Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Tom Giannopoulos - Chairman, President & Chief Executive Officer

Peter Rogers, Jr. - Executive Vice President, Investor Relations and Business Development

Cynthia Russo - Executive Vice President, Chief Financial Officer

Thomas Patz - Executive Vice President, Strategic Initiatives, and General Counsel

Analysts

Daniel Perlin - RBC Capital Markets

Terry Tillman - Raymond James

Ross Macmillan - Jefferies & Co.

Gil Luria - Wedbush Securities

Bhavan Suri - William Blair & Company

Brad Reback - Oppenheimer

Mayank Tandon - Needham & Company

Keith Housum - Northcoast Research

MICROS Systems, Inc. (MCRS) F4Q 2011 Earnings Call August 25, 2011 4:45 PM ET

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MICROS Systems Incorporated Fiscal Year 2011 Fourth Quarter Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder the conference is begin recorded Thursday, August 25, 2011. I would now like to turn the conference over to Tom Giannopoulos, Chairman and CEO of MICROS Systems. Inc., please go ahead, sir.

Tom Giannopoulos

Thank you, Kevin, and good afternoon everyone. Thank you again for attending this today's conference call. Again to remind you this is the fourth quarter and end of our fiscal year 2011 conference call. The fiscal year which of course ended on June 30, 2011. As always here with me are Cindy Russo, our CFO; Tom Patz, Peter Rogers, and we will commence with Peter and the disclaimer.

Peter Rogers, Jr.

Thank you, Tom. Good afternoon, ladies and gentlemen. Some of the comments today are forward-looking statements that involve risks and uncertainties, such as uncertainties of product demand and market acceptance; the impact of competitive products and pricing on margins; the ability to obtain on acceptable terms the right to incorporate in MICROS products and services; technology patented by others; environmental and health related events; unanticipated tax liabilities and the effects of terrorist activity and armed conflict.

MICROS undertakes no duty to update any forward-looking statements to conform to actual results or changes in MICROS expectations. Other risks and uncertainties associated with MICROS business are identified in the management’s discussion and analysis of financial condition, results of operations and business and investment risk sections of MICROS SEC filings. Tom?

Tom Giannopoulos

Okay, thanks, Peter. Our financial results for the quarter and the fiscal year were excellent under any circumstances but especially when you consider the global events turmoil of the past 18 months. We had an outstanding year and for the fiscal year of course we had double digit revenue growth. 10.2% from $9.14 million last year to $1.007 billion. We had record gross margin at 55.58% versus last year’s 54.93%. A record income from operations at $225 million, which is plus 25.3% from last year’s $180 million which was also 19.7% last year versus 22.41% this year.

Record income before taxes at 229 – all these numbers of course are non-GAAP numbers, $229.6 million or 22.7% versus last year’s $185.273 million and the growth there between the 185 and 229 is 23.97%. Record net income at 15.7%, $158 million, versus last year’s $127 million, at that’s a 24.5% growth year-to-year. A record EPS, $1.92 versus $1.57, a 22.3% growth. Record cash at $826.5 million, and that’s an increase of $221.3 million from last year. This is cash in investments. Our market value for the fiscal year increased by $1.46 billion. That’s June to June. And our stock price in the fiscal year of 2011 reached an all time high of $52.92 on April 27, 2011.

For Q4 specifically, this fiscal year when compared to last year the results were equally as impressive. Revenue growth of 10.4% from $248 million to $274 million, gross margin ratio improvement from 54.9% to 56.51%. Income from operations, growth of 25.38% from $54 million to $67 million. And income from operations ratio growth from 21.83% to 24.78%. All these are impressive numbers for our fiscal year and the quarter. I will ask Cindy to give you the details on the additional numbers.

Cynthia Russo

Thanks, Tom. The highlights for the balance sheet for the quarter and the year are as follows. MICROS had $826.5 million of cash and investments June 30. This is an increase of $23.7 million from our last announcement and an increase of $221.3 million or 36.6% from the beginning of the fiscal year. The cash break-out between international subsidiaries and our domestic segment remains at 58% international, 42% domestic. During the year the company generated $199.6 million of cash from operations and $183.3 million of free cash flow.

