Analyst Conference Summary

conference date: September 20, 2007 @ 2:00 PM Pacific Time
for quarter ending: August 31, 2007 (1st quarter fiscal 2008)

Forward-looking statements

Overview: Just keeps up amazing growth in revenues and earnings.

Basic data:

Revenues were $4.5 billion, up 26% from year-earlier (y/y).

GAAP net income $840 million, up 25% from year-earlier

GAAP earnings per share were $0.16 , up 28% from year-earlier.

Cash, marketable securities and equivalents ended at $7.7 billion.

Guidance:

New software license revenues up 15 to 25% y/y. 18 to 21% total revenue growth y/y. Non-GAAP EPS excluding stock based compensation $0.26 to $0.27. GAAP EPS $0.20 to $0.21. Assumes 28.7% tax rate. Currency fluctuations could impact these estimates.

Conference Highlights:

Non-GAAP: net income $1.2 billion, up 25% y/y; EPS $0.22, up 275.

Continues to take market share from SAP. Our strategy is tackling industry specific verticals and adding new products for our current customers; SAPs is moving down market to sell to smaller companies than their traditional base. Strong results were across the board and not from any particular large deal.

Service revenues were $1.06 billion, up 25% y/y.

Total software revenue was $3.5 billion, up 26% y/y. New software license revenue grew 35% to $1.09 billion, while license updates and product support had $2.4 billion revenue.

Database and middleware new license revenues grew 23% y/y. Already number 1 in databases and continues to pick up market share; may surpass IBM to become number 1 in middleware by end of year (excluding Microsoft, because its middleware is embedded in Windows). Oracle is number 2 in applications but growing faster than #1 SAP.

Applications new license revenues were up 65% y/y. Application Integration Architecture (AIA) is shipping and really helps customers. Lots of other new software products released.

Operating expenses totaled $3.3 billion. Interest was $94 million. Non-operating income was $77 million. Income tax provision $360 million.

Geographically revenue grew 23% in the Americas, 38% in EMEA, and 4% in Asia.

$80 million from Hyperion, Agile $7 million.

Non-GAAP operating margin 37%, up 1% y/y. Stock based compensation was less than $0.01 per share.

About $500 million spent on stock buy backs and paid down $1.4 billion on commercial paper. Lowered interest rate on debt service.

Content Database product was up 300% y/y.

Q&A:

How did you do so well compared to peers? Installed base has grown dramatically; new licenses add to the base. Acquisitions are well-integrated so they can be sold to customers; costs at first but generates better margins in long run.

Vertical penetration? Just beginning to penetrate this market. We purchased vertical companies that are technology leaders, which will hopefully become market leaders.

Operating margins going forward? Q1 is typically seasonally low, so we expect further margin expansion going forward. But another acquisition would mean costs that would lower the margin. We expect 2008 margins to be up 100 to 200 basis points.

Macroeconomic issues? Pipelines are much stronger than they were last year. We are diverse and getting benefits from a weak dollar.

Collections strong? They were strong because of the strength of Q4. Deferred revenues are strong for the usual reasons, so that did generate cash. Most deferred revenue is for maintenance.

Over time we invest more than IBM or Microsoft in database development, so we offer more and more features they cannot offer, and gain market share as a result. We are the cost leader as well.

Software as a service just doesn't seem to make any money.

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