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®Reports Record Third Quarter Revenue and Earnings
Recently Released Cognos ReportNet™ Delivers $15 Million in License Revenue
Ottawa, ON and Burlington MA, December 17, 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 third quarter of fiscal year 2004, ended November 30, 2003.
Revenue for the third quarter was $172.2 million, an increase of 25 percent compared to $138.1 million for the same period last year. License revenue in the quarter was $72.6 million, an increase of 17 percent compared to $62.2 million last year. Net income in the quarter was $24.2 million or $0.26 per share, an increase of 22 percent from $19.9 million or $0.22 per share in the third quarter of last year.
Revenue for the first nine months of this year was $481.0 million, an increase of 24 percent compared with $387.3 million for the same period last year. Net income for the nine-month period was $54.8 million or $0.60 per share, compared to $43.6 million or $0.48 per share last year.
Business intelligence revenue for the third quarter reached $164.7 million, an increase of 26 percent from the third quarter of last year. BI license revenue increased 17 percent in the third quarter to $70.6 million, compared with $60.3 million for the same period last year. BI support revenue increased 34 percent to $63.3 million, compared with $47.1 million last year.
Highlights of the Quarter
o | Outstanding customer response to Cognos ReportNet – over 200 ReportNet wins in the third quarter in leading organizations such as DaimlerChrysler, Interbrew, Port of Portland, State of Ohio, Tyson Foods, and Welch Foods |
o | 10 contracts greater than $1 million, an all-time high for the Company; 95 contracts greater than $200,000, an increase of 28 percent compared to the same period last year |
o | Cognos awarded top spot in Intelligent Enterprise’s 12 Most Influential Companies, and Cognos PowerPlay® named best multidimensional analysis tool in the Intelligent Enterprise Reader’s Choice Award |
Cognos’ balance sheet remains strong. In the third quarter the Company increased cash, cash equivalents, and short-term investments by $36.5 million to $320.9 million, which included operating cash flow of $29.2 million.
“Cognos delivered another outstanding quarter,” said Cognos CEO Ron Zambonini. “We reported strong revenue and operating income in a tough environment. Cognos ReportNet is spurring competitive success with new customers and further strengthening our position in our broad existing customer base. The Cognos team is performing on all fronts, and our customers are responding to the superior performance and value of our product solution.
“Leading organizations throughout the world made substantial commitments to the Cognos enterprise solution, as evidenced by major competitive wins at Abbott Laboratories, Allianz, Aventis, Deltek Systems, DIRECTV, Insurance Australia, Pampered Chef, Ricoh, U.S. Air Force, and U.S. Defense Information Systems Agency.
“Our commitment to product innovation is powering our leadership in enterprise business intelligence, and driving our advance in defining and leading the market for corporate performance management (CPM). Our leadership is strong, our vision is compelling and our execution remains focused.”
Business Outlook
Management offers the following outlook for the fourth quarter of fiscal year 2004, ending February 29, 2004:
o | Revenue is expected to be in the range of $191 million to $194 million; |
o | Diluted earnings per share are expected to be in the range of $0.32 to $0.35. |
Management offers the following outlook for the full fiscal year 2004:
o | Revenue is expected to be in the range of $672 million to $675 million; |
o | Diluted earnings per share are expected to be in the range of $0.92 to $0.95. |
Cognos management will host a Webcast and conference call to present results for the third quarter of fiscal year 2004 at 5:15 p.m. Eastern Time, today, December 17, 2003. The conference call may be accessed at 416-640-1907. The Webcast and archive may be accessed athttp://www.cognos.com/company/investor/events/fy04q3/index.html. A replay of the conference call may be accessed at 416-640-1917 until December 31, 2003. The passcode for the replay is 21027086#.
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 and acceptance of the Cognos ReportNet product; market positioning, business model 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; currency fluctuations; 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, as well as other periodic reports filed with the SEC. 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 and slides used in the Webcast. Non-GAAP financial measures that may be discussed on the Webcast, and the most directly comparable GAAP financial measures and a reconciliation of the difference between the GAAP and non-GAAP financial measures will be available atwww.cognos.com/company/investor/other/fy04q3.html.
About Cognos
Cognos, the world leader in business intelligence and corporate performance management solutions, 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, the Cognos logo, PowerPlay and ReportNet 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.
