Hummingbird Q1 2006 Earnings Conference Call Transcript

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

Question: Scott Penner - TD Newcrest - Analyst : Thank you. Barry, just on the solution side, are these still being sold mainly to existing enterprise customers?

Question: Scott Penner - TD Newcrest - Analyst : Okay. Is it -- ?

Question: Scott Penner - TD Newcrest - Analyst : And are these -- is your solutions business being sold by mainly your own direct sales force or partners?

Question: Scott Penner - TD Newcrest - Analyst : Great. Just -- I'd appreciate any comments you have about the whole Microsoft's position in the ECM business in general? It's been a highlight of many of your peers' conference calls and strategies. I'd be interested in hearing how you feel Microsoft approaches the partnerships that it has in the industry?

Question: Scott Penner - TD Newcrest - Analyst : No, it's very helpful. And just on the solutions, just as far as the deals that you're seeing, are you seeing -- I would imagine they're contributing to the number of $100,000 deals, but are these deals that are -- have more seats going in? Are they higher priced? Just any comments there.

Question: Scott Penner - TD Newcrest - Analyst : And, Inder, just, finally, the Connectivity business, has, I guess, the license or product revenue as a percentage of the Connectivity business, is that still around 60%

Question: Scott Penner - TD Newcrest - Analyst : And that's consistent with the prior-year comparable, for instance.

Question: Scott Penner - TD Newcrest - Analyst : Okay. Thanks a lot. 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: Paul Steep - Scotia Capital - Analyst : Great. Just on the solutions question, Barry could you talk a little bit about how many of the solutions, particularly, maybe Deal Management, Contract Management, and Correspondence Management are actually out there deployed, or why don't we just start with sold than worry about deployed first?

Question: Paul Steep - Scotia Capital - Analyst : Okay. And that's primarily targeted in the commercial side more so than the government or is it sort of equal?

Question: Paul Steep - Scotia Capital - Analyst : Looking ahead, it sounds like you have had some good success, if we look a year out or two years out how much of the revenue in licenses and ECM area do you think two years outcomes from the solution.

Question: Paul Steep - Scotia Capital - Analyst : Okay, fair enough. A couple quick questions for Inder. I guess, one is on RedDot, I think I've picked this off the right way, which is, I thought there was a contingent payment coming due in December, and maybe I missed it in looking through the statements. Did that actually get paid out?

Question: Paul Steep - Scotia Capital - Analyst : Okay. So they actually met the targets, I guess, was the question?

Question: Paul Steep - Scotia Capital - Analyst : Great. And, then, on the buyback, any buyback activity?

Question: Paul Steep - Scotia Capital - Analyst : Okay. And, then, the last one just for you, sort of housekeeping is related to the tax element this quarter was a lot lower, I guess, than we'd talked about at the end of last quarter. Is there anything unusual in there or is it ITCs?

Question: Paul Steep - Scotia Capital - Analyst : Okay, thanks.

Question: Howard Lis - GMP Securities - Analyst : Good afternoon, guys. Sorry, maybe I missed some of the answers there. That 10.7 million of other payables, that has to do with a performance payment that's due; is that right?

Question: Howard Lis - GMP Securities - Analyst : Okay. So that will be paid out in the current quarter?

Question: Howard Lis - GMP Securities - Analyst : Okay. And how much sort of ongoing cash restructuring expenses do you expect to have during the rest of this fiscal year?

Question: Howard Lis - GMP Securities - Analyst : Okay. And in your cash position chart where you show what cash would have been if you added back RedDot and then Valid -- that's the amount you paid for Valid, 11.3? 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 - GMP Securities - Analyst : Okay. Great. And, then, on your deals over 100K, as you mentioned, you hit a record 87 deals. That being said, the number -- the total value of those deals was down quite a bit, suggesting the average has dropped quite a bit. Can you talk about the dynamic going on there? And is it -- are customers buying components and sort of slowly rolling it out? Is that what you're finding in the current environment?

Question: Howard Lis - GMP Securities - Analyst : Right.

Question: Howard Lis - GMP Securities - Analyst : Okay. Okay. And, then, finally, I know you commented a bit on Microsoft, but any other comments you'd like to make on the ECM competitive environment in total? And, also, in terms of guidance for the next quarter?

Question: Howard Lis - GMP Securities - Analyst : Okay. 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 - GMP Securities - Analyst : Okay. And are you expecting any million-dollar transactions in the next quarter?

Question: Howard Lis - GMP Securities - Analyst : Great, okay, thank you, gentlemen.

Question: David Shore - Desjardins Securities - Analyst : Thanks. Barry, can you talk at all about revenue on a vertical basis, do you have any numbers -- ?