Purchases of property, plant and equipment amount $10.7 million, while MICROS capitalized $5.6 million in the year for its next generation software offering. The net sales of investments increased cash growth $70.7 million, simply due to the timing of our investment maturities. On the financing end, the company received $35.8 million from the exercise of stock options and the related tax benefit and spent $33.4 million on the repurchase of common stock.

During the fiscal year we purchased a total of 708,000 shares of which 444,000 were purchased in the fourth quarter. Thus far in Q1 MICROS has purchased 429,000 shares of common stock at an average price of $43.76 per share. Days sales outstanding at quarter end were 59.7 days compared to 62.2 days last quarter. International DSOs were 70.7 days while domestic DSOs were 47.5. Our inventory balance of 38.1 million is an increased of 2.4 million from the prior quarter. In addition to an increased due to exchange, the balance also reflects our shipments of the new Workstation 2015 released in August 2011.

Inventory turns for the fourth quarter were 9.3 inline with last year’s record of 9.4. Combined current and long term deferred revenue balance of $146.6 million is a 17.7% increase from the last year’s balance of $124.5 million. Along these same lines the consolidated backlog as of June 30, 2011, stand at $404.8 million, up 19.5% over Q4 last year. Much of this growth can be attributed to the increased market adoption of our SaaS offerings, both in the hospitality and retail sectors of the business.

A few additional items related to the income statement are as follows. On the revenue side, the segments break for the quarter was domestic 44%, international 56%. Year-to-date the reportable segments finished at domestic 47%, international 53%. Maintenance and hosting related revenues for the quarter grew over 15% from the prior year to a $103.5 million. Recurring services for the year totaled approximately $392 million or 57.5% of service revenue.

To give you some insight into our SaaS and hosting service revenues, we continue to see growth in this sector. Approximately 35% over the parallel quarter. Operating expenses as a percentage of revenue were a record low 31.7% for the quarter and 33.2% for the year. SG&A expenditure continue to decline as the company’s continues to monitor its spend level, offset slightly by our continued investments in R&D. Non-operating income excluding non-GAAP items amount to $1 million for the quarter and $3.7 million for the year.

On a GAAP basis, the company wrote down the remainder of one of its auction rate security holding as seen in our press release today. The majority of the ARS adjustments over the past few years have been to this particular security which is now written down in full and no longer reflected on the balance sheet. The 31% fiscal 2011 tax rate is inline with expectations and includes an increase in tax benefits realized upon the expiration of statutes. For fiscal 2012 we recommend that you continue to model a tax rate of 31% to 32% for both GAAP and non-GAAP.

Tom?

Tom Giannopoulos

Okay. Thanks, Cindy. Overall, for the year most of our businesses performed well. If you look at the European business, the total business. Asia Pacific, South America and the North America, just the street business in North America, all performed very well. Exceeding their numbers both in revenue and profitability. The rest of the small business units, some of them were better, some of them were not versus there budgeted numbers. But almost all had a better year than last year.

In regards to fiscal year 2012 which started July 1 and runs through of course June 30 of next year, our guidance is consistence with the already published first call numbers. Revenue of a $1.111 billion and EPS of $2.09. We believe we can do better than that. But at this time we are very cautious and aware of the global uncertainties, so we will stay with this guidance for the time being. Kevin, we will take questions now.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) Our first question comes from the line of Dan Perlin with RBC Capital Markets. Dan, your line is open.

Daniel Perlin - RBC Capital Markets

Thanks, good afternoon. Great quarter and thanks for the guidance as well. The question I have, just to start with, can you give us any insight into what you are seeing kind of in the current environment? In your quarter in June, obviously business was very strong. It sounds like based on the guidance you feel pretty good about what you see so far in ’12 in the backlog numbers is strong. But what you hear from clients right now, given all this uncertainty, and are you experiencing a pullback anywhere? And then if you could also just break that down in between really what you are seeing from your restaurant clients relative to your hotel clients? Thanks.

Tom Giannopoulos

Well, if you look at the press releases and results of many of our customers and non-customers, whether in restaurants or hotels, the majority of them had a very good last quarter, whatever their last quarter was. And a majority of them increased their guidance for the rest of the year. So at least those who have announced numbers, they feel very bullish about the rest of the year so that's a positive for us. And it's encouraging that they feel this way to the point where they've increased their numbers for the rest of year. That's it.

