Earnings Preview: BMC Software

BMC Software (BMC) is expected to report Q2 earnings after the market close on Thursday, October 29 with a conference call scheduled for 5 pm ET.

Guidance

The consensus estimate is 58c for EPS and $462.74M for revenue, according to First Call. On its last earnings call, management only provided FY10 EPS guidance of $2.47-$2.57, and for FY10 and bookings to be up in the low single digits.

Analyst Views

Goldman's recent checks suggest some return of large deals to the enterprise software space broadly, which should benefit BMC’s distributed business. Competitively, their checks suggest BMC remains share gainers versus it's “Big 4” peers in systems management. Goldman expects a Q2 EPS beat, though lean cash flow quarter. Their revenue and EPS Q2 estimates are above consensus at $465M and 60c. Goldman's Q2 bookings estimate of $403M is down 1.0% year-over-year. Their cash flow from operations, or CFFO, estimate for the quarter is $42M. On Aug. 10 BMC announced and closed the acquisition of MQSoftware. Goldman believes this acquisition will strengthen BMC’s WebSphere MQ monitoring capabilities. They expect the acquisition to contribute a few million dollars of incremental revenue in Q2 and have an immaterial impact on EPS. Goldman's revenue, EPS and CFFO estimates for Q3 are $489M, 65c and $152M versus the Street at $494M and 66c. For FY10, their revenue, EPS and CFFO estimates are $1.91B, $2.52, and $635M, which is in line with the Street. The company is likely to remain opportunistic regarding M&A, focusing on tuck-in acquisitions in the network management, application management, and virtualization management spaces. Goldman believes stock buybacks are likely to accelerate modestly above the recent $50M per-quarter pace.