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Sybase Reports Double-Digit Growth

Second Quarter Database License Revenue, Operating Income, and Earnings

PBDJ News Desk

Sybase, Inc. (NYSE:SY), the largest enterprise software and services company exclusively focused on managing and mobilizing information, today reported financial results for the second quarter ended June 30, 2009.

Highlights:

  • Historical second quarter records achieved in operating income, operating margin, net income, EPS, and cash flow
  • License revenue increased 4% year over year and 11% in constant currency
  • Database license revenue increased 23% and 30% in constant currency
  • Mobile software license revenue increased 4% and 11% in constant currency
  • GAAP operating income up 24% to $63.3 million, representing operating margin of 23%
  • Non-GAAP operating income up 23% to $78.3 million, representing operating margin of 28%
  • GAAP EPS up 28% to $0.43, non-GAAP EPS up 16% to $0.56
  • Cash flow from operations increased 9% to $68.3 million

2009 Second Quarter Results

Total revenue for the second quarter of 2009 was $278.0 million from $282.7 million in the second quarter of 2008. License revenue grew to $94.1 million compared to $90.5 million in the second quarter of 2008. Services revenue was $139.6 million, and messaging revenue was $44.2 million in the 2009 second quarter.

Sybase’s second quarter total revenue reflects a 7% negative impact from foreign currency exchange rates. Absent the impact of currency, total revenue increased 5% year over year, and license revenue increased 11% year over year.

Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the second quarter increased 24% year over year to $63.3 million, representing an operating margin of 23%.

For the quarter, the company reported GAAP net income of $37.6 million and GAAP earnings per diluted share (EPS) of $0.43. This compares with 2008 second quarter GAAP net income of $29.8 million and GAAP EPS of $0.33.

Non-GAAP operating income for the 2009 second quarter increased 23% year over year to $78.3 million, representing a 28% operating margin.

Non-GAAP net income for the second quarter grew 14% year over year to $49.4 million. Non-GAAP EPS grew 16% year over year to $0.56.

Non-GAAP amounts exclude the amortization of certain purchased intangibles, stock-based compensation, restructuring costs, charges related to the impairment of auction rate securities, imputed interest related to our convertible debt, gains or losses on assets held for employees in a deferred compensation plan, and the tax effect of these and related items.

Accompanying this release is a reconciliation from GAAP to non-GAAP amounts for the second quarters of 2008 and 2009.

Cash flow from operations was $68.3 million in the quarter.

Chairman, CEO and President of Sybase John Chen stated, "We are pleased to deliver another record performance in these challenging economic times, highlighted by second quarter all-time highs in operating margin, net income, and cash flow, as well as double-digit growth in database license revenue, operating income, and earnings.

“We also experienced momentum in our key growth initiatives including analytics, enterprise mobility and mobile commerce,” added Mr. Chen. “During the quarter, we launched risk analytics with time series capabilities, expanded partnerships with the Sybase Unwired Platform, and were selected to provide the technology platform on a number of mBanking and mCommerce opportunities.

“Due to our stronger-than-expected performance in the first half of this year, we are raising our full-year 2009 financial guidance for the second time this year,” concluded Mr. Chen.

Balance Sheet and Other Data

At June 30, 2009, Sybase reported $816.8 million in cash and cash investments, including restricted cash of $18.0 million.

As of June 30, 2009, $62.5 million remained authorized under the company’s current share repurchase program.

Days sales outstanding (DSO) for the first quarter was 76.

Guidance

For the third quarter ending September 30, 2009, management anticipates total revenue in the range of $275 million to $280 million, representing 4% to 6% growth before taking into account an estimated 7% negative currency impact. Management anticipates non-GAAP fully diluted EPS in the range of $0.55 to $0.57 and GAAP EPS in the range of $0.41 to $0.43.

For full-year 2009, management is raising guidance for total revenue to a range of $1.11 billion to $1.12 billion from prior expectations of approximately $1.10 billion. This represents growth of 5% to 6% before taking into account an estimated 7% negative currency impact. Management is raising guidance for non-GAAP EPS to a range of $2.23 to $2.27 from a previous range of $2.20 to $2.24. Management is raising GAAP EPS to a range of $1.67 to $1.71 from a previous range of $1.64 to $1.68. Management is also raising expectations for full-year 2009 cash flow from operations to approximately $275 million from prior expectations of $250 million or higher.

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