Concur reported net income of $2.8 million for the June
quarter, its fiscal third, down from $6.9 million in the same quarter of 2012.
Revenue in the quarter increased 23 percent year over year
to $138.7 million, and "met or exceeded all targets across all business
metrics," according to Concur chairman and CEO Steve Singh.
"Exactly as expected, we grew revenue 9 percent quarter-over-quarter
in fiscal quarter three, the highest sequential growth rate recorded in more
than five years, and that's even as our business has grown 102 percent over
that same time period," Singh said during a conference call with investors.
With total expenses rising to $386 million for the
nine-month fiscal period ending on June 30, the company reported a $16.9
million loss for that period. This is compared to a $1.2 million profit during
the same nine-month period last year.
Concur has continued to sign new clients both on the
commercial side and under its ETS2 contract with the U.S. General
Services Administration, covering the U.S. federal government.
Singh said Concur has closed deals with more than 70 percent of U.S. federal
agencies as part of the ETS2 award, including the Transportation Security
Administration, Immigration and Customs Enforcement, Customs and Border
Protection and Veterans Affairs. A few government agencies also went live last
quarter, according to Singh, with the Federal Emergency Management Agency starting
last month.
"It's important to understand that these are initial
deployments and in some cases the first step in a multi-step rollout. So the
revenue contribution will be negligible in the fourth quarter," Singh said
of ETS2. "Having said that, we're pleased with the progress … both on the
new customer signing and on the deployment side."
Several analysts expressed concerns about Concur's large
government clients and their long deployment times.
"We remain positive regarding [Concur's] long-term
strategy and growth prospects, but we are wary of margin and execution risks
over the next few quarters as the company ramps large-scale deployments in the
federal government sector," according to Janney Capital Markets analysts
in a Thursday research note.
FBR Capital Markets analysts in a research note also
released today noted that, "While government customers have longer
implementation cycles and could take longer to achieve 100 percent usage, the
revenue contribution should be meaningful in FY14 and even more so in
FY15."
Piper Jaffray analysts in a Wednesday research report noted
that Concur's potential 30 percent [revenue] growth rate is "artificially
inflated" due to "the temporary catch-up period for past deployments,
plus the simultaneous acquisition of two companies, one of which carries a $40
million revenue run-rate."
During the quarter, Concur acquired mid-office and
data solutions companies GDSX and TRX. It also made new investments from its
Perfect Trip Fund including $150 million in capital for technology companies that
offer the StayNTouch property management solution, travel photo app Trover and
price tracking service FareIQ. Concur also claimed 100 new business partners for
its Open Booking platform.