| | 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® Announces Results for the First Quarter of Fiscal Year 2006
Revenue Growth of 15 Percent, Earnings Growth of 18 Percent
Ottawa, Ontario & Burlington, Massachusetts, June 23, 2005 – Cognos Incorporated (Nasdaq: COGN; TSX: CSN – all figures in U.S. dollars and in accordance with U.S. GAAP), the world leader in business intelligence (BI) and corporate performance management (CPM) solutions, today announced financial results for the first quarter of fiscal year 2006, ended May 31, 2005.
Revenue for the first quarter was $200.1 million, an increase of 15 percent compared with revenue of $173.6 million in the first quarter of last fiscal year. License revenue was $71.1 million, an increase of 8 percent from $66.1 million for the same period of last fiscal year.
Net income in the quarter was $23.8 million, an increase of 18 percent compared with $20.1 million in the first quarter of last fiscal year, resulting in diluted earnings per share of $0.25 in the first quarter of fiscal year 2006, versus $0.22 in the same period last fiscal year.
Highlights of the Quarter
• | | Continued solid performance from Cognos ReportNet™ and Cognos Planning, with license revenue growth of 25 percent and 24 percent, respectively, compared with the first quarter of last fiscal year; |
• | | 668 contracts greater than $50,000, an increase of 17 percent over the first quarter of last year; 104 contracts greater than $200,000, up 14 percent over last year; |
• | | Major customer contracts from such leading organizations as the Arkansas Department of Education, Australian Department of Defence, Behn Meyer, DaimlerChrysler Services, New York State Education Department, Pennsylvania Department of Public Welfare, PMI, Singapore Management University, SSA Global Technologies, Travelocity, U.S. Department of Navy, and WestJet; |
• | | Cognos 8 commenced first round of beta trials on schedule in the first quarter and advanced to general field beta trial in early June. |
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“The fundamentals of the business are strong,” said Cognos President and CEO Rob Ashe. “While revenue was below our expectation in the quarter, our performance in the key strategic areas of Cognos ReportNet and Enterprise Planning was solid, our sales pipeline is healthy, and our product offering is the strongest in the industry. I remain very confident in our position as we move forward.”
Cognos has repurchased $45 million worth of shares to date under the current Normal Course Issuer Bid, which expires on October 8th, 2005. The intention is to continue to repurchase shares when market conditions warrant, and the Company’s board of directors yesterday approved additional purchases up to a total of $100 million under the current program.
Business Outlook
Management offers the following outlook for the second quarter of fiscal year 2006:
• | | Revenue is expected to be in the range of $207 million to $215 million; |
• | | Diluted earnings per share are expected to be in the range of $0.28 to $0.31. |
Management offers the following outlook for the full fiscal year 2006, ending February 28, 2006:
• | | Revenue is expected to be in the range of $915 million to $930 million; |
• | | Diluted earnings per share are expected to be in the range of $1.52 to $1.58. |
Cognos management will hold a webcast and conference call to present results for the first quarter of fiscal year 2006 and business outlook at 5:15 p.m. Eastern Time today, June 23, 2005. The webcast and an archive of the webcast may be accessed atwww.cognos.com/company/investor/events/fy06q1/index.html . The conference call may be accessed at 416-640-1907. A replay of the conference call will be available until July 6, 2005 at 416-640-1917, passcode 21126553#.
Safe Harbor for Forward-Looking Statements
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 Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements relate to, among other things, the Company’s expectations with respect to future growth and business outlook, including revenue and earnings for the second quarter of fiscal year 2006 and the full fiscal year ending February 28, 2006; the sales pipeline; our product offering; and our market and competitive position.
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 or accurately forecast revenue growth or to anticipate and accurately forecast a decline in revenue from any of its products or services; a continuing increase in the number of larger customer transactions and the potential for a related lengthening of sales cycles; the Company’s ability to compete in an intensely competitive market; the Company’s ability to develop and introduce new products and enhancements on schedule that respond to customer requirements and rapid technological change; new product introductions and enhancements by competitors; the Company’s ability to select and implement appropriate business models, plans and strategies and to execute on them; the Company’s ability to identify, hire, train, motivate, and retain highly qualified management and other key personnel; continued BI market consolidation and other competitive changes in the BI market; fluctuations in the Company’s quarterly and annual operating results; currency fluctuations; fluctuations in the Company’s tax exposure; the impact of global economic conditions on the Company’s business; unauthorized use or misappropriation 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 the impact of the laws of foreign jurisdictions; the Company’s ability to identify, pursue, and complete acquisitions with desired business results; and the existence of regulatory barriers to integration; as well as the risk factors discussed in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports 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.
