Hummingbird Q1 2003 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Penner - TD Newcrest - Analyst : Thanks. Barry, you'd said that there were 243 customers now, I guess sort of trialing the Hummingbird Enterprise, 167 last quarter. How many of those 167 actually did something during the quarter?

Question: Scott Penner - TD Newcrest - Analyst : Okay, so-

Question: Scott Penner - TD Newcrest - Analyst : Okay. And the line-of-business solutions initiative, are these partners that you already have relationships with, or is that whole message still to come? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Scott Penner - TD Newcrest - Analyst : The deals over 100k, were there any over $500,000, over $1m?

Question: Scott Penner - TD Newcrest - Analyst : Okay. Lastly, Inder, last quarter you had mentioned that about 30 to 35 percent of the licenses of the EIP division were from new customers. Do you have an update of that metric?

Question: Scott Penner - TD Newcrest - Analyst : Okay, great. Thanks very much.

Question: Paul Steep - Yorkton Securities - Analyst : Hi gentlemen. Barry, maybe you could just go on on Enterprise 5.0 in terms of what you'd expect. We saw a real good take up on that side of the DOCS Open, people moving forward. But what do you see going into, say the next six-month period as to how the pipeline is building and where you see that sort of mapping out over that time frame?

Question: Paul Steep - Yorkton Securities - Analyst : Okay. And then, Fred, I don't know how you're feeling in terms of guidance or what you think you'd be seeing revenues and earnings coming in toward in Q2. Have you got any feel for that at this time?

Question: Paul Steep - Yorkton Securities - Analyst : Okay, great. And the last one would just be around the packages that you described. Can you tell us just about some of the early success you've had in terms of the uptake or is this just a process where you're just starting to market these packages to the legal and government sector now?

Question: Paul Steep - Yorkton Securities - Analyst : Great. Thanks guys.

Question: David Beck - RBC Dominion Securities - Analyst : Good evening gentlemen, great quarter. Just a couple of things. On -- just because it's top of my mind -- Microsoft's acquisition of PlaceWare and their efforts in the collaboration, their efforts kind of highlight the attractiveness of getting into real time collaboration. Understandably, this is a little bit different than what you're offering as an Enterprise product, but what do you think this means for the collaboration space and perhaps you can provide an update as to the traction you've been having in this market.

Question: David Beck - RBC Dominion Securities - Analyst : Right. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: David Beck - RBC Dominion Securities - Analyst : I would suspect that they would probably want to imbed some of that over time in some of the content manager and those kinds of things, but that's a way down the road.

Question: David Beck - RBC Dominion Securities - Analyst : Just on the connectivity front, a nice number there, sequentially up. Perhaps describe what's happening there. Used to be that Q4 was particularly strong with the connectivity revenues, but you've actually outperformed that in Q1, which is a bit of a surprise. What's happening there? What's driving that? You've got the new version of product obviously, but describe the take up of that product.

Question: David Beck - RBC Dominion Securities - Analyst : Excellent. Okay. Well, that's great guys. Thank you.

Question: Peter Misek - Scotia Capital - Analyst : Good evening, gentlemen. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Peter Misek - Scotia Capital - Analyst : Two questions. First, can you help me out? Who is really the competition for you guys recently? I mean, IBM acquisition I think is quite interesting in that they've gone ahead, very serious. Who do you see, especially in your legal vertical, professional services vertical, I think more importantly, the U.S. Air Force, U.S. Internal Revenue Service?

Question: Peter Misek - Scotia Capital - Analyst : Thank you. The second question is, will we get more of a flavor for what the pipeline and customers is? It appears that your legal practice continues to execute well. You've gotten some good reasonable momentum in the U.S. government. I am wondering whether deal times are lengthening, shortening, any sort of idea on that and whether you continue to see strength in the legal and government sectors.

Question: Peter Misek - Scotia Capital - Analyst : And, sorry to sneak one last one in, but the deferred revenues seemed to be a little bit stronger than we expected. Is there anything special as to why that was?

Question: Peter Misek - Scotia Capital - Analyst : Thanks a lot guys. Thank you, Inder.

