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conference date: December 18, 2006
for quarter ending: November 30, 2006 (2nd fiscal quarter 2007)
Overview: Solid quarter with numbers coming in within guidance.
Basic data:
Revenues were $4.2 billion, up 26% from year-earlier.
Net income was $967 million (GAAP), up 21% from year-earlier. Non-GAAP net income was $1.17 billion, up 20% from year-earlier.
Earnings per share were $0.18, up 20% from year-earlier. Non-GAAP earnings were put at $0.22 per share, up 18% from year-earlier. and at guidance.
Cash and equivalents (including marketable securities) ended at $7.825 billion. But net trade receivables fell from $3 billion (year-earlier) to $2.54 billion.
Guidance:
Q3 GAAP guidance: revenues up 23 to 25% from year-earlier. Net Income growth of 24 to 29%. EPS between .18 and .19, up from $0.14 year-earlier.
Conference Highlights:
Total revenues were at high end of guidance. Software revenues were $3.2 billion, up 23% from year-earlier, at mid-point of guidance. Service revenues were $949 million, up 41%.
"We are now halfway through our five year plan targeting EPS growth at 20% per year."
Continues to gain market share in applications, middleware and databases. Their applications acquisition strategy has helped in retail, telecommunications and utilities industries. Retial new software license sales more than trippled. "Eight of the top ten retailers in North America use Oracle retail software, only one uses SAP."
East-asia and North American revenues were weak compared to strong growth in emerging markets and Latin America.
Technology license revenues were up 9% over year-earlier. Application license revenue was up 28% over year-earlier. Product update and support revenues were up 24%.
Operating margin was 39%, down 1% from year earlier, but expected to improve next quarter.
Stock buy backs were 54.5 million shares at $18.05, about $1 billion total, which is what is expected on a quarterly basis for the remainder of fiscal 2007.
Expects vertical retail market will continue to grow rapidly. A big deal with Walmart will be recognized over the next 3 quarters. Doing well in Europe, excepting Germany so far. Thinks will be very competitive in other vertical markets, driven by acquisitions.
Secure enterprise search will be the next big product. Other products coming soon in ERP suite, CRM.
Lots of comments about particular sales wins.
Oracle Technology network, their developer community, has surpassed 5 million members.
Q&A:
10g database sales with 11 release near? Sales include rights to next version, so releases have never had impact on sales. Does expect databases, middleware and options will all pick up in the second half.
Applications growth rate? Vertical applications are less saturated than ERP, so growth strategy in applications is to move beyond ERP.
Database growth? Combining database with middleware growth is going to be in the double digits, but core database might be in single digits.
IT spending trends? Does not see any softness due to economic downturn. Believes some deals that should have been executed in Q2 will be executed in Q3 or evern Q4. Pipeline growth has been double what they normally see between Q2 and Q3. IBM agreed to redistribute and sell more Oracle products in applications market. Growing backlog especially from acquired companies.
Cash flow less than usual? Impacted by large facility buy-outs and large tax payments.
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2006 William P. Meyers