CA Announces Q4 Full FY15 Results - CA Technologies
{{search ? 'Close':'Search'}}

CA Technologies Reports Fourth Quarter and Full Fiscal Year 2015 Results


  • Company Meets Fiscal Year 2015 Guidance Metrics
  • Fourth Quarter and FY2015 Revenue of $1.023 Billion and $4.262 Billion, Compared With $1.084 Billion and $4.412 Billion Last Year, Respectively
  • Fourth Quarter and FY2015 GAAP EPS of $0.33 and $1.82, Compared With $0.23 and $1.96 Last Year, Respectively
  • Fourth Quarter and FY2015 Non-GAAP EPS of $0.56 and $2.53, Compared With $0.62 and $3.02 Last Year, Respectively
  • Fourth Quarter and FY2015 Cash Flow From Continuing Operations of $485 Million and $1,030 Million, Compared With $478 Million and $973 Million Last Year, Respectively
  • Issues FY2016 Outlook

NEW YORK, May 7, 2015 - CA Technologies (NASDAQ: CA) today reported financial results for its fourth quarter and full fiscal year 2015, ended March 31, 2015.

Mike Gregoire, CA Technologies Chief Executive Officer, said:

"In fiscal year 2015, we focused our efforts on our go-to-market strategy, introduced new products and strengthened relationships with our customers.  As demonstrated by this quarter’s results, however, we still have work to do to drive the kind of growth that our company has the potential to achieve.

"I am convinced that we have set in place the appropriate strategy to transform CA and return it to growth. We are making progress in differentiating and building new products that help our customers succeed in the Application Economy.  We have also significantly improved the underlying efficiency of our business.

"In fiscal year 2016, we will make the required investments to drive innovation, while continuing to demonstrate financial discipline by expanding full year operating margin by two percentage points to 39 percent*, excluding the impact of any future material acquisitions.

"Over the medium term, I am confident that we can achieve sustainable low- to mid-single digit cash flow growth."

*This is a non-GAAP metric. GAAP margin is expected to improve three percentage points to 30 percent.

FINANCIAL OVERVIEW

REVENUE AND BOOKINGS

Fourth Quarter

  • Total revenue decreased primarily due to lower subscription and maintenance revenue. In addition, there was an unfavorable foreign exchange effect on total revenue of $53 million.
  • The Company's bookings were affected by an unfavorable foreign exchange rate and fewer than expected early renewals, as well as a year-over-year decrease in new product sales and services engagements.
  • The Company executed a total of 19 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $507 million.  During the fourth quarter of fiscal 2014, the Company executed a total of 16 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $456 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 3.05 years, compared with 3.15 years for the same period in fiscal 2014.

Full Year

  • Total revenue decreased primarily due to lower subscription and maintenance revenue and professional services revenue. In addition, there was an unfavorable foreign exchange effect on total revenue of $71 million.
  • The Company's total bookings were affected by a year-over-year decrease in renewals within subscription and maintenance bookings. Renewals were affected by a difficult year-over-year comparison that included a four-year contract renewal with a large systems integrator for more than $300 million in fiscal 2014 and by a lower value of contracts that renewed prior to their scheduled expiration dates.
  • The Company executed a total of 51 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1.448 billion.  During fiscal 2014, the Company executed a total of 54 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1.973 billion.
  • The weighted average duration of subscription and maintenance bookings for fiscal 2015 was 3.24 years, compared with 3.35 years for fiscal 2014.

EXPENSES AND MARGIN

Fourth Quarter

  • GAAP and non-GAAP operating expenses were favorably affected by foreign exchange.
  • GAAP and non-GAAP operating expenses were affected by $40 million from severance costs incurred in the fourth quarter of fiscal 2015.  This resulted in an unfavorable effect of $0.05 per (GAAP) diluted share.
  • GAAP operating expenses in the fourth quarter fiscal 2014 were affected by $37 million in expenses associated with the Company's fiscal 2014 rebalancing plan (the Fiscal 2014 Plan), which resulted in an unfavorable effect of $0.08 per diluted share.
  • GAAP and non-GAAP operating expenses were favorably affected by lower selling and marketing costs.
  • GAAP EPS was positively affected by $0.06 due to a lower effective tax rate. 
  • Non-GAAP EPS was adversely affected by $0.11 due to a higher effective tax rate in the fourth quarter of fiscal 2015.  The Company recognized a net benefit of approximately $181 million in the first quarter of fiscal 2014 which favorably affected the non-GAAP effective tax rate for the fourth quarter of fiscal 2014. This net discrete tax benefit was primarily as a result of the resolution of uncertain tax positions relating to U.S. and non-U.S. jurisdictions.

