Analyst Conference Summary


conference date: June 26, 2007 @ 2:00 PM Pacific Time
for quarter ending: May 31, 2007 (4th quarter fiscal 2007)

Forward-looking statements

Overview: Expected high growth rate continues. Non-GAAP EPS was $0.03 above guidance.

Basic data:

Revenues were $5.8 billion, up 20% from year earlier.

GAAP net income was up 23% to $1.6 billion.

GAAP earnings per share were $0.31, up 27% from year earlier.


Q1 is typically smallest seasonal quarter, but last year was exceptionally strong. Not including Agile, new software license revenues expected up 20 to 30%. Total revenue up 19 to 21% year-over-year. In fiscal 2008 stock option expenses will be included in non-GAAP numbers (about $50 million per quarter).

Non-GAAP EPS is expected to be $0.20 (including stock options). GAAP EPS $0.15.

28.6% tax rate assumed. Assumes currency exchange rate fall.

Conference Highlights:

Software revenues were $4.8 billion, up 19% from year earlier. New software license revenues were very strong. Database and middleware new license revenues were up 18%; applications new licenses 13% at $726 million; total new license revenues were up 17% from year earlier at $2.5 billion.

Non-GAAP earnings per share were $0.37, up 28%; net income was $1.9 billion, up 24% from year earlier.

Claimed Oracle new license revenues grew at a 32% annual rate while SAP's slowed to 10%. Also took database market share from IBM: Oracle now has 47%, IBM 21%; more than Microsoft and IBM combined. Also took share from BEA.

Growth was strong across all geographies: up 20% in the Americas, 20% in EMEA, and 10% in Asia-Pacific.

Hyperion contributed $43 million to new software license revenue.

Update and support revenue was up 19% at $2.3 billion.

Non-GAAP income from operations grew 23% to $2.7 billion, for an operating margin of 46%, up 1.6% from year earlier. Expect to see continued margin improvement in fiscal 2008.

Stock buy back was 55 million shares at average $18.33, for $1 billion. Fiscal 2007 buy back totaled $4 billion. $4 billion more is authorized.

Larry points to operating cash flow per share $1.05 for fiscal 2007.

Pleased with database sales with several large deals. Gained performance/price lead over Microsoft for first time. New reseller program announced.

AIA (Applications Integration Architecture) introduced this quarter. CRM-on demand revenue growing rapidly.


Pipeline size? Pipeline looks fantastic for Q1. Agile could close by end of July; is not included in guidance, but it is a relatively small company.

Operating margin model? It is a matter of scale and integrating acquisitions. Expects to see same level of margin improvement in fiscal 2008.

Applications geographically? U.S. had a tough comparison with year-earlier. Expects North America to grow strongly in applications business in Q1.

Acquisitions pace? Expects pace to continue.

Database license growth rate? Hitting on all cylinders. Significant product pipeline right now. Customers are re-looking at the wide variety of options now available. Middleware business is growing faster than database, but only now is becoming a significant percentage of overall revenue.

On July 11, 11g will be introduced, which will extend lead of competition. Shift to Linux is helping us; we are the standard there. Generation of data by customers just keeps growing. No one else (not IBM, Microsoft) has grid computing capabilities.

Vertical applications strategy? Varies by industry. But when a customer buys vertical applications we cross sell other products. Expanding number of vertical industries served, mainly by making acquisitions.

Seasonality of margin expansion? Thought on way to 50% margin goal. Decided to slow margin expansion and expand top line revenues instead. This was the acquisions strategy, which made margin expansion slower. Continuing to grow margins, but now 50% is not a neear term target. Is target overall. In general margin expansion is lowest in Q1 and highest in Q4.

Overall revenue growth is 20% annual; are ahead, but that will be no excuse for not hitting it again next year.

After an acquisition, it usually takes 3 to 15 months before a positive contribution to margins. Did very well executing in Europe this quarter.

Surround SAP strategy? Our products are designed to work well with SAP products, so we get some wins, then build on them. Customers rely on Oracle to make all the pieces work well together.

Salesforce? Oracle offers better security; competes well at high end of market.

Macro spending environment? Pipeline suggests "things are good for us." Cannot detect any macro issue.

OpenIcon Analyst Conference Summaries Main Page
Oracle Investor Relations Page



More Analyst Conference Pages:


Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2007 William P. Meyers