Note to Editors: Copies of previous Cognos press releases and Corporate and product information are available on the Cognos Web site atwww.cognos.com, and at PR Newswire’s site atwww.prnewswire.com.
SUPPLEMENTARY INFORMATION (unaudited):
FY2003 | FY2004 | ||||
Q3 | Q4 | Q1 | Q2 | Q3 | |
Revenue Statistics ($000s) | |||||
BI | 130,299 | 155,265 | 143,684 | 150,143 | 164,682 |
Application development tools | 7,775 | 8,463 | 6,879 | 8,038 | 7,545 |
BI License | 60,346 | 77,281 | 56,683 | 59,862 | 70,564 |
North America | 83,952 | 95,362 | 90,117 | 96,168 | 96,079 |
Europe | 43,750 | 56,634 | 47,043 | 47,459 | 58,838 |
Asia/Pacific | 10,372 | 11,732 | 13,403 | 14,554 | 17,310 |
Year-Over-Year Revenue Growth Statistics | |||||
BI | 14% | 16% | 29% | 25% | 26% |
Application development tools | (23%) | (8%) | (19%) | (6%) | (3%) |
BI License | 7% | 6% | 18% | 13% | 17% |
North America | 9% | 9% | 14% | 19% | 14% |
Europe | 14% | 25% | 40% | 21% | 34% |
Asia/Pacific | 21% | 18% | 79% | 60% | 67% |
Other Statistics | |||||
Cash, cash equivalents, and short-term investments ($000s) | 338,103 | 242,258 | 263,896 | 284,442 | 320,895 |
Days sales outstanding | 67 | 76 | 63 | 62 | 62 |
Total employees | 2,714 | 2,989 | 3,016 | 3,011 | 3,001 |
COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(US$000s except share amounts, U.S. GAAP)
(Unaudited)
Three months ended November 30, | Nine months ended November 30, | |||
2003 | 2002 | 2003 | 2002 | |
Revenue | ||||
Product license | $ 72,551 | $ 62,223 | $192,586 | $167,097 |
Product support | 68,676 | 52,853 | 198,965 | 152,269 |
Services | 31,000 | 22,998 | 89,420 | 67,942 |
Total revenue | 172,227 | 138,074 | 480,971 | 387,308 |
Cost of revenue | ||||
Cost of product license | 1,121 | 722 | 3,338 | 2,170 |
Cost of product support | 7,051 | 5,240 | 20,793 | 14,682 |
Cost of services | 22,924 | 17,599 | 65,286 | 50,219 |
Total cost of revenue | 31,096 | 23,561 | 89,417 | 67,071 |
Gross margin | 141,131 | 114,513 | 391,554 | 320,237 |
Operating expenses | ||||
Selling, general, and administrative | 86,185 | 67,492 | 248,199 | 201,100 |
Research and development | 22,265 | 18,264 | 67,273 | 56,991 |
Amortization of intangible assets | 1,890 | 759 | 5,705 | 2,358 |
Total operating expenses | 110,340 | 86,515 | 321,177 | 260,449 |
Operating income | 30,791 | 27,998 | 70,377 | 59,788 |
Interest expense | (552) | (211) | (877) | (442) |
Interest income | 975 | 1,521 | 3,562 | 4,741 |
Income before taxes | 31,214 | 29,308 | 73,062 | 64,087 |
Income tax provision | 6,966 | 9,379 | 18,265 | 20,508 |
Net income | $ 24,248 | $ 19,929 | $ 54,797 | $ 43,579 |
Net income per share | ||||
Basic | $0.27 | $0.23 | $0.61 | $0.50 |
Diluted | $0.26 | $0.22 | $0.60 | $0.48 |
Weighted average number of shares (000s) | ||||
Basic | 89,692 | 87,845 | 89,133 | 87,916 |
Diluted | 92,614 | 89,882 | 91,779 | 90,487 |
COGNOS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(US$000s, U.S. GAAP)
November 30, 2003 | February 28, 2003 | |
Assets | (Unaudited) | |
Current assets | ||
Cash and cash equivalents | $166,227 | $162,588 |
Short-term investments | 154,668 | 79,670 |
Accounts receivable | 118,767 | 139,116 |
Prepaid expenses and other current assets | 11,801 | 8,884 |
Deferred tax assets | 4,165 | 5,427 |
455,628 | 395,685 | |
Fixed assets | 72,599 | 63,467 |
Intangible assets | 23,703 | 29,408 |
Goodwill | 170,475 | 169,991 |
$722,405 | $658,551 | |
Liabilities | ||
Current liabilities | ||
