Enterprise Solutions segment performance
CA Technologies’ (CA) Enterprise Solutions segment is showing strong growth momentum, driven by the acquisitions of Automic and Veracode. The launch of new products and strong investments in IT (information technology) around the globe have resulted in double-digit growth. The segment’s revenue, which accounts for 40% of the company’s total revenue, grew 18.5% YoY (year-over-year) to $461 million in fiscal 3Q18. However, on a CC (constant currency), basis, it grew 11%.
In the reported period, the operating margin for the Enterprise Solutions segment was 11% compared to 14% in the same period last year. The decline in the margin was mainly affected by costs related to the Automic and Veracode acquisitions.
In the graph above, you can see revenue growth for the Enterprise Solutions segment in the last five quarters. During that period, it grew at a CAGR (compound annual growth rate) of 4.3%. We can also see from the chart that its revenue has grown every quarter.
Tailwinds and headwinds
In fiscal 3Q18, Veracode had the most bookings in its history, fueled by CA’s strong international presence. Veracode had solid growth internationally, driven by the nature of its products. The products are easy to install and execute, thus making them easier to sell.
Better economic conditions globally coupled with a growing demand for IoT (Internet of Things) could drive IT (information technology) spending and increase automation demand. However, the acquisitions of Apigee by Google (GOOGL) and AppDynamics by Cisco Systems (CSCO) may offer strong resistance to CA’s Enterprise Solutions.