Oracle Corporation (ORCL)

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Oracle Corporation (ORCL)

F4Q10 (Qtr End 05/31/10) Earnings Call Transcript

June 24, 2010 5:00 pm ET

Executives

Ken Bond – VP, IR

Jeff Epstein – EVP & CFO

Safra Catz – President

Larry Ellison – CEO

Charles Phillips – President

Analysts

Heather Bellini – ISI Group

Adam Holt – Morgan Stanley

John DiFucci – JPMorgan

Sarah Friar – Goldman Sachs

Joel Fishbein – Lazard Capital Markets

Phil Winslow – Credit Suisse

Operator

Good day, everyone, and welcome to the Oracle Corporation fourth quarter fiscal year 2010 conference call. As a reminder, today’s conference is being recorded. At this time, I would like to introduce Ken Bond, Vice President of Investor Relations, Oracle. Please go ahead, sir.

Ken Bond

Thank you, operator. Good afternoon, everyone, and welcome to Oracle’s fourth quarter and fiscal year 2010 earnings conference call. I am Ken Bond, Vice President, Investor Relations. And with us on the call today are Chief Executive Officer Larry Ellison; President Safra Catz; President Charles Phillips; and Chief Financial Officer Jeff Epstein.

As a reminder, today’s discussion will include forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment of what the future holds, these statements are also subject to risks and uncertainties that may cause actual results to differ materially from statement being made today. Throughout today’s discussion we will attempt to present some important factors relating to our business, which may potentially affect those forward-looking statements. We encourage you to review our most recent reports on Forms 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. As a result, we caution you against placing undue reliance on these forward-looking statements, which reflect our opinion only as of today. As a reminder, we are not obligating ourselves to revise or publicly release any revisions to these forward-looking statements in light of new information or future events.

A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplementary financial information can be viewed and downloaded from our Investor Relations website. We’ll begin the call with a few prepared remarks before taking questions from the audience. And with that, I would like to turn the call over to Jeff Epstein for his opening remarks. Jeff?

Jeff Epstein

Thank you, Ken. Good afternoon, everyone, and thank you for joining us. I will review our non-GAAP financial results focusing on U.S. dollar growth rates unless otherwise stated. This quarter, foreign exchange rates were not much of a factor in our overall results compared to our guidance of a 3% benefit to new license revenue and a 4% benefit to total revenue.

Even with the currency tailwind being less than anticipated we were at the high end of our guidance range for total revenue and we beat our guidance ranges for new license revenue and EPS with record earnings per share this quarter. On a constant dollar basis, we beat our guidance ranges for new license revenue, total revenue and earnings per share. In short, Q4 was an excellent quarter for Oracle.

In the fourth quarter, new software license revenues were $3.1 billion, up 14%. The Americas grew 28%, EMEA was down 3% in U.S. dollars, and up 4% in constant dollars. And Asia was up 15%. Our results continue to underscore the strength, balance and diversity of our business and the quarter was not dependent on usually large deals.

Technology new license revenues were $2.3 billion, up 18% as the Americas grew 34%, EMEA was down 1% in U.S. dollars and up 6% in constant dollars and Asia was up 19%. Applications new license revenues were $855 million, up 6% from last year. The Americas grew 16%, EMEA was down 7%, and Asia was up 2%.

Our software license updates and product support revenues were $3.5 billion, up 13% from last year. Customer support attachment and renewal rates continue at near record levels.

Revenues from our hardware systems products were $1.2 billion, while revenues from hardware system support were $688 million. Our services revenues were $1.1 billion, up 4% as we continue to manage this business to profitable margins. Our total revenues were $9.6 billion, up 40% from last year.

Non-GAAP operating income was $4.4 billion, up 26%. The non-GAAP operating margin was 46% for the quarter. Our tax rate for the fourth quarter was 27.3% as we saw some one-time benefits to our tax rate.

Our Q4 non-GAAP earnings per share were $0.60, $0.04 above the high end of our EPS guidance range of $0.52 to $0.56. Earnings per share were up 30% from last year. In Q4, we repurchased 10 million shares at an average price of $24.94 per share for a total of $250 million. For the full year, we repurchased 43.3 million shares at an average price of $22.94 per share for a total of $993 million. As we have previously discussed the rate of our stock buyback will fluctuate each quarter, taking into account alternative uses for our cash and our stock price.

Now, turning briefly to fiscal 2010 full year results, new software license revenues were $7.5 billion, up 6% for the year. The Americas were up 15%, EMEA down 5%, and Asia grew 4%. Technology new license revenues were $5.4 billion, up 6% while applications new license revenues were $2.1 billion, also up 6%.

Read the rest of this transcript for free on seekingalpha.com