We maintain a Neutral recommendation on Concur Technologies Inc. .
The company reported a strong second-quarter fiscal 2012, outperforming its expectations. Revenue increased 28% year over year, above its previous expectation of 25%. Concur benefits from a significant increase in travel transaction volume and quick returns on investments in new markets, such as the SMB market and the unmanaged travel market. Based on the outperformance in the quarter, Concur raised its revenue, operating margin, earnings and free cash flow expectations for fiscal 2012.
Valuable long-term drivers for the company include its investment in the emerging markets, its geographic expansion and customer retention (in which Concur leads the industry in client satisfaction). Over the long term, the company expects to benefit from its investment in content aggregation and delivery, big data and mobile computing. Through this, the company expects to build a strong position in the $1 trillion corporate travel market. The company plans to double its distribution capacity by the end of fiscal 2013 through significant increase in investment across its business.
However, the uncertain macroeconomic environment remains a matter of concern. Furthermore, the company is heavily dependent on sales of a smaller number of solutions. An important component of its business success depends on its ability to maintain and develop relationships with travel suppliers. Adverse changes in the existing relationships, or an inability to enter into new arrangements with these parties on favorable terms, could reduce the amount, quality and breadth of attractively-priced travel products and services.
Concur Technologies is a provider of business services that automate the processes involved in the management of corporate expense. The company’s revenue is primarily generated from four solutions, Concur Travel & Expense, Concur Expense, Concur ExpenseLink and Concur Cliqbook Travel. Major competitors of Concur are Compuware Corporation , Oracle Corp. (ORCL - Free Report) and SAP AG (SAP - Free Report) .
Concur Technologies currently has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.