Lawson Software Reports Better than Expected Q3

| About: Lawson Software, (LWSN)

Lawson Software (NASDAQ:LWSN) released its fiscal Q3 results Thursday. Although the company reported sharply weaker revenues of $173.8 million, its non-GAAP EPS came in higher at $0.10, beating our estimates by $0.03. The non-GAAP results excluded items including $11.1 million in restructuring and amortization of goodwill.

Quarter-over-quarter comparison also fared better as the company had taken an $8.1 million impairment charge in Q3 of the prior fiscal .

The weakest revenue segment in the reported quarter was Consulting, down 34% (26% adjusted for currency), followed by License revenues, down 22% (14% adjusted for currency). GAAP gross margin came in at 54.5%, slightly higher than the corresponding quarter of the last fiscal period. Excluding charges, non-GAAP net income was $16.4 million, or $0.10 per diluted share.

Generally speaking, the company attributed the Q3 revenue shortfall to reduced capital spending by customers and weakening foreign currencies. The company also reported key customer wins in the Americas, EMEA and the Asia-Pacific region during the quarter.

Lawson guided Q4 revenues of $175 - $182 million and non-GAAP EPS in the range of $0.08 - $0.10. This compares to our estimates of $190 million in revenues and $0.08 in non-GAAP EPS. Consensus estimates are at $197.8 million in revenues and non-GAAP EPS of $0.10.

We maintain our "Hold" rating on shares of LWSN.

By Abdul Saleh