Tibco Software (TIBX), a provider of infrastructure and business intelligence software, has announced a 87.61 percent plunge in profit for the quarter ended Aug. 31, 2014. Lower sales and steep drop in margins on increased expenses have pulled down earnings sharply during the quarter.
The company earned $2.63 million or $0.02 a share in the third-quarter compared with $21.25 million or $0.13 a share a year ago. Non-GAAP earnings per share came in at $0.14, when analysts expected $0.18.
Revenue during the third-quarter declined 5.63 percent to $255.60 million from $270.86 million in the last year period.
Gross margin contracted by 288 basis points over the last year period to 68.34 percent. Total expenses as a percentage of revenues increased to 93.10 percent from 86.26 percent in the same period last year. That has resulted in contraction of 684 basis points in operating margins to 6.90 percent.
The company reported operating income of $17.64 million, compared with $37.21 million in the previous year period.
''This quarter, we accelerated a number of strategic and operational changes that resulted in strong growth of subscription sales and a solid sequential improvement in our Spotfire business,''said Vivek Ranadivé, TIBCO's chairman and chief executive officer. ''The migration of perpetual to subscription-based licensing, together with less-than-expected revenue in Europe, had an impact on our overall software revenue results this quarter. We continue to believe, however, that reaching a broader base of customers through subscription pricing and building a solid base of recurring revenue is the right long-term strategy for TIBCO.''
Cash Flow
Tibco Software has generated cash of $61.70 million from operating activities during the nine month period, down 57.85 percent or $84.70 million when compared with the last year period. The company has generated 8.11 cents of operating cash flow in every sales dollar for the nine month period, down from 19.40 cents in the same period last year.
The company has spent $300.55 million cash to meet investing activities during the nine month period, as against cash outgo of $88.57 million in the last year period. It has made net capital expenditure of $23.47 million during the nine month period, which was higher by 119.47 percent or $12.78 million, from a year ago.
The company's free cash flow accounted for 61.96 percent of operating cash flow for the nine month period, compared with 92.69 percent in the last year period.
The company has spent $64.09 million cash to meet financing activities during the nine month period, as against cash outgo of $116.94 million in the last year period. It has spent net of $64.77 million on repurchase of common stocks.
As on Aug. 31, 2014, the company's cash balance stood at $354.37 million, down 46.81 percent or $311.84 million from Sep. 01, 2013.
Working Capital
Tibco Software has witnessed a decline in the working capital over the last one year. The company's working capital stood at $431.74 million as at Aug. 31, 2014, down $144.47 million or 25.07 percent from $576.21 million on Sep. 01, 2013. It registered a decrease in current ratio to 2.10 as at Aug. 31, 2014 from 2.45 on Sep. 01, 2013.
Days' sales outstanding moved up to 73 days for third quarter compared with 62 days for the last year period. This indicates the company has extended credit period to clients for making payment.
The company's days' payable outstanding went down to 32 days for third quarter from 36 days for the last year period. This reflects that the company has made early payment to vendors compared to prior year period.
Debt Position
Tibco Software has witnessed an increase in long-term debt over the last one year. As on Aug. 31, 2014, long-term debt stood at $552.27 million, up 3.02 percent or $16.20 million, from Sep. 01, 2013. The company's total debt was 28.22 percent of total assets as on Aug. 31, 2014, compared with 28.01 percent on Sep. 01, 2013.
The company's debt to equity ratio remained almost stable at 0.60 as on Aug. 31, 2014, when compared with the last year period. Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has declined to 2.04 from 4.42 in the same period last year.
Shares of the company gained $0.03 or 0.14 percent to settle at $20.79 on Thursday.
