A nip-and-tuck bottom-line battle between software-based revenues and subscription fees turned profitable for CA Technologies, according to the digital solutions provider’s quarterly earnings statement.
Reporting Oct. 27 on the second quarter of its 2017 fiscal year, the New York City-based software maker counted $1.02 billion in quarterly revenues, a 1.3 percent increase over 2Q FY2016.
North American revenues increased 2 percent year-over-year while international revenues were reported flat. As for the overall quarterly revenue increase, company officials credited a 32 percent year-over-year spike in software fees and related revenues, which was strong enough to offset year-over-year losses in revenues from subscription and maintenance fees (down 0.9 percent) and professional services (down 9.6 percent).
The one-time Computer Associates – formerly headquartered in Islandia, where it still maintains a large presence – also reported adjusted second-quarter income before interest and income taxes (including stock-based compensation) of $383 million, a 15.3 percent jump over the same quarter last fiscal year.
Net 2Q income was reported at $212 million, or roughly 50 cents per diluted share.
Among other quarterly highlights, CA Technologies extended its “DevOps” portfolio with the acquisition of California-based software engineer BlazeMeter, a leader in open source-based continuous application performance testing. Although the deal was announced during 2Q FY2017, it actually closed in October, during CA’s third quarter.
While the second-quarter performance was dented by a $45 million “agreement” with the Department of Justice, settling a complaint alleging that CA Technologies overcharged on a General Services Administration contract (the company admitted no wrongdoing), CEO Michael Gregoire said he was pleased with the “solid Q2 results.”
Speaking to investors Oct. 27, Gregoire noted “another quarter of revenue growth with strong margins and earnings,” portending good results for the company’s fiscal year as a whole.
“Our performance in the quarter improves our confidence in our ability to cross over into modest revenue growth for the full year of Fiscal 2017,” the CEO said. “Our product development and innovation engines are beginning to gain traction. And I am very pleased with our customer experience metrics.”
Recognizing that new sales declined in the second quarter – Gregoire referenced a “very difficult year-over-year comparison,” due to a large deal closed in 2Q FY2016 – the chief executive acknowledged “there are areas in which we still need to continue to improve.”
But “we know that we are moving the ball in the right direction,” he added.
“We now have agreements in place with our three largest [systems-integration] customers for the next several years,” Gregoire said. “This reflects our position as a trusted technology partner to the largest global system integrators and provides us with good visibility into our longer-term customer commitments.”