BMC Software (BMC) reported fourth quarter 2010 earnings per share of 65 cents, below the Zacks Consensus Estimate of 70 cents.
Revenue
Revenue of $491.0 million was up 3.0% from the year-ago period. All three revenue segments increased compared with the year-ago period. This increase in revenue may be attributed to the enhancement of the company’s technology portfolio and increased investment in sales force.
License revenue in the fourth quarter was $201.3 million, up 4.8% from $192.0 million in the year-ago quarter. Maintenance revenue in the quarter was $254.9 million, up 1.0% from $252.3 million in the year-ago quarter. Professional Services revenue in the quarter was $35.1 million, down 0.3% from $35.0 million reported in the year-ago quarter.
Operating Results
Operating income in the fourth quarter, on a GAAP basis, was $115.5 million, down 4.0% from $120.3 million in the year-ago quarter. Excluding special items like severance cost, amortization of intangible assets, stock-based compensation and in-process R&D expense, non-GAAP operating income was $160.7 million, down 5.1% from $169.4 million a year ago. The GAAP operating margin decreased 1.0 percentage point from the year-ago quarter to 24.0%. Excluding special items, the non-GAAP operating margin was 33.0%, down 2.0 percentage points on a year-over-year basis.
Net income on a GAAP basis in the fourth quarter was $118.8 million or $0.64 per share, up from $83.3 million or $0.44 per share reported in the year-ago quarter. Excluding special items, non-GAAP net income was $120.6 million or $0.65 per share, up from $120.2 million or $0.64 per share in the year-ago quarter.
Balance Sheet, Cash Flow & Share Repurchase
BMC Software generated cash flow from operations of $303.5 million in the fourth quarter, up from $83.0 million reported in the preceding quarter. This was in line with the company’s expectations, as it achieved its annual cash flow guidance. The company exited the quarter with cash and investments of $1.4 billion, up from $1.2 billion in the preceding quarter. The company’s net cash position was $1.0 billion. The company repurchased approximately 2.0 million shares for a total of $75.0 million. As of April 2010, the company authorized an additional $1.0 billion of share repurchase.
Guidance
For 2011, the company expects non-GAAP earnings per share in the range of $2.84 to $2.94, which at the midpoint would represent a 9.0% increase compared to the company’s initial 2010 guidance. Total bookings and revenue are expected to increase in the mid, single-digit range on a reported basis. For 2010, cash flow from operations is expected to be in the range of $660 million to $710 million, which remains unchanged from the prior guidance.
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