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MICROS Systems, Inc. (MCRS)
F3Q 2014 Earnings Conference Call
May 1, 2014 04:45 PM ET
Peter Rogers - EVP, IR
Peter Altabef - President and CEO
Cindy Russo - EVP and CFO
Gil Luria - Wedbush Securities
Dan Perlin - RBC Capital Markets
Keith Housum - Northcoast Research
Tom McCrohan - Janney Montgomery Scott
Tony Abbate - Granite Value Capital
Previous Statements by MCRS
» MICROS Systems Management Discusses Q2 2014 Results - Earnings Call Transcript
» MICROS Systems Management Discusses Q1 2014 Results - Earnings Call Transcript
» MICROS Systems Management Discusses Q4 2013 Results - Earnings Call Transcript
I would now like to turn the conference over to Peter Rogers, Executive Vice President. Please go ahead, sir.
Thank you. Good afternoon ladies and gentlemen. On behalf of the entire MICROS team assembled here today, I thank you for joining us to discuss our fiscal 2014 third quarter fiscal results which we released today after the market closed.
I'm here today with Peter Altabef, our President and CEO; Cindy Russo, our CFO; and Thomas Patz, our Chief Legal Counsel and EVP of Strategic Initiatives. I will start by reading a Safe Harbor statement and then turn the call over to Peter Altabef for his comments.
Some of the comments today are forward-looking statements involve risks and uncertainties, such as the uncertainties of product demand and market acceptance, the impact of competitor products and pricing on margins, the ability to obtain on acceptable terms the right to incorporate in MICROS' products and services technology patented by others, environmental and health-related events, unanticipated tax liabilities and the effects of terrorist activity and armed conflict.
MICROS’ undertakes no duty to update any forward-looking statements to conform to actual results, or changes in MICROS' expectations. Other risks and uncertainties associated with MICROS' business are identified in the Management's Discussion and Analysis of Financial Condition and Results of Operations and Business Investment Risk sections of MICROS' SEC filings.
I’ll now turn the call over to Peter Altabef, MICROS’ CEO and President. Peter?
Thank you, Peter and good afternoon everyone. We reported revenue of $349 million, an increase of $33.9 million or 10.7% over a year ago and 10.2% on a constant currency. The quarter revenue is a record for MICROS and the revenue growth is all organic.
Our third quarter non-GAAP net income was $55 million producing an EPS of $0.72, $0.07 above expectations. Our strong profit performance was driven by higher than expected revenue, a lower tax rate, and continued reduction in our share count. Our quarterly EPS performance is a record both on a non-GAAP and GAAP basis. Our food and beverage vertical recorded an excellent quarter with revenue increasing 15.9% over a year ago and 11.6% for nine months. Demand was strong in our two segments, U.S. Canada and international. The demand is being driven by several factors, such as an improved business environment, sites upgrading from Microsoft XP based software and new client wins.
Our SONIC rollout is proceeding well with 350 sites installed. Our Simphony product which is gaining momentum in the market was selected by several U.S. food and beverage chains including Ovation brands with 350 sites, Bruegger's Bagels with about 300 sites and a major global hotel chain. Internationally, we were selected by the 35 site Norwegian Dolly Dimple's pizza chain and the more than 600 site Australian QSR restaurant company, which includes the Red Rooster brand.
The hotel vertical also had a strong quarter with revenue increasing 14.3% versus a year ago and 7.8% year--date. Demand was strong in both reporting segments. Noticeable is the demand for OPERA from independent and smaller chains, several of which are new clients. We were selected to install OPERA in Foxwoods Resort & Casino. Great Stone Hotels a California based hotel chain selected OPERA delivered on our SaaS platform.
Banyan Tree Hotels & Resorts, a Singapore-based hotel chain, selected our reservation system myfidelio to be deployed with its current OPERA platform. GJP Hotels, a Brazilian hotel chain selected both OPERA and Simphony. And another significant event was the decision by Carlson Hotels to move over 500 hotels installed with OPERA On-Premise to our hosted solution. These hotels will join the over 500 Carlson Country Inns & Suites which already use OPERA SaaS.
The retail vertical declined to 2.2% versus a year ago with revenue up slightly at 0.6% on a year to date basis. The decline in the quarter was principally caused by a reduction in the Nordic and Benelux regions due to difficult comparisons versus the prior year. We expect modest revenue growth in the fourth quarter. In the quarter we won significant deal with Comex of Mexico, a large paint retailer. Bonmarche of Great Britain selected Retail-J and our multichannel hub software solution. Brooks Brothers selected Relate solution and both Trans World Entertainment and Samsonite selected Xstore.
Looking at our lines of business, hardware demonstrated significant strength with revenue increasing 21.8% versus a year ago and 10.6% on a year to date basis. The hardware performance is driven mainly by surging food and beverage demand. Software license revenue grew 6.6% on a quarterly basis and 11.3% year-to-date. Service revenue grew 8.1% on a quarterly basis and 5.8% on a year to date basis. We had a strong showing in our cloud based business with revenue growing 20.3% on a quarterly basis versus a year ago and 11.8% year to date. The SaaS hosting quarterly results will continue to fluctuate as our offerings mature but we are excited about the growing client interest in our expanding cloud based platforms.