Question: Scott Preston - Research Capital - Analyst : Good evening, guys. A couple of quick questions. Barry, the first couple are for you. Can you just tell us the percentage, legal wise, in the quarter, and then what percentage of customers upgrading to Enterprise purchased additional applications from you in the quarter?

Question: Scott Preston - Research Capital - Analyst : What percentage of revenue came from the legal sector?

Question: Scott Preston - Research Capital - Analyst : Yeah, from the Enterprise business?

Question: Scott Preston - Research Capital - Analyst : Of companies upgrading to Enterprise, how many are buying additional products from you?

Question: Scott Preston - Research Capital - Analyst : Is it above 50 percent?

Question: Scott Preston - Research Capital - Analyst : Okay, great. And then, how many of the customers you saw in the quarter, about what percent have never used a Hummingbird product before, that are brand new customers?

Question: Scott Preston - Research Capital - Analyst : Of total, not just - or is that of Enterprise?

Question: Scott Preston - Research Capital - Analyst : Do you know what the Enterprise is, what the new customer percentages are?

Question: Scott Preston - Research Capital - Analyst : Fifty percent, you say?

Question: Scott Preston - Research Capital - Analyst : Okay. All right. Thanks a lot guys.

Question: Scott Preston - Research Capital - Analyst : Okay. Thank you.

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay, thank you very much. Just a quick follow up on the last question, Barry. You said 50 percent of your customers are taking-

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay, how is that?

Question: Jeffrey Fan - UBS Warburg - Analyst : Just saying to follow up on the previous question, Barry you said that about 50 percent of your customers are taking more than one product. Is that percentage higher in the larger customer base? The larger deals?

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay, so it's pretty consistent between different size of customers.

Question: Jeffrey Fan - UBS Warburg - Analyst : I wanted to ask you about your outlook for 2003. I think on the last conference call, some general comments were passed regarding 10 percent growth in Enterprise, slightly down or flat on Connectivity in terms of revenue. Are you thinking those -

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay, great. Lastly, Fred, can you talk about your acquisition strategy?

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay, so the integration would be targeting the strategy that Barry talked about, the --

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay. And in terms of the technology side, there would -- could you elaborate a little bit further what sort of areas you are looking at in terms of technology, plug ins? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Jeffrey Fan - UBS Warburg - Analyst : Okay, thank you very much.

Question: Howard Lis - Griffiths McBurney - Analyst : Good evening. Congratulations on a solid quarter guys. Just one question, I wanted to focus on the accounts receivable. The DSOs still remain quite high and I just was wondering if you could talk a little bit about your plans for bringing that down to your target range. Secondly, I think last quarter you disclosed what percentage of those DSOs were greater than 120 days. Maybe you could just provide that information as well. Thanks.

Question: Howard Lis - Griffiths McBurney - Analyst : And last quarter you mentioned 30 to 40 percent of the receivables were greater than 120 days. What is that percentage this quarter? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Howard Lis - Griffiths McBurney - Analyst : And are the longer receivables, are they concentrated in any one geography?

Question: Howard Lis - Griffiths McBurney - Analyst : Okay. Thank you.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks very much and good evening. Congratulations on the quarter. Barry, could you talk more specifically about the line-of-business solutions that you're targeting, just some examples of what where we might see your products being used?

Question: David Wright - BMO Nesbitt Burns - Analyst : So in general terms, I mean, an application for the finance industry or something like that?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. Fred, this isn't meant to be too flippant, but how do we know that you're getting maximum productivity out of the sales force? Is it possible that they are capable of more, or do you think they are doing a great job maintaining the revenue levels that they are at? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: David Wright - BMO Nesbitt Burns - Analyst : Does the pipeline look different than a year ago? I would imagine it would because of your stats on the number of customers upgrading. Is there anything quantitative you can talk about there?

Question: David Wright - BMO Nesbitt Burns - Analyst : Right.

Question: David Wright - BMO Nesbitt Burns - Analyst : Yeah.

Question: David Wright - BMO Nesbitt Burns - Analyst : By then, then the interest rates will be up and then people will be complaining about that, but who knows.

Question: David Wright - BMO Nesbitt Burns - Analyst : I wondered if I could ask Inder. Inder, your comments on the deferred sales revenue number, should we expect it to increase throughout the year, hopefully?

