Analyst Conference Summary

conference date: March 26, 2008 @ 2:00 PM Pacific Time
for quarter ending: February 29, 2008 (3rd quarter fiscal 2008)

Forward-looking statements

Overview: A good quarter but revenues at low end of company's earlier guidance. Mostly flat sequentially, with solid y/y growth.

Basic data:

Revenues were $5.3 billion, sequentially flat, but up 21% from year-earlier.

Net income was $1.3 billion, sequentially flat, but up 30% from year-earlier.

Earnings Per Share (EPS) were $0.26, up 4% sequentially from $0.25 and up 30% from year-earlier.

Guidance:

Q4 new software license revenue 10% to 20% increase y/y. Total revenue 15 to 19%. Non-Gaap EPS $0.43 to $0.44. GAAP EPS $0.37 to $0.38. This is conservative guidance with upside possibility if macroeconomic situation does not deteriorate.

Conference Highlights:

Customers got a bit cautious towards the end of the quarter, but many deals closed into this quarter.

Software revenues were $4.2 billion, up 21% y/y, with new license revenues up 16% to $1.6 billion. Database and middleware new license revenu egrowth was 20% y/y. Software license updates and product support revenues were $2.6 billion, non-GAAP, up 23% y/y.

Services revenues were $1.1 billion, up 21% y/y.

Non-GAAP numbers: EPS $0.30, up 23% y/y, net income $1.6 billion, up 22% y/y.

Exceede there growth target of 20% for revenues [but were at low end of guidance].

Margin of 41%, up from 39% year-earlier, is "now substantially higher than our competitors, including Microsoft."

Total operating expense of $3.47 billion included $1.08 billion sales and marketing, $254 million product support, $989 million cost of services, $682 million R&D, $206 million general and administrative, $292 million amortization, $8 million restructuring, and an acquisition related gain of $40 million. Operating income was $1.87 billion, or 35% of revenue, and up 35% from year-earlier. Interest expense was $82 million. Non-operating income was $84 million.

Income tax provision was $537 million, or 10% of revenue.

Diluted share count was 5,235 million.

24 million shares bought back during quarter.

6 point positive currency impact on revenue. Will continue to benefit from the weaker dollar.

BEA cleared in U.S. and expect a review soon in Europe. Today's guidance will not assume BEA is acquired.

Off to a good start in fiscal Q4. Good sequential growth in pipeline. Q4 is usually our best quarter.

BI (Business Intelligence) had a breakout quarter, with a doubling and many new major customers.

Revenue by geography: Americas $2.7 billion, EMEA $1.9 billion, Asia Pacific $771 million.

Q&A:

Upside to Q4 guidance? Massive increase in pipeline for Q4, but using lower assumed close rate than in Q3 and historically. Deals seem to be taking longer to go through.

Margins going forward? On track for 200 basis point improvement for fiscal year. We have huge economies of scale, so as revenues expand margins should continue to improve.

Any color on weakness at end of February? Some of our largest deals in quarter were with banks. Just some delays, no particular vertical market was responsible. EMEA has been seasonal, seems to be shaping up for Q4. The numbers looks like weakness was in Apps business, but that is really from the lumpiness of that business.

Merging of BEA App Servers and middleware? We both use industry standards, so it should be relatively easy to consolidate products and switch customers.

Our customers asked us to buy BEA; all feed back has been good so far.

Apps business had a tough Q3 y/y comparison, will have an easier Q4 comparison.

OpenIcon Analyst Conference Summaries Main Page
Oracle Investor Relations Page

Search

More Analyst Conference Pages: