Concur Q2 Earnings in Line, Revs Beat - Analyst Blog

Concur Technologies CNQR reported second-quarter fiscal 2014 non-GAAP pre-tax earnings (excluding one-time items) of 15 cents per share, in line with the Zacks Consensus Estimate. However, the reported figure was 37.5% lower compared to the prior-year quarter.

On a GAAP basis, the company had a net loss of $56.0 million or 99 cents per share, wider than the loss of $7.6 million or 14 cents in the prior-year period.

Growth in the company's core business primarily drove its non-GAAP earnings. Moreover, the company won over more than 1,000 new customers in the reported quarter. Earnings growth was driven by increased demand in most of its end markets, especially in the core enterprise customer segment and the SMB market.

Moreover, the emerging international markets witnessed growth driven by the increased demand for integrated travel and expense management solutions. This apart, the company continued to witness strong momentum in its open platform initiatives as customers, travellers, developers and partners embraced TripLink and its time-saving expense app, ExpenseIt. The increasing popularity of Concur App Center also drove the bottom line.

Revenues

Concur reported total revenue of $169.5 million. The company's non-GAAP revenues came in at $167 million, up 31% year over year and 4% sequentially. Increase in revenues was driven by strong performance of the company's travel business, in turn attributable to the Perfect Trip Initiative. Revenues surpassed the Zacks Consensus Estimate of $165 million.

Income and Expenses

Operating loss for the quarter was $13.4 million compared with a loss of $2.7 million in the prior-year quarter. Consequently, non-GAAP operating margins fell to 7.1% from 12.4% in the prior-year quarter. The increase in loss was primarily due to higher expenses.

Sales and marketing expenses were $71.2 million, up from $55.5 million, while general and administration expenses were $25.5 million versus $20.3 million in the prior-year quarter.

Balance Sheet and Cash Flow

Cash and cash equivalents were $323.3 million at the quarter-end, compared with $301.7 million at the end of Sep 30, 2013. The company reported total equity of $745.9 million, compared with $796.0 million as on Sep 30, 2013.

The cash flow from operating activities increased to $22.8 from $18.7 million in the prior-year quarter.

Outlook

Along with the earnings release, management provided guidance for the third quarter and full-year fiscal 2014.

Concur expects non-GAAP revenues for the third quarter of fiscal 2014 to grow about 26% year over year and expects non-GAAP pre-tax income per share to be 24 cents a share.

Management reiterated its guidance for fiscal 2014 for non-GAAP revenue, which is expected to increase approximately 26% year over year and non-GAAP pre-tax income per share is projected at 93 cents a share.

For full-year 2014, the company narrowed its non-GAAP operating margin guidance to in the range of 10%–12% from 10%–14% as provided in the last quarter. Cash flow from operations in fiscal 2014 is predicted to be at least $72 million while capital expenditures are expected to be 8% to 9% of fiscal 2014 revenues.

Concur currently holds a Zacks Rank #3 (Hold). Some other stocks worth considering in the industry include Adobe Systems Inc. ADBE, Ansys, Inc. ANSS and Citrix Systems, Inc. CTXS. All of these carry a Zacks Rank #2 (Buy).