BMC Software, Inc. (
F2Q2011 Earnings Call Transcript
October 28, 2010 5:00 pm ET
Derrick Vializ – VP, IR
Robert Beauchamp – Chairman, CEO and President
Stephen Solcher – CFO and SVP
Walter Pritchard – Citi
Matthew Hedberg – RBC Capital Markets Corporation
Derek Bingham – Goldman Sachs Group Inc.
Kevin Buttigieg – Hapoalim Securities
Israel Hernandez – Barclays Capital, Inc.
Michael Turits – Raymond James & Associates
Yun Kim – Gleacher
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Good day, everyone and welcome to today's BMC Software second quarter fiscal year 2011 earnings results conference call. Today’s program is being recorded. At this time, for opening remarks and introductions, I'd like to turn things over to Mr. Derrick Vializ. Please go ahead, Derrick.
Good afternoon everyone. I'm Derek Vializ, Vice President of Investor Relations and I would like to thank you for joining us today. During our call Bob Beauchamp our Chairman and CEO will provide an overview of the second quarter performance of our company and business units and update you on recent initiatives.
After that, Steve Solcher our CFO will provide additional financial and operational detail. Bob will then provide an update on our expectations for fiscal 2011 before we open the call to questions.
These prepared comments were previously recorded. This call is being web cast and complete record of the call will be made and posted to our website.
In addition to today's earnings press release we have posted a presentation which we will refer to at various times during the call. Both of these documents are available on our Investor Relations website at investors.bmc.com.
Before we continue I would like to remind use of statements in this discussion including statements made during the question and answer session regarding BMC’s future financial and operational results, the development of and demand for, BMC products, BMC’s operating strategies acquisitions and other statements that are not statements of historical facts are considered forward looking statements.
These statements are subject to numerous important factors, risks and uncertainties which could cause actual results to differ from the results implied by these or any other forward looking statements. Cautionary statements relative to these forward looking statements and BMC's operating results are described in today's earnings press release and in our annual report on Form 10-K.
All of these documents are available on our website.
These forward looking statements are made as of today based on certain expectations and we undertake no obligation to update these forward looking statements.
I would also like to point out that the company's use of non-GAAP financial measures is explained in today's press release and a full reconciliation between non-GAAP measures and the corresponding GAAP measures is provided in the tables accompanying the press release and in our GAAP to non-GAAP reconciliation found on our website at investors.bmc.com.
At this time I'll turn the call over to Bob.
Thanks, Derek. Good afternoon and thank you for joining us on today’s call. BMC performed very well during the second quarter we're seeing strength across many areas of our business.
A few highlights for the quarter, total bookings grew 5% to 453 million. Licensed bookings grew 23% to 221 million. Revenue was up 9% to 502 million. Cash-flow from operations increased 36% to 127 million.
Non-GAAP diluted EPS increased 24% to $0.82 per share and our balance sheet remains strong with approximately $1.5 billion in cash and investments and 1.8 billion in deferred revenue.
That's a snapshot of our overall financial performance.
Let me turn next to provide a brief overview of ESM and MSM business units performance during the second quarter. Our ESM business had another strong quarter with robust year-over-year growth in ESM bookings across most geographic areas and all product disciplines.
ESM licensed bookings increased 32% from the year-ago quarter. We had 31 ESM transactions over $1 million in licensed bookings up over 50% from a year-ago. Over half of these largest transactions were multi-disciplined licensed transactions, major ESM wins during the second quarter included adobe by, Hospital Corporation of America, (inaudible) Corporation and Swisscom IT Services.
We're also encouraged to see continued strong growth in our mid-sized transactions. The number of ESM licensed transactions between 500,000 and $1 million increased by 22% compared to last year. This is the fifth straight quarter in which we've seen deals in this range grow by double digits.
Looking at our mainframe business, MSM bookings on a trailing 12-month basis were up 2%. MSM bookings on a trailing 12-month basis after normalizing for contract length were up 3%. During the first half of the year capacity upgrade volume was slightly below its usual pace, we may have been affected in the first half by customer anticipation by IBM’s new zEnterprise mainframes, which began shipping in September.
We expect availability of this powerful platform certainly to help our performance as we enter the second half of the year. We hope to capture this momentum and any pent up demand as you may now, we announced our support for the new IBM system last quarter.
During the quarter, we added 18 new customers to the MSM install base and expanded our relationship with 58 existing customers by adding new products to their portfolios. Some wins include the Internal Revenue Service, Korea Exchange Bank, Tom Sanofi-Aventis, Thomson Reuters and the United States Postal Service.
That provides an overview of our financial and business unit performance during the quarter.