This summary is based on the third quarter fiscal 2009 earnings call conducted by Oracle Corp. (ORCL) on March 18, 2009.
Management:
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Co-President: Safra A. Catz
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Chief Executive Officer: Lawrence J. Ellison
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Co-President: Charles E. Phillips, Jr.
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Chief Financial Officer: Jeff Epstein
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Investor Relations: Roy Lobo
Key Investors Issues
- Earnings were $1.33 billion or 26 cents a share, down 1% from $1.34 billion or 26 cents a share on adverse FX effects.
- Total revenues were $5.5 billion, up 2% from $5.4 billion in 2008.
- The firm announces its first-ever quarterly dividend of $0.05 per share.
Third Quarter Highlights
The strengthening U.S. dollar further reduced international revenues, expenses, and profits when measured in U.S. dollars.
- As a result, currency movements reduced new licenses revenues by 9%, total revenues by 10%, net income by 12%, and earnings per share by 13%, or $0.05 per share, compared to Q3 of last year.
- New software license revenues were $1.5 billion, up 3% in constant currency and down 6% in U.S. dollars as EMEA grew 12%, Asia grew 1%, and the Americas were down 4%.
- Technology new license revenues were $1.1 billion, up 6% in constant currency and down 4% in U.S. dollars as EMEA grew 15%, Asia grew 1%, and the Americas were down 1%.
The BEA products, which have now been technically integrated with Oracle''s Fusion Middleware, packaged in unified suites, and are sold off the same price list, accounted for $140.0 million of new license revenues.
- Applications new license revenues were $396.0 million, down 4% in constant currency and down 12% in U.S. dollars as EMEA grew 2%, Asia fell 2%, and the Americas were down 8%.
- Software license updates and product support revenues were $3.0 billion, up 21% in constant currency and up 12% in U.S. dollars.
- These revenues are annual fees that customers pay to receive updated versions of, and enhancements to, their existing products without having to buy the software again.
- On a trailing four-quarter basis software license updates and product support revenues totaled $11.8 billion, up 18% over the prior comparable period.
Services revenues were $1.0 billion, up 2% in constant currency and down 8% in U.S. dollars.
- Total revenues were $5.5 billion, up 2% from $5.4 billion in 2008.
- Operating income was $2.6 billion, up 26% in constant currency and up 15% in U.S. dollars.
- Non-GAAP operating margin grew by 510 basis points to 46.4% in U.S. dollars.
- The firm repurchased 86.0 million shares at an average price of $16.82 per share for a total of $1.4 billion.
Earnings were $1.33 billion or 26 cents a share, down 1% from $1.34 billion or 26 cents a share on adverse FX effects.
- The firm had $11.3 billion in cash and investments and sales outstanding improved from 54 days last year to 49 days this year.
- Oracle generated a record $8.0 billion in free cash flow over the last four quarters, growing 14% over the same period last year.
- The firm announces its first-ever quarterly dividend of $0.05 per share.
Operational Insights:
- The firm has refreshed the filling messages around cost reduction and consolidation and the elimination of costly customizations.
- It is more focused on add applications and add-on options to add value to existing deployments.
- This includes things like Agile, Demantra, G-Log, sourcing applications, EPM, which is our peer unit, and BI on the tool side of it.
- The ability to get people to upgrade to the latest releases of applications is setting the stage to upsell to recent add-on modules.
On the consulting side, Oracle has adjusted consulting hiring on projects to keep utilization and margins high by load-balancing with contractors and the integrators instead of hiring for future products ahead of the deal.
- Bank of America did a very large deal to purchase many components across the text dat, and because they wanted to lower their costs and consolidate around Oracle’sdatabase and the Middleware stack.
- There were also campus-wide license for RAC and database at New York University.
- New release of the database 11g release 2 should happen in the first quarter of 2010 and the key feature enhancement is an enhancement to rule application clusters a RAC.
- Some recent partner deployments of our Middleware are JP Morgan Chase, CSC at Wells Fargo, Deloitte at the University of North Carolina, IBM Global Services at Navistar.
The firm also has a major new release of the entire Middleware suite, using Middleware 11g which is the integration of all the BEA products, common metadata, upgrading components.
- Some recent wins on the platform include Smucker’s, Weight Watchers.
- At the application server level San Diego County, Verizon, Enterprise Performance Management, the Gap, Home Depot, Adobe Laboratories, Federal Reserve Board, CVS Pharmacy.
- Good wins in content management at the University of Arkansas, and identity and access management at Standard Life and Liberty University.
- The firm had a new release of Application Integration Architecture Version 2.3 in January.
Fiscal 2009 Outlook:
