TIBCO Software Management Discusses Q2 2012 Results - Earnings Call Transcript

TIBCO Software (TIBX)

Q2 2012 Earnings Call

June 28, 2012 4:30 pm ET

Executives

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

Murray D. Rode - Chief Operating Officer

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

Analysts

Brent Thill - UBS Investment Bank, Research Division

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

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

Brad A. Zelnick - Macquarie Research

Kash G. Rangan - BofA Merrill Lynch, Research Division

Jason Maynard - Wells Fargo Securities, LLC, Research Division

Karl Keirstead - BMO Capital Markets U.S.

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

Jesse Hulsing - Pacific Crest Securities, Inc., Research Division

Matthew J. Coss - Piper Jaffray Companies, Research Division

Presentation

Operator

Good afternoon, ladies and gentlemen. I'm Jamaria. Welcome to TIBCO's Second Quarter 2012 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) 585-8367 or (404) 537-3406 internationally. The confirmation code is 88581564.

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 risk 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 Form 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 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 Y. Ranadivé

Thanks. Hello, everyone, for joining us today. I'll begin with a brief discussion of our Q2 performance and provide some remarks on the broader environment we're seeing before turning it over to Murray and Sydney to discuss details.

We delivered another quarter of strong growth in Q2, with total revenue increasing 20% and license revenue increasing 17%, respectively on a constant currency basis. Sydney will describe the currency effects in further detail later in the call.

As reported, total revenue came in at $247 million. License revenue was $93 million. Non-GAAP operating margins were 25%, and our non-GAAP EPS was $0.26. This now marks 4 straight years, 16 consecutive quarters, where we have beaten consensus EPS estimates. This will also be the 10th consecutive quarter of growing EPS by more than 20% over the prior year.

It was a busy quarter for TIBCO. We met or exceeded all of our guidance metrics. We acquired a great company and exciting technology in LogLogic. We signed some terrific new logos and partners. We shored up our balance sheet and domestic cash. We held a number of regional marketing events that saw truly impressive attendance and demand. A lot of people are wondering what are we seeing in the broader environment, and how is it that we are continuing to grow at 20%. Here is my perspective.

Firstly, any volatility in this time should be sharply contrasted with 2008 and 2009. We do not see what was then a shutdown in spending. We do not see big deals drying up. In fact, companies are willing to fund large technology buys when the value is clearly demonstrable. Ironically, I might argue that it's actually easier to justify a big deal than a small deal in the current environment because the big one can actually move the needle on the company's performance.

Secondly, marketing is really emerging as a larger and larger influence in corporate budgets, and CMOs are making more important technology decisions. I believe this is because companies are looking to marketing to figure out how to expand, how to engage and how to monetize the social network that is inherent in every company. And this involves more than just setting up a Facebook page. If a company really wants to see the exponential value of its social network, it needs the platform, the application and the tools that enable it to understand and exploit all the information flows, that is the big data that makes up that social network. This plays right into TIBCO's strengths.

And finally, the demand for our event-driven infrastructure applications has never been greater. While the 20th century players are tied to the database and most of the smaller players are one-product companies focused only on one segment, TIBCO offers a powerful, integrated assembly of pearls, everything needed for delivering event-driven application and the two-second advantage.

Consider just one of those pearls: TIBCO Loyalty Lab, our cloud-based loyalty platform. Today, Loyalty Lab has 260 million loyalty members under management. This is up 120% in the past 12 months and up 40 million in Q2 alone. In the past year, we added 8 different retail categories, including sports retail, beauty, hardware, pet supplies, travel, restaurant retail, and this quarter, kiosks and coffee. Now by adding other pearls such as Spotfire, BusinessEvents and master data management to TIBCO Loyalty Lab, we're working to deliver next-generation real-time intelligence platforms for some of the fastest-growing retailers in the country.

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