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BMC Software Inc. (BMC) reported fourth quarter 2012 earnings per share of 59 cents, lagging the Zacks Consensus Estimate of 66 cents.

Revenue

Total revenue in the reported quarter was $564.7 million, up 0.4% year over year. The company witnessed indifferent results across different revenue segments. The SaaS business performed well across its different business segments. This is best measured on the basis of recurring revenue and also on the basis of total bookings.At the end of the quarter, SaaS MRR totaled $1.7 million, up 350% year over year, while total bookings for the year grew almost 250% to $26 million.

License revenue in the fourth quarter was $233.6 million, down 6.8% year over year. ESM license revenue was $145 million, down 8.0%, while MSM license revenue came in at $89.0 million, down 5.0% year over year.

Maintenance revenue during the fourth quarter was $273.0 million, up 5.6% year over year. Professional services revenue in the quarter was $58.1 million, up 9.6% year over year.

Bookings

Total cloud bookings for fiscal 2012 were approximately $100 million, with cloud-related license bookings increasing 70.0% on a year-over-year basis in fiscal 2012. SaaS bookings skyrocketed 250.0% with over 200 customers added during fiscal 2012. MSM bookings for fiscal 2012 rose 6.0% year over year

Operating Results

Operating income on a GAAP basis was $106.0 million, down 25.2% from $141.8 million in the year-ago quarter. Excluding special items such as severance costs and amortization of intangible assets but including stock-based compensation expense, non-GAAP operating income was $419.2 million in the reported quarter, up 6.0% from $395.4 million in the prior-year quarter.

Net income on a GAAP basis was $70.7 million compared with $122.5 million in the year-ago quarter. Excluding special items such as amortization and severance costs but including stock-based compensation expense, non-GAAP net income was 59 cents per share compared with 75 cents in the year-ago quarter.

Balance Sheet, Cash Flow & Share Repurchase

BMC Software generated $212.9 million in cash flow from operations in the reported quarter versus $164.3 million in the previous quarter. The company exited the quarter with cash and investments of $1.58 billion, down from $1.36 billion in the prior quarter.

During the reported quarter, BMC repurchased 4.1 million shares for a total cost of $150.0 million. At the end of the quarter, BMC had $850.0 million remaining under its current share repurchase program.

Guidance

For fiscal 2013, the company expects non-GAAP diluted earnings per share in the range of $3.49 to $3.59 per share. BMC expects fiscal 2013 cash flow from operations to be between $800.0 million and $850.0 million, which at the midpoint represent a 3 percent improvement over fiscal 2012.

Our Take

BMC Software is one of the leading software vendors and providers of system and service management solutions across the globe. BMC reported sluggish fourth quarter results but guidance was modest for fiscal 2013. However, the company witnessed substantial cloud bookings.

The company witnessed growth in most of its business segments and generated decent cash flow. However, we are a bit apprehensive about the bleak business conditions in Europe. This apart, growing competition from big players such as International Business Machines Inc. (IBM), Hewlett-Packard Company (HPQ), EMC Corp. (EMC) and CA Inc. (CA), will pose challenges to the company.

The company carries a Zacks #3 Rank, implying a short-term Hold rating.

 
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