Cognos® Reports First Quarter Results

Cognos Incorporated (Nasdaq: COGN; TSX: CSN – all figures in U.S. dollars and in accordance with U.S. GAAP unless otherwise stated), the world leader in business intelligence (BI) and performance management solutions, today announced financial results for its first quarter of fiscal year 2008, ended May 31, 2007.

Revenue for the first quarter was $236.7 million, compared with $217.0 million for the same period of last fiscal year, an increase of 9 percent. License revenue was $75.7 million, compared with $73.7 million a year ago.

Net income on a U.S. GAAP basis in the quarter was $22.4 million, compared with $14.5 million for the same period last fiscal year, an increase of 54 percent. Net income on a non-GAAP basis (excluding amortization of acquisition-related intangible assets and stock-based compensation expense) for the quarter was $29.2 million, compared with $19.8 million for the same period last fiscal year, an increase of 48 percent. Earnings per diluted share (EPS) on a U.S. GAAP basis for the quarter was $0.25, compared with $0.16 for the same period last fiscal year. EPS on a non-GAAP basis (excluding amortization of acquisition-related intangible assets and stock-based compensation expense) for the quarter was $0.32, compared with $0.22 in the first quarter of last fiscal year.

First quarter non-GAAP results differ from results measured under U.S. GAAP as they exclude $1.8 million of amortization of acquisition-related intangible assets and $7.5 million of stock-based compensation expense, before taxes. Compared to the GAAP results, this is an increase of $0.07 per share, in the aggregate, after the effect of taxes.

“I am pleased with our overall performance this quarter. We enter our second quarter, and the remainder of the year, with a strong product line-up and a healthy market opportunity,” said Rob Ashe, Cognos president and chief executive officer. “We achieved over 50 percent growth in earnings, despite the recent strength of the Canadian dollar. In our seasonally toughest quarter, Cognos 8 BI and our financial applications performed very well.

“Customer and partner commitment to Cognos is very strong, as demonstrated by the record attendance at our recent Cognos Forum user conference. Our industry-leading product portfolio continues to expand with recent innovations such as Cognos 8 BI version 8.2, Cognos Now!, Cognos 8 Go! Mobile, and Cognos 8 Controller version 8.2. Our sales capacity of 390 sales representatives at the end of the quarter is our largest ever. On the strength of our solid business fundamentals, industry-leading products and expanding sales capacity, I feel very confident about our opportunity for the remainder of fiscal year 2008.”

Cognos’ balance sheet remains strong. First quarter operating cash flow was $29.9 million. The company exited the quarter with $654.0 million in cash, cash equivalents, and short-term investments. Days sales outstanding for accounts receivable was 63 days in the quarter, compared with 58 days for the same period last year.

Business Outlook

The company’s outlook for the second quarter and full fiscal year 2008 assumes no significant changes in the economy, a U.S. GAAP tax rate of 22 percent, a Canadian dollar of $0.94 U.S., and a Euro of $1.33 U.S. for the year.

Management offers the following outlook for the second quarter of fiscal year 2008 ending August 31, 2007:

Revenue is expected to be in the range of $245 million to $255 million
U.S. GAAP diluted earnings per share are expected to be in the range of $0.25 to $0.30
Non-GAAP diluted earnings per share are expected to be in the range of $0.34 to $0.39
Expected non-GAAP diluted earnings per share for the quarter ending August 31, 2007 exclude approximately $1.8 million of amortization of acquisition-related intangible assets and approximately $9.0 million of stock-based compensation expense, before taxes. This is an increase of approximately $0.09 per share, in the aggregate, after the effect of taxes.

Management offers the following outlook for the full fiscal year 2008 ending February 29, 2008:

Revenue is expected to be in the range of $1.065 billion to $1.085 billion
U.S. GAAP diluted earnings per share are expected to be in the range of $1.66 to $1.73
Non-GAAP diluted earnings per share are expected to be in the range of $1.98 to $2.05
Expected non-GAAP diluted earnings per share for fiscal year 2008 ending February 29, 2008, exclude approximately $6.8 million of amortization of acquisition-related intangible assets and approximately $31.5 million of stock-based compensation expense, before taxes. This is an increase of approximately $0.32 per share, in the aggregate, after the effect of taxes.