Hummingbird Q2 2006 Earnings Conference Call Transcript

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

Question: Scott Penner - TD Newcrest - Analyst : Thanks. Inder, would you - - the 26.9 million of product revenue, can you break that out between the Connectivity and the ECM?

Question: Scott Penner - TD Newcrest - Analyst : Right. Is it fair to say then that the Connectivity business as a whole is still running at about 605 product revenue?

Question: Scott Penner - TD Newcrest - Analyst : That's fine. Then on the restructuring, can you just update us as to when you plan to complete these small little restructurings?

Question: Scott Penner - TD Newcrest - Analyst : Okay, and how much cash was spent on the restructuring this quarter?

Question: Scott Penner - TD Newcrest - Analyst : Okay, was that number about 6 million last quarter?

Question: Scott Penner - TD Newcrest - Analyst : Okay, and then just lastly again, Inder, if you could just run us through your how the foreign currency may have affected both the revenue and the operating income? Thanks.

Question: Scott Penner - TD Newcrest - Analyst : And is your Euro exposure basically flat on a profit basis? 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 : Okay. Barry, just quickly on the Microsoft front, can you just run us through again why your partnership or your level of integration with Microsoft may be deeper than some of the other announcements from some of the other vendors that we see?

Question: Scott Penner - TD Newcrest - Analyst : Great. Thank you.

Question: Blair Abernathy - Clarus Securities - Analyst : Thank you. A couple of things. I'm wondering if you have revenue by vertical this quarter?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, great. Thank you. In terms of you bought back a little bit of stock this quarter. How many shares did you buy back and what's the availability on your buyback? 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 Abernathy - Clarus Securities - Analyst : Okay, and Inder, on your balance sheet there was an other payable number of $10 million. What is that?

Question: Blair Abernathy - Clarus Securities - Analyst : Last quarter, not in September thought. Okay, so that's a milestone payment?

Question: Blair Abernathy - Clarus Securities - Analyst : And is that going to be it for RedDot or any of the prior acquisitions in terms of earn out?

Question: Blair Abernathy - Clarus Securities - Analyst : So that's the last one and an estimated amount. And is that paid this fiscal year or this calendar year? When do you expect to pay that?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, great. Are you giving any sort of outlook for what you're expecting for Q3?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, great. Thanks, guys.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks very much. Good evening. What, in your solutions you've got a whole host of them now. Are they predominantly out for this fiscal year or are there still a whole bunch of other ones to come? The various contract management solutions and that sort of thing?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. And so a year from now we wouldn't see another 15 or so? It's these ones that you're concentrating on essentially?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. So this is essentially - - I'm going to get to the question on R&D in a few minutes, but so essentially the heavy lifting is done here?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, great. You're highlighting the financial services market. You said that it's now roughly 10% of vertical now. How would you characterizes the efforts here? Are they - - do you feel like you're really gearing up and we're going to see this 10% number start to climb in total or is it just going to track along with Hummingbird's business in total?

Question: David Wright - BMO Nesbitt Burns - Analyst : Are you in a position where you're hiring sales reps specifically for the financial industry vertical?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, great. Thanks. Inder, I guess a question on - - so R&D and G&A and the trend spending - - should we, through your restructuring efforts, should we expect any kind of reduction on a sequential basis on either the G&A or the R&D line? Or is this kind of the base spending level now?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. Good there. You answered the share buyback. Deferred revenue went up nicely in the quarter. Usually I guess the trend has been you kind of work it off throughout the year. But obviously things are going well if it's going up. Do you expect that trend to continue higher next quarter or?

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

Question: David Wright - BMO Nesbitt Burns - Analyst : I'll go again if there's nobody else. Do you plan to at some point sort of break out partner influenced revenues or anything like that? Is that a number that you're tracking?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, very good. Could you give us any kind of trend there in terms of last quarter and year ago for those 4 numbers?

Question: David Wright - BMO Nesbitt Burns - Analyst : Great. And what's your employee count and sales rep count if you could give that out?

Question: David Wright - BMO Nesbitt Burns - Analyst : And as far as your restructuring effort goes in the headcount that you have, does it change much where there's still people to - - ?

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

Question: Scott Penner - TD Newcrest - Analyst : Barry, in that big deal count, were there any $1 million deals or maybe you could give us a flavor of what were the largest deals in there?

