Tibco Software (TIBX)

Q1 2011 Earnings Call

March 29, 2011 4:30 pm ET


Sydney Carey - Chief Financial Officer and Executive Vice President

Murray Rode - Chief Operating Officer and Executive Vice President

Vivek Ranadivé - Chairman, Chief Executive Officer and President


Derek Bingham - Goldman Sachs Group Inc.

Yun Kim - Gleacher & Company, Inc.

John DiFucci - JP Morgan Chase & Co

James Wood - Susquehanna Financial Group, LLLP

Brad Zelnick - Macquarie Research

Tim Klasell - Stifel, Nicolaus & Co., Inc.

Mark Murphy - Piper Jaffray Companies

Nabil Elsheshai - Pacific Crest Securities, Inc.

Steven Koenig - Longbow Research LLC

Kash Rangan - BofA Merrill Lynch



Good afternoon, ladies and gentlemen. I'm Casey. Welcome to TIBCO's First Quarter 2011 Conference Call. [Operator Instructions] 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 1-800-642-1687 from the U.S. or (706) 645-9291 internationally. The confirmation code is 48596709.

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 revenue, 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.

The 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 conditions 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 presenters on the call are Vivek Ranadivé, 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 Ranadivé

Hello. Thanks, Casey, and thank you all for joining us today. I will begin the call with a summary and remarks on our first quarter performance. I will next provide an update on the broader market environment we're seeing and pursuing, then I will turn it over to Murray and Sydney to discuss further details.

We started 2011 in our strongest position ever, as our Q1 results will attest. Total revenue grew by 20% over the first quarter of 2010 for a Q1 record of $185.3 million. License revenue grew by 29%, its fastest pace in a decade for a Q1, to $70.1 million. Non-GAAP operating margins came in at 21.9%, a 230 basis point expansion over the same period a year ago, and non-GAAP EPS at $0.16 grew by 33% over the first quarter of last year. Once again, we exceeded our guidance ranges for revenue and profitability.

Last year, I spoke of the tipping point in our business and a new era in Enterprise computing as companies shift from transactional or database-centric architectures to event-driven architectures built around the service parts. This new era has arrived, and the 21st century has begun. Whereas content was king in the 20th century, context will be king in the 21st century.

Context is the ability to bridge fast occurrences with current behavior and understand what is happening at a moment in time. And every one of our prospects and customers today are looking for context as they seek to acquire new customers, deepen their relationships with existing ones and grow and manage their business. For example, we have retailers who want to offer the right promotion to a customer before they leave the shopping aisle. We have utilities that wish to detect a power outage before it actually occurs, and we have banks that want to prevent fraud before it happens.

To acquire this important context, however, businesses must fully leverage the Internet, exploit mobility, operate in real time and harness the resulting explosion in data volumes. TIBCO's middleware platform is uniquely qualified to scale to the needs of business today, provide context from streams of events and provide the connections such that the right information can get to the right person or place at the right time. Customers, old and new, are increasingly appreciating the power of our platform and building a whole range of 21st century context-aware applications.

This first quarter, we had another Central U.S. oil and gas company adopt our platform as the digital spinal cord to accelerate their smart grid initiative which will drive customer interaction and communication for over 800,000 customers system-wide. A new gaming customer came to TIBCO with bidirectional data flow and to capture and correlate real-time consumer behavior, with static information captured over a customer's life, in a channel deal where our software will be embedded as part of a larger solution. A bank, whose mission was to define 21st century customer service and initially chose to work with IBM, called us back two months later to explain that the project was getting too complicated, too complex and too costly. We signed a seven-figure deal one month later.

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