Hummingbird Q3 2003 Earnings Conference Call Transcript

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

Question: Scott Penner - TD Newcrest - Analyst : Yeah, thanks. Just wanted to make sure. You mentioned the year-over-year and sequential growth for the IT business. Just as far as the product portion, are the growth rates about the same?

Question: Scott Penner - TD Newcrest - Analyst : Okay. And the -- can you just confirm, I guess, Inder, the revenue from the acquired businesses?

Question: Scott Penner - TD Newcrest - Analyst : Okay but just -- I mean, in the last conference call you said that acquisitions were about $1.5 to $2.5 million in the quarter. I wanted to kind of firm that number up.

Question: Scott Penner - TD Newcrest - Analyst : Okay. Great. And I guess, Barry, just on the contract management and the other line of business applications, what sort of verticals have you seen being some of the early adopters?

Question: Scott Penner - TD Newcrest - Analyst : Is part of the strategy to use the line of business applications to get more vertical exposure, like the retail market?

Question: Scott Penner - TD Newcrest - Analyst : Okay. I guess just finally, Inder, the EIP segment, I guess last quarter you said sort of the percentage of licensed revenue from new customers was in and around the 25, 27% range. Are we consistent 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: Scott Penner - TD Newcrest - Analyst : Okay. Thanks very much.

Question: Jeff Fan - UBS Warburg - Analyst : Hi, good afternoon, gentlemen. A couple of questions. One, some of the split deals in the last quarter. Can you update us on how many of those or a percentage of those value deals have slipped, have closed so far in July?

Question: Jeff Fan - UBS Warburg - Analyst : And what type of size are we talking about on those deals? So no update, basically.

Question: Jeff Fan - UBS Warburg - Analyst : Okay.

Question: Jeff Fan - UBS Warburg - Analyst : Okay. And on the incremental costs within the quarter related to acquisitions, I believe on the last call you said that about $700,000 was related to sales force training or $200 to 300,000 related to severance or staff realignment.

Question: Jeff Fan - UBS Warburg - Analyst : Can you reiterate, those are one-time in nature and you don't expect to see those costs come in again, I guess in your current quarter.

Question: Jeff Fan - UBS Warburg - Analyst : And lastly can you give us a head count that you ended the quarter with and also where you expect to be post all the acquisition realignment of staff?

Question: Jeff Fan - UBS Warburg - Analyst : Right.

Question: Jeff Fan - UBS Warburg - Analyst : Okay. Great. Thank you very much.

Question: David Beck - RBC Capital Markets - Analyst : Inder, I missed the number for the DSOs that you stated and I just wanted to understand what you're doing to manage that number, why it's -- why it seems to be kind of stuck as being a little bit high.

Question: David Beck - RBC Capital Markets - Analyst : For the eight days. I picked up the eight-day number.

Question: David Beck - RBC Capital Markets - Analyst : But you missed as well these closing of deals at the quarter end, which should have improved the situation.

Question: David Beck - RBC Capital Markets - Analyst : But what percentage is beyond 90 days?

Question: David Beck - RBC Capital Markets - Analyst : Okay. Okay. And any comments on an outlook for Q4 and next year at all?

Question: David Beck - RBC Capital Markets - Analyst : No, no, not DSO. Next topic, in terms of top and bottom line, are you commenting on the fourth quarter and next year at all, Fred?

Question: David Beck - RBC Capital Markets - 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: David Beck - RBC Capital Markets - Analyst : Okay. Very good. Well, I will turn it over to the next person. Thanks.

Question: Howard Lis - Griffiths McBurney Partners - Analyst :

Question: Howard Lis - Griffiths McBurney Partners - Analyst : Okay, thanks. And Inder you said the DSOs above 90 days was 15% and above 120 days would be under10%?

Question: Howard Lis - Griffiths McBurney Partners - Analyst : Okay. Great. And in terms of the acquisitions you completed the KLA acquisition during the quarter, how much did that add, if anything, meaningful to the deferred revenue?

