This summary is based on the second quarter fiscal 2009 earnings call conducted by Oracle Corp. (ORCL) on December 18, 2008.
Management:
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CEO: Larry Ellison
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EVP & CFO: Jeff Epstein
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President: Safra Catz
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President: Charles Phillips
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Investor Relations: Roy Lobo
Key Investors Issues
- Revenues were $5.7 billion, up 6% from $5.3 billion in the prior year.
- Earnings were $1.27 billion or 25 cents a share, down 1% from $1.3 billion or 25 cents a share in 2007.
- The firm bought back 108 million shares for $1.8 billion.
Half Year Highlights:
- Revenues were up 11% to $10.9 billion.
- Net income increased by 11% to $2.3 billion or 46 cents a share from $2.1 billion or 42 cents a share.
Second Quarter Highlights
Total revenues were $5.7 billion, up 6% from $5.3 billion in the prior year due to growth in license updates and product support.
- The currency impact reduced new license revenues by 8%, total revenues by 7%, and earnings per share by 9% or 3 cents per share.
- New software license revenues were $1.6 billion, up 5% in constant currency and down 3% in US dollars as EMEA grew 7%, the Americas grew 3%, and Asia grew 5%.
- Technology new license revenues were $1.2 billion, up 12% in constant currency and up 4% in US dollars, EMEA grew 16%, Americas grew 10%, and Asia grew 8%.
- BEA contributed approximately $127 million in new license revenues this quarter.
Applications new license revenues were $469 million, down 9% in constant currency and down 15% in US dollars, EMEA was down 16%, Americas were down 6%, and Asia was down 2%.
- Software license updates and product support revenues were $2.9 billion, up 21% in constant currency and up 15% in US dollars.
- Renewal rates continue to be very high because customers value the benefits they receive from updates and support fueled by the $3 billion annual investment in research and development.
- Services revenues were $1.1 billion up 5% in constant currency, and down 2% in US dollars.
- On demand revenues grew 19%, consulting grew 4%, and education fell 3%.
Operating income was $2.6 billion, up 18% in US dollars and operating margin grew by 460 basis points in US dollars to 46%.
- The firm increased stock repurchase activities quarter buying 108 million shares at an average price of $17.14 for a total of $1.8 billion.
- Earnings were $1.27 billion or 25 cents a share, down 1% from $1.3 billion or 25 cents a share, due to the negative impact of the strengthening dollar.
- The firm had $10.6 billion in cash and investments after the $1.8 billion stock buyback. - Day sales outstanding improved from 55 days last year to 52 days this year as the firm continued to focus on the quality of receivables and the effectiveness of collection efforts.
Fiscal 2009 Outlook:
- The firm expects new software license revenues to grow a negative 2% to plus 8% in constant currency and minus 10% to flat assuming today’s rates.
- It expects total revenues to grow 8% to 11% in constant currency and 1% to 4% assuming today’s rates.
- Earnings per share are expected to be 34 cents to 36 cents in constant currency.
Product Areas:
- Middleware sales continue to grow very strongly even in this economic climate, even after correcting for the strengthening of the dollar.
- In sales on demand, the primary competitor there is salesforce.com and this quarter was conspicuous and a series of competitive wins against salesforce.com.
- The recently introduced Oracle database machine is the most successful introduction of a new product in Oracle’s history so there’s huge interest out there and quantified by an enormous pipeline which it has built.
Key questions and answers from the second quarter earnings call conducted by Oracle Corp. (ORCL) on December 18, 2008.
Adam Holt (Morgan Stanley):
On the maintenance revenue, was there any change on the pricing side or any other mechanics around the maintenance stream?
