BMC Software (BMC)

Q3 2012 Earnings Call

February 01, 2012 5:00 pm ET

Executives

Derrick Vializ - Vice President of Investor Relations

Robert E. Beauchamp - Chairman, Chief Executive Officer and President

Stephen B. Solcher - Chief Financial officer and Senior Vice President

Analysts

Aaron Schwartz - Jefferies & Company, Inc., Research Division

Gregg Moskowitz - Cowen and Company, LLC, Research Division

Philip Winslow - Crédit Suisse AG, Research Division

Walter H. Pritchard - Citigroup Inc, Research Division

Philip C. Rueppel - Wells Fargo Securities, LLC, Research Division

Michael Turits - Raymond James & Associates, Inc., Research Division

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

Matthew Hedberg - RBC Capital Markets, LLC, Research Division

Presentation

Operator

Good day, everyone. Welcome to today's BMC Software Third Quarter Fiscal Year 2012 Earning Results Conference. Today's call is being recorded. At this time for opening remarks, I'd like to turn things over to Mr. Derrick Vializ. Please go ahead, sir.

Derrick Vializ

Good afternoon, everyone. I'm Derrick 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 third quarter fiscal 2012 performance of both our company and business units and update you on recent initiatives. After that, Steve Solcher, our CFO, will provide additional financial and operational details. Bob will then discuss and provide an update to our expectations for fiscal 2012 before we open the call to questions.

These prepared comments were previously recorded. This call is being webcast and a 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 you that statements in this discussion, including statements made during the question-and-answer session regarding BMC's future financial and operating results, particularly statements and views regarding the remainder of fiscal 2012, the development of and demand for BMC's products, BMC's operating strategies, acquisitions and other statements that are not statements of historical fact 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 earnings 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 at investors.bmc.com.

Now I will turn the call over to Bob.

Robert E. Beauchamp

Good afternoon, everyone. Before I discuss the results during the quarter, let me begin by saying BMC is well-positioned with the right strategy and the right products in attractive growth markets. Our strong position is validated by significant customer wins where large enterprises are standardizing on BMC solutions: by growing demand for our solutions in high growth areas, such as cloud management and Software-as-a-Service; by our strong partnerships with industry leaders, including 2 recent announcements. And we believe our position will be further strengthened by our pending acquisition of Numara, which will broaden our portfolio and expand our reach into new growth markets.

Let me now elaborate on each of these areas beginning with our ongoing success with major BSM implementations. Today, our solutions are at the heart of IT transformation efforts in the world's largest enterprises. I was visiting with the CIO of one of the world's largest energy companies in our Executive Briefing Center recently. And they described our BSM Solutions as a cornerstone of their IT transformation program. They envision a 10-plus year platform commitment to BMC. The head of infrastructure of one of the world's largest financial institutions after a significant transaction this quarter considers the automation initiatives that our solution support as fundamental to delivery of all their services to all their clients. The CTO of a Fortune 500 leading pharmaceutical company, who recently standardized on our BSM portfolio across their worldwide IT environment, confirmed our BSM Solutions are core to their technology and business transformation efforts. We hear from our customers every day about how our solutions are driving the strategic long-term transformation of IT and contributing to new strategic business models.

The ongoing validation confirms that we're on the right path. I noted on prior calls one of our key goals is to generate more cross-platform and multiproduct wins. During the third quarter fiscal quarter, 19 of our 22 ESM license transactions over $1 million included multiple product lines. We continue to see increasing demand for our heterogeneous cloud management and SaaS solutions. During the quarter, we had dozens of cloud wins at all major geographies. New cloud wins included Atos and CSC, 2 large and global IT services in solutions providers that selected BMC's cloud management solutions as an important part of their offerings. In addition to our strong position with global outsourcers and systems integrators, we had continued success in the enterprise market. Energy giant Chevron offers a compelling example of using our cloud management solution to build and manage their private cloud environment. They will leverage our cloud management and automation capabilities to accelerate deployment of all their business services. Also, the solution reduces their IT unit cost by providing a unified business service management solution to manage all business services spanning physical, virtual and hybrid environments.

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