Sybase Reports 22% License Revenue Growth In 2Q 06

Published 21st July 2006

Revenues, EPS exceed analyst consensus estimates management raises full-year EPS guidance.

Highlights:
• Core database license revenue grows 31%, mobile & wireless license revenue increases 21%, year-over-year
• Pro Forma EPS increases 33% to $0.36 and GAAP EPS increases 71% to $0.29, year-over-year
• Management raises full-year pro forma EPS guidance to $1.38 from $1.29, GAAP EPS guidance to $1.12 from $1.07...


HONG KONG - 21 July 2006
Sybase, Inc. (NYSE: SY), a leading provider of enterprise infrastructure and mobile software, today reported financial results for the second quarter ended June 30, 2006.

For the 2006 second quarter, total license revenue increased 22% to $83.1 million from $67.9 million in the second quarter of 2005. Total revenue for the 2006 second quarter increased 5% to $215.6 million from $204.4 million for the second quarter of 2005.

Operating income calculated in accordance with generally accepted accounting principles (GAAP) for the second quarter of 2006 increased 15% to $32.4 million, compared with GAAP operating income of $28.1 million for the year-ago quarter. The GAAP results for the 2006 second quarter include the impact of $3.3 million associated with implementation of FAS 123R.

GAAP net income for the 2006 second quarter increased 66% to $26.3 million, or GAAP EPS of $0.29, compared with GAAP net income of $15.9 million, or GAAP EPS of $0.17 for the 2005 second quarter.

Pro forma operating income increased 22% to $41.8 million, compared with pro forma operating income of $34.3 million in the second quarter of 2005. Pro forma net income for the second quarter increased 31% to $32.8 million, or earnings per diluted share of $0.36. This compares with pro forma net income of $25.0 million, or earnings per diluted share of $0.27, for the 2005 second quarter.

Pro forma amounts exclude amortization of certain expenses including certain purchased intangibles, stock-based compensation, and restructuring costs. Accompanying this release is a reconciliation of pro forma and GAAP amounts for the 2006 second quarter.

"Our strong growth in the quarter was driven by demand for our ASE 15 flagship data management solution and its encryption and partitioning options, growth in data integration solutions, plus solid performance in our mobile business," said John Chen, chairman, CEO, and president of Sybase.

"This resulted in our highest year-over-year license growth in 12 years and the highest Q2 operating margin in our history as a public company," added Mr. Chen. "Our second quarter performance validates the strength of our Unwired Enterprise strategy and solutions, and we remain committed to growing the business through investments in R&D, sales and marketing, and other strategic initiatives.

"We're encouraged by the quality of our business, consistently high levels of customer satisfaction, and solid maintenance renewal rates. As a result, we remain on track to achieve our revenue growth targets, and we expect to meet or exceed our previous cash flow and profitability targets for the year," concluded Mr. Chen.

Balance Sheet and Other Data
At June 30, 2006, Sybase reported $935.9 million in cash and cash investments, including restricted cash of $5.5 million. The company generated $51.6 million in cash flow from operations in the second quarter.

Sybase repurchased approximately $20.6 million worth of its stock during the 2006 second quarter. As of June 30, 2006, approximately $264.3 million remained authorized in the company's current share repurchase program.

Days sales outstanding for the second quarter was 56 days.

Forward Guidance
For the third quarter ending September 30, 2006, management anticipates revenues will range from $210 to $215 million, with pro forma fully diluted EPS of approximately $0.33. GAAP EPS is estimated to be approximately $0.27, which would include the impact of expensing options under FAS 123R.

For the 12-month period ending December 31, 2006, management anticipates total revenue growth of 6%. Due to improved margin performance in the first half of 2006, management is raising its most recent full-year estimates for fully diluted pro forma EPS to approximately $1.38 from $1.29. Management is also raising GAAP EPS guidance to approximately $1.12 from $1.07. Management also expects it will be able to meet, or slightly exceed, the cash flow target of $170 million for the year.

Q206 Company Highlights
• Launched Information Anywhere® Suite, an enterprise-class mobile platform enabling customers to securely extend back-end applications and business processes to remote workers on the front lines.
• Acquired privately held Solonde AG, a Hamburg, Germany-based provider of next-generation ETL technology, in an all-cash transaction.
• Launched SQL Anywhere® 10, the next-generation of the market-leading data management and synchronization solution for frontline environments.
• Delivered Sybase Replication Server® 15, the next-generation data movement solution that synchronizes operational data across mixed database environments and geographies in real time.
• Delivered Mirror Activator™, Sybase's business continuity solution, now available for Oracle database environments.
• Delivered RFID Anywhere™ 2.1, the latest-generation platform for developing and managing robust, highly distributed radio frequency identification (RFID) solutions.
• Delivered DataWindow .NET™ 2.0 application development tool to support the Microsoft .NET Framework.
• Delivered Sybase® WorkSpace 1.5, an Eclipse-based unified application development environment.
• Announced support for Motorola Q by Sybase iAnywhere technologies.