TIBCO Software Inc. (TIBX)

F4Q2010 Earnings Call Transcript

December 21, 2010 4:30 pm ET

Executives

Vivek Ranadive – Chairman and CEO

Murray Rode – COO and EVP

Sydney Carey – CFO and EVP

Analysts

Derrick Wood – Susquehanna

John DiFucci – JP Morgan

Derek Bingham – Goldman Sachs

Nabil Elsheshai – Pacific Crest Securities

Yun Kim – Gleacher & Company

Tim Klasell – Stifel Nicolaus

Brad Zelnick – Macquarie Capital

Steve Koenig – Longbow Research

Presentation

Operator

Good afternoon, ladies and gentlemen. I am Christine. Welcome to TIBCO’s fourth quarter 2010 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. You can also listen to this call via the internet at www.tibco.com.

Today’s call is being recorded and will be available for playback from TIBCO Software’s website at www.tibco.com. In addition, replay will be available through Intercall for one month following today’s call by dialing 800-642-1687 from the U.S. or 706-645-9291 internationally. The pass code for both the call and the replay is 29493957.

The following conference call includes forward-looking statements, which represent TIBCO Software’s outlook and guidance only as of today, and which are subject to risks and uncertainties. These forward-looking statements include, but are not limited to, forecasts of revenues, operating margins, operating expenses, outstanding shares, and earnings per share for future periods.

Our actual results could differ materially from those projected in such forward-looking statements. Additional information regarding the factors that could cause actual results to differ materially are discussed in the risk factors section of TIBCO’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. TIBCO assumes no obligation to update the forward-looking statements included in this call, whether as a result of new developments or otherwise.

This conference call also includes certain financial information that has not been prepared in accordance with Generally Accepted Accounting Principles, as we believe that such information is useful for understanding our financial condition and results of operations. For a presentation of the most directly comparable financial measures calculated in accordance with GAAP and a reconciliation of the differences between the non-GAAP and GAAP financial information, please see our website at www.tibco.com.

The participants on this call are Vivek Ranadive, TIBCO’s Chairman and CEO; Murray Rode, Chief Operating Officer; and Sydney Carey, Chief Financial Officer.

I’d now like to turn the call over to Vivek.

Vivek Ranadive

Hello, Christine, and thank you all for joining us today. I am joining today’s call myself from outside. Before I start, I would like to give a shout out [ph] to my dad, the captain, who never missed a call. He passed away a couple of months ago, but I know that wherever he is he’s still dialed in. So, I love you dad.

On today’s call, I will break my comments into 3 parts. First, I will briefly review our Q4 and 2010 highlights. Second, I will comment on the very strong market position we find ourselves in, and third, I will share some thoughts on where our focus lies has we enter the New Year. I will then turn it over to Murray and Sydney to discuss the details.

Q4 provided a strong and fitting close to what has been an excellent year for TIBCO. I have spoken previously about the tipping point our business hit over the course of the past year, and I believe the numbers for both Q4 and the full-year support this notion. In Q4, we once again exceeded expectations for growth and profitability.

Total revenue grew by 23% over Q4 of 2009 and came in at 241 million. License revenue grew by 21% and came in at 115 million. Non-GAAP operating margins were 31.6%, and non-GAAP EPS was $0.31. Total revenue grew 21% to 754 million. License revenue grew 22% to 302 million.

Non-GAAP operating profit grew 36% to 190 million for an implied operating margin surpassing 25%, and non-GAAP EPS came in at $0.76, a full 38% higher than last year. Cash flow from operations grew 29% to 149 million, and we spent more than 200 million during the year repurchasing 15 million of our shares. But we are only just getting started.

As we look forward, there are three great forces shaping the enterprise software landscape, and TIBCO sits at the nexus of all three. First, there is the shift from transactional systems centered around the database event-driven systems that incorporate in-memory data management and our base on distributed middleware. Second, there is the explosion in mobility, which is helping create a mass of events, requiring the new architectures mentioned in my first point. And third is the emergence of the cloud.

The cloud is, of course, about utility computing, but it is also bringing a new deployment model to the enterprise and creating a whole new set of demands and opportunities for middleware like TIBCO’s. Just as on-premise infrastructure software and middleware has garnered a larger share of spend over the past 10 years, Cloud infrastructure, such as what we provide, will see a similar trend.

The ability to harness these three forces of event-driven, Cloud-based, and mobile computing through a common infrastructure will allow companies to address 21 st-century problems and opportunities, and give our customers what I call the two second advantage. I talk about this in my upcoming book of the same name with the simple premise being that it is better to have a little bit of the right information just a little bit beforehand, rather than all of the information in the world after the facts.

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