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Comverse Technology Inc. (Nasdaq: CMVT) reported revenue growth and more than quintupled its net profit for its third fiscal quarter of 2011, which ends in October, thanks to improved results by most of its business units, and beating the analysts' consensus.
Revenue rose 6.5% to $453.1 million for the third fiscal quarter from $228.9 million for the corresponding fiscal quarter of 2010, beating the analysts' consensus of $401.6 million. GAAP-based net profit was $35.7 million ($0.17 per share) for the third quarter, and non-GAAP net profit rose to $35.2 million ($0.17 per share) from $6.3 million.
Comverse Technology's Comverse subsidiary posted $243.8 million revenue for the third quarter, up from $228.9 million for the corresponding quarter. Revenue from customer solutions rose 13.7% to $160.6 million from $141.3 million. The unit swung to an operating profit of $29.5 million from an operating loss of $9.1 million.
Increased revenue and operating profit from Comverse's business support solutions unit offset lower revenue and operating profit from its value-added services unit. Comverse BSS revenue rose to $117.7 million for the third quarter from $90.9 million for the corresponding quarter and operating income rose to $30.4 million from $26 million. Comverse VAS revenue fell to $112.7 million from $121.1 million, and its operating income fell to $48.4 million from $55.9 million.
Results by roaming services solutions provider Starhome were barely changed. Revenue rose to $11 million from $10.7 million and income from operations rose to $2 million from $1.9 million.
Profit by actionable intelligence solutions subsidiary Verint Systems Inc. (Nasdaq: VRNT) was halved, despite higher revenue, missing the analysts' consensus. Although third fiscal quarter revenue rose 9.6% to $199.4 million for the third quarter from $186.6 million for the corresponding quarter, GAAP-based net profit fell to $9.4 million ($0.15 per share) from $17.1 million and non-GAAP net profit fell to $29.6 million ($0.59 per share) from $43.8 million. The company missed the analysts' consensus of $0.76 earnings per share on $218.7 million revenue.
In its guidance, Verint estimated its full-year (ending in January 2012) revenue at $784-792 million and an operating profit margin of 20-25%. The analysts' consensus is $2.50 earnings per share on $790.5 million revenue. The company predicts 10% revenue growth in fiscal year 2012, ending in January 2013.
Comverse Technology and its Comverse subsidiary had an aggregate $342.6 million in cash, cash equivalents, bank time deposits and restricted cash at the end of October, after paying out $36.5 million in expenses, including $20 million under a class action settlement agreement and $10.4 million in professional fees.
Comverse Technology Chairman and CEO Charles Burdick said, "We achieved profitability and positive operating cash flow in each of our three subsidiaries, and have a solid financial foundation to support our future success. Our Comverse subsidiary is experiencing increasing recognition for its leadership in the emerging converged billing BSS segment, with new Comverse ONE customer wins, and endorsements from network operators and other industry thought leaders. Comverse also continues to reinforce its leading market position in value-added services with the introduction of its new IP messaging platform and Service Enablement Middleware cloud-based solution. Our majority-owned Verint and Starhome subsidiaries again delivered strong operating and market performance."
Comverse's share price rose 6% on Nasdaq on Friday to $6.72, giving a market cap of $1.38 billion, and Verint's share price rose 3.6% to $28.10, giving a market cap of $1.1 billion.
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