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CA, Inc. (CA)

F1Q10 (Qtr End 06/30/09) Earnings Call Transcript

July 23, 2009 5:00 pm ET

Executives

Kelsey Doherty – SVP of IR

John Swainson – CEO

Nancy Cooper – EVP and CFO

Analysts

John DiFucci – JP Morgan

Todd Raker – Deutsche Bank

Gregory Shaw – Jefferies

Richard Sherman – MKM Partners

Walter Pritchard – Cowen

Stephanie Witter – Goldman Sachs

Michael Turits – Raymond James

Phil Winslow – Credit Suisse

Robert Breza – RBC Capital Markets

Presentation

Operator

Ladies and gentlemen, good day and welcome to the CA First Quarter 2010 conference call. Just a quick note that today’s conference is being recorded. At this time, I would like to turn the conference over to Kelsey Doherty. Please go ahead.

Kelsey Doherty

Thank you and good afternoon everyone. Welcome to CA’s First Quarter 2010 Earnings Call. I am Kelsey Doherty, Senior Vice President of Investor Relations for CA. Joining me today are John Swainson, our Chief Executive Officer, and Nancy Cooper, our Chief Financial Officer.

John will open this afternoon’s call with a high-level review of the quarter and a strategic discussion. Nancy will provide more detail regarding first quarter results and provide updated guidance. We then will open the call up for questions before John returns with some closing comments.

As a reminder, this conference call is being broadcast on Thursday, July 23, 2009, over the phone and the Internet to all interested parties. This information shared in the call is effective as of today’s date and will not be updated. All content is the property of CA and is protected by U.S. and international copyright law and may not be reproduced, transcribed, or produced in any way without the expressed written consent of CA. We consider your continued participation in this call as consent to our recording.

During this call, non-GAAP financial measures will be discussed. Reconciliations to the most directly comparable GAAP financial measures are included in the earnings release which was filed on Form 8-K earlier today as well as in our supplemental earnings materials, all of which are available on our website at investor.ca.com

Today's discussion will include forward-looking statements subject to risks and uncertainties, and actual results could differ materially from these forward-looking statements. Please refer to our SEC filings for a detailed discussion of potential risks.

And with that, I’ll turn the call over to John Swainson.

John Swainson

Thanks, Kelsey. Good afternoon and thank you for joining us.

Before I start, I would like to take the opportunity to welcome Kelsey to CA. Many of you already know her from her role as Head of Investor Relations at McAfee. She has more than 15 years of experience in Investor Relations and we are very pleased to have her on the CA team.

So, let us begin.

CA got off to a strong start in the first quarter. We are pleased that we grew revenue and both GAAP and non-GAAP earnings per share on a constant currency basis, increased operating margin on both a GAAP and non-GAAP basis and delivered cash flow from operations of $262 million, one of the highest first quarter totals ever.

Accordingly, we are updating our outlook for the full fiscal year, which we provided in May. While some of the update is due to the lessening of currency headwinds going forward, the update does underscore our continued focus on additional revenue opportunities and operating margin leverage. Nancy will give you the details in a few moments.

I am first going to talk about what we are hearing from our customers and how we are helping them get the most out of their IT infrastructures and then I will discuss where we see growth opportunities.

Over the past few months, I have talked with literally hundreds of customers around the globe. Two things continue to be clear: First, customers want to get more out of their IT infrastructure at a lower cost; and second, they want to be prepared to use IT to capture market opportunities as the economy improves.

They tell me that they have five things top of their minds: First, how do they improve productivity and do more with less? Secondly, how do they use technology to address a growing number of regulation, governance, and compliance issues? Third, how do they take advantage of new and promising technologies such as cloud computing and virtualization and integrate them with their existing infrastructure? Fourth, how do they better align their IT with their business? And last but not least, how do they achieve a rapid ROI on all their technology projects?

Let me give you a few examples of how CA is helping them achieve what we call Lean IT: Optimizing the value IT delivers to the business at the lowest possible costs.

NASDAQ, as you know, is the leading U.S. electronic stock market, which lists more than 3,200 companies and handles more than two billion share trades a day, and they approached us to help them reduce the manual labor costs and improve productivity in their IT operations. They told us they wanted to make IT more like an automated factory production line. We provided a proof of concepts centered on our CA Spectrum Automation Manager and supporting CA Services, which will substantially reduce their cost associated with running manual processes, at and the same time significantly increase productivity. I am very pleased that NASDAQ is a new customer.

MGM Mirage came to us to help them manage their IT resources and control IT costs, while at the same time, maximizing the results they delivered to the business and ultimately providing a better experience for their customers. MGM Mirage, as you know, are one of the world’s largest entertainment companies, and they have a large, complex IT infrastructure. They implemented an integrated CA Enterprise IT Management solution, which included our Service Desk, Spectrum, our Asset Management product, added along with a number of other CA products. Using these, MGM Mirage has been able to simplify the management of 100,000 IT assets, dozens of IT projects, and significantly reduced their IT problems.

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