Question: Howard Lis - Griffiths McBurney Partners - Analyst : How much do you expect of the -- the valid acquisition to add in the upcoming quarter.

Question: Howard Lis - Griffiths McBurney Partners - Analyst : Are there any deals over $1 million in the quarter.

Question: Howard Lis - Griffiths McBurney Partners - Analyst : How many were there.

Question: Howard Lis - Griffiths McBurney Partners - Analyst : And is one of those one of the receivables, Inder, you were referring to?

Question: Howard Lis - Griffiths McBurney Partners - Analyst : And one other minor other long-term liabilities jumped about $900,000 sequentially, was that related to acquisition? 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 Partners - Analyst : All right, thanks very much.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks very much. Good evening.

Question: David Wright - BMO Nesbitt Burns - Analyst : Could you talk about the competitive environment? I mean Imanage put up growth numbers year-over-year. Have you noticed anyone becoming more aggressive on pricing or not at this stage?

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

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

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

Question: David Wright - BMO Nesbitt Burns - Analyst : I would have expected, though, that Imanage would have had poorer results than they actually had because I -- because of your impact.

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

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. Barry, when you read off the customer list, did you slip in SAP as a customer.

Question: David Wright - BMO Nesbitt Burns - Analyst : Just before, I think it was Barkley's. 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, the second or third last.

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. And then looking at operating expenses and -- so you've mentioned that there were a number of one-time events in this quarter, could you expect that the operating expenses next quarter should be lower or not because you acquired all these people from the acquisition.

Question: David Wright - BMO Nesbitt Burns - Analyst : Yep. Okay. That's helpful. Thank you very much.

Question: Blair Abernethy - Paradigm Capital - Analyst : Sorry I didn't get the percentage on that last question.

Question: Blair Abernethy - Paradigm Capital - Analyst : Yeah was it 11 to 12? 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 : Okay.

Question: Blair Abernethy - Paradigm Capital - Analyst : Tax to operate. Okay. And what is the interest rate you are getting on your cash today?

Question: Blair Abernethy - Paradigm Capital - Analyst : Okay.

Question: Blair Abernethy - Paradigm Capital - Analyst : Okay. I was just wondering if we could get some commentary on the connectivity revenue. Were any of the slipped deals connectivity deals? And also in sort of looking at the trend in the last four quarters it's been slowly but steadily down. I'm just wondering if you guys are seeing a bottom coming on this at all or are you expect more of the same.

Question: Blair Abernethy - Paradigm Capital - Analyst : Okay. And just, Fred, on the acquisitions. 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 : What's -- what are you -- you still got $111 million, and lots of positive cash flow.

Question: Blair Abernethy - Paradigm Capital - Analyst : Are you still looking for more acquisitions?

Question: Blair Abernethy - Paradigm Capital - Analyst : What areas?

Question: Blair Abernethy - Paradigm Capital - Analyst : Okay. Great. Thank you.

Question: David Shore - Desjardins Securities - Analyst : Yeah, thanks. Can you talk about bundling deals and customers buying more than one product, more than a DM and RM or do a collaboration and portal and how that is moving. 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 : And what about below that? Are you see people at more of an entry level, even at a small level.

Question: David Shore - Desjardins Securities - Analyst : Good. What's happening with the share buyback program?

Question: David Shore - Desjardins Securities - Analyst : Okay. Just coming back to the competitive situation. Any comment on IBM buying AVTRIX.

Question: David Shore - Desjardins Securities - Analyst : No, it seems to be be a pretty small vendor. I'm wondering if you are seeing them competitively?

Question: David Shore - Desjardins Securities - Analyst : Okay. Thank you. That's it for me. 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 : First of all, following up on IBM, they announced the launch of its new Lotus products and they are going to focus on record management for serving certain issues. Have you bumped into them? Are you not bumping into them? Different market segment? And then I have another question on deals.

