Tibco reported earnings after the market close yesterday for their first fiscal quarter of 2006. The numbers beat guidance and analyst EPS estimates, yet traded off on an up market day. Tibco posted EPS of $0.06 versus expectations of $0.05, and revenue of $114.6M versus consensus of $110 and a guided range of $109.2 - $112.5M. Operating margins were 14.7%, cash flow from operations was $30.8M. About the only negative point was that deferred revenue declined approximately $1.03M, versus increases of $12M in Q4 and $10M in Q105.
Days like this will make TIBX shareholders pull their hair out. Credit Suisse's Jason Maynard observes:
"For the third quarter in a row, Tibco beat estimates without closing any mega deals. It appears business has stabilized to the point where the company can continue meeting estimates without the help of large deals... While we had no expectation for Q1 to be a “beat and raise” type of quarter, we were generally pleased to see solid operational results across the board... As we progress through 2006, we continue to believe there are a number of potential catalysts that could accelerate growth, including improving sales execution, robust demand in key verticals (energy, financial, telco), and the potential for some large deal contribution.
Tibco's backbone historically has been their superlative messaging product, Rendezvous. This product has commanded a premium in vertical markets that spend more on technically proficient solutions (Financial Services, Energy, Telco). When I began covering Tibco in 2003, they carried a stigma that they relied too much on $5M or even $10M deals, and this created volatility in the name. Hence Jason's point about the ability to beat expectations without resorting to an eight digit telco deal in Europe, (for example).
Even though the mega deals have been absent for the past three quarters, it is noteworthy to point out the ASP for deals over $100K was $725K for the quarter. This follows the past three quarters trend of $450K, $500K, and $600K respectively. CEO Vivek Ranadive did remark that Tibco was able to maintain pricing power this quarter. For the Tibco bulls, this could be a sign of strength - the company is improving their execution on large deals. The bears will have to acknowledge the success and look to see if this data point is a fluke.
All in all, Tibco is a stock to play if you are a believer in SOA. They have the messaging and the business process orchestration. They do have some wood to chop on the web service IDE (for lack of a better term), and I have to dig a bit on how compliant they are with the key web services standards- I assume they're there with the key ones. But what they have is enough to more than outstrip the rising tide that SOA claims to be.
More on SOA later. What is it? Why now? Is it the real deal?
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