Lawson Software, Inc. (LWSN) recently reported a 61% jump in net income in the first quarter of fiscal 2011. Net income came in at $9.6 million or 6 cents per share compared with $6.0 million or 4 cents in the year-earlier quarter.
Currency exchange rate fluctuations had a positive impact of approximately $0.01 on the bottom-line. Excluding one-time charges but including stock-based compensation expenses, EPS came in at 8 cents, beating the Zacks Consensus Estimate by a penny.
Revenues came in at $174.7 million, up 3.0% year over year and in line with management’s guidance of $168 million – $172 million. Excluding adjustments related to purchase accounting, revenues came in at $176.6 million, up 4.5% year over year.
On a segment basis, license fees came in at $24.5 million, down 6% year over year despite a 21% growth in license contracting.
Revenues from Maintenance services came in at $96.1 million, up 12% year over year driven by positive contribution from Healthvision. Lawson acquired Healthvision in mid-January 2010. On an organic basis, maintenance revenues increased by 11%. Excluding Healthvision, maintenance revenues increased by 4% year-over-year, driven by strong results from maintenance renewal cycle in the Americas. Lawson achieved a record renewal rate of 96% for this cycle, significantly higher than 92% last year.
Consulting revenues came in at $56 million, down 3% year over year. Lawson has been downsizing its consulting organization over the past one and half years. Lawson now has approximately 100 fewer billable consultants compared to a year ago.
Gross margin came in at 61%, up 170 basis year over year driven by revenue mix. Operating margin (excluding one-time items and stock-based compensation expense) came in at 16.6% compared with 15.5% in the year-earlier quarter. Operating expenses grew 6% year over year primarily due to the acquisition of Healthvision.
During the quarter, Lawson used $38 million of cash from operations, compared to $21 million used in the year-ago quarter, due to lower maintenance collections in the quarter. Lawson ended the quarter with cash and equivalents of $333.1 million, down from $375.9 million at the end of the previous quarter.
Total deferred revenues at the end of the first quarter were $273 million, down from $328 million at the end of the fourth quarter, primarily driven by maintenance renewal cycle.
Guidance
Lawson projects revenues between $184 million and $189 million in the second quarter of fiscal 2011. Including approximately $1 million of revenues impacted by purchase accounting adjustments, revenues are estimated between $185 million and $189 million. EPS is expected at 4 cents – 5 cents. Excluding one-time items and stock-based compensation expenses, Lawson projects EPS at 11 cents – 12 cents.
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