(RTTNews) - Tuesday, enterprise systems management software developer Quest Software, Inc. (QSFT: News ) reported a lower profit for the third quarter, hurt mainly by the impact of a significant litigation loss provision associated with the pending settlement of the shareholder class action.

Quest Software's third quarter net income plunged to $2.9 million or $0.03 per share from $17.3 million or $0.16 per share in the year ago period.

During the quarter, Quest reached an agreement in principle with the class representative to settle the shareholder class action relating to alleged option backdating against Quest and certain of its current or former officers and directors for a payment of $29.4 million.

Excluding items, net income increased to $31.2 million or $0.34 per share from $26.8 million or $0.25 per share in the previous year quarter.

On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.30 per share for the quarter. Analysts' estimates typically exclude one-time items.

The Aliso Viejo, California-based company total revenue for the quarter fell to $170.84 million from $187.56 million in the comparable quarter last year. Analysts expected revenue of $172.06 million for the quarter.
For the current quarter, operating margin was down to a negative of 1.2% from 14.8% a year ago. Non-GAAP operating margin increased to 24.3% from 22.1% in the year ago period.

The company's operating expense for the quarter surged to $151.05 million from $137.66 million in the same quarter last year.

For the nine months, net income was $33.3 million or $0.35 per share, down from $38.9 million or $0.36 per share in the prior year. Non-GAAP net income increased to $80.8 million or $0.86 per share from $66.7 million or $0.63 per share last year. Year-to-date revenue was $500.70 million, compared with $533.77 million in the prior year.

QSFT last traded at $17.25, up $0.60 or 3.60% on a volume of 1.62million shares on the Nasdaq.

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by RTT Staff Writer

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