Hummingbird Q4 2003 Earnings Conference Call Transcript

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

Question: Paul Steep - Orion Securities - Analyst : Hi gentlemen. Fred, maybe you could talk a little bit this quarter about the acquisition strategy. We chatted last time I guess in Q3 about your thoughts towards maybe approaching a larger transaction. What's your view given the consolidation in the recent weeks in the market?

Question: Paul Steep - Orion Securities - Analyst : Fair enough, Barry, maybe you could talk a little bit about the rollout of 5.0 and now that we've got 5.1 live in the market, what the acceleration and the adoption. I know we're getting at a point where maybe the numbers don't make as much sense, but just some comments around that'd be helpful.

Question: Paul Steep - Orion Securities - Analyst : OK, and then two quick clarifications. Inder, just on the contribution from the acquisitions, I think you said that you were going a little fast and I may have missed it, so just what did V a l i d (ph) and the other deals contribute for revenues in the quarter?

Question: Paul Steep - Orion Securities - Analyst : OK, fair enough. Thanks guys.

Question: Sheif Alanni - UBS - Analyst : Hi it's ( S h e i f A l a n n i (ph) on behalf of Jeffrey Fan. I had a question first about guidance for Q1, not sure if you mentioned that, if you could provide that? As well as wanted to ask about the combination of business intelligence and the records management, document management side and how much traction you're seeing with that solution and if there are any customers who decide to go with both in the last quarter?

Question: Sheif Alanni - UBS - Analyst : And with respect to the guidance?

Question: Sheif Alanni - UBS - Analyst : Any guidance for Q1?

Question: Sheif Alanni - UBS - Analyst : Yes, thank you.

Question: David Beck - RBC Capital Markets - Analyst : Evening gentlemen. Just wondering, I may have missed a couple numbers, but Barry, you didn't break out, you've quoted in the past this adoption of Enterprise Five, am I to infer from your previous comment with Paul that you didn't break that out this quarter?

Question: David Beck - RBC Capital Markets - Analyst : OK.

Question: David Beck - RBC Capital Markets - Analyst : OK, it's not so important. And if Fred, could you maybe just restate, so I don't have to listen to the conference call again, although I really would like to, but your guidance for the whole year. You did mention a revenue range, and I just missed that.

Question: David Beck - RBC Capital Markets - Analyst : OK.

Question: David Beck - RBC Capital Markets - Analyst : 213 to 215, right?

Question: David Beck - RBC Capital Markets - Analyst : OK.

Question: David Beck - RBC Capital Markets - Analyst : And did you guys disclose, did you disclose the contribution of the acquisitions in this quarter to total revenue?

Question: David Beck - RBC Capital Markets - Analyst : Right.

Question: David Beck - RBC Capital Markets - Analyst : OK.

Question: David Beck - RBC Capital Markets - Analyst : OK, OK, thanks Fred. 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 - Dashardane Securities - Analyst : Yes, thanks, good quarter guys.

Question: David Shore - Dashardane Securities - Analyst : How many, did you have any deals in the quarter that were over $1 million?

Question: David Shore - Dashardane Securities - Analyst : OK, the average deal size on the more than 100K deals slipped a little bit from last quarter down to about 220,000. Is there any kind of trend there, people going more initial pipeline? 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 - Dashardane Securities - Analyst : OK, geographically, it looks like you're pretty strong in Europe this quarter. I guess that's a little bit unusual considering it's usually slow there in the summer months.

Question: David Shore - Dashardane Securities - Analyst : OK, so that's really where the acquisition revenues come from.

Question: David Shore - Dashardane Securities - Analyst : OK.

Question: David Shore - Dashardane Securities - Analyst : OK. That's it for me, thank you.

Question: Blair Abernethy - Paradigm Capital - Analyst : Thank you. Nice quarter gentlemen.

Question: Blair Abernethy - Paradigm Capital - Analyst : Just wondering if you can break out or give us some sense of the revenue by sector? You know, I know legal and government are very strong for you obviously, on the IP side, what else were you seeing good traction in?

Question: Blair Abernethy - Paradigm Capital - Analyst : From the banks?

