TIBCO Software, (TIBX)

Q3 2011 Earnings Call, Sep 22, 2011

September 22, 2011 4:30 pm ET

Executives

Sydney L. Carey - Chief Financial Officer and Executive Vice President

Vivek Y. Ranadivé - Chairman, Chief Executive Officer and President

Murray Rode - Chief Operating Officer and Executive Vice President

Analysts

James Derrick Wood - Susquehanna Financial Group, LLLP, Research Division

Nabil Elsheshai - Pacific Crest Securities, Inc., Research Division

Mark R. Murphy - Piper Jaffray Companies, Research Division

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

Kash G. Rangan - BofA Merrill Lynch, Research Division

John S. DiFucci - JP Morgan Chase & Co, Research Division

Steven R. Koenig - Longbow Research LLC

Brad A. Zelnick - Macquarie Research

Presentation

Operator

Good afternoon, ladies and gentlemen. I'm Kristen. Welcome to TIBCO's Third Quarter 2011 Conference Call. [Operator Instructions] 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 confirmation code is 96124467. 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 operation. For a presentation of the most directly comparable financial measures calculated in accordance with GAAP and a reconciliation of the differences between non-GAAP and GAAP financial information, please see our website at www.tibco.com. The presenters on this call are Vivek Ranadivé, TIBCO's Chairman and CEO; Murray Rode, Chief Operating Officer; and Sydney Carey, Chief Financial Officer. I would now like to turn the call over to Vivek.

Vivek Y. Ranadivé

Well, thanks, Kristen, and hello, everyone, for joining us today. I'll begin the call with summary remarks on our third quarter performance and comment on the environment at large before turning it over to Murray and Sydney to will discuss the details.

Once again, we delivered a strong performance in Q3, with healthy growth in both revenue and profits. For the third quarter, total revenue came in at $229 million, up 24%. License revenue came in at $91 million, up 29%. Non-GAAP operating profit grew by 28%. Operating margins expanded 80 basis points to 25.2%, and non-GAAP fundings per share came in at $0.23, growing, once again, by more than 30% over the same quarter last year.

I've spoken to you before about the tipping point our business has hit, and the evidence continues to mount. This past quarter marked the seventh consecutive quarter we've grown license revenue by more than 20%, the seventh consecutive quarter we've grown earnings per share by more than 30% and the 13th consecutive quarter where we've beaten consensus EPS estimates.

Once more, our vision of the Two-Second Advantage is really hitting home. The idea simply is that it's far more valuable to have a little bit of the right information just a little bit beforehand than all the information in the world after the fact.

Certainly, it's true that these are uncertain times we live in and lots of questions abound. Government struggle to do more with less. Banks continue to grapple with managing risk, and businesses of all types complete ferociously to build loyalty from a savvy retail consumer. Markets will rise. Markets will fall. But some changes are unstoppable. The shift from desktop to lapstops [laptops], the shift from landlines to cell phones, the shift from transactions to events. A transaction is an agreement between parties, whereas an event is simply when something happens.

The threats and opportunities of hard time require a software platform that is engineered from the ground up to operate in realtime and to handle the volume and velocity of events. Such a platform must do 5 things. One, it must detect relevant patterns and correlations amidst a wave of big data and events. Two, it must provide powerful analytic capabilities, so that anyone can interpret what is happening when it counts. Three, it must have the automation ability to initiate corrective action and support flexible composite application. Four, it must scale elastically on-premise and off. And five, it must provide a natural means for collaboration between humans and machines. Only TIBCO has a complete and integrated platform to detect, harness and make sense of the threats and opportunities that lie in events.

So as it turns out, if you're actually selling something that people want today, you are in pretty good shape. This is a time and this is a market of separation, haves from have-nots, 21st versus the 20th century, winners versus losers. While the old companies will fight to hold on to their dying businesses, there's no denying the underlying shifts that compel this world and our opportunity forward. Namely, the explosion in data volumes, rise of the cloud, and push not merely for Software as a Service, but software as a self-service.

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