Question: David Wright - BMO Nesbitt Burns - Analyst : Like we did. Okay. That's great, thanks very much.

Question: David Shore - Desjardins Securities - Analyst : Thanks. Barry, last quarter you broke out the customers evaluating by country, the number of seats. Can you provide us with that again?

Question: David Shore - Desjardins Securities - Analyst : Just quick, back of the envelope, numbers look like you had a pretty good quarter in Europe, up sequentially there. Can you just kind of talk about those conditions in Europe and what you are experiencing there?

Question: David Shore - Desjardins Securities - Analyst : Yes. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: David Shore - Desjardins Securities - Analyst : Okay. What would the head count stand at now? Can you break out the number of reps you have for Connectivity versus EIP?

Question: David Shore - Desjardins Securities - Analyst : Last question. The thing that Bush is doing with dividends in the U.S., Microsoft has now declared a dividend. Would you consider, with the large cash balance you have there, paying a dividend instead of maybe doing the share buy-back?

Question: David Shore - Desjardins Securities - Analyst : Thank you.

Question: Blair Abernethy - Paradigm Capital - Analyst : Thank you. Nice quarter gentlemen.

Question: Blair Abernethy - Paradigm Capital - Analyst : A couple of questions, probably for you, Barry. On the records management side, can you tell me who you're running up against, or who you see the most of out there in competitive bid situations?

Question: Blair Abernethy - Paradigm Capital - Analyst : Okay. And outside of legal and government, where are you seeing good traction or good interest in your products on the Enterprise side this year?

Question: Blair Abernethy - Paradigm Capital - Analyst : Just on the companies that are trialing the Enterprise product, you've gone 167 and you added 76. Of the original 167, is that the original number or have some of those moved on and bought the product and you've got another group in there? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Blair Abernethy - Paradigm Capital - Analyst : Great. And what's the typical time frame you are seeing with these guys? How long are they trialing for?

Question: Blair Abernethy - Paradigm Capital - Analyst : Three to four months after piloting. And then just finally on the broader look at your Enterprise products, outside of DM and records management, any highlights, anything that's doing well out there for you? Is it the portal, is it BI, what else can you tell us about that?

Question: Blair Abernethy - Paradigm Capital - Analyst : Great. Thanks very much.

Question: Ralph Garcea - CS First Boston - Analyst : Good evening, gentlemen. I just wanted to clarify on the vertical portion that was asked earlier. I think for the legal side you said it was 25 percent. Was that of licensed revenue or total revenue that legal represented? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Ralph Garcea - CS First Boston - Analyst : And would government be sort of the same size, in the 25 percent range?

Question: Ralph Garcea - CS First Boston - Analyst : Less than 20?

Question: Ralph Garcea - CS First Boston - Analyst : Okay. And on the RM side I guess, with the Canadian government, I believe that was a multi-year rollout. So do you see more opportunity, both within the Canadian government and USAF as you roll out both those installations?

Question: Ralph Garcea - CS First Boston - Analyst : Is it 2X, 3X of the current run rate? Over the next three to five years, what do you see out of those two?

Question: Ralph Garcea - CS First Boston - Analyst : And as you've been rolling it out to date, has it been sort of in equal increments quarterly or is it in fits and starts, depending on sort of government-specific situations? I am just trying to see how balanced the revenue has been from that government vertical.

Question: Ralph Garcea - CS First Boston - Analyst : As you've rolled it out to-date, let's say the Canadian government's implementation, has it been equal through the past two or three quarters? Or have you seen it seasonal in nature as they roll it out?

Question: Ralph Garcea - CS First Boston - Analyst : Is it the same on the U.S. side? The U.S. government side?

Question: Ralph Garcea - CS First Boston - Analyst : And then one last question for Inder. As you roll out the SAP through the rest of the regions, do you think you can bring your [G&A] below 10 percent? How much can you take out of the cost side?

Question: Ralph Garcea - CS First Boston - Analyst : So the long-term target, for [G&A], 8 percent to 9 percent of revenue, once you have fully rolled it out?

Question: Ralph Garcea - CS First Boston - Analyst : And, I mean this SAP rollout should also hopefully bring your DSOs to the desired target levels.

Question: Ralph Garcea - CS First Boston - Analyst : Thank you.