• Strong Start to Fiscal 2017
• First Quarter Revenue of $999 Million
• First Quarter GAAP EPS of $0.47
• First Quarter Non-GAAP EPS of $0.64
• First Quarter Cash Flow From Continuing Operations of $161 Million
India August 1, 2016 - CA Technologies (NASDAQ:CA) today reported financial results for its first quarter fiscal 2017, which ended June 30, 2016.
Mike Gregoire, CA Technologies Chief Executive Officer, said:
“Following solid performance in fiscal year 2016, I am pleased to report that we are off to a strong start in fiscal year 2017.
“In the first quarter, revenue grew year-over-year, total new sales were strong and we delivered a solid operating margin. These results improve our confidence in our ability to cross over into modest growth for the full year.
“Though we recognize that we still have work ahead to reach our potential, we are progressing well on our journey to position CA for sustainable, long-term growth. Looking ahead, we will continue to be customer-focused and agile as we evolve CA to meet the challenges of an incredibly dynamic technology market. This is reflected in the organizational changes we are announcing today.”
ORGANIZATIONAL UPDATE
CA Technologies has agreed with Richard Beckert, Chief Financial Officer, that it is the appropriate time to transition the role, and he retired as CFO from CA Technologies effective July 26. Beckert joined CA in 2006 during a pivotal time in the Company’s history, and he played an important role in our ongoing transformation.
Kieran J. McGrath, Corporate Controller, has been named interim Chief Financial Officer, reporting to CEO Mike Gregoire. McGrath, who has been with CA since 2014 as corporate controller, was previously the Finance lead of IBM’s $25B Global Software Business and brings a wealth of financial, operational and transformational management experience. McGrath will lead CA’s Finance organization while the Company undertakes the process of identifying a new CFO.
Gregoire commented, “I would like to thank Rich for his many contributions to CA and the positive impact he has had on our business. On behalf of CA we wish Rich much continued success in the future. Separately, I look forward to working closely with Kieran in the months ahead and have the utmost confidence in his ability to help lead this important evolution.”
CA Technologies also announced that Adam Elster, formerly EVP of Sales, has been named President, Global Field Operations, and that Ayman Sayed, formerly EVP and Chief Product Officer, has been named President, Chief Product Officer.
Gregoire continued, “In these new roles, Adam and Ayman will be responsible for collaborating to ensure that our development and go-to-market efforts are completely aligned to customer and market demand, and that we are positioned to achieve our goal of consistently delivering better, more impactful products to our customers.”
FINANCIAL OVERVIEW
(dollars in millions, except share data)
|
First Quarter FY17 vs. FY16
| |||||
FY17
|
FY16
|
% Change
|
% Change CC*
| |||
Revenue
|
$999
|
$977
|
2%
|
3%
| ||
GAAP Income from Continuing Operations
|
$198
|
$207
|
(4)%
|
(9)%
| ||
Non-GAAP Income from Continuing Operations*
|
$269
|
$283
|
(5)%
|
(6)%
| ||
GAAP Diluted EPS from Continuing Operations
|
$0.47
|
$0.47
|
0%
|
(4)%
| ||
Non-GAAP Diluted EPS from Continuing Operations*
|
$0.64
|
$0.64
|
0%
|
(2)%
| ||
Cash Flow from Continuing Operations
|
$161
|
$188
|
(14)%
|
(10)%
| ||
* Non-GAAP income, Non-GAAP earnings per share and CC or Constant Currency are non-GAAP financial measures, as noted in the discussion of non-GAAP results below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.
REVENUE AND BOOKINGS
(dollars in millions)
|
First Quarter FY17 vs. FY16
| |||||||
FY17
|
% of
Total |
FY16
|
% of
Total |
%
Change |
%
Change CC* | |||
North America Revenue
|
$669
|
67%
|
$652
|
67%
|
3%
|
3%
| ||
International Revenue
|
$330
|
33%
|
$325
|
33%
|
2%
|
2%
| ||
Total Revenue
|
$999
|
$977
|
2%
|
3%
| ||||
North America Bookings
|
$992
|
73%
|
$451
|
68%
|
120%
|
120%
| ||
International Bookings
|
$361
|
27%
|
$211
|
32%
|
71%
|
76%
| ||
Total Bookings
|
$1,353
|
$662
|
104%
|
106%
| ||||
Current Revenue Backlog
|
$3,031
|
$3,042
|
0%
|
0%
| ||||
Total Revenue Backlog
|
$7,151
|
$6,278
|
14%
|
15%
| ||||
*CC or Constant Currency is a non-GAAP financial measure, as noted in the discussion of non-GAAP results below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.
