OPERATOR: Good day, everyone. Welcome to today's Oracle Corporation quarterly conference call. Today's conference is being recorded.
At this time, I'd like to introduce Roy Lobo, Head of Investor Relations of Oracle. Please go ahead, sir.
ROY LOBO, DIRECTOR OF INVESTOR RELATIONS, ORACLE: Thank you, operator. Good afternoon, everyone. Welcome to Oracle's first quarter fiscal year 2009 earnings conference call. With me on this call are Chief Executive Officer, Larry Ellison, Oracle's President, Charles Phillips, and Oracle's President and Chief Financial Officer, Safra Catz. Joining us in the room today is also Jeff Epstein, our Executive Vice President, who will become our CFO once our 10-Q is filed, so a warm welcome to you, Jeff.
JEFF EPSTEIN, EVP, ORACLE: Thank you.
ROY LOBO: We'll begin with a few prepared remarks and then take a few questions from the audience.
Let me begin by reminding everyone that today's discussions may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinion only as of the date of this presentation.
Please keep in mind we are not obligating ourselves to revise or publicly release the results of any revision of these forward-looking statements in light of new information or future events. Throughout today's discussion we'll attempt to present some important factors relating to our business that may affect our predictions.
You should always review our most recent Form 10-K and Form 10-Q for a complete discussion of these factors and other risks that may affect our future results or the market price of our stocks. A PDF copy of our Press Release and financial tables, which include a GAAP to non-GAAP reconciliation, can be viewed and downloaded on the Oracle Investor Relations web site at www.Oracle.Com/investor.
With that, I'd like to turn the call over to Safra Catz for her opening comments.
SAFRA CATZ, PRESIDENT AND CFO, ORACLE: Thanks, Roy. Good afternoon, everyone, and thanks for joining us. I'm going to first focus on our non-GAAP results for Q1. I'll then review guidance for Q2, and then turn the call over to Larry and Charles.
Our non-GAAP EPS grew 32% to $0.29, setting us up well for another year of very strong EPS growth. This quarter's 32% growth is compared to our non-GAAP earnings growth of 27% in Q1 of last year, and it follows the 27% earnings growth we had in Q4.
We're also able to improve our operating profitability by 350 basis points this quarter to 40.1%, achieving the highest Q1 non-GAAP operating margin in the Company's history, and really proving once again the leverage of our model.
Our non-GAAP operating income grew 29% to 2.2 billion. This quarter, we came in at the mid point of our license guidance despite a very tough comparison to last year's 35% license growth.
The currency impact for the quarter was positive four points on revenue as compared to the five points I included in my June guidance. New software license revenues were up 14% to 1.2 billion, right at the mid point of my guidance adjusting for the change in currency impact.
We saw exceptional strength in our technology license business with revenues growing 27%, improving on last year's Q1 growth of 23% and following our 23% growth in Q4 of 2008. BEA contributed 84 million in the quarter but we need to remember that this is now a merged product with Fusion middleware in most cases and so the allocations are not precise.
Our applications license revenue contributed 331 million in the quarter, and that is down by 12% in the quarter, primarily due to the 65% applications growth we had last Q1. We're extremely pleased with our execution in growth in our applications business, since our application license revenue has more than tripled over the last three years.
Operating cash flows for the trailing 12 months increased by 1.3 billion to 7.9 billion, while free cash flow increased 20%. Product updates and support revenue was up 24% on a non-GAAP basis to 3 billion. Our first quarter, product update and support revenue alone is now bigger than the total annual software revenues for all but the top five software companies.
As you can see, the scale of our business, combined with our recurring revenue model, enables us to deliver free cash flow, net income growth, margin improvement, and earnings growth.
In Q1, we bought back approximately 22.7 million shares at an average price of $21.97. As we have said, the rate of our buyback will fluctuate each quarter taking into account both our stock price and alternative uses for our cash.
Now, let me turn to guidance. Our as reported guidance for Q2 will show a substantial change in exchange rates as the dollar has strengthened enormously. The currency contribution in Q2 last year was a positive seven points. Our currency assumption for this quarter is a negative three points.
Now, I want to remind everyone that we don't actually predict currency. All we do is take currency spot rates where they are today for the purposes of giving our as reported guidance. In my guidance today, I'll give you the constant currency range, the range as reported, and the currency assumption I use to get to the as reported range.
If currency moves up or down during the quarter, you should assume that the …