This is a summary of the second quarter fiscal 2009 earnings call conducted by CA, Inc. (CA) on October 29, 2008.
Management:
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Chief Executive Officer: John Swainson
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Chief Financial Officer: Nancy Cooper
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VP of Investor Relations: Joseph Doncheski
Key Investor Issues:
- The company earned $209 million, or 39 cents per share, up from $137 million, or 26 cents per share, in the same period a year ago.
- Revenue rose 4% to $1.11 billion from $1.07 billion.
- The quarter''s expenses before interest and income taxes, declined 6% to $777 million.
- Total bookings increased 44% to $1.50 billion.
Second Quarter Highlights:
Total bookings were strong up 44% over the same period last year.
The booking strength was led by the signing of a number of large deals. Several of these deals were five year renewals and that helped increase the average contract length. In this environment, the company will gladly sign long term deals if they make economic sense and particularly if they promote strong long term relationships. However, in general the company still targets contract lengths in the three year range.
The company also saw considerable growth in new mainframe capacity and maintenance.
The mainframe business continues to perform well as more companies are adding capacity due to the momentum behind IBM’s release of the z10. Sales of infrastructure management solution based on the Enterprise IT Management strategy excelled in the quarter. In this area, CA saw increased demand for the eHealth and SPECTRUM and service management offering. The company also saw very strong demand for its application performance management solutions and the IT government solution.
The revenue was up 4% from a year ago.
Non-GAAP earnings per share grew year-over-year at 28%, driven in part by the long term focus on business process improvement and expense management. Cash flow from operations was $218 million.
In June the company planned a major products launch in October.
A few weeks ago the company had that announcement which featured 10 new and upgraded products, including CA''s data center automation manager, the exciting new offering that helps customers automate the dynamic provisioning of physical and virtual IT environments. This was the second major launch this year and it featured CA developed products that help customers adapt to change, capitalize on new opportunities and control costs. The announcement represented the next step forward in the enterprise IT management strategy.
NETCOM, which is the network enterprise technology command is responsible for communications capabilities across the US Army.
This organization, which calls itself the Voice of the Army, turned to CA to standardize its infrastructure management tools. NETCOMs needed to consolidate its IT infrastructure, standardize on a common solution and refresh its capabilities to fulfill current and future responsibility. Working together with the NETCOM IT team, the company created an end-to-end management infrastructure using CAs Spectrum and E-Health solutions, to keep Army’s critical networks available and reliable and at the same time to reduce their operational costs considerably.
Intuit who are the premier provider of software for tax preparation in the United States needed a solution to provide end-to-end monitoring of its IT infrastructure to ensure that its systems to ensure that its systems don''t go down and they turned to CA.
Total bookings which increased 44% to 1.5 billion, compared to the year-ago period.
The weighted average life of subscription and maintenance bookings was 4.14 years as compared to 2.97 years in the prior year period. When annualized, the year-over-year increase in subscription and maintenance bookings for the quarter was 11%, or 8% on a constant currency basis. North America and EMEA drove booking strength in the quarter. The company saw continued momentum in its mainframe business from IBM''s introduction of the z10 with bookings of mainframe capacity showing strong growth.
The company saw growth in new license sales in both the mainframe and distributed businesses.
While this can fluctuate period to period, the company is seeing traction in its ability to sell new licenses to new and existing customers.