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About Cognos
Cognos, the world leader in business intelligence and corporate performance management, delivers software and services that help 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 23,000 customers in over 135 countries. Cognos enterprise business intelligence and performance management solutions and services are also available from more than 3,000 worldwide partners and resellers. For more information, visit the Cognos web site atwww.cognos.com.
Cognos, the Cognos logo and ReportNet are registered trademarks of Cognos Incorporated in the United States and/or other countries.
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.
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SUPPLEMENTARY INFORMATION (unaudited):
| FY2005 | FY2006 |
|
| |
|
| Q1 | Q2 | Q3 | Q4 | | Q1 |
|
| |
|
|
Total License Revenue ($000s) | 66,070 | 75,362 | 91,580 | 129,946 | | 71,146 |
|
Year-Over-Year License Revenue Growth | 14% | 21% | 26% | 39% | | 8% |
|
Geographic Distribution |
|
Total Revenue ($000s) |
Americas | 104,831 | 110,240 | 121,503 | 141,189 | | 115,516 |
Europe | 54,989 | 57,952 | 69,308 | 94,145 | | 66,461 |
Asia/Pacific | 13,799 | 17,028 | 19,555 | 20,992 | | 18,098 |
|
% of Total |
Americas | 60% | 60% | 58% | 55% | | 58% |
Europe | 32% | 31% | 33% | 37% | | 33% |
Asia/Pacific | 8% | 9% | 9% | 8% | | 9% |
|
Year-Over-Year Revenue Growth - Total |
Americas | 16% | 15% | 26% | 23% | | 10% |
Europe | 17% | 22% | 18% | 26% | | 21% |
Asia/Pacific | 3% | 17% | 13% | 63% | | 31% |
|
Pro Forma Year-Over-Year Revenue Growth - In Local Currency |
Americas | 15% | 14% | 25% | 22% | | 9% |
Europe | 7% | 11% | 7% | 19% | | 17% |
Asia/Pacific | (9%) | 10% | 7% | 61% | | 26% |
|
Orders (License, Support, Services) |
> $ 1M | 8 | 7 | 15 | 18 | | 6 |
> $200K | 91 | 109 | 127 | 208 | | 104 |
> $ 50K | 569 | 655 | 709 | 1,215 | | 668 |
|
Average Selling Price (License Orders only) ($000s) |
> $ 50K | 169 | 176 | 183 | 207 | | 175 |
|
New vs Existing License Revenue - % of Total |
New | 31% | 38% | 32% | 37% | | 32% |
Existing | 69% | 62% | 68% | 63% | | 68% |
|
Channel — License Revenue - % of Total |
Direct | 73% | 73% | 74% | 77% | | 68% |
Third Party | 27% | 27% | 26% | 23% | | 32% |
|
Other Statistics |
Cash, cash equivalents, and short-term investments ($000s) | 416,362 | 440,410 | 439,367 | 522,900 | | 496,036 |
Days sales outstanding | 55 | 56 | 61 | 67 | | 63 |
Total employees | 3,027 | 3,062 | 3,346 | 3,393 | | 3,408 |
|
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COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(US$000s except share amounts, U.S. GAAP)
(Unaudited)
| Three Months Ended May 31, |
|
| 2005 | 2004 |
|
Revenue |
Product license | $ 71,146 | $ 66,070 |
Product support | 88,505 | 74,787 |
Services | 40,424 | 32,762 |
|
Total revenue | 200,075 | 173,619 |
|
Cost of revenue |
Cost of product license | 1,222 | 621 |
Cost of product support | 8,882 | 7,175 |
Cost of services | 32,090 | 25,475 |
|
Total cost of revenue | 42,194 | 33,271 |
|
Gross margin | 157,881 | 140,348 |
|
Operating expenses |
Selling, general, and administrative | 103,013 | 90,645 |
Research and development | 28,874 | 24,325 |
Amortization of acquisition-related intangible assets | 1,637 | 1,236 |
|
Total operating expenses | 133,524 | 116,206 |
|
Operating income | 24,357 | 24,142 |
Interest and other expenses | (339) | (71) |
Interest income | 3,119 | 1,404 |
|
Income before taxes | 27,137 | 25,475 |
Income tax provision | 3,312 | 5,350 |
|
Net income | $ 23,825 | $ 20,125 |
|
Net income per share |
Basic | $0.26 | $0.22 |
|
Diluted | $0.25 | $0.22 |
|
Weighted average number of shares (000s) |
