甲骨文 (ORCL) 2003 Q2 法說會逐字稿

Good afternoon ladies and gentlemen.

Welcome to the SeeBeyond announces (ph) the actual second-quarter results conference call.

At this time all participants are in a listen-only mode.

Later we will conduct a question-and-answer session.

I would now like to turn the call over to Ms. Andrea Williams, Senior Director of Investor Relations.

Ms. Williams you may begin.

Good afternoon everyone.

Thank you for participating in today's conference call.

To discuss SeeBeyond's final second-quarter 2003 results.

With us today are Jim Demetrios, CEO of SeeBeyond;

Barry Plaga, Chief Financial Officer; and Carg Mohr, President and COO.

Following management's comments, we'll open up the call for questions.

Now I would like to read the Safe Harbor disclaimer and other securities laws related statements.

The following conference call includes statements that are not historical in nature and as such are intended to be forward-looking statements for purposes of the Safe Harbor provided by the Securities Litigation Reform Act.

These statements, including those related to estimated revenue, growth, estimated loss per share levels of the third quarter of 2003, the expected timing of profitability on a quarterly basis, the expected level of future customer demand, and the success of efforts to secure new customers, control costs, and release new products are all statements based on SeeBeyond's current expectations, assumptions, estimates, and projections, its industry, and its future prospects.

The Company would like to remind you that these statements are predictions and that actual events and results may differ materially from those forward-looking statements based on certain risks, including market acceptance of our products and services, risks relating to customer adoption of the Company's new SeeBeyond ICanSuite (ph) 5.0, the discretionary decision to released new versions of SeeBeyond products, release of competitive products, and changes in the mix of products and service revenue, among other factors.

The forward-looking statements contained in this earnings release and earnings conference call are also subject other risks and uncertainties, including those more fully described in the company's filings with the SEC.

These include its annual report filed on form 10-K for the year ended December 30, 2002 and its quarterly report on form 10-Q.

The Company does not undertake to update any forward-looking statements.

Non-GAAP financial measures statement -- please note that on this call, we will provide you with several financial metrics determined on a non-GAAP or pro forma basis.

These items, together with the corresponding GAAP numbers and the reconciliation to GAAP, where practicable are contained in today's press release which reposted on our web site at www.seebeyond.com and also furnished to the SEC on form 8-K.

Please note as well that on this call, we will discuss historical financial and other statistical information regarding our business and operations.

Some of this information is included in today's press release which we have posted on our web site and also furnished to the SEC on form 8-K.

The remainder of the information will be available on our web site by accessing a replay of this call.

Now, I'd like to turn the call over to Jim.

Thank you Andrea.

As you have already seen in our press release, final second-quarter 2003 results are as follows.

SeeBeyond reported total revenue of 28.9 million, license revenue of 7.1 million, and a GAAP net loss of 21 cents per share.

Pro forma net loss was 13 cents per share for the second quarter.

In addition, we ended the second quarter with 80.1 million in cash and a 64 day DSO.

The second quarter of 2003 was a very disappointing quarter for SeeBeyond.

We encountered a difficult deal-closing environment throughout the quarter, culminating in a very tough June when our sales teams -- particularly here in the U.S. -- did not perform as we had expected.

Obviously, SeeBeyond wanted to do much better than we did in the second quarter.

Nevertheless, we believe our performance was generally indicative of a larger structural change in the marketplace.

A change for which we have been anticipating and preparing for the last few years.

As of our Q2 and the Q2's of others, I've demonstrated the IP spending environment -- particularly for integration software is not improving.

It is worsening.

It is clear that customers need business solutions beyond the traditional integration software, we and our competitors have been offering.

Having seen this change coming, SeeBeyond has spent the last few years developing and bringing to the market and new thoroughly differentiated platform that is several generations ahead of traditional EAI software currently available, from SeeBeyond or other companies in the industry.

This new product is SeeBeyond's ICAN -- Integrated Composite Application Network -- 5.0 Suite which we introduced in March of this year to a very positive analyst, media, and customer response.

SeeBeyond's ICAN 5.0 Suite is generally being used now by several strategic early-adopter customers and will be generally released during the current quarter.

Realizing it was not enough simply to bring a newly-evolved product suite to market, SeeBeyond has also embarked on a reorganization of its sales, marketing, and alliance teams.

We're happy to report that this reorganization is well under way.

As you saw this morning, we hired Mike Manspach (ph) as Senior Vice President of Marketing, succeeding Kate Mitchell in this position.

