Alys Woodward
Cognos grows 15% in Q1, but faces some challenges
Cognos, the Canadian business intelligence and performance-management software company, has posted its results for the first quarter of its financial 2006. Revenue was $200m, up 15% year-over-year, and net profit was $23.8m, up 18%. License revenue was $71.1m, up 8%, while support revenue grew by 18% and services grew 23% to $40.4m.The company has reduced its forecast for fiscal 2006 from a previous range of $930m to $950m as forecast in March this year, to between $915m and $930m.Comment: Two weeks ago, we reported on the disappointing preliminary results from Cognos, which were attributed to the failure to close its target of between eight and 12 large (more than $1m) deals (it actually closed only 6 of these deals). However, the reduced forecasts indicate that Cognos doesn't expect to make up the shortfall over the remainder of the year. Cognos also blamed its performance on the weakening euro and stated that the forecast had been reduced primarily for this reason. A third of the company's revenue comes from Europe, and it grew by 21% this quarter.In general, the company expects a successful 2006. Cognos 8, the company's re-engineered BI product suite that is SOA (service-oriented architecture) compatible, is on general beta release and will be launched in September. This will make a very good story for BI standardisation and should be causing worry to Business Objects, which is slightly behind in the race to fully integrate its product suite. Cognos is also focusing on finance departments and competing with long-standing rival Hyperion in this space. So Cognos is addressing all the threats from the BI players well.But the strongest long-term threats to BI specialists are Microsoft's focus on the BI market, and the increasing buzz around open-source BI. While both of these are a long way from the maturity and user functionality of the Cognos tools, a big change to the BI landscape is on its way. Currency and sales-force execution problems pale in comparison with these challenges - we hope Cognos can address them.
