Cognos Reports Second Quarter Results; Revenue Increases 20%, Net Income Up 123%.

OTTAWA, Canada--(BUSINESS WIRE)--Sept. 28, 1995--Cognos Incorporated (TSE:CSN;NASDAQ:COGNF) today announced results for its second fiscal quarter ended August 31, 1995.

Revenue for the quarter was $48.5 million, a 20 percent increase over the same period last year. Pretax income was $6.1 million, compared to pretax income of $3.2 million in the second quarter of last year. Net income was $4.6 million and 34 cents per share, compared to $2.1 million and 16 cents per share, respectively, for the same period last year.

Revenue for the six months ended August 31, 1995 was $94.9 million, an increase of 21 percent over revenue of $78.6 million for the first six months of last fiscal year. Net income and net income per share were $7.9 million and 58 cents, respectively. This compares with net income of $3.3 million and 25 cents, respectively, for the same period a year ago. (All figures for the second quarter and six months periods are stated in Canadian dollars.)

Ron Zambonini, President and newly-appointed CEO of Cognos, stated, "We are very pleased with the continuing progress we are making. The results for the first half of this fiscal year reflect solid business momentum and improved operating performance."

Revenue growth continues to be fueled by the company's business intelligence products, PowerPlay and Impromptu. Total revenue for these products in the quarter was $18.8 million, an increase of 128 percent from the second quarter of last year. Zambonini added, "For the first time, these products accounted for over half of our license sales. As well, another milestone was passed in the quarter as life-to-date revenues for these products surpassed $100 million.

"The profile of this business is clearly reinforcing the position of these products as the market's client - or PC - based tools of choice for business intelligence. PowerPlay, now in its fourth major version, has set the standard for multidimensional analysis tools. We have now licensed this product for use on more than 100,000 PCs. Further, our leadership position in this market was reinforced by the response to the release of the third version of Impromptu. Led by our enterprise sales to large companies, we are seeing more and more customers licensing both products and rolling those capabilities out to a large number of end users. In the quarter, the number of orders exceeding $50,000 trebled from a year ago.

"As a part of our product strategy for this business, we took additional steps during the quarter with the licensing of `best of breed' data mining technology from Angoss Software. With this technology, we will extend the functionality of PowerPlay and Impromptu to include the ability to draw the end user's attention to business trends and relationships that are not easily apparent. We expect to release the first version of our data mining products in the first half of our next fiscal year. Our goal is clearly to meet all the business needs for end user reporting and analysis for both the office and mobile worker."

Revenue from the company's application development tools, PowerHouse and Axiant, was $29.7 million in the second quarter, compared to $32.2 million in the second quarter of last year.

Zambonini said, "These revenue levels continue to be in line with our expectations and reflect our strategy and commitment to sustaining this business. Having both proven product on UNIX servers and an effective path for migrating PowerHouse applications to client/server is clearly serving our customers well. Both our direct customers and value-added resellers are verifying to us that PowerHouse Client for Windows and Axiant can protect their investments and reduce the cost of moving their applications to newer architectures. At the same time these customers are telling us that the capabilities that we are building into Axiant 2.0 are exactly what they will require to build new, more complex applications that deliver on the promise of distributed, networked resources.

"We are also pleased with the geographic profile of our results. We are seeing solid growth and productivity improvements in our major markets, especially in the U.S. where revenue in the first half was 23% higher than a year ago. Overall, our worldwide sales productivity has risen 26% in the first half of the year. This rise in productivity is driving the increase in operating profitability that we have delivered. As well, these operating improvements are expected to be more tax effective, as indicated by a lowering of our tax rate for the first half."

Zambonini concluded, "Our strategies are aligned well with the emerging needs of the market. These strategies have been tailored for both our application development tools and business intelligence and the management team is executing these strategies very successfully. Our growth and improved earnings are clear evidence that we are on the right track."

Cognos develops, markets and supports - both directly and through resellers worldwide - advanced client/server application development and reporting tools on a wide range of open and proprietary platforms, including UNIX and Microsoft Windows. Cognos is a publicly held company with dual headquarters in Ottawa, Canada and Burlington, MA. Cognos' World Wide Web address is http://www.cognos.com. -0-

Second Quarter Results

All figures are reported in thousands of Canadian dollars,
except per share figures which are shown in dollars.

                                      ($000)
                                  Three Months Ended
                                      August 31
                                    1995      1994

      Revenue                     48,526    40,461
      Operating expenses          43,737    37,883
      Operating income             4,789     2,578
      Income before taxes          6,094     3,200

      Net income                   4,645     2,080
      Net income per share          0.34      0.16

                                      ($000)
                                 Six Months Ended
                                    August 31
                                  1995      1994

      Revenue                     94,940    78,629
      Operating expenses          86,802    74,496
      Operating income             8,138     4,133
      Income before taxes         10,612     5,123

      Net income                   7,853     3,330
      Net income per share          0.58      0.25

CONTACT: Cognos

Roberta J. Carlton, 617/229-6600