Seeking Alpha
Profile| Send Message|
( followers)  

With an economic recovery in full swing for the tech industry, BMC Software (NASDAQ:BMC) reports 2% year-to-year revenue growth, driven mainly by customer adoption of cloud computing, virtualization, and Software-as-a-Service (SaaS).

  • BMC Software reported 51 new customers in IT Management offerings, and 15 customer wins with its SaaS offerings of Remedy On-Demand and BMC Service Desktop on the Salesforce.com platform.
  • ESM license bookings grew 40% year-to-year, as a result of 14 large (deals between $500,000 and $1 million) ESM transactions with companies like Tata Consulting Services and Computer Sciences Corporation. BMC also reported new customers in the federal and public industries.
  • BMC Software reported 25 cloud and virtualization deals during calendar 2Q10 as the virtualization and cloud platform businesses begin to see adoption. BMC will target offerings around cloud planning, operations, IT governance, and life cycle management to enable customers to shift to virtualized computing environments and consume BMC’s cloud service management offerings.
  • TBR believes revenue growth will continue to be propelled by market disrupters like cloud and SaaS as mainframe growth remains flat.
  • Partnerships with fast growth companies, like Salesforce.com, positions BMC to expand revenue more rapidly as the company’s bookings and deferred revenue business model yields moderate growth rates.
  • While software companies report double-digit growth rates in 2Q10 in comparison to weak sales a year ago, BMC sustained moderate growth as its business held steady through the recession, demonstrating to customers the stability of the mainframe and IT management software business.

Core technologies from acquisitions provide BMC Software with the ability to differentiate management tools and stimulate revenue expansion.

  • BMC Software reported that prior acquisitions of Tideway Systems and MQSoftware purchased in 2009 are fueling adoption of Atrium CMDB, Service Assurance, and Service Support as the technologies are integrated across the portfolio.
  • The acquisition of BladeLogic provided BMC Software with the core technology for its IT process automation offering Atrium Orchestrator. Automation software is a capstone offering for large enterprise customers that differentiates BMC’s product lines from competitors.
  • TBR believes the Atrium Orchestrator provides customers with a value proposition in dashboards and automated processes for IT workloads to provide customers with the capabilities to achieve greater IT efficiency.
  • TBR believes that as M&A activity increases following the recession, BMC Software will look to make tuck-in acquisitions within virtualization, cloud computing, and SaaS to acquire technologies that will pave new avenues for revenue growth.

Disclosure: No positions

Source: BMC Software: New Technologies Driving Growth