Concur Slips - Analyst Blog

Concur Technologies Inc. (CNQR) reported earnings per share from continuing operations of 7 cents for the first quarter of 2011, below the Zacks Consensus Estimate of 11 cents. Total revenue for the first quarter of 2011 was $80.2 million, ahead of the Zacks Consensus Estimate of $79 million.

Revenue grew 19% year over year and reached an all-time high at $80.2 million. The company continues investing in order to deliver services to small- and medium-sized businesses across the globe. It believes that this market segment is underserved and can be a significant source of revenue and profits over the next decade.

Concur acquired privately held TripIt, which makes mobile trip management applications. In addition to helping travelers easily organize and share travel plans, Triplt's open platform integrates applications from over 700 partners to provide value for the business traveler on the road.

Concur signed a definitive agreement to establish a new joint venture in Tokyo, Japan, known as Concur Japan.

Gross margin was up approximately 50 basis points year over year to 72%, reflecting increased economies of scale. Excluding share-based compensation expense, sales and marketing spend increased 26% year over year, reflecting new investment in distribution.  General & administrative spend increased 36% year over year, reflecting investment in new initiatives.

Cash flow from operations was $10.9 million for the quarter. After capital investments of $4.8 million, free cash flow was $6.1 million for the quarter. Free cash flow benefited from operational improvements, such as a three-day reduction in DSOs quarter over quarter.

The company's balance sheet continues to be very strong and provides tremendous leverage in continuing to expand its market and leadership. Cash and investments, net of customer funding liabilities, grew approximately $5.2 million by quarter end to $606 million.

And despite the continued challenges faced by businesses, as the global economy recovers, cash collections were strong, and days sales outstanding ended at 59 days, below 60- to 70-day expected range. Based on the overall growth in the business, deferred revenue grew to approximately $60 million by quarter end, reflecting approximately 18% growth over the same period of the prior year.

Concur expects revenue for the second quarter of 2011 to grow approximately 15.5% year over year and expects fiscal 2011 revenue growth rate to be above the fiscal 2010 revenue growth rate.

With the acquisition of TripIt, Concur expects 2011 non-GAAP operating margin to be 21.5% or more for the year as a whole.

Concur expects cash flows from operations in 2011 to be between $84 million and $87 million, excluding one-time acquisition and other related costs, and capital expenditures to be between $25 million and $27 million.

Concur Technologies is a provider of business services that automate the processes involved in the management of corporate expense. The company was incorporated in the state of Washington in 1993 and commenced operations during 1994. It reincorporated in the state of Delaware and completed its initial public offering of common stock in 1998.

Concur focuses on reducing costly and inefficient expense processes in businesses of all sizes, by streamlining the reimbursement processes, reducing operating costs, improving internal controls, and enabling customers to apply greater insight into their spending patterns through analytics. Compuware Corporation (CPWR) is a major competitor.

We currently have a Neutral recommendation on Concur Technologies.