Question: Blair Abernethy - Paradigm Capital - Analyst : OK, and are you targeting any other verticals outside of legal and government that particularly this year?

Question: Blair Abernethy - Paradigm Capital - Analyst : OK, just on the breakout of your revenues. On the IP side, do you have a license number?

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

Question: Blair Abernethy - Paradigm Capital - Analyst : OK. Do you guys have any intention of breaking out a force in the future at all, to give us a better, clearer picture into how you're doing ...

Question: Blair Abernethy - Paradigm Capital - Analyst : Yes, just, you know, break it out as a license and service maintenance?

Question: Blair Abernethy - Paradigm Capital - Analyst : I think it would be helpful in the future ... 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 : ... doing.

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

Question: Blair Abernethy - Paradigm Capital - Analyst : That would be very helpful.

Question: Blair Abernethy - Paradigm Capital - Analyst : Just on the acquisition side, I mean you still got 100 plus million cash, what are sort of, what would you buy today, what types of things would you buy today to fill in any gaps, either product wise or geographically?

Question: Blair Abernethy - Paradigm Capital - Analyst : OK, great.

Question: Blair Abernethy - Paradigm Capital - Analyst : And one last question if I could for Inder. Inder do you have some sense of what the year-over-year foreign exchange impact was on your total revenues?

Question: Blair Abernethy - Paradigm Capital - Analyst : OK, no problem. Thanks, thanks a lot guys.

Question: Paul Bradley - Dundee Securities - Analyst : Yes, good evening gentlemen. I think most of my questions have been answered already. I just wanted to focus a little bit on the sales force. You've talked about the verticalization of your products and offerings. I'm just wondering if I could have an idea, give me an idea of total number of sales people, and how they're organized to deal with those particular vertical markets?

Question: Paul Bradley - Dundee Securities - Analyst : Total sales and then kind of the allocations, you know, have you, where you're focusing their efforts? 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 Bradley - Dundee Securities - Analyst : OK.

Question: Paul Bradley - Dundee Securities - Analyst : OK.

Question: Paul Bradley - Dundee Securities - Analyst : OK, now are they organized, you mentioned three vertical sectors before legal government financial sector ...

Question: Paul Bradley - Dundee Securities - Analyst : OK.

Question: Paul Bradley - Dundee Securities - Analyst : OK.

Question: Paul Bradley - Dundee Securities - Analyst : OK, so within a regional organization, you've got people focused on each of these, each of these sectors. Do you run named accounts for the largest ones or how does that work?

Question: Paul Bradley - Dundee Securities - Analyst : Do you run a named account method of dealing with ...

Question: Paul Bradley - Dundee Securities - Analyst : OK, now just to following along that line of reasoning, Barry you talked about some of the new products out there. You talked about the contract management. You talked about the solutions from E s r y (ph) , can we take, can we expect other ones to specifically introduced to these vertical markets or are you seeking to enter other areas to generate sales there.

Question: Paul Bradley - Dundee Securities - Analyst : OK, clearly that's in response to recent legislation, customer feedback on that, specific stuff that we're looking for that they don't see in products in the market right now, or is it just an evolution of what you have out there?

Question: Paul Bradley - Dundee Securities - Analyst : OK, and that's the effort you've gone through over the last number of years to build the integrated platform there. l litwin: Absolutely.

Question: Paul Bradley - Dundee Securities - Analyst : OK. Thank you very much indeed. 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. Congratulations both on your numbers and your ability to answer multiple questions from analysts. I wondered about, is the connectivity business based on your guidance that you've given, you essentially see it as flat for the next year.

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

Question: David Wright - BMO Nesbitt Burns - Analyst : OK. Inder you were asked about I guess currency rates and things like that. Do you have constant currency numbers, so what the revenues would have been in constant currencies in Europe versus?

Question: David Wright - BMO Nesbitt Burns - Analyst : OK, terrific. Now I think it was K r a m e r L e e (ph) acquisition where you purchased some technology that would help you with a solution for the UK government and then you'd extend that out to Europe ...

Question: David Wright - BMO Nesbitt Burns - Analyst : Oh, OK, sorry, so how is that going? Is the product ready and has it been spun out to multiple markets yet?

