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CA Management Discusses F2Q2011 Results Earnings Call Transcript

CA Management Discusses F2Q2011 Results Earnings Call Transcript

CA, Inc (



F2Q11 (Qtr End 9/30/10) Earnings Call

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October 21, 2010 05:00 p.m. ET


Kelsey Doherty - SVP, IR

Bill McCracken - CEO

Nancy Cooper - EVP & CFO

George Fischer - EVP, Worldwide Sales and Operations

David Dobson - EVP & Group Executive, Customer Solutions Group


Gregg Moskowitz - Cowen

Philip Rueppel - Wells Fargo

Shaul Eyal - Oppenheimer & Co

John DiFucci - JPMorgan

Michael Turits - Raymond James

Brian Thackray - Deutsche Bank

Matt Hedberg - RBC Capital Markets

Derek Bingham - Goldman Sachs



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» CA, Inc. F1Q11 (Qtr End 06/30/10) Earnings Call Transcript
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» CA, Inc. F2Q10 (Qtr End 09/30/09) Earnings Call Transcript

Good day everyone and welcome to the CA Technologies Second Quarter 2011 Earnings Conference Call. Today's call is being recorded. At this time I would like to turn the call over to Ms. Kelsey Doherty, Senior Vice President of Investor Relations. Please go ahead.

Kelsey Doherty

Thank you and good afternoon everyone. Welcome to CA Technology's second quarter fiscal 2011 earnings call. Joining me today are Bill McCracken, our Chief Executive Officer and Nancy Cooper, our Chief Financial Officer.

Also on the call and available to answer your questions are David Dobson, our Executive Vice President and Group Executives, Customer Solutions Group and George Fischer, Executive Vice President and Group Executive, Worldwide Sales in Operations.

Bill will open the call with an overview of the quarter. Then, Nancy will review our second quarter results and affirm full year guidance. Bill will return to conclude and then we will take your questions. As a reminder, this conference call is being broadcast on Thursday, October 21


, 2010 over the telephone and the Internet.

The information shared on this call is effective as of today's date and will not be updated. All content is the property of CA Technologies and is protected by U.S. and International Copyright Law and may not be reproduced or transcribed in any way without the expressed written consent of CA Technologies. We consider your continued participation in this call as consent to our recording.

During this call, non-GAAP financial measures will be discussed. Please note as we told you on the last earnings call, all non-GAAP operating measures will be reported excluding share based compensation expense on an ongoing basis. Prior period non-GAAP metrics also reflect this change for comparative purposes. In addition, guidance provided this afternoon reflects the affect of AFC 260-10-45 which became effective in 2009.

For further information please reference footnote six and table five in the press release.

Reconciliations to the both directly comparable GAAP financial measures are included in the earnings release which was filed on form 8-K earlier today as well as in our supplemental earnings materials, all of which are available on our website at

Today's discussion will include forward-looking statements subject to risks and uncertainties and actual results could differ materially from these forward-looking statements. Please refer to our SEC filings for a detailed discussion of potential risks. So with that, let me turn the call over to Bill.

Bill McCracken

Thanks Kelsey and good afternoon to everyone and thanks for joining us. I am pleased to announce that CA Technologies had grown at second quarter. These results demonstrate that we are making progress. Our strategy to manage and secure physical, virtual and cloud environments is the right strategy and the changes we made to our organization and our focus on rigorous execution are beginning to pay off.

Year-over-year revenue grew 5% in constant currency and which is at the high end of our revenue expectations. Non-GAAP operating margin was 35% reflecting the planned delusion from acquisitions they were closed during fiscal 2010. Even with these investments non-GAAP EPS was up 10% in constant currency.

Cash flow from operations was up 11% in constant currency and amid our expectations. And finally both current and total revenue backlog grew, a good indicator for me of our future revenue growth.

Let me give you a little insight about our sales performance within the business book during the quarter. Total new product sales and capacity grew at high single digits year-over-year. Within this, our distributed products delivered the strongest new sales performance in 10 quarters. Even more satisfying is the breadth of demand across our portfolio.

Project and portfolio management and identity and access management, both grew new sales of products double digits with service insurance tripling year-over-year. It was a record quarter for security, specifically identity and access management.

We were also pleased that we were able to achieve this new sales growth, despite a significant decrease in mainframe capacity sales. This was due to the nature and mix of our renewed portfolio in the quarter which was weighted toward distributed.

Finally, given the lumpy timing of our renewals, I look to our renewal yield to judge the health of our portfolio. Our renewal yield this quarter was in the low 90's consistent with previous quarters.

As we have said over the past few quarters the renewal portfolio increases in the second half of fiscal 2011 compared to the first half and we expect momentum in mainframe to build as well. This combined with our strong first half performance gives us confidence in our ability to achieve our full year outlook which we are re affirming this afternoon.

At the end of last quarters earnings call I highlighted our operational priorities. They continue to be. Increasing the number of free standing stales with new products, responding to customer demand in both geographies and emerging enterprises and continuing to alight the organization to be more responsive to customers needs and emerging trends.

I believe these priorities will help us unlock the value of CA Technologies. And while we are not yet done we did make very good progress against these objectives during the quarter.

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