With more than 13 years of experience -- most recently with SeeCommerce (ph), Mike brings to SeeBeyond a track record of success in positioning new and differentiated technology effectively in the marketplace.

To assure that our SeeBeyond ICAN 5.0 outreach to existing and new customers is handled at the most senior level, we have established a strategic position of a Chief Customer Officer, which will be filled by Kate Mitchell pelandre.

Our former SVP of Marketing and Business Development Kate, really has worked with our customers, partners, analysts, and media on a global basis for more than 40 years to help achieve appropriate visibility for SeeBeyond as a universally recognized technology leader.

Now she'll be working directly with senior executives at new and existing customer organizations to enumerate the business advantages of our ICAN 5.0 Suite.

Finally, we made a very significant announcement this afternoon that H. Carvel Moore (ph) has joined SeeBeyond as President and Chief Operations Officer.

Carv was formerly President of Novell, Inc. and was responsible for leading all assets of Novell's operations in the Americas, including both the Novell and Cambridge (ph) technology partners businesses which approximated over 600 million in revenue and employed over 1300 people.

Prior to Novell, Carv was President, North America for Cambridge technology partners.

And prior to that he was the President and COO of Excel Beta Corp. which was acquired by Cambridge technology 1998.

At SeeBeyond Carv will oversee worldwide sales, marketing, services, support, and alliances operations.

The reason we have hired Carv is that the company has tripled in size in the last four years without a single acquisition.

We're the only company in our industry to do that.

We are releasing a product this quarter that is unique and has the potential to grow SeeBeyond dramatically.

What we need is an executive that has grown and managed the operations of a company our size to a $600 million company.

The company needs someone to come in and run the field and lead the customer charge.

We needed a senior guy and we got him.

Today, we have announced what I believe to be one of the most strategic hires in the Company's history and the hire that will prove to be the problem solver for the company's recent challenges.

Carv is here with us by conference call today and would like to take a few minutes to introduce himself and to tell us why he joined SeeBeyond.

Thanks, Jim.

And I'm just delighted and excited over the opportunity -- I've been in conversations with Jim and the team for quite some time now.

And it's great to finally be here today.

What Jim outlined as my role in partnering up with him and focusing on the client side in the operations is what I have been doing for the past several years, not only with my own privately-held company, which was sold, but also as well as Cambridge technology partners and Novell.

In all cases, making sure that the company was realinged and ready to execute as strategies involved and products were released in order to get to market quickly and effectively or while they were revising their strategy in its entirety.

The areas of my activity -- recently Novell included rebuilding and re-operationalizing sales, operations, processes that support that, the metrics for accountability to make sure that the organization was on the track to performing as well as individual accountability and supporting evolution from a product company to a solutions company.

Similarly at Cambridge, I helped drive a change from a company that went from systems integration through the business wave up through its merger with Novell back in 1998.

And I'm looking forward to rolling up my sleeves today's my first day, obviously, -- but diving in with Jim and focusing on our partnerships and our alliances, our sales, and operations here at SeeBeyond.

I am as I said, I'm delighted -- why did I join here?

Well, I saw ICAN 5.0 with Jim down at headquarters a few weeks ago.

I'd like to reiterate the comments that he made previously -- about that this is what I saw was a product that is truly differentiated from where the other offerings are currently in the marketplace.

And I'm excited for the opportunity to help take that to the clients.

Clearly, the promise of the integration marketplace is still out there.

Clients looking to truly leverage their investments they've made up to this point through some very trying times and seeing what 5.0 can do to help enable that.

I had the pleasure of meeting most of the senior team that works for Jim as part of the process of getting to know them.

And I can tell you I ran into a group of individuals that is committed to excellence and execution here at SeeBeyond.

On top of that, it's a tremendous Board of Directors.

Each and every director brings I think a wealth of experience and perspective that I haven't seen on Boards like this.

And I'm delighted to have the opportunity and the privilege to be working with them.

I think lastly, but certainly not least important, is a fantastic customer base, which is global.

It's not concentrated in any one area so I'm looking forward to working with Jim and getting out with each of these clients as we drive the 5.0 message to the market here in the near future.

So Jim, thanks for the opportunity to introduce myself and I'll kick it back over to you.

Thank you Carv.

We're very excited to have you to be part of the SeeBeyond team.

