Siebel Systems Exceeds Expectations for the Fourth Quarter Ended December 31, 2005
January 12 2006 - 7:30AM
Business Wire
Siebel Systems, Inc. (NASDAQ:SEBL): -- License Revenues Up 91% over
Third Quarter -- Operating Margin Exceeds 23%; Operating Income Up
203% over Third Quarter -- Strong Results Across Key Geographies,
Industries and Products Siebel Systems, Inc. (NASDAQ:SEBL), a
leading provider of customer-facing solutions, today announced
preliminary financial results for the fourth quarter ended December
31, 2005 that significantly exceeded management guidance and
analyst consensus expectations, and achieved strong sequential and
year over year growth across all revenue and profit measures. -0-
*T Q4 2005 Q4 2005 ------------------ Preliminary Company Analyst
Q3 2005 Q4 2004 ($M, except %s) Results Guidance Consensus Actual
Actual --------------------------------- -------- --------- -------
-------- Revenues License 214 110-130 124 112 161 Maintenance 131
120-126 126 125 122 Services & Other 124 110-115 114 111 109
----------- -------- --------- ------- -------- Total Revenues 469
340-360 362 348 392 Operating Income 107-111 N/A N/A 36 65
Operating Margin 23-24% 13%-16% 15% 10% 17% Pre-Tax Income 123-127
N/A N/A 53 79 Pre-Tax Margin 26-27% N/A N/A 15% 20% Q4 2005
Preliminary Results vs. ----------------------------------- Company
Analyst Q3 2005 Q4 2004 ($M, except %s) Guidance Consensus Actual
Actual ---------------------------------- -------- ---------
------- -------- Revenues License +78% +73% +91% +33% Maintenance
+7% +4% +5% +7% Services & Other +10% +9% +12% +14% --------
--------- ------- -------- Total Revenues +34% +30% +35% +20%
Operating Income N/A N/A +203% +68% Operating Margin +62% +57%
+135% +38% Pre-Tax Income N/A N/A +136% +58% Pre-Tax Margin N/A N/A
+77% +33% Q4 2005 Guidance as of October 26, 2005. Analyst
Consensus as of January 6, 2006. *T The company expects total
revenues for the fourth quarter of 2005 to be approximately $469
million, above analyst consensus expectations by 30%, up 35%
sequentially, and up 20% year over year. The company expects
license revenues for the quarter to be approximately $214 million,
above analyst consensus expectations by 73%, up 91% sequentially,
and up 33% year over year. Maintenance revenues are expected to be
approximately $131 million, above analyst consensus expectations by
4%, up 5% sequentially, and up 7% year over year. Services and
Other revenues are expected to be approximately $124 million, above
analyst consensus expectations by 9%, up 12% sequentially, and up
14% year over year. In addition, OnDemand total contract value for
the fourth quarter of 2005 is expected to be approximately $16
million, up 42% sequentially and 65% year over year. License
revenues grew significantly across all major geographies, including
approximately 56% sequentially and 43% year over year in the US,
approximately 79% sequentially and 150% year over year in APAC/ROW
and approximately 162% sequentially and 5% year over year in EMEA.
Domestic business accounted for approximately 43% of license
revenues and new customers accounted for approximately 33% of
license revenues. Total transaction count, at 513 license
transactions during the quarter, increased approximately 61%
sequentially and 21% year over year. Forty-four of these
transactions were over $1 million, of which six transactions were
$5 million or more and of which four transactions representing each
major business (Americas, EMEA, APAC and Americas Public Sector)
were between $10 million and $15 million. Preliminary average
license transaction size of $418,000 was up approximately 18%
sequentially and 10% year over year. Terms, sales cycles and close
rates were consistent with historical norms. Many key products,
including Siebel Business Analytics, Self Service, Customer Data
Integration, Siebel CRM Professional Edition and Siebel CRM
OnDemand, as well as key verticals, including Telecommunications,
Financial Services, Life Sciences, and Manufacturing and
Distribution, contributed strong results. Operating margin for the
fourth quarter of 2005 is expected to be approximately 23% to 24%
of total revenues and operating income is expected to be
approximately $107 million to $111 million, up approximately 203%
sequentially and 68% year over year. Pre-tax margin is expected to
be approximately 26% to 27% of total revenues and pre-tax income is
expected to be approximately $123 million to $127 million, up
approximately 136% sequentially and 58% year over year. The company
is still reviewing its effective tax rate for the quarter and thus
will not provide a preliminary estimate of net income or earnings
per share at this time. The company's cash, cash equivalents and
short term investments are expected to be approximately $2.39
billion as of December 31, 2005, reflecting net cash generated
during the fourth quarter of 2005 of approximately $144 million.
