Hummingbird Q2 2004 Earnings Conference Call Transcript

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

Question: Paul Steep - Scotia Capital - Analyst : Good evening, gentlemen. Fred, perhaps you could tell us a little bit about your outlook for Q3 and what you'd be looking for the business to deliver in that quarter.

Question: Paul Steep - Scotia Capital - Analyst : And what about on the bottom line? What would you expect to see there?

Question: Paul Steep - Scotia Capital - Analyst : OK, great, and then, if we look at the pickup in Hummingbird Enterprise 2004, could you talk a little bit about any of the initiatives you're doing to try to drive upgrade from the install base?

Question: Paul Steep - Scotia Capital - Analyst : I guess I'm looking to see if you guy's done anything, because I notice there's a significant jump in the deferred revenue. Have you been doing anything to really motivate people to switch over to the newer version of the product, or is it just sort of--?

Question: Paul Steep - Scotia Capital - Analyst : OK. And on those multi-year deals, was there anything specific that was sort of driving people to sign up for multiple years, or is this a new initiative you're after? 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 : OK. And the last one I'd have would just be on the sales rep plan. Is there plans to hire, or do you think you have sufficient capacity within the current staff out there, to make sort of the numbers for the remainder of the year?

Question: Paul Steep - Scotia Capital - Analyst : Great, thank you.

Question: Howard Lis - GMP Securities - Analyst : Yes, good afternoon, gentlemen. Can you talk a bit about your acquisition pipeline? You had talked quite specifically about some large transactions you were looking at, and just wondering how that's progressing. And also, know that you did buy some stock back this quarter. Can you talk a little bit more about your intentions going forward on that front? Thanks.

Question: Howard Lis - GMP Securities - Analyst : Your acquisition pipeline and how that's going.

Question: Howard Lis - GMP Securities - Analyst : You had talked previously about some substantial acquisitions.

Question: Howard Lis - GMP Securities - Analyst : And can you talk a little bit about how much of your revenue is coming from your existing customer base, please?

Question: Howard Lis - GMP Securities - Analyst : And then, just one final question. You're obviously continuing to do very well in the legal vertical and the document management side. How much growth potential do you see left there, or is that getting to be kind of a saturated market? 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. Thank you.

Question: David Shore - Desjardins Securities - Analyst : Yes, thanks, couple questions. How many seats did you have upgraded to DM 5.X in the quarter?

Question: David Shore - Desjardins Securities - Analyst : Yes.

Question: David Shore - Desjardins Securities - Analyst : Okay. Can you break out for us-- you gave us some indication that-- some presentation about percentages by different vertical. Can you kind of update where you are in the quarter?

Question: David Shore - Desjardins Securities - Analyst : OK, last question. Inder, can you break out for us how much revenue this quarter would have come from acquired businesses?

Question: David Shore - Desjardins Securities - Analyst : OK, thank you.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks very much. Actually, most of my questions have been answered, so a couple are minor things. When you're looking at your acquisition strategy, Fred, do you tend to look at private companies or public companies? What-- is there any trend there we can draw from?

Question: David Wright - BMO Nesbitt Burns - Analyst : Right, OK. Do you know-- is there a comment you can make about the pricing pressure in the marketplace? Are you finding is there any increase to pricing pressure, competitive pressure that way, or how are you feeling about things?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, thank you very much.

Question: David Wright - BMO Nesbitt Burns - Analyst : Great, thank you very much.

Question: Richard See - Merrill Lynch - Analyst : Yes, just a quick question on the connectivity side. You seem to have reversed a decline this quarter, which is positive. Can you attribute that to anything? You've talked before in the past that it's related to the economy. Is that the case, or are there any initiatives in-house that are being done to help out in this reversal?

Question: Richard See - Merrill Lynch - Analyst : Okay, and second and final question. With respect to your strategy to kind of move beyond the legal and government market, can you kind of give us some examples of where you're going to be spending these resources, and examples of what programs are in place to kind of tackle other vertical markets outside of legal and government?

Question: Richard See - Merrill Lynch - Analyst : Okay, great. Thank you.

