Sybase 2007 third quarter results exceed first call revenue, EPS consensus

Sybase (NYSE: SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the third quarter ended 30 September 2007.

* Total revenue increased 22% and licence revenue up 12% year-over-year;
* Total database licence revenue increased 18% year-over-year;
* Total iAnywhere revenue up 10% and licence revenue up 16% year-over-year;
* Non-GAAP operating income up 40% year-over-year, non-GAAP operating margin of 22%;
* GAAP operating income up 39% year-over-year, GAAP operating margin of 17%;
* Non-GAAP EPS of $0.47; GAAP EPS of $0.37;
* Management raises full-year non-GAAP EPS to range of $1.64 to $1.66 and GAAP EPS to range of $1.25 to $1.27; and
* Full-year cash flow guidance raised to approximately $210 million.

Total revenue increased 22% to $255.3 million, from $209.1 million in the third quarter of 2006. Licence revenue increased 12% to $85.1 million from $76.3 million in the third quarter of 2006. Services revenue was up slightly to $135.8 million, and messaging revenue was $34.3 million.

Non-GAAP operating income for the 2007 third quarter increased 40% year-over-year to $57.3 million, representing a 22% operating margin.

Non-GAAP net income for the quarter was $42.8 million, or earnings per diluted share (EPS) of $0.47. This compares with non-GAAP net income of $36.3 million, or EPS of $0.40 for the third quarter of 2006.

Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the quarter increased 39% year-over-year to $44.6 million, representing a 17% operating margin.

GAAP net income was $34.1 million, or GAAP EPS of $0.37, for the quarter. This compares with GAAP net income of $25.1 million, or GAAP EPS of $0.27, for the 2006 third quarter. Non-GAAP amounts exclude the amortisation of certain purchased intangibles, stock-based compensation, and restructuring costs, and the tax effect of these and related items. Accompanying this release is a reconciliation from GAAP to non-GAAP amounts for the 2007 third quarter.

"We are extremely pleased with our performance in the third quarter, with strong contributions from each of our three business segments," said John Chen, chairman, CEO, and president of Sybase. "Solid growth across all of our key product lines - data management, mobile middleware, and messaging services - demonstrates the growing market acceptance of our Unwired Enterprise platform.

"The strong revenue performance in each of our three business segments also demonstrates the leverage in our business model and growing cross-selling synergies in our enterprise customer base. This helped drive our sixth consecutive quarter of consolidated operating margin expansion. As a result, we are raising our outlook for full-year EPS and operating cash flow for the second time this year," concluded Chen.

At 30 September 2007, Sybase reported $717.3 million in cash and cash investments, including restricted cash of $6.1 million. In the third quarter, the company generated $47.1 million in cash flow from operations.

Sybase repurchased $32.8 million worth of its stock during the 2007 third quarter. As of 30 September 2007, $158.4 million remained authorised in the company's current share repurchase program.

Days sales outstanding (DSO) for the 2007 third quarter was 75.

Upon filing the Form 10-Q for the 2007 third quarter, senior vice-president and chief financial officer Pieter Van der Vorst will become senior vice-president and general manager of the EMEA region, reporting to Steve Capelli, president of Worldwide Field Operations.

In this position, Van der Vorst will be headquartered in London with responsibility for field and business operations in the EMEA region. Van der Vorst has been with Sybase since 1991 and served as the company's chief financial officer for the past eight years.

Jeff Ross will be promoted to senior vice-president and chief financial officer of Sybase from his current role as vice-president and corporate controller, a position he has held for three years at Sybase.

Ross joined Sybase in 1997 as group director of tax and corporate accounting, with responsibility for the worldwide tax function and internal financial reporting. Previously, he spent 10 years at Price Waterhouse in various positions of increasing responsibility. A certified public accountant, Ross earned a BA in business administration from University of California at Berkeley.

"Pieter has been an invaluable partner of mine over the last eight years. Given his thorough knowledge of our customer base, product lines, and business strategy, this new opportunity will allow Pieter to further expand his contribution to Sybase," stated Chen.

"We are very pleased to promote Jeff, a 10-year veteran of the Sybase finance organisation. Jeff's promotion allows us to maintain operational continuity and demonstrates Sybase's depth of management," concluded Chen.

Forward Guidance For the fourth quarter, ending 31 December 2007, management anticipates non-GAAP fully diluted EPS in the range of $0.54 to $0.56 and total revenue in the range of $280 million to $290 million. GAAP EPS for the fourth quarter is expected to range from $0.44 to $0.46.

For full-year 2007, management is raising guidance for fully diluted non-GAAP EPS to a range of $1.64 to $1.66 from prior guidance of approximately $1.56. Management anticipates total revenue for 2007 will range from $1.01 billion to $1.02 billion. Management is raising guidance for GAAP EPS to a range of $1.25 to $1.27 from prior guidance of approximately $1.19.

Management is raising guidance for full-year 2007 cash flow from operations to approximately $210 million, compared with prior guidance of $195 million to $205 million. Accompanying this release is a reconciliation from projected GAAP to non-GAAP amounts for the 2007 fourth quarter and full year.