Cognos Inc. on Thursday reported flat revenues and net income for the third quarter on a year-to-year basis, but company officials chose instead to site sequential growth in this era of diminished expectations.
The Ottawa, Canada-based company saw revenues fall slightly from the same period last year, from $124.6 million to $124.2 million. Net income dropped similarly, from $13.6 million to $13.3 million. License revenues fell from $64.8 million to $59.1 million.
But Rob Ashe, Cognos chief corporate officer, described the quarter, which ended Nov. 30, as "exceptional."
"We exceeded our earnings expectations by 2 cents, we grew our BI (business intelligence) revenues sequentially, we managed our balance sheet very well. All in all, from the financial management perspective, we had a very good quarter," Ashe said.
Ashe said Cognos is judging the quarter by sequential rather than year-to-year growth, a perspective financial analysts and the market in general typically frown upon. Cognos recorded revenue of $116.3 million and net income of $7.1 million in the second quarter of this year.
"It was a different world a year ago," he said. "Our fiscal 2001 [which ended Feb. 28] was the best year we ever had. It was at the height of the boom. We resized our estimates for the first quarter and focused on sequential growth for this fiscal year. Last year was really beyond what was normal."
Ashe said Cognos secured six deals of $1 million or more in the quarter. The company expects even better results next quarter—earnings of 21 to 22 cents a share, compared to 15 cents a share this quarter—when the next generation of its software, Cognos Series 7, ships in January.
Ashe sounded a familiar refrain, saying the focus on return on investment was driving Cognos business as executives seek to limit IT spending to projects that will deliver a quick turnaround and help them glean new efficiencies from their business operations through improved business intelligence.
"CEOs are looking to make investment decisions that allow them to get more out of their existing infrastructure as opposed to creating new infrastructure," he said.
Cognos, which cut 300 jobs in May to trim expenses, did not have to undertake any more deep cost cuts in the quarter, according to Ashe. "But it was a quarter for expense management," he said. "We were careful with our money."