Daniel Perlin - RBC Capital Markets

Okay. Fair enough. And then you had a long-term goal of achieving almost a 25% operating margin. You guys were really close to doing it in the fourth quarter and it was going to pull your number, but the business has obviously started to produce a lot of leverage. My question is, in the event that things actually go backwards with the economy, and ultimately the business, do you feel like you have ample room to continue to take cost out or would you say you’ve taken a lot of cost out through this past year?

Tom Giannopoulos

It's a pessimistic view of the world. But of course the 25% is a goal that we have stated before. I think if you look at companies with our business model, which is hardware, software, and service, there doing 20% or 21% would be a great number. So do we have room for additional cost-cutting and improvements? Of course. But I think we're looking on the positive side and that is to make sure that we get our products out there to our customers and get new customers under our – using our new products that we are developing.

Daniel Perlin - RBC Capital Markets

Few quick ones than I'll jump back in queue. Can you just give us an update on what kind of demand you're seeing for Simphony? It sounds like it's pretty strong, but I'd like to hear your view. And then lastly, is the plan to still increase maintenance fees as you first approach the January period. Thank you.

Tom Giannopoulos

Simphony is doing very well. In the sites where we have it installed it’s doing very well and customers like it. It obviously generates a lot of interest from new customers because there is a lot of savings as the majority of those are centrally hosted solutions or SaaS, however you want to define it. And with regards to the maintenance revenue, we will play it by ear and see what happens with the economy. We will always do the right thing for our customers. If the economy improves, the majority of the maintenance contracts are renewed in the December-January timeframe. So we'll see how it goes.

Daniel Perlin - RBC Capital Markets

Okay. Thank you, guys.

Operator

Our next question comes from the line of Terry Tillman with Raymond James. Your line is open.

Terry Tillman - Raymond James

Yeah, thanks for taking my questions and good afternoon. I guess the first question just relates to, Tom, you provided some qualitative color on the European business, Asia-Pac business and a couple of the other regions as well as the U.S. or North America street business. What about North America national accounts type business and other bigger nameplates. How is that business either in the quarter or the year versus expectation?

Tom Giannopoulos

They were flat basically. The majority of our – the major account customers, whether restaurants or hotels are – at least in the last fiscal year – didn't really spend a lot of money. So they were flat. But I think they're ready to – I can tell you of a conversation that I had with the CEO of a hotel chain who said let's get together as business is getting better and we need to refresh our technology and we need to do it fast.

Terry Tillman - Raymond James

Okay. And then, Tom, my guess is that, I think last year if I am not mistaken, going into the FY '11 fiscal year, I want to – maybe I am putting – I am recreating history. But I thought you had talked a little about the three largest parts of your business. Restaurants, hotels, and retail. Is there any way you could give us some, at least some general directional commentary on the relative growth rates that you expect in FY '12?

Tom Giannopoulos

I think retail will grow a little bit faster.

Terry Tillman - Raymond James

Okay.

Tom Giannopoulos

If the company grows at 10 points something, 10.2%-10.3%. It is from the 107 to 1111. Retail will grow a little bit faster because of its size, let's say. The others, restaurants and hotels will grow about the same.

Terry Tillman - Raymond James

Okay. And it was the intriguing, the commentary about the SaaS business. Did I – and I don't know if this is for Cyndi or who it’s for but – I don't know if I got my notes right here. 35% growth sequentially and if that's the case, it's typically a subscription business, how did it ramp so quickly? Is there Simphony in that component and anything you can tell us about the actual size of that business now? Thank you.

Cynthia Russo

The size for the quarter in the SaaS business is approximately $16.1 million for the fourth quarter. And it includes not only – includes all of our products from the mymicros to the Simphony to the OPERA hosted. And it's continuing to grow at a very nice pace.

Tom Giannopoulos

Next.

Operator

Next question comes from the line of (Alan Wenfield with David Securities).

