The company attributes much of its growth to its efforts in Business Services Management.
BMC Software surpassed the high end of revenue projections for its third fiscal quarter of 2007 on Feb. 8 when it posted a 9 percent gain to $413 million.
BMC had projected last quarter that it would generate as much as $410 million. The company also topped out its non-GAAP (Generally Accepted Accounting Principles) earnings per share at 41 cents, after it had projected earnings of between 35 to 39 cents. Still, GAAP earnings were 22 cents a share with a GAAP net income of $64 million, compared to 22 cents a share and $49 million in net income in the same quarter a year ago.
BMC attributed much of its growth to its Business Services Management offerings, which the company said drove an 18 percent increase in license bookings over the same quarter last year. That figure was down, however, from the second quarter, when BSM drove a 23 percent increase in license bookings.
BMC is "capturing" a healthy portion of the "growing demand for BSM solutions," said CEO Bob Beauchamp in the earnings call on Feb. 8. He attributed growth in BSM to the fact that customers are looking to reduce IT labor costs and are recognizing that the process automation enabled by BSM increases efficiency and saves money. "It also allows greater alignment between IT and the business by automating workflows. It is a compelling business case," he said.
During the third quarter, BMC Software gained several large new BSM customers, including CNA, Charles Schwab and Micron Technology. BMC, which has been pursuing its BSM strategy for at least three years, also suggested that the company is taking market share from major competitors.
Click here to read more about BMCs revenue growth in the second quarter.
According to Beauchamp, BMC replaced products from rivals Hewlett-Packard, NetIQ and CA with its BSM offerings at one large U.S.-based insurance company, and BMC replaced IBM and HP offerings at a large European financial services firm.
As BMC continues to enhance products that are a part of its BSM initiative, the company believes it will appeal increasingly to its large installed base of Remedy service desk customers, Beauchamp said. BMC boasts some 2000 Remedy customers worldwide.
BMC also remains bullish about its mainframe management software business. Although smaller enterprises are moving away from mainframe usage, large enterprises "have shifted toward mainframes because of the stability, reliability and improvements [that have been] made in total cost of ownership," Beauchamp said.
BMC in 2006 carved out a separate mainframe business unit with the goal of increasing BMCs share of the mainframe management market as well as stabilizing and improving mainframe earnings, Beauchamp said. During the third fiscal quarter BMC signed on 22 new mainframe management customers.
In the fourth fiscal quarter of 2007, BMC expects to generate revenues of between $415 million and $435 million and non-GAAP earnings per share of 36 cents to 40 cents.
BMC bumped up its forecast for its full-year earnings per share. Now it expects to generate non-GAAP earnings per share of from $1.45 to $1.49, up from its earlier forecast of $1.40 to $1.48. The company expects revenue for the quarter to grow in the mid-single digits.
BMCs non-GAAP numbers exclude the amortization costs for acquired technology, stock-based compensation expenses and restructuring costs.
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