Compuware Profits, Sales Jump

Detroit-based Compuware Corp. (Nasdaq: CPWR) saw its profits jump 36.4 percent in its fiscal third quarter ended Dec. 31, on a 7.5 percent increase in revenue.

Revenue for the company's fast-growing application performance management business, consisting of its Vantage and Gomez products, hit $56.1 million for the quarter, up 34 percent from a year earlier.

Revenue at the Covisint secure connectivity and networking subsidiary hit $14.4 million for the quarter, up 32.8 percent from a year earlier.

Net income for the quarter was $34 million or 15 cents a share, up from $24.4 million or 11 cents a share a year earlier.

The company's total revenue was $247 million for the quarter, up from $229.9 million a year earlier. Software license fees, an important indicator of future growth, were $60.2 million, up from $52 million a year earlier. Maintenance and subscription fees were $124.2 million, up from $117.6 million. Professional services fees were $62.7 million, up from $60.3 million.

Analysts polled by FactSet Research had predicted the company would earn 16 cents a share on $246 million in revenue, according to MarketWatch.com.

For the nine months, Compuware net income was $72.6 million or 32 cents a share, down from $103.4 million or 44 cents a share a year earlier.

Nine-month revenue was $679.4 million, up from $662.2 million a year earlier. Nine-month software license fees were $139.1 million, down from $142.7 million a year earlier. Maintenance and subscription fees were $362.9 million, up from $338.4 million a year earlier. Professional services fees were $177.4 million, down from $181.1 million a year earlier.

"Compuware continues to focus on delivering steady increases in revenue, earnings and margins, and Q3 was no exception," said Compuware President and Chief Operating Officer Bob Paul. "Our growth businesses – APM and Covisint – showed great momentum in their multi-billion-dollar markets, both achieving strong growth this quarter. Mainframe renewals remained greater than 90 percent, and professional services delivered a 15 percent contribution margin this quarter."

Wall Street seemed nonplussed by the results. Compuware shares were unchanged at $11.57 in after-hours trading, after falling 14 cents or 1.2 percent during regular trading hours Thursday, before the 4 p.m. announcement.

In a conference call with analysts after the announcement, Paul said Compuware had delivered "another solid, on-target quarter" and was "investing in the businesses that will drive Compuware's breakout growth."

Declared Paul: "Our strategy is working. And we will continue to strive to deliver market leading solutions with even greater improvement in operational efficiencies."

To listen to a replay of the conference call, call (800) 475-6701 in the United States; the international replay number will be (320) 365-3844. The replay passcode is 182384. The call is also archived in the Investor Relations section of www.compuware.com.