Cognos gets green light from SEC, resumes financial reporting

Business intelligence software maker Cognos moved a long way toward clearing up a lingering accounting debacle on Friday, as it reported results for its most recent quarter and announced that it has resolved issues with the US Securities and Exchange Commission (SEC) related to its revenue recognition practices.

Questions about how Cognos delineated support and license revenue led to the SEC's review, disclosed in May, which prompted Cognos to delay filing required quarterly financial reports . Those delays in turn imperiled Cognos's Nasdaq listing and created uncertainty about the company's accounting practices.

Cognos, Ottawa, Ontario, said Friday that the SEC is now satisfied with its revenue-recognition practices. The company remains delinquent on its quarterly report filings, but said it expects to have those reports ready shortly. Meanwhile, it announced results for its first fiscal quarter of 2007, ended May 31. Revenue for the quarter was US$217 million, up 8 percent from the previous year, while license revenue rose 4 percent to US$73.7 million. Net income was US$14.5 million, down from US$20.4 million a year earlier.

Indirect sales accounted for 30 percent of Cognos's first-quarter revenue. The company said it is actively hiring additional sales representatives, looking to add roughly three dozen more employees to its current sales staff of around 340.

Cognos is among the vendors at the vanguard of the burgeoning business intelligence market, which analysts are eying for signs of consolidation and price wars as competition heats up. Traditional application vendors like Microsoft and Oracle and making plays for a bigger slice of the analytics business, while pure-play software makers like Cognos and its chief rivals, Hyperion and Business Objects, expand their product portfolios to capture more of their customers' spending.

Cognos shipped a major upgrade, Cognos 8, earlier this year. It initially struggled out of the gate, hampered by timing and sales execution issues, but lately appears to have picked up steam. In the first quarter, 59 percent of Cognos' license revenue came from Cognos 8 sales, the company reported.