TIBCO Software Inc. (NASDAQ: TIBX) Management Interview

TIBCO Software Inc.
Murray D. Rode, COO


WSR: Good day from Wall Street. This is Juan Costello, Senior Analyst at The Wall Street Reporter. Joining us today is Murray Rode, the COO of TIBCO Software Incorporated. The company trades on NASDAQ and their ticker symbol is TIBX. They are a provider of infrastructure software. Thanks for joining us today Murray.

Murray Rode: My pleasure, thank you, Juan.

WSR: Starting off, talk about the company now offering cloud-based business analytics.

Murray Rode: As you said in your intro, the company provides quite a range of infrastructure software. Part of what we offer is a visual analytics technology called Spotfire. What we’ve done recently with Spotfire is taken the same kind of technology that we offer to the enterprise, say, a financial analyst or a research analyst and a clinical trial setting, etcetera, financial analyst, that same sophisticated visual analytics technology we’ve moved to a cloud offering such that anyone, an individual or small business or our larger enterprise customers can now access it through a cloud-based offering.

WSR: Talk about some of the other company’s key products, some of your other operating subsidiaries, and what the market opportunity is there.

Murray Rode: If you look TIBCO, it’s actually a company that sells a wide range of technologies and products. All can kind of be lumped under the umbrella of infrastructure software, for companies, for the movement of information and integration of their systems. What our suite of products does broadly is two things. First of all, it enables companies to seamlessly integrate their information and systems that drive their business and then secondly they can create new systems, building blocks style on top of this platform of infrastructure software. What we like to say in terms of the value of all this is that it gives companies a two-second advantage in the way they run their business. By that we mean, if you as a company can have the right information just two seconds ahead of time that can be worth much more to you than a whole bunch of information six months after the fact. So, this is sort of thing where if you can kind of understand customer behavior and see just a couple of seconds ahead of time you can cross-sell or upsell that customer a new product. If it’s retail financial services company and a customer is rolling over a mortgage calculator on the website, that’s an opportunity to upsell that customer other products, if you can understand that information in time and act on it. And that’s really what all the products we sell are focused on, is how to give this two-second advantage to customers.

WSR: In the ’80s you were known for the real-time software to help on Wall Street. Talk a little about the trends right now in the sector and how well positioned you believe the company is to capitalize on them?

Murray Rode: It’s interesting to look back at the roots of the company, the initial foray we had into financial services on Wall Street. That’s really where we honed a lot of our skills and originally developed a lot of the concepts for our technology in handling large volumes of information in real-time, distributing those to the desktops of traders and then integrating the systems that process trades. What we’ve seen over the last decade or so is a move in most companies towards a much broader focus on information. So, it’s gone from being just concerned about transactions, selling a stock, or processing a trade, or selling a product to a customer, to a much broader notion of information, what we talk about as events. So, all the various events that are of interest to a business, what a customer does when they are looking at products in a store on a website, how business is behaving, what’s happening in the distribution network for the business. All of these parts of the business generate events of interest and so this has created a huge new mass of information that companies have to sift through and try and get value up quickly. It’s a bit of an extension of what trading firms have seen on Wall Street. The same concept is now very mainstream as companies try to make sense of all this information and take advantage of it in real-time or near real-time to get the maximum benefit.

WSR: What would you say continues to make the company unique from some of the other players in your sector?

Murray Rode: A few things make us very unique in the space. One, we’ve been talking about this approach to systems in the enterprise — or the information systems that companies use, this event driven infrastructure-based approach to how companies develop their systems and manage their IT environments. So, we were really a pioneer in this, and I think are still the innovator in terms of real-time technologies and technologies for integrating and analyzing and automating systems in this fashion. The second thing is that, for us, the competitors are really big conglomerate software companies, IBM most notably, and for them this kind of technology is just a part of what they do, it’s not their sole focus. So, we now really stand-alone as the pure play independent provider of this kind of technology and it’s a very large market, and so it puts us really at the forefront as the innovator for this space. I think from an investor perspective that’s one of things that interesting about TIBCO, our proven track record as being the innovator here and now our position as the stand-alone independent provider, the kind of Switzerland of enterprise software.

WSR: A reason the stock has reached 52-week high. With that being said, is there still anything you wish that investors better understood about the company?

Murray Rode: I think we’ve certainly seen good performance in the stock this year. But when you look at our position relative to other enterprise software comps, I think there’s still a lot of upside really in the value of TIBCO as a company and as a stock. We’ve been very public about our objective to grow EPS on an annual basis 15% to 20%, and the first half of this year, the first two quarters of our fiscal this year were very strong in terms of performance. On a year-to-date basis, revenues are up over 19%, license revenue is up over 20%, our operating income is up over 40%, and EPS is up about 37% on a year-to-date basis. We’ve now had eight consecutive quarters where we’ve beat consensus. So, I think one of the things that’s happening with performance of the stock is it’s starting to catch up to the performance of the company. When you compare our valuation to others in the space, we’re still half or two-thirds of what other comparable companies are getting for valuations. So, I think there’s a lot of upside in the stock and we continue to be positive in terms of the opportunity for the company in the long-term.

WSR: Perhaps you can walk us through your background and experience, and talk a little about some of the strengths of the management team over at TIBX.

Murray Rode: I actually came out of a management consulting background, did a lot of work in large scale systems integration, strategic planning, business process, reengineering, that’s sort of thing. I’ve been at TIBCO over 15 years now in a variety of roles and a variety of departments in the company. Before moving into the COO role, I was CFO for over three years. So, a pretty varied background, and you’ll actually see that kind of profile across the board in the executive management team. I think the shortest tenure among the executive officers in the company is six years, many of us are ten-plus, another guy in the team is about 15 like me, and again from varied backgrounds. There’s management consulting, there’s big software experience, small software company experience. So, it gives us a good variety of skills and perspectives. Our CEO, Vivek Ranadive, founded the company, still with the company, very much a visionary in information technology and seeing many of these trends and driving the business to capitalize on them.

WSR: What are the milestones, goals, and objectives that the team is hoping to accomplish over the course of next year?

Murray Rode: One of the big things I mentioned a moment ago is delivering 15% to 20% annual EPS growth, that’s a major focus for the management team, continuing to deliver that kind of value to shareholders. In support of that, there are several key things we’re focused on. One is continuing to manage the business tightly, effectively managing costs, and maintaining efficiency in the operation. The second is growth, both organically in terms of the businesses we have and inorganically acquiring other complementary businesses. The last thing I’d call in terms of major areas of focus is innovation. The history and the DNA of the company is to be an innovator, to be a growth company, and to define new solutions and be a leader in our space, and that’s something we continue to be very focused on.

WSR: Once again, joining us today is Murray Rode, Chief Operating Officer for TIBCO Software, which trades on NASDAQ, ticker symbol is TIBX, currently trading north of $14 a share, the market cap is $2.3 billion. Before we conclude, just to recap some of you key points, why do you believe that investors should consider TIBCO Software as a good long-term investment opportunity?

Murray Rode: First of all, we address a very large market in terms of enterprise software. Secondly, we’re an innovator in the space. So, our potential to grow and build on our already very strong blue chip customer base is strong. Thirdly, we would argue still relatively undervalued compared to many of our peers, given our performance and our potential.

WSR: We certainly do look forward to continuing to track the company’s growth, as well as report on your upcoming progress. I like to thank you for taking the time to join us today and to update our investors on TIBCO Software.

Murray Rode: Thank you.

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