CA, Inc. (NASDAQ:CA) Q1 2016 Earnings Conference Call - Final Transcript

Jul 23, 2015 • 05:00 pm ET


CA, Inc. (NASDAQ:CA) Q1 2016 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the CA Technologies First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Traci Tsuchiguch, Vice President of Investor Relations. You may begin.

Traci Tsuchiguch

Thank you and good afternoon everyone. Welcome to CA Technologies' First Quarter Fiscal Year 2016 Earnings Call. Joining me today are Mike Gregoire, our Chief Executive Officer, and Rich Beckert, our Chief Financial Officer. Mike and Rich will offer some prepared remarks and then we will open up the call up for a Q&A session.

(Forward-Looking Cautionary Statements)

So, with that, let me turn the call over now to Mike.

Mike Gregoire

Good afternoon, and thank you for joining us. We had an encouraging first quarter, driven by improved sales execution, strong operating margin performance, and continued progress towards achieving our long-term goals. While our overall first-quarter total new sales were down mid-single digits year-over-year, enterprise solutions new sales were up low-single digits year-over-year. This was offset by mainframe new sales, which were down in the high-teens. The decline in mainframe new sales was in-line with our expectations.

Mainframe capacity was negatively impacted by both the decline and composition of our Q1 renewal portfolio, as well as a renewal with a large North American financial institution that required less capacity following a merger that occurred multiple years ago. That said, our outlook for the mainframe business remains unchanged, as we continue to expect mainframe revenue to be down low single-digits over the medium-term, which we believe is in-line with the mainframe market.

Non-GAAP operating margin was 41% in the quarter, as we remain focused on efficient execution and financial discipline. Although I am pleased with the efficiency of the business and encouraged by the improvement in enterprise new sales, we still have work to do to drive the kind of growth that our company has the potential to achieve.

Our recent results only partly capture the traction we are experiencing in the field and the strong market opportunity in front of the company. The disruption of traditional business models is clearly accelerating, as enterprises across the globe are embracing the application economy to drive innovation. CA's solutions enable enterprises to capitalize on the opportunities created by this application economy, where software is the competitive differentiator and application development is the driver of innovation.

Let me provide you with more insight into the progress we're making towards our strategy to deliver differentiated solutions, improve sales execution and increase our velocity. First, in product development, we have stated that in order to be a leader in the next generation of software, innovation must be the lifeblood of our company.

The recent hiring of Otto Berkes as our new Chief Technology Officer signals our intent to accelerate organic innovation and enrich CA's long-term technology