Basic | 91,078 | 90,091 |
|
Diluted | 93,897 | 92,692 |
|
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COGNOS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(US$000s, U.S. GAAP)
(Unaudited)
| May 31, 2005 | February 28, 2005 |
|
Assets | | |
Current assets |
Cash and cash equivalents | $377,426 | $ 378,348 |
Short-term investments | 118,610 | 144,552 |
Accounts receivable | 138,974 | 189,602 |
Prepaid expenses and other current assets | 17,150 | 18,941 |
Deferred tax assets | 2,238 | 3,856 |
|
| 654,398 | 735,299 |
Fixed assets, net | 71,377 | 73,566 |
Intangible assets, net | 25,657 | 27,234 |
Other assets | 6,107 | 6,378 |
Goodwill | 221,359 | 221,490 |
|
| $978,898 | $1,063,967 |
|
Liabilities |
Current liabilities |
Accounts payable | $ 21,982 | $ 30,705 |
Accrued charges | 22,051 | 31,047 |
Salaries, commissions, and related items | 52,574 | 91,010 |
Income taxes payable | 2,657 | 21,148 |
Deferred revenue | 200,852 | 217,153 |
|
| 300,116 | 391,063 |
Deferred income taxes | 11,561 | 17,083 |
|
| 311,677 | 408,146 |
|
Stockholders’ Equity |
Capital stock |
Common shares and additional paid-in capital (May 31, 2005 - 90,981,065; February 28, 2005 - 91,070,967) | 262,896 | 252,561 |
Treasury shares (May 31, 2005 - 36,978; February 28, 2005 - 46,375) | (894) | (1,199) |
Deferred stock-based compensation | (109) | (277) |
Retained earnings | 402,258 | 402,020 |
Accumulated other comprehensive income | 3,070 | 2,716 |
|
| 667,221 | 655,821 |
|
| $978,898 | $1,063,967 |
|
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COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, U.S. GAAP)
(Unaudited)
| Three Months Ended May 31, |
|
| 2005 | 2004 |
|
Cash flows from operating activities |
Net income | $ 23,825 | $ 20,125 |
Non-cash items |
Depreciation and amortization | 7,165 | 6,498 |
Amortization of deferred stock-based compensation | 168 | 185 |
Amortization of other deferred compensation | — | 7 |
Deferred income taxes | (3,889) | 1,016 |
Loss on disposal of fixed assets | 87 | 1 |
|
| 27,356 | 27,832 |
Change in non-cash working capital |
Decrease in accounts receivable | 46,835 | 44,933 |
Decrease in prepaid expenses and other current assets | 1,423 | 870 |
Decrease in accounts payable | (8,043) | (6,967) |
Decrease in accrued charges | (8,003) | (3,195) |
Decrease in salaries, commissions, and related items | (36,133) | (15,743) |
Decrease in income taxes payable | (17,943) | (2,092) |
Decrease in deferred revenue | (10,825) | (12,549) |
|
Net cash provided by (used in) operating activities | (5,333) | 33,089 |
|
Cash flows from investing activities |
Maturity of short-term investments | 127,925 | 145,593 |
Purchase of short-term investments | (101,983) | (71,395) |
Additions to fixed assets | (4,756) | (3,073) |
Additions to intangible assets | (245) | (69) |
Decrease in other assets | 245 | — |
Acquisition costs, net of cash and cash equivalents | 131 | — |
|
Net cash provided by investing activities | 21,317 | 71,056 |
|
Cash flows from financing activities |
Issue of common shares | 12,307 | 10,289 |
Repurchase of shares | (25,254) | (9,989) |
|
Net cash provided by (used in) financing activities | (12,947) | 300 |
|
Effect of exchange rate changes on cash | (3,959) | (1,834) |
|
Net increase (decrease) in cash and cash equivalents | (922) | 102,611 |
Cash and cash equivalents, beginning of period | 378,348 | 224,830 |
|
Cash and cash equivalents, end of period | 377,426 | 327,441 |
Short-term investments, end of period | 118,610 | 88,921 |
|
Cash, cash equivalents, and short-term investments, end of period | $ 496,036 | $416,362 |
|
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