Question: David Shore - Desjardins Securities - Analyst : Can you hear me better now?

Question: David Shore - Desjardins Securities - Analyst : One second, here. Is that better?

Question: David Shore - Desjardins Securities - Analyst : Okay. Those darn headsets.

Question: David Shore - Desjardins Securities - Analyst : Okay. Sorry. Revenue by vertical, you did mention financial services, do you have any numbers you can kind of put around that?

Question: David Shore - Desjardins Securities - Analyst : Was for -- was for financial services?

Question: David Shore - Desjardins Securities - Analyst : And government and legal?

Question: David Shore - Desjardins Securities - Analyst : Okay. The cost of goods spiked up a little bit in this quarter, Inder, anything going on there that we need to know?

Question: David Shore - Desjardins Securities - Analyst : Okay. How many salespeople are you sitting with?

Question: David Shore - Desjardins Securities - Analyst : And how would they be split with Connectivity?

Question: David Shore - Desjardins Securities - Analyst : Okay. Okay. And, then, finally, Barry, I don't know if you care to comment at all on the lawsuit and where that stands, if anything's changed there?

Question: David Shore - Desjardins Securities - Analyst : Is there any possibility of recovering revenue from the end customers? 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.

Question: David Shore - Desjardins Securities - Analyst : Okay. But you are going after the people you're suing for -- ?

Question: David Shore - Desjardins Securities - Analyst : Good, thank you, very much.

Question: Blair Abernethy - Clarus - Analyst : Hi. Barry, just wondering if you could comment on progress with VERITAS in the quarter and sort of what you hope to accomplish there this year?

Question: Blair Abernethy - Clarus - Analyst : Can you sort of quantify what -- how many opportunities you see in your pipeline that you think might be able to -- ?

Question: Blair Abernethy - Clarus - Analyst : Okay, good, good. And, just, Inder do you have any sense on the forex impact on revenues this quarter, particularly coming out of Europe?

Question: Blair Abernethy - Clarus - Analyst : Okay. And are you able to provide, or would you provide, the contribution from RedDot this quarter, giving us the first full quarter?

Question: Blair Abernethy - Clarus - Analyst : Fair enough. And, Barry, just your sense on RedDot in terms of where you're at now? Are you sort of on plan or ahead of where you thought you might be? And, sort of, what do you expect?

Question: Blair Abernethy - Clarus - Analyst : Okay, great, thanks, guys.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks, very much. Most of my questions have been answered here, but, maybe, I'll just take a slightly different slant on some of them. You mentioned that financial services was about now -- about 12% of revenues. So is that versus a couple years ago, it was almost nil, and it's grown that much?

Question: David Wright - BMO Nesbitt Burns - Analyst : Excellent. Okay. And, Inder, on -- so accounts receivable balance was a little higher than I expected, and you mentioned something about day sales outstanding would have been lower if you had had a year of RedDot revenues in there, so I understand that, but the number was higher. Should we -- were the DSOs on RedDot higher than Hummingbird? And should we expect that coming down over time?

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

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. And, I guess, as you integrate, now that you fully own RedDot and as you integrate, should we expect, sequentially, the expenses of the Company would fall sequentially or not that dramatic a change? 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 : Okay, great. And, last question just comes back to the average deal size. And is there any sense there that some of the projects there are really sort of pilot projects and they're growing or -- ?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. Okay. Great. Thanks, very much, congratulations.

Question: Roger Chuchen - Morgan Stanley - Analyst : Hi, guys, just a couple questions. First off, I think I missed the guidance for the next quarter, can you repeat that?

Question: Roger Chuchen - Morgan Stanley - Analyst : Got it. And, then, secondly, could you talk about the restructuring charges that were taken in the December quarter? What type of returns should we be expecting from that in terms of cost savings? And should that flow to the bottom line? 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: Roger Chuchen - Morgan Stanley - Analyst : Okay. Any chance that you could quantify the magnitude of it, just on a gross number basis?

Question: Roger Chuchen - Morgan Stanley - Analyst : Okay. And, then, if you could address, maybe, the sales and marketing portion of your OpEx? It seems like it's about 45.6% this year, and it's up significantly from the same period a year ago. What do you expect that to trend over the next several quarters? And, I guess, at what point should we see returns on that spending?

Question: Roger Chuchen - Morgan Stanley - Analyst : Okay. So if I understand that correctly, you're saying in about a couple quarters sales and marketing should drop as a percentage of sales? 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: Roger Chuchen - Morgan Stanley - Analyst : Okay, got it. All right, thanks, guys.