Convergys Reports 28% Revenue Increase for Q1

Billing and customer care company Convergys Corporation (Cincinnati, OH) reported Q1 2000 revenues (ended March 31) of $513.6 million, which represents an increase of 28% over $399.8 million reported in the first quarter of 1999. Operating income increased 41% to $74.7 million, up from $52.8 million. Operating margin increased to 14.5% from 13.2%. Net income increased 37% to $44.4 million or $0.28 per share (diluted), up from net income of $32.4 million or $0.21 per share (diluted).

Strong performance in the company's core operations offset lower results from the cellular partnership. The cellular partnership produced equity income of $5.8 million, or $0.02 per share compared to $7.6 million, or $0.03 per share, last year. Cash earnings per share, excluding goodwill amortization, increased 37% to $0.33 from $0.24 in the first quarter of 1999.

Information Management Group
Excluding inter-company sales, Q1 Information Management Group (IMG) revenues increased 17% to $173.6 million, from $148.1 million in the same period last year. Data processing revenues increased 20% to $112.9 million from $94.3 million, primarily as a result of subscriber growth at key wireless clients. Professional and consulting revenues decreased 10% to $33.9 million reflecting fewer subscriber conversions under a large cable-billing contract. License and other revenues more than doubled to $13.9 million from $6.3 million due to higher license fees and hardware sales to some cable clients.

International revenues increased approximately $3 million or 29% to $12.9 million, primarily reflecting a full quarter of revenues from Wiztec Solutions, which was acquired in March 1999.

Operating income for IMG increased 18% to $35.9 million from $30.3 million reported in the first quarter 1999. Operating margin in the first quarter was 20.7% compared to 20.5% in the first quarter last year. IMG's results reflect profit flow-through from increased revenues partially offset by increased spending on IP development.

Customer Management Group
Revenues for the Customer Management Group (CMG) were $340.0 million, up 35% compared to $251.7 million in the first quarter of 1999, fueled by strong demand for services from AT&T and DirecTV as well as strong increases in technical support services and web-based customer relationship management services. Revenues from Internet-based services grew to $25.4 million, up 570% versus the previous year and 32% from the fourth quarter of 1999.

Operating income for CMG increased 72% to $40.7 million, up from $23.7 million in the same period last year. Operating margin improved to 12.0% in the first quarter 2000 versus 9.4% reported in the comparable year-ago period, marking the seventh consecutive quarter of improvement since the 6.3% margin in the second quarter of 1998. This stems from the flow-through from higher revenues and the ongoing benefits of continuous process improvements.

Edited by Ellen Jensen