The 10-second takeaway
For the quarter ended March 31 (Q2), Ariba beat expectations on revenue and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share improved.
Gross margin shrank, operating margin expanded, and net margin grew.
Ariba logged revenue of $131.5 million. The 12 analysts polled by S&P Capital IQ foresaw a top line of $128.9 million on the same basis. GAAP reported sales were 21% higher than the prior-year quarter's $108.8 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.25. The 12 earnings estimates compiled by S&P Capital IQ averaged $0.22 per share. GAAP EPS of $0.02 for Q2 were much higher than the prior-year quarter's $0.00 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 66.0%, 10 basis points worse than the prior-year quarter. Operating margin was 3.2%, 260 basis points better than the prior-year quarter. Net margin was 1.8%, 180 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $134.5 million. On the bottom line, the average EPS estimate is $0.24.
Next year's average estimate for revenue is $528.6 million. The average EPS estimate is $0.96.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 103 members out of 150 rating the stock outperform, and 47 members rating it underperform. Among 42 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 31 give Ariba a green thumbs-up, and 11 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Ariba is outperform, with an average price target of $35.30.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.