Accounts payable | $ 25,623 | $ 33,310 |
Accrued charges | 24,486 | 34,192 |
Salaries, commissions, and related items | 45,357 | 48,916 |
Income taxes payable | 9,797 | 4,395 |
Deferred revenue | 129,882 | 146,008 |
235,145 | 266,821 | |
Long-term liabilities | — | 1,647 |
Deferred income taxes | 19,628 | 13,561 |
254,773 | 282,029 | |
Stockholders’ Equity | ||
Capital stock | ||
Common shares and additional paid-in capital (November 30, 2003 - 89,915,921; February 28, 2003 - 88,124,914) | 200,600 | 173,363 |
Treasury shares (November 30, 2003 - 43,500; February 28, 2003 - 22,500) | (1,065) | (501) |
Deferred stock-based compensation | (870) | (1,243) |
Retained earnings | 268,324 | 213,527 |
Accumulated other comprehensive income (loss) | 643 | (8,624) |
467,632 | 376,522 | |
$722,405 | $658,551 | |
COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, U.S. GAAP)
(Unaudited)
Three months ended November 30, | Nine months ended November 30, | |||
2003 | 2002 | 2003 | 2002 | |
Cash flows from operating activities | ||||
Net income | $ 24,248 | $ 19,929 | $ 54,797 | $ 43,579 |
Non-cash items | ||||
Depreciation and amortization | 7,252 | 5,242 | 21,718 | 15,247 |
Amortization of deferred stock-based compensation | 215 | 148 | 605 | 518 |
Amortization of other deferred compensation | 44 | 119 | 168 | 415 |
Deferred income taxes | 1,227 | 4,389 | 5,280 | 3,659 |
Loss on disposal of fixed assets | 76 | 8 | 539 | 109 |
33,062 | 29,835 | 83,107 | 63,527 | |
Change in non-cash working capital | ||||
Decrease (increase) in accounts receivable | (5,716) | (18,157) | 26,181 | 15,642 |
Decrease (increase) in prepaid expenses and other current assets | 2,327 | 1,687 | (1,533) | 855 |
Increase (decrease) in accounts payable | 837 | 4,259 | (9,941) | (4,458) |
Decrease in accrued charges | (4,610) | (355) | (11,682) | (9,755) |
Increase (decrease) in salaries, commissions, and related items | 6,647 | 3,390 | (7,141) | 935 |
Increase (decrease) in income taxes payable | 3,967 | 154 | 5,126 | (3,045) |
Decrease in deferred revenue | (7,314) | (5,484) | (22,665) | (14,903) |
Net cash provided by operating activities | 29,200 | 15,329 | 61,452 | 48,798 |
Cash flows from investing activities | ||||
Maturity of short-term investments | 88,663 | 19,851 | 205,473 | 190,232 |
Purchase of short-term investments | (144,406) | (139,146) | (277,445) | (228,789) |
Additions to fixed assets | (6,165) | (3,559) | (18,349) | (11,328) |
Acquisition costs | (254) | — | (484) | — |
Net cash used in investing activities | (62,162) | (122,854) | (90,805) | (49,885) |
Cash flows from financing activities | ||||
Issue of common shares | 8,896 | 4,106 | 27,005 | 9,831 |
Purchase of treasury shares | — | — | (564) | — |
Repurchase of shares | — | (6,850) | — | (19,992) |
Decrease in long-term debt and long-term liabilities | — | (2,361) | (1,697) | (5,464) |
Net cash provided by (used in) financing activities | 8,896 | (5,105) | 24,744 | (15,625) |
Effect of exchange rate changes on cash | 4,111 | 72 | 8,248 | 354 |
Net increase (decrease) in cash and cash equivalents | (19,955) | (112,558) | 3,639 | (16,358) |
Cash and cash equivalents, beginning of period | 186,182 | 289,100 | 162,588 | 192,900 |
Cash and cash equivalents, end of period | 166,227 | 176,542 | 166,227 | 176,542 |
Short-term investments, end of period | 154,668 | 161,561 | 154,668 | 161,561 |
Cash, cash equivalents, and short-term investments, end of period | $320,895 | $338,103 | $320,895 | $338,103 |