Question: Peter Misek - Scotia Capital - Analyst : Okay. On the -- on your deals and maybe a little bit into your pipeline the -- obviously the Gartner announcement and Forrest were very big. You are now viewed as leaders. Can you give us any color on bookings or when we can see that trend later to pick up in sales? Those two impacts usually are fairly positive for sales or have a good correlation of sales into --

Question: Peter Misek - Scotia Capital - Analyst : Any color you can give us on -- or detail on the pipeline, how the marketing efforts are going. You know, just give us a sense what kind of pickup you can see out there or what you are seeing out there.

Question: Peter Misek - Scotia Capital - Analyst : Last question, and I will turn it over. On the consolidation that appears to be really picking up in software. 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 : Are you guys looking at something bigger to do, to bulk up? Has anyone approached you for a merger?

Question: Peter Misek - Scotia Capital - Analyst : No I understand but I have to ask anyway.

Question: Peter Misek - Scotia Capital - Analyst : Okay. Thank you very much, gentlemen.

Question: Scott Preston - Research Capital - Analyst : Hi, good afternoon. Barry, maybe if you can just comment on the upgrades to DM 5, just curious with your upgrades, are you see any additional revenues for suite -- per seat and any additional seats. Can you give us some average figures what kind of upside you are seeing as customers upgrade.

Question: Scott Preston - Research Capital - Analyst : Can you give us any example of the incremental revenues what percentages those are.

Question: Scott Preston - Research Capital - Analyst : Okay. Also, on the acquired companies, I guess, you know, Dispro and LegalKEY are probably the only examples because you have those longer, a couple months, but what's the pipeline like for Hummingbird product into some of their customer bases? Have you had any success there with -- I guess that would be pretty preliminary stages there, in that sales cycle but what's the feedback you've gotten so far?

Question: Scott Preston - Research Capital - Analyst : I'm curious, of the customer base --

Question: Scott Preston - Research Capital - Analyst : Yeah, about cross opportunities have you with Hummingbird product.

Question: Scott Preston - Research Capital - Analyst : Yeah. Okay. Inder, two quick questions for. What was the currency impact on the top line in the quarter. And do you have the renewal -- the maintenance renewal number on the connectivity business? 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 Preston - Research Capital - Analyst : The maintenance on connectivity revenue or maintenance renewal rate, sorry on connectivity.

Question: Scott Preston - Research Capital - Analyst : So on the enterprise business, it's 95. 90%.

Question: Scott Preston - Research Capital - Analyst : All right. Thank you very much.

Question: Paul Seecam - ORM Securities - Analyst : Fred, can you just clarify a little bit on the M&A in the states that you are looking at would we be looking somewhere north of $100 million in revenues.

Question: Paul Seecam - ORM Securities - Analyst : Okay. And any particular -- I would assume on the enterprise side -- 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 Seecam - ORM Securities - Analyst : We've been focusing but I guess is it a technology deal, obviously you will be getting some size there but would would it be -- because at one point Barry said I think -- about two calls ago, you know technologywise you were very happy where where you are at in the world.

Question: Paul Seecam - ORM Securities - Analyst : Okay. Great. And then just one quick -- quick clarification on the staffing side.

Question: Paul Seecam - ORM Securities - Analyst : Have you started beyond legal -- because I understand --

Question: Paul Seecam - ORM Securities - Analyst : Beyond the legal market or the legal vertical.

Question: Paul Seecam - ORM Securities - Analyst : Have you started to move the sales force in specific roles as far as contract management or geographic or is it still a little early in that process yet? 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 Seecam - ORM Securities - Analyst : Okay. Great. Thank you very much.

Question: Stephen Lee - Raymond James - Analyst : Just a quick one. When are you planning the next release of XC and hostExplorer.

Question: Stephen Lee - Raymond James - Analyst : And does the revenues pick up with the new release.

Question: Stephen Lee - Raymond James - Analyst : Okay. Thank you.