Zacks_Analysts' Blog : Rightnow Tech. Beats Estimates - Analyst Blog

Rightnow Technologies Inc. (RNOW) reported non-GAAP diluted earnings per share of 17 cents for the fourth quarter 2010, ahead of Zacks Consensus Estimate of 10 cents. The result compares favorably with the last year’s 10 cents.

For the financial year 2010, the non-GAAP diluted earnings reported by the company was 49 cents per share, up from 39 cents reported in the previous year and surpassed the Zacks Consensus Estimate of 24 cents per share.

Quarter That Was

Total revenue for the quarter increased 23.6% from the previous year quarter and 5.8% sequentially to $51.4 million, marginally beating the Zacks Consensus Estimate of $51.0 million. Recurring revenue increased 27.0% from the previous year quarter to $40.9 million while revenue from professional services witnessed a rise of 10.6% from the year ago quarter to $10.4 million.

For the financial year 2010, Rightnow reported revenue of $185.5 million, up 21.5% from the previous year. Zacks Consensus had estimated the full year revenue of $185.0 million.

Gross profit increased 28.7% from the previous year quarter to $37.2 million. Gross margin increased 2.9 percentage points from the previous year quarter to 72.4%.

Operating profit increased 200% from the year ago quarter to $5.1 million. Operating margin increased 5.8 percentage points to 9.9%.

Current software backlog increased 28.0% from the previous year quarter to $149.0 million. The company recorded 18 transactions with value of greater than $1.0 million.

Acquisition

RightNow announced the completion of the acquisition of Q-go.com B.V. The acquisition will be recorded in the Company's March 31, 2011 quarter end financial statements.

Outlook

For the forthcoming quarter the management expects total revenue to be around $52.0 million. First quarter net loss per diluted share is expected to be 4 cents. First quarter non-GAAP net income per diluted share is expected to be 8 cents.

For the full year 2011, the company expects total revenue be around $225.0 million, with recurring revenue to grow by 23.0%. Net income per diluted share for the full year 2011 is expected to be 6 cents. Non-GAAP net income per diluted share is expected to be 52 cents for the year 2011.

Conclusion

Analyst estimates have been rising in the run up to the earnings release with ten analysts raising their estimates and only one analyst lowering its estimtes in the last thirty days. The average estimate was 10 cents when the company reported. We note that Rightnow Technologies has consistently exceeded estimates over the past year or so. The average surprise in the preceding 4 quarters is a positive 153.97%, and another positive surprise was therefore expected.

The company faces competition from Oracle Corporation (ORCL) and SAP AG (SAP).

We currently have Zacks #3 Rank for Rightnow Technologies, which translates into a Hold rating on short-term basis. We have a Neutral recommendation on long-term basis.