Question: Scott Penner - TD Newcrest - Analyst : And were they Solutions? Were they Platform deals?

Question: Scott Penner - TD Newcrest - Analyst : And I also wonder, Inder, if you can just tell us again what the percentage of the license revenue on the ECM side from new customers is? It's a number you've given out.

Question: Scott Penner - TD Newcrest - Analyst : Okay, that's all. Thank you. 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: Steven Li - Raymond James - Analyst : Thanks. Barry, Connectivity has been stable recently. Do you expect more of the same in the second half or a bit more growth?

Question: Steven Li - Raymond James - Analyst : Okay and the million dollar deal in Connectivity. Was that a new customer or an existing one?

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

Question: Blair Abernathy - Clarus Securities - Analyst : Hi, guys, I though I'd jump back on here again. Just a couple of things. In your slide presentation, Barry, there's 10 solutions listed there. Are you actively marketing all those solutions today? And what would be the top 3 that you've got traction with out there?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, and how many, have you got a rough figure of how many solutions are installed out there? How many installations have you got versus a year ago?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, great. And just on the, I don't know if you touched on it or not yet, but on Veritas and the progress with that partnership for this quarter?

Question: Blair Abernathy - Clarus Securities - Analyst : Yeah, sorry. Although their website is still Veritas.

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, still working at that one. And any comments at all on the competitive landscape? Any changes or what you're seeing out there?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay. And some of the other competitors have been talking about pricing pressure on maintenance. Do you have any comments to that effect?

Question: Blair Abernathy - Clarus Securities - Analyst : Okay, great, thank you.

Question: Aya Oldfield - Canacord Adams - Analyst : [Inaudible] Could you just comments about the current upgrade cycle and if it's going the same as historically.

Question: Aya Oldfield - Canacord Adams - Analyst : Sorry, I was wanting you guys to comment on your current upgrade cycle, your current customers and just let us know if it's going basically the

Question: Aya Oldfield - Canacord Adams - Analyst : Yeah, no, your new database software. Records management and your new version.

Question: Aya Oldfield - Canacord Adams - Analyst : Okay, so you're not seeing any new changes, any new pressures or anything there.

Question: Aya Oldfield - Canacord Adams - Analyst : Maybe it's my connection, that's fine. That's all I have, thank you.

Question: Robert Moses - RGM Capital - Analyst : Good afternoon. Just had a question about margins. Obviously we're pleased and I assume you are as well, with revenue and cash flow. And there's been a lot of investment in R&D and sales and marketing . Some of that varies probably with RedDot which is skewing the margins a bit lower. But would you expect, if we can continue to see revenue growth at the pact that we're seeing to eventually get higher EBITA margins and is that something that needs to happen at RedDot reflecting the profitability or better margins for those total company margins to improve?

Question: Robert Moses - RGM Capital - Analyst : And is that kind of returning to the kid of EBITA margins of 15, 16%? I mean, is that something as we look out into the next fiscal year or even something we can kind of move towards a couple of quarters out?

Question: Robert Moses - RGM Capital - Analyst : Fantastic. And do you focus on sales and marketing to license revenue? I think if I backed into your license revenue number it was something like 26.9 I guess in the quarter. And your sales and marketing dollars were about 29.1. Is there any relevance to kind of how you look at your sales force and sales and marketing as it relates to your license revenue? Or is that not a metric you focus in on a whole lot?

Question: Robert Moses - RGM Capital - Analyst : And so the sales and marketing dollars is, I guess, a couple of things. One is try to expand the verticals, growing your sales force, as well to some extent RedDot probably has some influence there as well?

Question: Robert Moses - RGM Capital - Analyst : I would agree. I would think that And I guess at the end of the day, you do expect that gap between the two to close, but it's, there are other factors that go into it as well I guess is your point.

Question: Robert Moses - RGM Capital - Analyst : Fantastic quarter. I appreciate your answers.

Question: Scott Penner - TD Newcrest - Analyst : Barry, I've got to ask - - last quarter you deferred a look on the year until you had a better sense of how the year was shaping up. Now after Q2, can we get a guidance from you on the full year?

Question: Scott Penner - TD Newcrest - Analyst : That's fine. Thank you.