Unidentified Analyst

Congratulations, guys. Nice quarter. I was just curious as you go around the world. you have to be a great barometer since you are in 33 countries and you really touch big enterprise in some of your customers. And you touch the average consumer in the Burger King, Starbucks and so many other places. We've heard from many companies that places in Europe were tough in the quarter that ended June 30. And we've heard from other ones that it was just either their execution that powered them ahead in their fine numbers or that the macro was just too much to overcome. It seems like you powered through it. Do you have anything to say on how you've come through July and August, you’re now two-thirds through the quarter and what have you seen from, again, the average consumer to the largest enterprise, hotel chains?

Tom Giannopoulos

Alan, basically we see what everybody sees in the papers, and that is there is substantial uncertainty. Last week or two weeks ago or whatever the timeframe was. Germany came out with a shock. Shocking the world with their growth, GDP growth. We continue to install our products to our major customers around the world, who I think need our products to improve their businesses as well.

So if you look at the company that you mentioned by name, they continue to install our product in their stores and so far so good for us. So, we continue to see a nice demand for our products. We know that the consumer, generally speaking, around the world is substantially challenged because of higher gas prices, because of the political events and so forth. But overall, business continues for us as planned and we challenge our people to go out there and get the business in this difficult environment.

Unidentified Analyst

Thanks a lot.

Operator

(Operator Instructions) Our next question comes from the line of Ross Macmillan with Jefferies.

Ross Macmillan - Jefferies & Co.

Thanks. I had a question on operating expenses. Those were actually down sequentially this quarter and I'd just like to maybe hear your comments as to why that happened and, I guess I was talking about SG&A specifically. What drove that sequential decline and how should we think about cost growth as we look into next year?

Cynthia Russo

From an SG&A perspective, it's not that it's less than – it's a very small amount that it went down. Went from $71.7 million in quarter three to basically $70 million, $1.7 million. So there's nothing in particular, one reason or another. And overall when you look at the percentage of SG&A compared to last year, it has gone slightly down. I mean, it's all a function of trying to reduce our expenses when we can and making sure our headcount –we're putting – adding our heads in the proper places.

Ross Macmillan - Jefferies & Co.

I would just assume, though, that in the fiscal fourth quarter it typically would be higher, but maybe we can take it offline. And then just on gross margins, you had great success in hardware gross margins, those are up year-over-year. Your software gross margins are up materially year-over-year. Again, thinking forward, would you have us think about the gross margins for hardware and software being sustainable? Could they even improve from here, I would love to hear your thoughts?

Tom Giannopoulos

I remember long time ago me telling you and others, that you know we buy the stock if the gross margin is around 50%. Now we're at 55%, and is it sustainable? It depends on the economic conditions and it depends on our customers, prospective customers and so forth. I like to see – like I always like to see the operating expense ratio being less than 30%. I like to see the gross margin stay where they are now. But – and also make sure that the operating profit is where it is now. That would be a very successful company from my point of view and we shouldn't really be thinking about pushing those numbers higher.

Ross Macmillan - Jefferies & Co.

Okay. And then maybe one just, Tom, for you on demand in Europe. I know that this last fiscal year on the hotel business side I think, Europe was probably a better region for you then the U.S. in terms of deployments and revenue growth. Do you still feel looking forward that Europe, for the hotel side, will be a better performer than the domestic business?

Tom Giannopoulos

It depends on some of the negotiations that we have on the domestic side. If we are successful with those, then I believe U.S. or North America will be equal, if not outpacing, the European business. But at this particular time the question mark is the negotiations that we have with some major customers in the U.S.

Ross Macmillan - Jefferies & Co.

Great. Thank you.

Operator

Next question comes from the line of Gil Luria with Wedbush Securities. Your line is open.

Gil Luria - Wedbush Securities

Yes, thank you. Good afternoon. So wanted to follow-up on that question. You were helpful on laying out for us by business line how that would compare to your overall growth rate. Can you do the same thing for geographies? If you're overall growing 10%, where would U.S., Europe, and Asia rank as compared to that goal?

Tom Giannopoulos

I guess I am getting instructions here. You know if you look at South America, it’s a much smaller revenue stream versus the others. So we expect those – from my point of view – to grow faster. If you look at Asia Pacific, it’s next, let's say smaller, entity. South America is being first from a small perspective and Asia Pacific where all the growth is supposed to be happening, whether it’s in China or India. Lots of our customers obviously are expanding there and there is a continuous growth of our customers in that particular area. So I would expect that they would grow faster. And then of course we have Europe where today we conduct a substantial business there, over €260 million-€270 million. So they are more mature. So the growth rate there would be lesser then the other two. But only because of the sizes of the other two.