• Total revenue increased as a result of an increase in software fees and other revenue, partially offset by a decrease in subscription and maintenance revenue. Our fiscal 2016 acquisitions of Rally Software Development Corp. (Rally) and Xceedium, Inc. (Xceedium) contributed approximately 4 points of revenue growth for the quarter.
• Total bookings grew primarily due to the replacement and extension of a large system integrator transaction that was scheduled to expire in fiscal 2018, as well as an increase in mainframe solutions renewals that were not associated with this transaction. The large system integrator transaction provides an incremental contract value in excess of $475 million, extends the term of the replaced agreement for an additional five years and was a strong contributor to renewals and new product sales in the quarter.
• The Company executed a total of 14 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $910 million including the aforementioned large system integrator transaction. During the first quarter of fiscal 2016, the Company executed a total of 6 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $214 million.
• The weighted average duration of subscription and maintenance bookings for the quarter was 4.93 years, compared with 3.45 years for the same period in fiscal 2016.
EXPENSES AND MARGIN AND EARNINGS PER SHARE
(dollars in millions)
|
First Quarter FY17 vs. FY16
| |||||
FY17
|
FY16
|
%
Change |
%
Change CC** | |||
GAAP
| ||||||
Operating Expenses Before Interest and Income Taxes
|
$707
|
$673
|
5%
|
8%
| ||
Operating Income Before Interest and Income Taxes
|
$292
|
$304
|
(4)%
|
(8)%
| ||
Diluted EPS from Continuing Operations
|
$0.47
|
$0.47
|
0%
|
(4)%
| ||
Operating Margin
|
29%
|
31%
| ||||
Effective Tax Rate
|
28.5%
|
29.8%
| ||||
Non-GAAP*
| ||||||
Operating Expenses Before Interest and Income Taxes
|
$607
|
$572
|
6%
|
8%
| ||
Operating Income Before Interest and Income Taxes
|
$392
|
$405
|
(3)%
|
(5)%
| ||
Diluted EPS from Continuing Operations
|
$0.64
|
$0.64
|
0%
|
(2)%
| ||
Operating Margin
|
39%
|
41%
| ||||
Effective Tax Rate
|
28.6%
|
28.5%
| ||||
*A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release. Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, amortization of internal software costs, Board approved workforce rebalancing initiatives and certain other gains and losses. The results also include gains and losses on hedges that mature within the quarter, but exclude gains and losses on hedges that do not mature within the quarter.
**CC or Constant Currency is a non-GAAP financial measure, as noted in the discussion of non-GAAP results below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.
• GAAP and Non-GAAP first quarter operating expenses increased primarily due to operational costs associated with the acquisitions of Rally and Xceedium.
• GAAP and Non-GAAP EPS in the first quarter of fiscal 2017 were consistent with the year-ago period due to an increase in expenses, primarily due to operational costs associated with the acquisitions of Rally and Xceedium, offset by an increase in revenue and a decrease in weighted average common shares outstanding.
SELECTED HIGHLIGHTS FROM THE QUARTER
Leadership and recognition during the quarter include:
• For the second consecutive year, CA Technologies was positioned by Gartner, Inc. as a leader in the Magic Quadrant for IT Project and Portfolio Management Software Applications, Worldwide.(1)
• IT Central Station, a leading product review site for enterprise technology, named CA Unified Infrastructure Management as the number one solution for cloud monitoring.(2)
• CA Technologies was named an API Management market leader for 2016-2017 by Ovum in its API Management Decision Matrix, and received the highest overall score for the technology evaluation dimension.(3)
Customer traction for CA Technologies innovation during the quarter include:
• CA Privileged Access Management (CA PAM) closed its single largest deal ever and was selected over competitors to become the standard for this American multinational corporation's 1000+ global customers.
• CA PAM also displaced an incumbent at a large American multi-national telecommunications company that chose the product for the strength of its password management.
• CA Project and Portfolio Management (PPM) closed several six-figure transactions during the quarter, three of which were brand new customers to the platform