BMC Software (BMC) reported third quarter 2010 earnings per share of 76 cents, exceeding the Zacks Consensus Estimate of 60 cents per share.

Revenue

Revenue of $508.0 million was up 4% from the year-ago period. Out of the three revenue segments in which the company reports, only one declined on a year-over-year basis, while the other two segments reported increases.

License revenue for the third quarter was $216.1 million, up 12.1% from $192.8 million reported in the year-ago quarter. Maintenance revenue for the quarter was $260.2 million, up 1.8% from $255.7 million reported in the year-ago quarter. Professional services revenue for the quarter was $31.8 million, down 20.3% from $39.9 million reported in the year-ago quarter.

Operating Results

Third quarter GAAP operating income of $147.6 million increased 14.7% from $128.7 million reported in the year-ago quarter. Excluding special items such as severance costs, amortization of intangible assets and stock-based compensation, non-GAAP operating income for the quarter was $190.8 million, up 4.0% from $183.4 million reported in the year-ago quarter. The GAAP operating margin increased 3.0 percentage points from the year-ago quarter to 29.0%. Excluding special items, non-GAAP operating margin was 38.0%, flat on a year-over-year basis.

Third quarter GAAP net income was $110.7 million, or 59 cents per share, up from $83.8 million or 44 cents per share reported in the year-ago quarter. Excluding special items, non-GAAP net income was $141.5 million or 76 cents per share, up from $121.0 million or 64 cents per share reported in the year-ago quarter.

Balance Sheet, Cash Flow & Share Repurchase

BMC generated cash flow from operations of $83.0 million in the quarter, down from $93.0 million reported in the previous quarter. This was in line with the company’s expectations and on track to meet the annual cash flow guidance. The company exited the quarter with cash and investments of $1.2 billion, flat compared to the previous quarter. The company’s net cash position was $929 million. DSOs increased to 60 days, up 8 days from the second quarter, as a direct result of strong bookings performance in the reported quarter. The company repurchased approximately 2.0 million shares for a total of $75.0 million. As of December 31, the remaining amount authorized on the share repurchase program is $145.0 million.

Guidance

For fiscal year 2010, the company expects non-GAAP earnings per share in the range of $2.64 to $2.72, which at the midpoint would represent an 11.0% increase compared to the company’s initial fiscal 2010 guidance. Total bookings and revenue are expected to increase in the low single digits on a reported basis. Fiscal year 2010 cash flow from operations is expected to be in the range of $600 million to $650 million, which remains unchanged.

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