Gil Luria, Wedbush Securities

And then where would the U.S. rank among those?

Tom Giannopoulos

Somewhere in the middle there. I would hope that the U.S., overall, we can grow more than 10%.

Gil Luria, Wedbush Securities

Got it. And then in terms of your product roadmap. You seem to be involved in some interesting products and projects going forward. Could you give us a little bit more detail in terms of the timeline you see for leveraging your hotel reservations for possibly using that for online reservations with a partner? And in terms of mobile, you put out some press releases around some partnerships there. Do you think that you're going to put more emphasis on putting mobile applications there that you can license to your restaurant customers?

Tom Giannopoulos

Overall, we’re developing products to meet the needs of our customers. Mobile applications, e-commerce applications, online reservations, online ordering, and delivery on the restaurant side. We're working obviously substantially on centrally hosted solutions because that's the way of the future. The new product or enhanced product on OPERA is cloud enabled and service oriented, and multi-tenancy, everything that the customers need for centrally hosted solutions. So, we're working on all fronts. We have advisory council meetings with our customers, both on the restaurant and hotel side, and retail side as well. And the result of those particular meetings is the development of products that meet all those requirements that we talk about.

Gil Luria, Wedbush Securities

Got it. And then finally, Tom, big picture question. You just hit a pretty important milestone. You had $1 billion worth of revenue. What's your timeline for getting to the next milestone, $1.5 billion? Are you going to hang around until then?

Tom Giannopoulos

We're skipping the $1.5 billion, we have, at least a goal to become $2 billion company by, let's say, fiscal year 2015-2016, somewhere in there. And it's a published goal internally for us. Please don't buy the stock because of that. And I think we have plans in place to hopefully reach that goal between 2015-2016. The other question, whether I am personally going to hang around or what?

Gil Luria, Wedbush Securities

Yeah.

Tom Giannopoulos

I have nothing else do to do but MICROS. So...

Gil Luria, Wedbush Securities

Very good. Thank you so much.

Tom Giannopoulos

Thank you.

Operator

(Operator Instructions) We have a question from the line of Bhavan Suri with William Blair & Company. Please proceed.

Bhavan Suri - William Blair & Company

Hey guys, nice job there. Just a couple of quick questions. One on the backlog. I guess the backlog was up nicely, about 20%. So, given that the backlog was up 20% and given that you typically recognize most of that through the year, I guess I was just a little surprised that you didn't feel comfortable given sort of things. They're not great, but they're not horrible, in sort of raising guidance a little more because you grew 10% last year but backlog was worse, so the environment seems somewhat the same?

Tom Giannopoulos

Well it’s a good question. But I think, I don't believe that the environment is the same as a year ago. I think the environment is worse. So, we're being cautious.

Bhavan Suri - William Blair & Company

Okay. That’s fair. And then when I look at the SaaS business and gross margins, I guess over time should I see gross margin improvement because you're selling less hardware, say, less servers in stores and things like that and more services. So, understandably I’m not talking on the cost cutting side here, just sort of the natural movement. If you're growing SaaS 35% sequentially, should I see some improvement in gross margin from that transition?

Tom Giannopoulos

Of course, yes. But you got to be careful here that you don't want to really push all your business immediately to the SaaS, because there’s going to be a drop overall on your revenue line because you're not getting any license revenue upfront.

Bhavan Suri - William Blair & Company

Right.

Tom Giannopoulos

So, we're trying to manage that carefully so that, even though obviously we want the SaaS business and we want centrally hosted business because they're there for a longer time, we've been very careful about the transition between SaaS business and license revenue.

Bhavan Suri - William Blair & Company

And so, Tom, just to follow-up on that a little bit. The services business grew 6% sequentially this quarter to $182 million, so can you just sort of give us a little color of how much of that – of the SaaS piece of it came from the hardware and software license fees?

Cynthia Russo

All SaaS revenue is recorded in the service revenue line.

