BMC Software Inc. ( BMC - Analyst Report ) reported third quarter 2013 earnings per share of 80 cents, missing the Zacks Consensus Estimate of 85 cents.

Revenue

Total revenue in the reported quarter was $580.2 million, up 5.8% from $548.2 million in the year-ago quarter.

The company registered massive growth in the Professional services segment. This business performed largely in line with the company’s expectations.

Enhanced process discipline, backlog scheduling and resource allocation have helped the company to report stronger results. The segment has directly benefited from the transformational projects with some of the large customers, thus strengthening the company’s competitive position.

License revenue in the third quarter was $232.3 million, down 3.2% from the year-ago quarter. This apart, the Maintenance revenue was $288.7 million, up 6.0% from the year-ago period.

Bookings

Total bookings for the third quarter were $514 million, a decrease of 2% from the year-ago quarter on both reported and constant currency basis. Trailing 12-month bookings were $2.1 billion, down 6% as reported and 5% in constant currency.

Operating Results

Operating income was $147.6 million in the quarter, down 8.8% from $161.8 million in the year-ago quarter. Excluding special items like severance costs and amortization of intangible assets but including stock-based compensation expense, non-GAAP operating income was $168.7 million in the reported quarter, down 7.1% from $181.6 million in the prior-year quarter.

Net income on a GAAP basis was $106.3 million or 70 cents compared with $119.9 million or 71 cents in the year-ago quarter. Excluding special items such as amortization and severance costs but including stock-based compensation expense, non-GAAP net income was 80 cents per share, in line with the year-ago level.

Balance Sheet, Cash Flow & Share Repurchase

BMC Software generated $131.8 million in cash flow from operations in the reported quarter versus $164.3 million in the year-ago quarter. The company exited the quarter with cash and investments of $1.18 billion, down from $1.44 billion in the prior quarter.

During the reported quarter, BMC repurchased a total of 14.3 million shares. In Nov, the company repurchased 13.1 million shares, which is in addition to the 1.2 million shares we repurchased for $50 million earlier in the quarter.

Guidance

BMC expects non-GAAP earnings per share to be in the range of $3.35 to $3.45 per share for fiscal 2013. This apart, BMC expects fiscal 2013 cash flow from operations to be between $735 million and $785 million.

Outlook

BMC reported weak third quarter 2013 results, with EPS below the Zacks Consensus Estimate, but revenue up on a year-over-year basis. Moreover, bookings also declined from the year-ago quarter. Most of the company’s business segments grew but cash position deteriorated sequentially.

We are a bit apprehensive about the bleak business conditions in Europe. Moreover, growing competition from big players such as IBM Corp. ( IBM - Analyst Report ) , Hewlett-Packard Company ( HPQ - Analyst Report ) , EMC Corp. ( EMC - Analyst Report ) and CA Inc. ( CA - Analyst Report ) will pose a challenge for the company.

Currently, BMC has a Zacks Rank #3 (Hold).