Full Year

  • GAAP and non-GAAP operating expenses were favorably affected by foreign exchange.
  • GAAP and non-GAAP operating expenses were affected by $40 million from severance costs incurred in the fourth quarter of fiscal 2015. This resulted in an unfavorable effect of $0.08 per (GAAP) diluted share. 
  • GAAP operating expenses were favorably affected by a decrease of $151 million in expenses associated with the Fiscal 2014 Plan, which resulted in a favorable effect of $0.30 per diluted share.
  • GAAP and non-GAAP EPS were adversely affected by $0.36 and $0.50, respectively, due to a higher tax rate in fiscal 2015.  The Company recognized a net benefit of approximately $168 million in fiscal 2014, primarily from the resolution of uncertain tax positions relating to U.S. and non-U.S. jurisdictions.

SELECTED HIGHLIGHTS

  • Corporate announcements during the fourth quarter include:
    • Jeffrey G. Katz, formerly the founding chairman, president and chief executive officer of Orbitz Worldwide, Inc., was elected to the Company's Board of Directors.
    • Michael C. Bisignano joined the Company as executive vice president and general counsel.
    • The Company joined the World Economic Forum’s (WEF) Partnering Against Corruption Initiative (PACI) and appointed members to the WEF Technology Pioneers Selection Committee 2015.
  • Solutions leadership for Fiscal 2015, CA is recognized as a Leader by industry analyst firms including Gartner and Forrester:
  • Customer traction for CA Technologies innovations during fiscal 2015 included:
    • A large health insurance company based in the U.S. selected CA Security solutions to authenticate application access for employees, business partners and consumer customers, ensuring that identities of its constituents are appropriately secured.  
    • Toyota Finance Australia selected CA Executive Playbook to help their business have better clarity of their IT expenditure and align investments with strategic objectives.
    • 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,CA Unified Infrastructure Management and CA Workload Automation.
    • A French airline is now working with CA Service Virtualization to increase the speed and stability of application updates for their new mobile booking system.

SEGMENT INFORMATION

Fourth Quarter

  • Mainframe Solutions revenue was lower compared with the year-ago period primarily due to an unfavorable foreign exchange effect and, to a lesser extent, insufficient revenue from prior period new sales.
  • Enterprise Solutions revenue increased, excluding the unfavorable foreign exchange effect.  Enterprise Solutions operating margin for the fourth quarter of fiscal 2015 increased compared with the year-ago period primarily driven by a decrease in selling and marketing expenses.
  • Services revenue was lower as a result of the smaller size and number of services engagements during the fourth quarter of fiscal 2015.  Operating margin for the Company’s Services segment decreased as a result of an increase in severance costs.

Full Year

  • Mainframe Solutions revenue decreased primarily due to insufficient revenue from prior period new sales to offset the decline in revenue contribution from renewals. In addition, there was an unfavorable foreign exchange effect of $40 million for fiscal 2015.
  • Enterprise Solutions revenue decreased compared with the year-ago period primarily due to an unfavorable foreign exchange effect and lower new sales. Enterprise Solutions operating margin for fiscal 2015 increased compared with the year-ago period primarily as a result of lower commissions and personnel-related expenses.
  • Services revenue decreased primarily as a result of the smaller size and number of services engagements during fiscal 2015, including non-core engagements with government customers that are not directly related to the Company’s software product sales.  Operating margin for the Company’s Services segment decreased as a result of an increase in severance costs.

CASH FLOW FROM OPERATIONS

  • Cash flow from continuing operations for the fourth quarter was $485 million, compared with $478 million in the prior year.
  • For the full year, cash flow from continuing operations was $1,030 million, compared with $973 million in the prior fiscal year.  This increase was primarily due to lower cash tax payments. 