Question: David Wright - BMO Nesbitt Burns - Analyst : OK, so a couple of quarters before I think you were even thinking of spinning out to the U.S. as well, and so that's a few quarters away, is it?

Question: David Wright - BMO Nesbitt Burns - Analyst : OK, great. Can we have an update on the employee count?

Question: David Wright - BMO Nesbitt Burns - Analyst : Right, OK, that's great there. And OK, last question is a conceptual one, which is the market's consolidating around you and is, do you have any concerns about, you know, you're no longer the largest in your space, how do you compete against that, because I guess what I'm worried about it, you know, maybe you don't hear about enough deals, but the ones you hear about you win, do you have that concern at all?

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

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

Question: Peter Misel - Scotia Capital - Analyst : Evening gentlemen. Obviously, some of the third party analyst research has been quite positive on your guys lately. I was hoping to get a sense for your pipeline and how you've seen that being pulled through. Is now the ramp that we've been waiting for and hoping for, is it starting to come through. Are you seeing it?

Question: Peter Misel - Scotia Capital - Analyst : No, no, what I'm saying is that we've been long through this technology drought, and the third party analysts have all very much turned positive on your product offering. Are we seeing the pipeline improve very strongly? Is it ramping strongly?

Question: Peter Misel - Scotia Capital - Analyst : That's great. 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. Inder I think I missed what you said regarding how many shares you bought back and the price you paid?

Question: Steven Li - Raymond James - Analyst : OK, thanks. 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: Ralph Garcea - Credit Suisse First Boston - Analyst : Good evening gentlemen. If we look at the European revenue, what's the split between UK, Germany and the rest of Europe?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : Yes, is the UK half of your European revenue or less than half, more than half?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : Well I just ...

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : Because that's going to include obviously the acquisitions you did out of the UK. So I'm just trying to get a feel, one, how important the UK is to you and then two, what you're seeing in Germany and the rest of Europe with regards to you know, turn around, have we bottomed them there.

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : OK, and then what are you guys seeing in Germany and the rest of Europe with regards to a turnaround in IT spending?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : OK, and then on the forecast ...

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : Yes?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : OK, and then for Inder, I guess on the forecast, what sort of currency exchange rate are you using with regards to the dollar? You working with a 75 or a 76 cent dollar or?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : OK, and then I guess for Fred.

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : Yes, most of the senior people including the sales people took salary cuts or freezes last year. What are you guys intending to do for fiscal '04 with regards just, you know, to the base salaries in that?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : Yes.

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : But that would have already shown up in the Q3 and Q4 numbers, correct?

Question: Ralph Garcea - Credit Suisse First Boston - Analyst : OK, thank you.

Question: Blair Abernethy - Paradigm Capital - Analyst : Thanks, just two quick ones hopefully. Can you just comment on partners in terms of going to market partners, either through integrators or technology partners at all, anything happening there of note?

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

Question: Blair Abernethy - Paradigm Capital - Analyst : In the U.S. are they, can you give us a sense of how much they're driving of your EIP sales?

Question: Blair Abernethy - Paradigm Capital - Analyst : Yes. 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 : Just a ballpark.

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

Question: Blair Abernethy - Paradigm Capital - Analyst : Around there. OK, and just a hypothetical question.

Question: Blair Abernethy - Paradigm Capital - Analyst : On the connectivity business.

Question: Blair Abernethy - Paradigm Capital - Analyst : Have you guys considered or would you consider if you were to spin that business out, to sell that business and then take the capital and redeploy it in the higher growth EIP business? Would that be something you would, you'd look at? 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 : Sure, I understand.

Question: Blair Abernethy - Paradigm Capital - Analyst : No problem.

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

Question: Blair Abernethy - Paradigm Capital - Analyst : Thank you gentlemen. Bye-bye.

Question: Scott Penner - TD Newcrest - Analyst : Thanks. Just a quick one for you Inder, you mentioned the concentration on the installed base, could you give a ballpark of the percentage of the EIP product revenue into new customers?

Question: Scott Penner - TD Newcrest - Analyst : So it's fairly constant with past quarters?

Question: Scott Penner - TD Newcrest - Analyst : OK, that's great, thanks.