Hummingbird Q3 2004 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 large deals first of all. Obviously, the average is up quite substantially. Are there any big deals in there that skew it?

Question: Scott Penner - TD Newcrest - Analyst : Are they just for the record or there any million-dollar deals of course?

Question: Scott Penner - TD Newcrest - Analyst : Okay. And Fred, last quarter you mentioned seeing some pricing pressure from -- specifically some of the acquired Companies Documentum and iManage. Is this sort of -- did it continue this quarter or did it get any worse?

Question: Scott Penner - TD Newcrest - Analyst : Okay, the DSO was down nicely this quarter. Is there anything that you can kind of point to, as a trend or a reason why the DSO was down and are you still kind of looking at the ninety-day level for the end of the year? 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. Thank you.

Question: Paul Steep - Scotia Capital - Analyst : Hi. Fred maybe you could chat a little bit about your outlook on the market given the difficulties we've seen from a number of different firms. You got to get your perspective on what you would seek, I guess heading into the next quarter and the remainder of the year, maybe?

Question: Paul Steep - Scotia Capital - Analyst : Now, you gave me a good perspective. I guess maybe be more specific. Did you see any slow down at the end of June? Everyone is talking that the market has fallen off here in the last few weeks. I am curious because you obviously delivered your numbers as you promised what you have seen at this time.

Question: Paul Steep - Scotia Capital - Analyst : Great, and I guess the other one, I had here is just on the upgrades of customers to Hummingbird Enterprise 2004. You or Barry can just comment on what you have sort of seen in terms of the number of customers migrating to the latest release?

Question: Paul Steep - Scotia Capital - Analyst : Great. Thanks.

Question: Howard Lis - GMP Securities - Analyst : Yes. Good afternoon. Thanks a lot. Congratulations on a solid quarter, gentlemen. Just a couple of quick questions, first of all for house keeping. How many shares were repurchased in the quarter and Inder, if you can just re-clarify the product revenue number from last quarter, please?

Question: Howard Lis - GMP Securities - Analyst : The product revenue last quarter, I have in my notes here $20m. Yet I thought you mentioned that the $27.5m this quarter was up over $2.2m from last quarter. Maybe I got that wrong?

Question: David Beck - RBC Capital Markets - Analyst : You can give it to me Inder.

Question: David Beck - RBC Capital Markets - Analyst : Hi guys -- Are you ready? Or do you want me to ask?

Question: Howard Lis - GMP Securities - Analyst : Thank you, .

Question: David Beck - RBC Capital Markets - Analyst : So, the US dollar decline relative to the euro has negatively impacted your topline? 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. How about those revenues?

Question: David Beck - RBC Capital Markets - Analyst : How about on the topline?

Question: David Beck - RBC Capital Markets - Analyst : That's okay. Okay very good. Any comment on, the US Federal Government has been an important client of your company. It was a little bit weak for some software vendors in the quarter and a number of companies pre-releasing. Do you have any color on -- can you provide us any color on how you did in the US Federal Government sector, if you noticed similar weakness and obviously, we are able to compensate in other areas but if that was not the case in terms of your execution.

Question: David Beck - RBC Capital Markets - Analyst : Okay. Is it that both governments or just --

Question: David Beck - RBC Capital Markets - Analyst : US Federal Government as well? 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 : And any comments on guidance for -- to wrap this fiscal year and potentially into next year?

Question: David Beck - RBC Capital Markets - Analyst : If possible next year, Fred, or you're going to wait until the following Q4?

Question: David Beck - RBC Capital Markets - Analyst : Okay, thank you.

Question: Howard Lis - GMP Securities - Analyst : Hi, can you hear me?

Question: Howard Lis - GMP Securities - Analyst : All right. Let's not press the eject button this time. In terms of new customer revenue, how much of the new customer -- how much of your sales is represented by new customers in this past 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 - GMP Securities - Analyst : 35% to 40%?

Question: Howard Lis - GMP Securities - Analyst : And you mentioned earlier that you are sure having to fight for every deal. Is that suggesting that the sales cycles maybe a little bit lengthened as you go through several more customers and p r o s p e c t s (ph) go through more dew diligence in evaluation and the products in reference checks or is it --?

Question: Howard Lis - GMP Securities - Analyst : And one final question, just on the gross margins, they've kind of been trending a little bit down for the five quarters now. Is there something going on there? Is that just a function of some other pricing pressures you talked about earlier?

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

Question: Howard Lis - GMP Securities - Analyst : All right. Thank you very much.

Question: Paul Lechem - CIBC World Markets - Analyst : Thank you. Just turning back to the larger deals, the deals over a $100,000 you mentioned, what is driving that increase of it? Is that, are you selling more seats per customer? Are you selling at a higher price per seat or is it the line of business solutions? What's actually driving the increase?

