CA Technologies Reports First Quarter Fiscal Year 2015 Results - CA Technologies
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CA Technologies Reports First Quarter Fiscal Year 2015 Results


  • Results in-line with expectations; demonstrated continued financial discipline; showed strong performance in connection with renewals
  • Adjusted to reflect arcserve as discontinued operation;
    • First Quarter Revenue of $1.069 Billion, Compared With $1.095 Billion Last Year
    • First Quarter GAAP EPS of $0.48, Compared With $0.72 Last Year (prior year results positively impacted by $0.40 per share tax benefit)
    • First Quarter Non-GAAP EPS of $0.65, Compared With $0.76 Last Year (prior year results positively impacted by $0.14 per share tax benefit)
    • First Quarter Cash Flow From Continuing Operations of $166 Million, Compared With $3 Million Last Year (primarily due to lower tax payments in current quarter)

NEW YORK, July 23, 2014 - CA Technologies (NASDAQ:CA) today reported financial results for its first quarter fiscal 2015, ended June 30, 2014.

Mike Gregoire, CA Technologies Chief Executive Officer, made the following comments:

“CA’s results for the first quarter are in-line with our expectations, reflecting continued financial discipline and a strong performance in connection with renewals, which contributed to an uptick in Enterprise Solutions new sales.  In addition, the investment focus and new capabilities we established last year allowed us to make important strategic progress in the quarter.  We launched a highly differentiated, CA-built SaaS solution in the IT Service Management space with a powerful user experience and one of the industry’s most attractive time-to-value offerings.  And, we announced the divestiture of the arcserve business, further managing our portfolio and sharpening our focus.    

“As we look ahead to the balance of FY2015, we know that there is still much work ahead of us to build CA for growth.  We will continue to focus on our strengths, invest in key growth areas and drive the level of execution needed to advance our business strategy, serve our customers and deliver long-term value for our shareholders.”

FINANCIAL OVERVIEW

Note: All financial results have been adjusted to reflect the classification of the Company's arcserve data protection business as a discontinued operation.

REVENUE AND BOOKINGS

  • The decrease in revenue was primarily due to a decrease in subscription and maintenance revenue and a decrease in professional services revenue. 
  • The decrease in bookings was primarily due to lower year-over-year professional services bookings, due to a decrease in the size and number of professional services engagements, including non-core engagements with government customers that are not directly related to our software product sales.   
  • The Company executed a total of 8 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $330 million.  During the first quarter of fiscal 2014, the Company executed a total of 9 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $323 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 3.60 years, compared with 3.10 years for the same period in fiscal 2014, primarily attributable to a contract renewal with a large financial services company.

EXPENSES AND MARGIN

  • GAAP and non-GAAP EPS in the first quarter of fiscal 2015 were negatively affected by $0.58 and $0.15, respectively, from an increase in the Company's GAAP and non-GAAP effective tax rates.  The Company recognized a net discrete tax benefit of approximately $181 million in the first quarter of fiscal 2014, primarily from the resolution of uncertain tax positions relating to U.S. and non-U.S. jurisdictions.
  • GAAP operating expenses include approximately $9 million in costs associated with the Fiscal 2014 Rebalancing Plan, compared with $117 million in the first quarter of fiscal 2014.  This resulted in a positive impact of $0.39 on GAAP EPS.

SELECTED HIGHLIGHTS FROM THE QUARTER

  • Customer traction for CA innovations continued in the quarter.
    • A large financial services company is incorporating the full suite of CA virtualization and automation solutions to improve speed and quality of application production.
    • Together with a partner, CA signed a multi-million dollar contract with a large government entity to help improve the quality of a high-profile, consumer-facing healthcare application.
    • Tata Sky – India’s leading direct broadcast television provider – selected CA Application Performance Management, Nimsoft Monitoring and Workload Automation.
    • Dillard’s – a US-based department store chain – chose CA as the company-wide API solution.
  • CA launched Cloud Service Management, a CA-built solution that redefines SaaS in the segment by delivering rapid time to value and a differentiated user-experience.
  • Further strengthened the leadership team: named Amit Chatterjee EVP, Enterprise Solutions and Technology Group.

SEGMENT INFORMATION

  • The increase in Mainframe Solutions and Enterprise Solutions operating margin in the first quarter of fiscal 2015 was primarily a result of timing of selling and marketing expenses and a reduction in personnel costs.
  • The decrease in Enterprise Solutions revenue for the first quarter of fiscal 2015 was primarily due to a decrease in new product sales in the prior fiscal year.  
  • The decline in Services revenue was primarily due to a decrease in the size and number of professional services engagements including non-core engagements with government customers that are not directly related to our software product sales.

CASH FLOW FROM OPERATIONS

  • Cash flow from operations in the first quarter of fiscal 2015 was $166 million, compared with $3 million in the prior year. The increase was primarily due to a decrease in income tax payments. 

CAPITAL STRUCTURE

  • Cash, cash equivalents and investments at June 30, 2014 were $3.255 billion.
  • With $1.769 billion in total debt outstanding and $140 million in notional pooling, the Company’s net cash, cash equivalents and investments position was $1.346 billion.
  • In the first quarter of fiscal 2015, the Company repurchased 1.7 million shares of common stock for $50 million. 
  • The Company is currently authorized to purchase $950 million of its common stock under its current stock repurchase program.
  • The Company distributed $111 million in dividends to shareholders.
  • The Company’s outstanding share count at June 30, 2014 was 440 million.

OUTLOOK FOR FISCAL YEAR 2015 

The Company reaffirmed the following outlook, which represents "forward-looking statements" (as defined below). It takes into account the effect of the definitive agreement to divest CA arcserve data protection business announced on July 7, 2014.

The Company expects the following:

  • Total revenue to decrease in a range of minus 2 percent to minus 1 percent in constant currency.  At June 30, 2014 exchange rates, this translates to reported revenue of $4.34 billion to $4.40 billion.
  • GAAP diluted earnings per share from continuing operations to decrease in a range of minus 12 percent to minus 8 percent in constant currency.  At June 30, 2014 exchange rates, this translates to reported GAAP diluted earnings per share of $1.77 to $1.84.
  • Non-GAAP diluted earnings per share from continuing operations to decrease in a range of minus 21 percent to minus 19 percent in constant currency.  At June 30, 2014 exchange rates, this translates to reported non-GAAP diluted earnings per share of $2.42 to $2.49.
  • Cash flow from continuing operations to increase in a range of 5 percent to 12 percent in constant currency.  At June 30, 2014 exchange rates, this translates to reported cash flow from continuing operations of $1.04 billion to $1.11 billion.

This outlook assumes no material acquisitions and a partial currency hedge of operating income.  The Company expects a full-year GAAP operating margin of 28 percent and non-GAAP operating margin of 37 percent.  The Company also expects to return to a normalized full-year GAAP and non-GAAP effective tax rate of approximately 30 percent, which results in a negative impact to GAAP and non-GAAP diluted earnings per share from continuing operations of approximately $0.43 and $0.59, respectively. 
The Company anticipates approximately 436 million shares outstanding at fiscal 2015 year-end and weighted average diluted shares outstanding of approximately 441 million for the fiscal year.

ABOUT CA TECHNOLOGIES

CA Technologies (NASDAQ:CA) creates software that fuels transformation for companies and enables them to seize the opportunities of the application economy. Software is at the heart of every business in every industry. From planning, to development, to management and security, CA is working with companies worldwide to change the way we live, transact, and communicate – across mobile, private and public cloud, distributed and mainframe environments. Learn more at www.ca.com.

LEGAL NOTICES

Copyright © 2014 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

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