payable | 1,297 | (421) | 1,159 | (3,199) |
Decrease in deferred revenue | (5,069) | (5,639) | (15,351) | (9,419) |
Net cash provided by operating activities | 21,711 | 3,041 | 32,252 | 33,469 |
Cash flows from investing activities | ||||
Maturity of short-term investments | 53,058 | 57,195 | 116,810 | 170,381 |
Purchase of short-term investments | (88,339) | (42,017) | (133,039) | (89,643) |
Additions to fixed assets | (5,454) | (3,500) | (12,184) | (7,769) |
Acquisition costs | (122) | - | (230) | - |
Net cash provided by (used in) investing activities | (40,857) | 11,678 | (28,643) | 72,969 |
Cash flows from financing activities | ||||
Issue of common shares | 5,643 | 1,960 | 18,109 | 5,725 |
Purchase of treasury shares | - | - | (564) | - |
Repurchase of shares | - | (3,150) | - | (13,142) |
Decrease in long-term debt and long-term liabilities | - | (3,087) | (1,697) | (3,103) |
Net cash provided by (used in) financing activities | 5,643 | (4,277) | 15,848 | (10,520) |
Effect of exchange rate changes on cash | (985) | (2,372) | 4,137 | 281 |
Net increase (decrease) in cash and cash equivalents | (14,488) | 8,070 | 23,594 | 96,199 |
Cash and cash equivalents, beginning of period | 200,670 | 281,030 | 162,588 | 192,901 |
Cash and cash equivalents, end of period | 186,182 | 289,100 | 186,182 | 289,100 |
Short-term investments, end of period | 98,260 | 42,161 | 98,260 | 42,161 |
Cash, cash equivalents, and short-term investments, end of period | $284,442 | $331,261 | $284,442 | $331,261 |