Really, just as the ICAN 5.0 Suite differentiates SeeBeyond in the marketplace, we are confident that our sales and management reorganization will do the same.

SeeBeyond is at a pivotal point in its corporate evolution.

And we've done this now several times, as we have grown through various stages.

We have taken, I think, the steps necessary to strengthen our functional leadership and ensure the success of the 5.0 product suite release and return the company to profitable growth.

We look forward to updating you in the coming weeks on a formal basis with the announcement of the release of our new product suite, as well as introducing you directly to some of the new members of our management team.

In closing, let me say this.

We did not achieve our financial targets in Q2 of 2003.

Nonetheless, our entire organization is, if anything, more committed than ever to executing our plan going into the second half of 2003 and beyond.

That plan is, number 1, we will maintain and enhance our status as the leading technology company in the marketplace.

A status we have clearly demonstrated again with the new ICAN 5.0 Suite.

Number two, we're going to maintain our focus on gaining and retaining long-term customers from the global 2000.

Just to give you an idea -- our sales force this week had started demonstrating to over 100 sites per week the 5.0 product.

Number 3, we will continue to aggressively execute new businesses with our strategic partners.

We believe these strategic partners are going to be important to training, educating and implementing and upgrading our customers around the world -- to what is the easiest to use the most comprehensive integration platform in the world.

Number four, we will continue to focus relentlessly on controlling costs and obtaining profitability in the near-term.

At this time, I would like to turn the call over to Barry Plaga, our CFO, for the second-quarter financial overview.

Barry?

Thanks, Jim.

Today, I will cover our operating results for the second quarter ended June 30, 2003.

Then, I'll follow-up with a discussion of our forward-looking guidance.

We reported total revenue for the second quarter ended June 30 of 28.9 million.

Total license revenue for Q2 was 7.1 million which represented 25 percent of our Q2 revenue mix.

International revenue represented 41 percent of total revenues for Q2 with Europe representing 30 percent of total revenues and Pac-Asia 11 percent.

We executed 64 deals in Q2.

Some of the companies that purchased SeeBeyond software in the second quarter were Altrea, Bausch & Lomb, BMW, Bombardier, Cathio AB (ph), Equifax, Ericson, Fox Systems, FronTech, Gymboree, General Motors, IDX, Land's End, Maersk, Nicholas Applegate, Stanley Electric, Vanguard Health Systems, and the American Postal Workers Union.

Top five license revenue verticals for Q2 were health care, financial services and insurance, manufacturing, retail, and the energy utility sector.

In terms of percentages, health care was 29 percent, financial services and insurance 19 percent, manufacturing 18 percent, retail was 8 percent, energy and utilities was 5 percent, and government was 5 percent.

Balance or other -- made up of some telco and services companies was 16 percent.

SeeBeyond has no 10 percent or more customers during Q2.

In terms of partner revenue during Q2, our strategic partners, consulting, and software influenced approximately 55 percent of our licensed revenue.

PBC and DeLoyd (ph) consulting were our top two strategic the second-quarter based on licensed revenue instruments.

Repeat license revenue in Q2 '03 which is licensed revenue from pre-existing customers was 56 percent.

Service revenue for the second quarter was 9.8 million down 13 percent sequentially from 11.2 million in the March quarter and maintenance revenue for the second quarter was 11.9 million an increase of 3 percent for Q1.

Overall gross profit for Q2 was 62.4 percent down from 66.2 percent in the March quarter.

And this decrease was due to the change in the revenue mix.

Services and maintenance margin was 51.3 percent up from 49.4 percent in March.

As we continue to reduce overhead infrastructure costs in our services organization.

Total operating expenses excluding restructuring charges and non-cash charges for amortization of stock compensation and warrants was 29 million in the second quarter down from 29.7 million in the first quarter of '03.

R&D expense decreased in Q2 to 10.4 million from 10.6 million.

Sales and marketing expense decreased to 14 million from 14.5 million in Q1 and this decrease was attributable to a decrease in discretionary marketing costs and lower sales commissions.

G&A expenses remained flat at 4.6 million from Q1 to Q2.

Other income and expense for Q2 was 193,000 compared with 170,000 in Q1.

On a GAAP basis, net loss for the quarter ended June 30 2003 was $17.3 million or 21 cents per share versus a loss of 7.1 million or 8 cents per share and the prior year's period.

Pro forma net loss for Q2 was 10.8 million or 13 cents per share versus a loss of 6.9 million or 8 cents per share in the prior year's period.