Question: Steven Li - Raymond James - Analyst : Hi. Inder, you commented on your connectivity bookings last quarter, which was about 18.5. Was it about the same level in Q2?

Question: Steven Li - Raymond James - Analyst : Okay, and next, on the gross margins, do you expect your gross margin to remain around the 89%, or do you forecast some improvement in the second half? Thank you.

Question: Steven Li - Raymond James - Analyst : Okay, thanks.

Question: Scott Penner - TD Securities - Analyst : Yes. Barry, can you just update me on your portfolio of industry solutions right now, and what ones we should be looking for?

Question: Scott Penner - TD Securities - Analyst : Is there any expected fine point on the time line for the financial?

Question: Scott Penner - TD Securities - Analyst : And is it possible to separate out the contribution in general from those-- from your vertical solutions?

Question: Scott Penner - TD Securities - Analyst : Are these solutions generally taken to market by partners or by your own sales force?

Question: Scott Penner - TD Securities - Analyst : Okay, great. Thanks.

Question: Paul Lechem - CIBC World Markets - Analyst : Thank you. Just to follow up on the vertical market questions, have you done anything to the sales force in terms of putting specific salespeople into the verticals, focusing on individual verticals? Have you done anything like that to try and drive sales in the verticals like that?

Question: Paul Lechem - CIBC World Markets - Analyst : So, out of the 150 odd sales reps you have on the content management side, how many of those will be focused on individual verticals?

Question: Paul Lechem - CIBC World Markets - Analyst : Okay. On the acquisition front, you mentioned that the acquisitions you made over the last year were more heavily focused on or slanted towards the services side of the business. Can you explain why that is, and are you doing anything to those acquisitions to start to drive more license-type revenues from them? 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 Lechem - CIBC World Markets - Analyst : Okay. The geographic mix of business this quarter, looked like North America was a bit stronger and Europe a bit weaker than the last couple of quarters. Can you talk about that a bit?

Question: Paul Lechem - CIBC World Markets - Analyst : That's about a 5% swing from Europe to North America. Compared to-- your last quarter to Q1, that's about a 5% swing in revenues from Europe to North America. I don't know if that's anything you can talk about in terms of the geographic.

Question: Paul Lechem - CIBC World Markets - Analyst : Last question. Can you-- do you have a breakout in terms of what the foreign exchange impact was on the top 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: Paul Lechem - CIBC World Markets - Analyst : Sorry, 4 to 500,000 on what?

Question: Paul Lechem - CIBC World Markets - Analyst : That's the net impact to the bottom line?

Question: Paul Lechem - CIBC World Markets - Analyst : Okay, but to the top line you don't break that out?

Question: Paul Lechem - CIBC World Markets - Analyst : All right, thank you.

Question: David Shore - Desjardins Securities - Analyst : Yes, thanks. You had a nice little pickup in the larger deal category this quarter. Were there any deals over $1m? 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, and was that a current customer or a new customer?

Question: David Shore - Desjardins Securities - Analyst : Okay. Inder, the sale and marketing expenses this quarter ticked up a little bit from first quarter. Is that mostly due to Summit? And we can expect that to come down a little bit?

Question: David Shore - Desjardins Securities - Analyst : Okay, thank you.

Question: Jeffrey Fan - UBS - Analyst : Thank you, and good afternoon. I just have one question. It's regarding your Enterprise 2004. Can you just give us an update as to the timing of when you expect the revenue contribution to start to kick in, and just review what some of the components, where you expect to see some incremental revenue opportunities, or maybe another way of asking, were-- what is the revenue driver, or where should we expect to see incremental revenue from this product upgrade? Thanks.

Question: Jeffrey Fan - UBS - Analyst : Okay. In terms of your sales force training on 2004, is that all fully complete?

Question: Jeffrey Fan - UBS - Analyst : And when-- so, everything will be complete by--?

Question: Jeffrey Fan - UBS - Analyst : Okay, that's great. Thanks.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks. I was just wondering your hiring plans, and I missed your total employee count, but do you have any plans for adding additional sales reps at this point?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, and your total employee count?

Question: David Wright - BMO Nesbitt Burns - Analyst : Thank you very much.