CAPITAL STRUCTURE

  • Cash, cash equivalents and investments at March 31, 2015 were $2.804 billion.
  • With $1.263 billion in total debt outstanding and $138 million in notional pooling, the Company’s net cash, cash equivalents and investments position was $1.403 billion.
  • In the fourth quarter of fiscal 2015, the Company repurchased 2.9 million shares of common stock for $90 million.  For fiscal 2015, the Company repurchased 7.2 million shares of stock for $215 million.
  • As of March 31, 2015, the Company is currently authorized to purchase $785 million of its common stock under its current stock repurchase program that was authorized in May 2014.
  • During the fourth quarter of fiscal 2015, the Company distributed $111 million in dividends to shareholders. For fiscal 2015, the Company distributed $444 million in dividends to shareholders.
  • The Company’s outstanding share count at March 31, 2015 was 436 million.

OUTLOOK FOR FISCAL 2016

The following outlook for fiscal 2016 contains "forward-looking statements" (as defined below).

The Company expects the following:

  • Total revenue to decrease 2 percent in constant currency. At March 31, 2015 exchange rates, this translates to reported revenue of $3.95 billion to $3.99 billion.
  • GAAP diluted earnings per share from continuing operations to increase in a range of 12 percent to 17 percent in constant currency.  At March 31, 2015 exchange rates, this translates to reported GAAP diluted earnings per share from continuing operations of $1.83 to $1.90.
  • Non-GAAP diluted earnings per share from continuing operations to increase in a range of 2 percent to 5 percent in constant currency.  At March 31, 2015 exchange rates, this translates to reported non-GAAP diluted earnings per share from continuing operations of $2.38 to $2.45.
    •     Cash flow from continuing operations to increase in a range of 2 percent to 7 percent in constant currency.  At March 31, 2015 exchange rates, this translates to reported cash flow from continuing operations of $0.97 billion to $1.01 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 30 percent and non-GAAP operating margin of 39 percent.  The Company also expects a full-year GAAP and non-GAAP effective tax rate of between 28 percent and 29 percent.

The Company anticipates approximately 433 million shares outstanding at fiscal 2016 year-end and weighted average diluted shares outstanding of approximately 437 million for the fiscal year.

Webcast

This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company’s website, including a supplemental financial package, as well as a conference call and webcast that the Company will host at 5:00 p.m. ET today to discuss its unaudited fourth quarter and full fiscal year results.  The webcast will be archived on the website.  Individuals can access the webcast, as well as the press release and supplemental financial information at http://ca.com/invest or can listen to the call at 1-877-561-2748.  The international participant number is 1-720-545-0044.

* The Forrester Wave™: API Management Solutions, Q3 2014, September 29, 2014
The Forrester Wave™: Strategic Planning for the BT Agenda, Q1 2015, March 13, 2015
The Forrester Wave™: Portfolio Management For The BT Agenda, Q1 2015, March 18, 2015
The Forrester Wave™: Portfolio Management For The Tech Management Agenda, Q1 2015, March 18, 2015
** Gartner, Inc., “Magic Quadrant for Data Center Infrastructure Management Tools,” Jay E Pultz et al, September 22, 2014
***Gartner, Inc., “Magic Quadrant for Integrated IT Portfolio Analysis Applications,” Daniel B. Stang, Jim Duggan, November 18, 2014
****Gartner, Inc. “MarketScope for IT Project and Portfolio Management Software Applications” Daniel B. Stang, Robert A. Handler, May 16, 2014

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Press Contacts


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 © 2015 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

Highlight CA Blog

Timely topics and trends that are shaping the application economy.

Contact
Call us at 1-800-225-5224
Call us at 1-800-225-5224
Email
Get in touch with CA
Email Us

Chat with CA

Just give us some brief information and we'll connect you to the right CA Expert.

Our hours of availability are 8AM - 5PM CST.

All Fields Required

connecting

We're matching your request.

Unfortunately, we can't connect you to an agent. If you are not automatically redirected please click here.

  • {{message.agentProfile.name}} will be helping you today.

    View Profile


  • Transfered to {{message.agentProfile.name}}

    {{message.agentProfile.name}} joined the conversation

    {{message.agentProfile.name}} left the conversation

  • Your chat with {{$storage.chatSession.messages[$index - 1].agentProfile.name}} has ended.
    Thank you for your interest in CA.


    How Did We Do?
    Let us know how we did so that we can maintain a quality experience.

    Take Our Survey >

    Rate Your Chat Experience.

    {{chat.statusMsg}}

agent is typing