Question: Paul Lechem - CIBC World Markets - Analyst : Have you seen any increase in the numbers of seats?

Question: Paul Lechem - CIBC World Markets - Analyst : And what about the new verticals of --- do you see any difference in terms of average sale price in the financial services and manufacturing verticals versus the legal and government?

Question: Paul Lechem - CIBC World Markets - Analyst : Under these larger deals, there were existing customers typically or they are often new name accounts? 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. In this quarter, you are looking to be very strong versus the last few quarters, and I think going on Europe, that you saw?

Question: Paul Lechem - CIBC World Markets - Analyst : Europe.

Question: Paul Lechem - CIBC World Markets - Analyst : Yes.

Question: Paul Lechem - CIBC World Markets - Analyst : You already now seem to be very strong for the quarter in Europe. What drove that?

Question: Paul Lechem - CIBC World Markets - Analyst : Okay. Fair enough. Okay, 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: David Wright - BMO Nesbitt Burns - Analyst : Thanks very much and congratulations on a good quarter. Obviously, there has been consolidation and your competitors have changed somewhat. Could you go back over, how is the environment different today compared to what it was, let's say a year ago in a -- when you were pitching for business?

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks. And when you look at those competitors in your -- when you are winning your business, can you point to any specific factors as to why you are winning, I mean is the fact that your product is more tightly integrated in those situations?

Question: David Wright - BMO Nesbitt Burns - Analyst : Wrapped up solution, okay and integration of solution or you might putting --

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes, I know you have been doing it, as the market recognizing that now you are winning more deals because of--

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, that's good. Perhaps I missed in the -- did you give about the geographic breakdown, I might have missed that, the importance of America's versus Europe?

Question: David Wright - BMO Nesbitt Burns - Analyst : Thank you and congratulations on getting your DSO's down and you expect that trend to continue, do you?

Question: David Wright - BMO Nesbitt Burns - Analyst : That is good. Your -- Fred's guidance, your guidance is what's your guidance is. I was just wondering though what you are expecting for the coming quarters? I mean, are you expecting that the environment gets a little better. Certainly number of people think that the economy is picking up and that there will be more spending on technology. Are you already anticipating that or you just keeping a fairly conservative view?

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

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, and just a word on Connectivity, I guess the declines have slowed down, do you - is there any change in that environment or do you expect this to continue with single-digit declines? 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 and how about on the hiring fund, you really have not increased the headcount at all, is there any reason at this point and time to be adding sales people, or -?

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

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. And my last question is on R&D and I guess as a percent of revenue, it would seem that most of your significant development has been done now. Do you continue to spend the same sort of percent of revenue on R&D or, is there some that can you trim back there?

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes, that is fair to say.

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

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

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, that's fair.

Question: David Wright - BMO Nesbitt Burns - Analyst : Then should we expect an increase?

Question: David Wright - BMO Nesbitt Burns - Analyst : Thanks for your time.

Question: Martin Cecchetto - UBS - Analyst : Hi, thank you. Good afternoon. Two questions. First one is, you are talking about getting more traction in manufacturing and financial services verticals. Can you talk about how you're approaching that? Are you using direct sales there or are you using more the system integrators?

Question: Martin Cecchetto - UBS - Analyst : Okay, and how would that compare to the rest of your business then?

Question: Martin Cecchetto - UBS - Analyst : Well, direct versus --

Question: Martin Cecchetto - UBS - Analyst : Okay. Thank you and next question, you were talking about that your pipeline is increasing, could you quantify the change that you're seeing in your pipeline? What was that and how much is it growing?

Question: Martin Cecchetto - UBS - Analyst : Okay. 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: Blair Abernethy - Paradigm Capital Inc. - Analyst : Thank you. Nice quarter guys. Couple of questions, just, Inder, do you have a breakdown of ECM product revenue by vertical?

Question: Blair Abernethy - Paradigm Capital Inc. - Analyst : Okay. And also, there was a question earlier on the contribution from acquisitions year-over-year in your revenue number, do you have that?

Question: Blair Abernethy - Paradigm Capital Inc. - Analyst : Okay. And just on some of the new verticals that you're trying to expand into -- that you are expanding into. Can you give us some sense of -- are these more departmental implements for the new customers, are they more departmental approaches or are they more enterprise approaches and who you seeing competitively when you're bidding in these new verticals?

Question: Blair Abernethy - Paradigm Capital Inc. - Analyst : Okay. And who you -- who you guys seeing in the financials and in the manufacturing side?

Question: Blair Abernethy - Paradigm Capital Inc. - Analyst : Okay. That's great. Thanks guys.

Question: David Beck - RBC Capital Markets - Analyst : Hi, that's fine, guys. My questions have been asked and answered.