Mercury Interactive Sees Sales Soar

The company reported revenue of $118.1 million, up 26 percent from $94 million in the same period one year earlier. Product revenue was up 23 percent to $70.5 million, including a 7 percent increase in license fees to $48 million and an 82 percent increase in subscription fees to $22.5 million. Maintenance and professional-service fees also increased. Sales of application-testing products reached $54.5 million while application-management product sales were $16 million.

"It's clear that business technology optimization has emerged as a strategic technology area," president and CEO Amnon Landan said Wednesday during a conference call with financial analysts. Business technology optimization is Mercury Interactive's term for application testing, monitoring, and management. "We continue to take market share in the application performance-management space."

The company reported net income of $16.9 million (20 cents per share), down 6 percent from one year ago. During the quarter the company increased spending for professional services, marketing and sales, research and development, and administration. Landan said the company also increased its staff count during the quarter.

Mercury Interactive has been on a buying spree lately, and acquisition and restructuring charges ate into profits. During the quarter the company completed its $22.5-million acquisition of Performant Inc., a developer of Java 2 Enterprise Edition diagnostic tools. The company also has a deal to acquire IT-governance software vendor Kintana Inc. for $225 million in cash and stock. That deal is expected to close this quarter, resulting in one-time charges of $8 million to $9 million for severance and in-process research and development.

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