This summary is based on the second quarter fiscal 2008 earnings call conducted by BMC Software, Inc. (BMC: chart) on November 6, 2007.

Management:

CEO: Robert Beauchamp
CFO: Steve Solcher
IR: Derrick Vializ

Key Investors Issues

- EPS were 39 cents per share compared to 28 cents per share last year.
- Earnings rose to $78.2 million from $58.2 million in the year-ago quarter.
- Revenue grew 9% to $420.7 million from $386.7 million a year ago.

Second Quarter Highlights

Non-GAAP operating margin continues to expand, 28% in the second quarter through a combination of revenue growth and expense control.

The company has held non-GAAP operating expenses flat for the last four quarters, while growing revenue in the mid single-digits.

Non-GAAP operating income increased by 39% to $119 million.

- Non-GAAP operating margin increased 6 percentage points from a year ago to 28%.
- Non-GAAP net earnings were at $96 million, an increase of 24% over fiscal 2007.
- Non-GAAP EPS was 48 cents per share, up 30% compared to the year ago period. This reflects a non-GAAP effective tax rate of 31%. These non-GAAP results reflect shares outstanding of 202 million versus 209 million in the year ago period.

GAAP operating income was $91 million compared to $60 million in the year ago period.

- GAAP net income and fully EPS were $78 million and 39 cents per share compared to $58 million and 28 cents per share in the second quarter of fiscal 2007.
- Total bookings of $341 million were up 8% compared to the year ago period.
- License, maintenance, and professional services booking were all up.

- With license bookings up 7%, maintenance bookings were up 7% and professional services bookings were up 20% as compared to the year ago period.
- Total bookings on a trailing 12-month basis were $1.8 billion, up 16% compared to the year ago period.
- The weighted average contract length for total bookings on a trailing 12-month basis was 2.4 years compared to 2.2 years for the year ago period.
- On an annualized basis, trailing 12-month bookings were $742 million, up 6% compared to the year ago period.

Total ESM license bookings were $85 million, up 4% over the year ago period. Within ESM business unit, license bookings of core BSM product group were up 16%.

Partially offsetting the impact of higher core BSM license bookings was the decline in the distributed systems management license bookings. Like the MSM business unit, DSM performance can be skewed by large transactions and the timing of contract renewals. Over the first half of the year, DSM license bookings were up 16%.

The MSM business unit is best evaluated on the basis of total and annualized bookings over the trailing 12 months. Total MSM bookings on a trailing 12-month basis were $770 million with an average contract length of 3.1 years. In the year ago period, total MSM bookings were $642 million with an average contract length of 2.9 years. Normalizing for contract length, total annualized MSM bookings for the trailing 12 months were $245 million, an 11% increase.

Total revenues were $421 million, a 9% increase compared to fiscal 2007 second quarter.

License revenues were $151 million, an increase of 9% compared to a year ago. The percentage of licensed bookings that was deferred was 45%. This is up 7 percentage points from the 38% ratable rate in the second quarter of fiscal 2007, but its down from the 58% ratable rate in the first quarter of fiscal 2008. This lower ratable rate was driven from a lower volume of term transactions in the second quarter relative to the first quarter.

- From a geographical perspective, revenue growth was balanced with the US increasing 7% and international increasing 11%.
- Maintenance revenues were $241 million, an increase of 6% compared to a year ago and a $6 million increase on a sequential basis.
- Professional services revenues were $29 million, up 31% compared to $22 million in the year ago period.
- The company has spent a lot of time re-training and improving the skills of consulting organization to support BSM strategy and this effort is beginning to show progress.

Non-GAAP operating expenses were $302 million, flat on a year-over-year basis.