Critical and insight information service provider IHS Inc. (IHS), Wednesday reported a drop in first quarter profit, hurt by higher expenses and changes related to shift in the executive conference period. Excluding changes, profit for the quarter improved 20%. Revenue for the quarter also grew helped by improved performance from all its three segments. The company has also reaffirmed its revenue forecast for full year 2010.
Quarterly net income for the quarter attributable to Englewood, Colorado-based IHS dropped to $26.82 million or $0.42 per share from $27.10 million or $0.43 per share in the same quarter a year ago.
Adjusted earnings were $0.62 per share for the quarter, an increase of 7% over the prior-year period. However, after adjusting for the impact of the CERAWeek executive conference shift, the increase was 20%.
On average, 6 analysts' polled by Thomson Reuters expected earnings of $0.62 per share for the quarter. Analysts' estimate typically excludes one-time items.
IHS' revenue rose to $240.74 million, up 2% from the first quarter 2009 revenue of $235.41 million, which is still below Street estimates of $247.43 million.
However, in the last two quarters the company had reported a profit. In the fourth quarter, the increase in profit was 24%, boosted by revenue growth from all regions and contribution from acquisitions. Fourth quarter net income rose to $41.2 million or $0.64 per share and revenues increased 11% to $257 million. In the third quarter, profit increased to $34.7 million or $0.54 per share from $21.0 million or $0.33 per share helped by a 15% increase in revenues to $239 million.
In an effort to further penetrate the European market, IHS today purchased an automotive market forecasting firm CSM Worldwide, dedicated in providing automotive suppliers with market information and production, powertrain and sales forecasting for about $27 million.
According to the company, currently more than 85% of the world's top automotive OEMs and suppliers subscribe to CSM for their forecasting needs and strategic planning. Core services include the Vehicle Production Forecast Service, Vehicle Sales Forecast Service, Powertrain Forecast Service, Supply Chain & Technology Forecast Service and Advisory Service. IHS automotive comprise more than 100 analysts located in eight countries.
After adjusting for the shift in the CERAWeek executive conference from the first quarter to the second quarter, year-over-year revenue increase was $13.7 million, or 6%.
Organic revenue growth was 1% overall, and 4% for the subscription-based portion of the business, which represented 81% of total revenue. Acquisitions contributed 2% of the increase, while foreign currency movements increased revenue 3% during the first quarter of 2010.
Business in the North and South America segment increased its revenue by $9.9 million or 7% to $152 million, while the Europe, Middle East and Africa segment revenues grew 3% to $69.4 million. Revenues from the Asia Pacific segment was up $1.9 million or 11% to $19.4 million.
Total operating expenses increased to $204.00 million from $197.68 million in the same quarter last year.
Operating income for the quarter was down 3% at $36.74 million from $37.73 million in the year-earlier quarter. Americas' operating income increased 4% to $46.7 million and APAC's operating income grew 13% to $5.6 million, while EMEA's operating income decreased 5% to $13.4 million.
Amongst others in the industry, business software maker SAP AG (SAP) in its fourth quarter, reported a profit that dropped from a year ago, as revenues declined year-over-year in an unstable market environment. Net income attributable to shareholders of SAP was EUR 726 million or EUR 0.61 per share and total were EUR 3.189 billion.
Another player, IT management software company CA, Inc. (CA), reported a higher profit for the third quarter, primarily on an increase in revenue across segments and regions. Net income was $257 million or $0.49 per share and revenues were $1.128 billion.
For the full year 2010, IHS continues to sees revenues in a range of $1.04 billion - $1.08 billion or 8%-12% all-in growth from a 2009 base of $967 million. Street analysts' currently expect revenues of $1.06 billion for the year.
On October 1, 2009 brokerage Robert Baird initiated an 'Outperform' rating on IHS shares, with a mean target of $61.71. IHS closed Wednesday's regular trading at $56.07, down $0.01 or 0.02%, on a volume of 0.21 million shares. In after-hours, the stock further dropped $2.07 or 3.69%, to trade at $54.00. In the last 52-week period, the stock trended in a range of $36.74 - $56.73, with a three-month average volume of 0.17 million shares.
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