BMC Software (BMC) Wednesday reported a rise in third-quarter profit on improved margins and modest revenue growth. Earnings for the quarter came in ahead of Street estimates, but revenues fell short. Looking ahead, the company lifted its full-year earnings guidance.
The Houston, Texas-headquartered company's net earnings for the third quarter were $120 million or $0.71 per share, compared to $109 million or $0.60 per share in the year-ago period.
Adjusted earnings for the quarter were $157 million or $0.93 per share, up from $143.2 million or $0.79 per share in the year-ago quarter. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.82 per share for the quarter. Analysts' estimate typically excludes certain special items.
Total revenue for the quarter rose 1.5 percent to $548.2 million from $539.9 million in the year-ago quarter. Fourteen Street analysts on consensus expected revenues of $556.0 million.
Cost of revenues increased for license revenue, maintenance revenue, and professional services revenue, somewhat offset by lower Selling and Marketing, Research and development, and General and Administrative expenses. Total operating expenses for the quarter decreased 3.5 percent to $386.4 million from $400.5 million last year.
Operating income for the quarter rose 16.1 percent to $161.8 million from $139.4 million in the year-ago quarter.
Non-GAAP operating margin was 39 percent, up 4 percentage points from the year-ago quarter. ESM license bookings in the quarter were down 23 percent year-over-year. Total bookings declined 12 percent compared to the year-ago quarter, or 11 percent on a constant currency basis.
ESM sales attrition during the quarter was below 25 percent on an annualized basis, significantly better than experienced in the first half of the fiscal year, BMC said in a statement.
For the full year, BMC now expects adjusted earnings in the range of $3.26 to $3.34 per share, compared to prior guidance of $3.21 to $3.31 per share. The Street currently expects earnings of $3.24 per share for the full year. At the midpoint, the company's guidance would represent a 10 percent increase over the prior year.
The adjustments exclude an estimated $0.90 to $0.95 per share of expenses related to the amortization of intangible assets, stock-based compensation and severance, exit costs and related charges.
Bob Beauchamp, BMC's chairman and chief executive officer said, "We continue to advance our position through key internal and external investments in technology and talent, while simultaneously making solid progress in addressing previously identified ESM sales capacity issues. The results of these efforts are encouraging and should positively impact our performance in fiscal 2013."
The pending Numara Software acquisition has a purchase price of approximately $300 million and is expected to close during the fiscal 2012 fourth quarter.
At the end of the third quarter, BMC had $1 billion remaining in its current share repurchase program. Over the last 12 months, BMC returned about $800 million to shareholders.
BMC closed Wednesday's regular trade at $35.86, down $0.40 or 1.10%, on the Nasdaq. In after-hours, the stock gained $0.29 or 0.81%.
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