Bhavan Suri - William Blair & Company

Right, right, but if that has been sold as license, or if was there a customer that had bought license instead recognized SaaS ratably over whatever period. I guess, I'm trying to figure out how much that impacted the license line, going to Tom's earlier point.

Tom Giannopoulos

I think it would be like 5:1 ratio.

Bhavan Suri - William Blair & Company

Okay. And then one last one from me. We talked, I guess last quarter, and the national accounts had been very interested in the Simphony sort of SaaS version, but there was some functionality that was lacking. Sort of when you order the screen in the kitchen pops up and stuff like that, and you were building that out. Any update on where that is and if that's being deployed yet with some of the national accounts?

Tom Giannopoulos

We continue to upgrade and add feature functionality to Simphony depending on the market where we sell. For example the ballpark sports arenas market, the product is 100% complete and we don't need any new feature functionality there. In the QSR market, it needs some additional functionality or it needed some additional functionality. So I believe by the end of this calendar year, our goal is to complete the product with all feature functionalities. Functionality for all the customers, all segments of our customers. QSR, table service, casual dining, sports arenas and so forth.

Bhavan Suri - William Blair & Company

Great. And then just if you could give us a quick update also on the hotel reservation system in conjunction with Google. I guess there was a beta going on, and sort of how that's progressing and what the interest or uptick is there?

Tom Giannopoulos

It's okay. I'd rather not talk about it because it's competitive information. So I will skip that.

Bhavan Suri - William Blair & Company

Okay. Fair enough. Thanks guys, good quarter.

Tom Giannopoulos

Thank you.

Operator

Next question comes from the line of Brad Reback with Oppenheimer. Your line is open.

Brad Reback - Oppenheimer

Hey guys, how are you?

Tom Giannopoulos

Fine, Brad, how are you?

Brad Reback - Oppenheimer

Good, Tom. Going back to the gross margin on the hardware question, at least in my models, I think for the last 10 years it looks like this is the highest number by far. Were there any meaningful shifts in mix in this quarter that may not be around next quarter or broadly speaking fiscal '12?

Cynthia Russo

Yes, there are. There is kind of a one-time flip in there. We would not forecast that going forward.

Brad Reback - Oppenheimer

And was that national account sort of related, Cindy, or something else?

Cynthia Russo

It was a combination of some mix and some other items.

Brad Reback - Oppenheimer

Okay. And going back to the SaaS transition. Tom, if you look over the course of this year, license revenue decelerated every quarter. Your service growth rate accelerated over the course of the year pretty much. Is that something we should continue to expect where license growth is going to be a bit more moderate but we'll see it made up in service/maintenance?

Tom Giannopoulos

Yes. I mean, we'll continue to increase the SaaS revenue because that's what the customers are demanding. And obviously, as a result, the license revenue will be decreasing. And like I said before, the trick is to make sure you manage that transition. And so far, so good.

Brad Reback - Oppenheimer

If that transition were to accelerate, would you guys provide incremental metrics around billings or backlog in a given quarter so we could understand what the true level of the business was in the quarter?

Tom Giannopoulos

Of course. Of course, we will do.

Brad Reback - Oppenheimer

Okay. And then final question on the cash front. You get the question from time-to-time, obviously you buy back stock, any new thoughts on the dividend?

Tom Giannopoulos

The interesting or the difficult thing there is that the majority of – not the majority but about 56%-57% of our cash is overseas. Okay. So it's not in the States where we can take it and give a dividend, let's say. We have to repatriate the cash, 58% of our cash is overseas, and we're kind of waiting for our government to see whether they are going to allow repatriation of the cash without any taxes and so forth. Then it will be a lot easier to think about a dividend. So the cash that we have in the States between the – our goal to make some acquisitions and the stock buyback program and saving some for the rainy day, as they say. You cannot really afford to give a dividend of some sorts that would be meaningful.

Brad Reback - Oppenheimer

Great. Thanks very much.

Operator

Next question comes from the line of Mayank Tandon with Needham. Your line is open.

Mayank Tandon - Needham & Company

Thank you. Most of my questions have been answered, but I did want to get your thoughts on the acquisition of Radiant by NCR, just get your take in terms of what does that mean for MICROS?

