In Thursday's second-quarter earnings conference call, the management of Cognos (NASDAQ:COGN) was fairly upbeat. But Wall Street isn't so sure about the company, and the stock price is down today. Then again, the stock has rallied about 13% since mid-August.

Cognos, which sells software that helps companies analyze data, is having little trouble finding customers. Q2 revenue increased 10% to $252.4 million and license revenue was up 12% to $87 million. The company signed nine contracts in excess of $1 million and 129 contracts of more than $200,000. 

Basically, the company is getting lots of traction with its flagship offering, Cognos 8. It also helps that Cognos has leveraged key alliances with companies like Accenture (NYSE:ACN) and IBM (NYSE:IBM).

However, over the past six months, the Canadian dollar has surged 16% against the U.S. dollar. The upshot is that Cognos' expenses have inflated, chopping about 1.6% from its operating margins. While the company has the goal of 20% operating margins, it looks like the figure will instead be about 18% to 19%. And for a company that will generate more than $1 billion in revenue for the year, this is certainly material.

The good news is that Cognos continues to stand tough against its fierce competitors, such as Business Objects (NASDAQ:BOBJ), Oracle (NASDAQ:ORCL), and SAP (NYSE:SAP). In fact, just a few weeks ago, Cognos agreed to purchase Applix (NASDAQ:APLX), a Motley Fool Rule Breakers pick, for $339 million. The deal will double Cognos' customer base for financial performance management, which is a growing market -- Applix's revenue increased 45% over the past year. 

I'm a bull on Cognos. The company has been bolstering its sales force as well as adding innovative features to Cognos 8. What's more, the Applix acquisition should boost things going into 2008. All in all, it looks like things are still on track for Cognos.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is ranked 5,691 out of more than 65,000 investors in Motley Fool CAPS. The Fool has a disclosure policy.