Below is TBR’s commentary on BMC's Calendar 1Q10 Earnings. Please feel free to use the below content, or call/email for additional commentary.
BMC emerges from the recession stable and looking for renewed growth
As software companies pull through the recession, BMC Software passed through relatively unscathed, posting only one quarter of receding revenue in calendar 3Q09; however, profitability over the course of the year has been increasing as the company exercises tight fiscal control. Closing fiscal calendar 2010, the company maintained 2% growth year over year, reaching nearly $2 billion in revenue. BMC’s mainframe business, a main source of profit, was a stabilizing force throughout the year, while large ESM deals, virtualization, and IT process automation revenues boosted growth overall. BMC Software President, Bob Beauchamp, announced that ESM closed its largest transaction to date. As a result, bookings were up 9% year-to-year, with ESM surpassing MSM in revenue during calendar 1Q10. All in all, BMC grew revenue 2.5% year-to-year to reach $201 million, demonstrating that the worst is now behind the company. TBR believes that while the outlook looks good at the end of the fiscal quarter, BMC still has some significant headwinds to make to begin seeing a more significant amount of growth to come.
Atrium Orchestrator drives adoption across the portfolio
Success with customer adoption of BMC’s IT process automation offering helped to lead the company in revenue growth. BMC drives a value proposition with the Atrium Orchestrator, which focuses on customer benefits, like bringing higher value to existing IT infrastructure and lowering costs. BMC incorporates pre-built runbooks into Atrium, to streamline customer implementation and see faster returns on investment, allowing the customer to deploy with a running start. Several large ESM deals were driven by adoption of the Atrium Orchestrator. BMC promotes IT process automation as a tool to increase IT efficiency, a message that resonates well given the squeeze on IT budgets. TBR believes BMC will continue to leverage the Atrium, selling software across the portfolio to drive increased customer adoption as it faces increased competition from IT process automation vendors Microsoft, HP, IBM, and CA.
Partnerships expand market scope
The partnership to provide management software for Cisco’s Unified Computing System servers will provide revenue and partner growth opportunities for the systems management vendor as it continues to position itself in the SaaS and cloud computing environments. Cisco provides networking capabilities to BMC, while the UCS offers a host of virtualization partners including EMC in hardware, and VMware in virtualization. The potential for BMC Software to partner with VMware would create further virtualization opportunities, as BMC could provide its systems management expertise, while VMware provides another virtualization platform with a broad customer base for BMC to deploy its Remedy desktop solution. Meanwhile EMC offers the storage solutions missing in BMC’s IT stack. TBR believes it is essential for BMC to create new alliances to successfully launch itself as a vendor of systems management solutions to keep pace with CA, HP, IBM, Symantec, and Oracle.
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