Tom Giannopoulos

Again that's kind of the competitive information. At the end of the day we competed with them both in the past. So now only have to compete with one of them. And competition is good and it keeps us on our toes, as we say, so it's business as usual as far as we are concerned.

Mayank Tandon - Needham & Company

Tom, just to probe that a little bit more. I mean is there an opportunity to hire some high quality people from both the organizations as they go through the integration process which always tends to be challenging in a large acquisition?

Tom Giannopoulos

Again, that's competitive information and we'll see what happens.

Mayank Tandon - Needham & Company

Okay. And then just on the margins, I wanted to just dig in a little bit deeper. As you look at the guidance for the next year basically, earnings growth is going to mirror revenue growth. And in the past I think you guys have talked about 100 basis points of margin expansion year-over-year. So, are we to think that you overachieved in the fiscal '11 period, so you’re not going to see that kind of expansion in fiscal '12 or is there more to that?

Tom Giannopoulos

Like I said before, we need to be careful about continuing to increase, let’s say, the demand on those particular numbers. I think the numbers are great. They are higher than the business model of our business, let's say plans, and so if we continue to attain 55% to 56% - 54% gross margins then we have a very healthy company.

Mayank Tandon - Needham & Company

Okay. And finally going back to the cash question. Just wanted to get maybe a little bit more color on your acquisition strategy. What specifically are you looking to acquire? Is it going to be more a geographic expansion, more capabilities? And then we haven't heard much about the fourth vertical in a while, so just wanted to get your latest thoughts on – your thoughts longer term on acquisitions?

Tom Giannopoulos

Generally speaking, the valuations, for whatever reason, have gone sky high as they say. And we're just not going to make an acquisition and overpay because valuations have come up. We continue to look at companies in the three verticals that we are in. We have the list of them and we continue to talk and examine and investigate. And the fourth vertical, the same thing there. We're looking at anything that can help us in the fourth vertical. Again the issue here at this particular instant is that the valuations of these assets are not really practical from my point of view, to be frank.

Mayank Tandon - Needham & Company

Got it. And then can you remind us how much of your share buyback program is left? And I am assuming that with the stock coming down into the low to mid 40s, I mean do you see this as an opportunity to maybe step up the buyback program given your cash balances?

Tom Giannopoulos

Absolutely. And we have –

Cynthia Russo

We have 2.5 million available to repurchase right now in the program.

Tom Giannopoulos

Number of shares.

Mayank Tandon - Needham & Company

Got it. Great. Congrats again. Thank you.

Tom Giannopoulos

Thank you.

Operator

Next question comes from the line of (Vincent Colicchio with Microsystems). Please proceed.

Unidentified Analyst

Yeah, Nice quarter, Tom. Just one question, others were answered. I know you had some traction, your run up through the casino market. You had some opportunities a quarter or two ago. Any updates there?

Tom Giannopoulos

As we speak, we're doing installations of certain properties that we have targeted before that have become, let's say, orders for us. So, we are doing well there.

Unidentified Analyst

And do you expect that to continue into the next year?

Tom Giannopoulos

Yes.

Unidentified Analyst

Okay.

Tom Giannopoulos

Next could be in this year though.

Unidentified Analyst

Exactly. Thank you.

Operator

Your next question comes from the line of Keith Housum with Northcoast Research. Your line is open.

Keith Housum - Northcoast Research

Thanks guys. Thanks for taking my call. I appreciate it. My questions have been answered as well. But I think the final one I had is, as I look at the results for the quarter, how much of the revenue benefited from foreign exchange translation?

Cynthia Russo

For the year the foreign currency from a revenue perspective was $17.2 million. However, on the net income earnings per share gets no benefit to the company at all.

Keith Housum - Northcoast Research

Okay. How about in the fourth quarter?

Cynthia Russo

For the fourth quarter it's the exact same number, 17.2 and zero.

Keith Housum - Northcoast Research

Okay. Great. Thank you again.

Operator

And there are no further questions from the phones at this moment.

Tom Giannopoulos

Okay, great. Well, thank you very much for attending the conference call and we'll talk to you in October. Thank you. Bye-bye. Bye Kevin, thank you.

Operator

Thank you, sir. Again, ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: MICROS Systems' CEO Discusses F4Q 2011 Results - Earnings Call Transcript
This Transcript
All Transcripts