PeopleSoft posts solid Q3 revenue growth

PeopleSoft Inc. raced past analyst expectations in its just-ended quarter, reporting on Thursday a 12 percent increase in revenue, to US$698.8 million, and a slight uptick in revenue from software license sales.

The quarter, which ended Sept. 30, was the first for which analysts can compare PeopleSoft's results including J.D. Edwards & Co., which it bought in July 2003. PeopleSoft fell short of expectations in its last two quarters, and analysts had been expecting shaky results in the third quarter before PeopleSoft announced earlier this month that it had topped estimates. PeopleSoft said at the time it would report revenue of up to $695 million, a result it slightly surpassed. The consensus estimate of analysts polled by Thomson First Call was for revenue of $680.8 million.

Net income for the quarter was $23.6 million, up from a $7.3 million loss in last year's third quarter. Excluding a number of non-operating costs, PeopleSoft's per-share earnings were $0.17, ahead of analysts' $0.14 per share expectation. That figure excludes restructuring charges, some acquisition costs, costs related to Oracle Corp.'s ongoing tender offer for control of PeopleSoft, and "executive separation charges," which include PeopleSoft's costs for firing Craig Conway as its chief executive officer.

PeopleSoft recorded $5.3 million during the quarter in costs associated with Oracle -- down from the $10.5 million it recorded last quarter -- and $6.4 million in costs for executive separations.

While PeopleSoft's revenue grew solidly from last year's third quarter, most of the increase came from maintenance revenue, which increased from $234.6 million to $320.2 million. Professional services revenue dropped 5 percent, to $217.2 million, while license fee revenue was essentially flat, with a $1 million increase to $161.4 million.

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