Deferred revenues are expected to be approximately $409 million as
of December 31, 2005, up approximately $94 million over the third
quarter. As of December 31, 2005, headcount was 4,686. "In the
second quarter of 2005, we committed to strengthening Siebel's
leadership team and increasing accountability throughout our
organization," said George T. Shaheen, Chief Executive Officer of
Siebel Systems. "We committed to improving our revenue generation
capability, aligning our cost structure with the scale of our
business, and investing in the products and technology that would
keep Siebel Systems at the forefront of CRM and analytics. We have
delivered strongly against these objectives. I am proud of our
improvement in the second half of 2005, which yielded sequential
and year over year growth in all revenue and profit categories
during the fourth quarter. This quarter represents our best
revenue, profit and cash generation performance since the first
quarter of 2002. Our performance in the fourth quarter of 2005
represents a strong affirmation of the market opportunity in CRM
and analytics, the improvements we've made to address the market,
and customer confidence in the future of Siebel CRM and analytics
following the proposed Oracle transaction." Siebel Systems Secures
New Customers and Repeat Orders: The company concluded
approximately 513 new software licensing agreements with new and
existing customers in the fourth quarter, including Airbus France,
Alaska Airlines, Amgen, Bank of Montreal, Barclays Bank Plc., Blue
Cross & Blue Shield of Florida, The Boeing Company, Genzyme
Corporation, ITT Flygt AB, Level 3 Communications, Lloyds TSB Bank
PLC., Maersk Sealand, Massachusetts Mutual Life Insurance Company,
Medtronic, Motorola, The New York Times Company, Neopost SA, Nissan
North America, Norwich Union Healthcare Limited, Novartis
Pharmaceuticals Corp, Rabobank Nederland, Royal Mail Group plc, Die
Schweizerische Post, Societe Generale, Telecom Italia SpA, Telstra
Corporation Limited, Trend Micro, and Warner Brothers
Entertainment. Siebel Systems will host a conference call today,
Thursday, January 12, 2006, at 5:30 a.m. Pacific. The live webcast
and replay can be accessed at www.siebel.com/investor. The company
currently expects to release its final financial results for the
fourth quarter of 2005 the week of January 23, 2006. About Siebel
Systems Siebel Systems is a leading provider of software solutions
and services that drive value and loyalty in client-customer
relationships, providing best-in-class capabilities in on-premise
and hosted customer relationship management (CRM), business
analytics, and customer data integration. Siebel's new Customer
Adaptive Solutions enable organizations to model their
customer-centric business processes in order to drive the most
effective customer interactions, gain increased insight over time,
and continually realign those processes for systemic and consistent
improvement. With more than $2 billion in R&D investments, 13
years of customer software experience, an extensive global
ecosystem of alliance partners, and more than 4,000 customers and
3.8 million live users, Siebel is the proven choice in helping
organizations of all types and sizes achieve customer-driven
business results. For more information, visit www.siebel.com.
Siebel is a trademark of Siebel Systems, Inc. and may be registered
in certain jurisdictions. GAAP preliminary financial results
presented above include the impact of approximately $4 million in
Upshot acquisition earn out, merger related legal fees and other
charges. This press release contains forward-looking statements
that involve risks and uncertainties. The final results for the
fourth quarter of 2005 of Siebel Systems, Inc. may differ from the
preliminary results discussed above due to factors that include,
but are not limited to, risks associated with final review of the
results and preparation of quarterly financial statements. Future
operating results of Siebel Systems, Inc. may differ from that
forecasted in the forward-looking statements due to factors that
include, but are not limited to, risks associated with our pending
merger with Oracle Corporation, financial, economic, political and
other uncertainties, the business software applications market,
dependence on the Internet, risks associated with new versions and
new products and risks associated with rapid technological change.
Further information on potential factors that could affect the
financial results of Siebel Systems, Inc. are included in its
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and its
other filings with the Securities and Exchange Commission, which
are available at www.sec.gov. Siebel Systems assumes no obligation
to update the information in this press release.
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