Oracle Financial Services Software (532466) Q4 01/02 earnings summary

Executive summary

• FY02 growth continued despite global slowdown and subdued spending; consolidated US GAAP revenue rose 34% to Rs 4,357.18 million, while net income increased 2% to Rs 1,036.01 million.

• Standalone Indian GAAP revenue rose 32% to Rs 4,252.71 million and net profit grew 15% to Rs 1,267.61 million; these figures use a different accounting and consolidation basis from US GAAP results.

Financial highlights

• US GAAP gross profit was Rs 2,447.76 million; operating income rose 8% to Rs 1,140.09 million, while cost of revenues increased 53% to Rs 1,909.41 million.

• Products revenue grew 51% to Rs 2,614.39 million and services revenue rose 15% to Rs 1,742.78 million; sales and marketing expense increased 83% to Rs 603.16 million.

• Net income increased 2% to Rs 1,036.01 million, compared with 28% growth in FY01; basic and diluted EPS were Rs 32.98 and Rs 31.64, respectively.

Outlook and guidance

• Near-term growth in revenue and net income, and net margins, were expected to remain under pressure, especially in services, given the global slowdown and adverse target-market conditions.

• FLEXCUBE license order book was US$27.01 million at March 31, 2002; contract implementation delays or lower realized license and related service revenue could reduce conversion to revenue.

• U.S. revenue and product sales were expected to increase following the end of Regulation K restrictions; insurance was identified as a future growth area and new FLEXCUBE modules were in development.

• FY03 export profits were no longer fully tax-exempt: 10% of eligible profits would be taxable at the proposed 36.75% corporate rate, with a further rise in effective tax rate expected.