Oracle Financial Services Software (532466) Q4 05/06 earnings summary

Executive summary

• FY2005-06 Indian GAAP consolidated revenue rose 30% to Rs 14,823m; net income increased 2% to Rs 2,376.5m, reflecting a prior-period item and acquisition-related costs.

• US GAAP revenue grew 30% to Rs 14,835.2m and net income rose 8% to Rs 2,190.4m; operating income declined 2% to Rs 2,392.5m.

• Growth spanned products and services, while KPO remained in an investment phase; FLEXCUBE was ranked the world’s No. 1 selling core banking solution for a fourth consecutive year.

Financial highlights

• Indian GAAP unconsolidated revenue increased 28% to Rs 11,538.2m; net income before prior-period item rose 24% to Rs 2,447.5m.

• Indian GAAP consolidated income before tax was Rs 3,028.5m, up 2.6%; net income before prior-period items reached Rs 2,473.9m, up 6.4%.

• US GAAP cost of revenue rose 37% to Rs 8,146.7m, taking cost of revenue to 55% of revenue versus 52% in FY05; increased investment and KPO costs pressured gross profit.

• US GAAP operating cash flow was Rs 1,415.3m versus Rs 1,711.8m in FY05; net income was Rs 2,190.4m versus Rs 2,031.4m.

Outlook and guidance

• Core banking replacement, multi-country system standardization, legacy package upgrades, risk and compliance, and expansion into insurance were identified as growth opportunities.

• Oracle’s global sales network and partner-enabled implementations were expected to expand market reach and available implementation capacity.

• Operating cash flow was expected to meet foreseeable capital expenditure and working-capital needs; future funding requirements were primarily tied to business expansion.