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Source: Tibco.

TIBCO Software (NASDAQ:TIBX) reported third-quarter results on Thursday night. Following the report, Tibco shares fell as much as 6% in after-hours trading.

The maker of business intelligence and data analysis software reported adjusted earnings of $0.14 per diluted share on $260 million in non-GAAP sales. The adjusted revenue figure includes subscription revenues that go into the deferred revenue line on Tibco's balance sheet under GAAP.

Analysts were looking for earnings of $0.18 per share on $272 million in sales. Tibco missed both of these targets.

Looking ahead management set a fourth-quarter revenue guidance range between $290 million and $305 million, yielding non-GAAP earnings between $0.18 and $0.24 per share. That's below the current Street view, which points to earnings of $0.32 per share on about $313 million in sales.

Tibco CEO Vivek Ranadive noted that the migration to subscription-based sales is reducing near-term revenues more than expected. "We accelerated a number of strategic and operational changes that resulted in strong growth of subscription sales and a solid sequential improvement in our Spotfire business," Ranadive said in a prepared statement.

Moreover, Tibco's sales execution problems continued in Europe. Ranadive lamented "less-than-expected revenue in Europe," indicating that management had expected a stronger showing than the European sales force could deliver.

GAAP gross margins landed at 68.3%, down from 70.8% in the year-ago period. GAAP operating margins shrank from 13.7% to 6.9% year-over-year, continuing a falling trend in recent quarters.

Non-GAAP operating margins also narrowed from 23.7% to 15.7%.

Apart from subscription revenue adjustments, largely related to the recent Jaspersoft acquisition, non-GAAP results exclude a fairly standard list of non-cash items. Largest among these excluded items is $10.3 million in amortization of intangible assets, related to acquisitions and to stock-based compensation programs.

Share-based compensation can often dilute the value of company stock, but not this time. Thanks to Tibco's active share buyback program, which retired $114 million worth of Tibco stock over the last 4 quarters, the number of diluted Tibco shares actually decreased slightly 0.4% , year over year.

Anders Bylund owns shares of Tibco Software. The Motley Fool recommends Tibco Software. Try any of our Foolish newsletter services free for 30 days.

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