Pervasive Software Inc. F1Q09 (Qtr End 9/30/08) Earnings Call Transcript

Oct.21.08 | About: Pervasive Software (PVSW)

Pervasive Software Inc. (NASDAQ:PVSW)

F1Q09 Earnings Call

October 21, 2008 5:00 pm ET

Executives

John E. Farr – Chief Executive Officer

Randall G. Jonkers – Chief Financial Officer

Analysts

Mark Murphy - Piper Jaffray

Neha Bhargava - RedChip Research

Patrick Walker - Walker Smith Capital

Presentation

Operator

At this time, I would like to welcome everyone to fiscal year 2009 first quarter financial results conference call. (Operator Instructions) I would now like to turn the call over to Mr. Randall Jonkers, Chief Financial Officer of Pervasive Software. Sir you may begin your conference.

Randal G. Jonkers

Thank you. Good afternoon and thank you for joining us. I am Randy Jonkers, Chief Financial Officer of Pervasive Software. While we wait for others to join, I will go over to standard disclaimer regarding remarks on this call. This conference call may contain forward-looking statements within the meaning of the Federal Securities Law including statements regarding the companies or management intentions, hopes, beliefs, expectations, and strategies for the future.

Forward-looking statements may include without limitation statements regarding the following: future investment, sales, market growth and direction, competition, revenue growth, operating margins and profitability. The detailed discussion of risks and uncertainties that could cause actual results that tends to differ materially from such forward- looking statements is included in Pervasive’s most recent filings with the Securities and Exchange Commission.

Pervasive does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this conference call. Also and as a reminder, our non-GAAP results for the quarters ending September 30th 2008 and 2007 exclude the amortization of purchased intangibles and stock based compensation expense and present income taxes at a statutory rate of 34%.

We believe that the non-GAAP results described in today’s press release and in this conference call are useful for an understanding of our on going operations and to assist the investor community in comparing Pervasive’s non-GAAP results from period to period as well as comparing our results with that of similar companies. We use these non-GAAP results to compare our performance to that of prior periods for analysis and trends, to evaluate the Company’s financial strength, develop budget, manage expenditures, and develop a financial outlook.

Non-GAAP results are supplemental and are not intended as a substitute for GAAP results. Note that our call today has been broadcasted simultaneously via the Pervasive website, welcome to those listeners.

In this call we will cover two primary agenda items. First, I will recap Pervasive’s financial results during our first fiscal quarter, and then John will update you on our plans and operations, now for the financial results.

Today we released financial results for the first quarter of our fiscal year 2009. Revenue is at the top end of our updated guidance issued on October 1. Our GAAP earnings slightly exceeded updated guidance and our non-GAAP guidance was at the high end of our updated guidance. Pervasive revenues totaled $11.9 million in Q1 which is an increase of $1.7 million as compared to Q1 of last fiscal year. Our GAAP basis net income is $1.3 million in Q1 and diluted earnings per share were $0.07 representing an increase from GAAP basis net income of $550,000 and diluted EPS of $0.03 in Q1 of last year.

Our expected tax expense rate in Q1 was 34% as compared to a tax rate of 39% in Q1 of last fiscal year. Our non-GAAP net income in Q1, before amortization of purchased intangibles and stock based compensation expense and tax of 34%, was $1.8 million compared to $1.1 million in Q1 of last fiscal year.

Our non-GAAP earnings per share were $0.09, an increase of $0.04 per share as compared to Q1 of last fiscal year. We ended the quarter with approximately $46.8 million in cash and marketable securities, representing $2.47 per issue in outstanding share of Pervasive. During the first quarter, we repurchased approximately a 146,000 Pervasive shares on the open market at the total cost of approximately $605,000, approximately $4.13 per share. And we generated approximately $2.7 million of positive cash flow from operations. Our DSO or day sales outstanding were in excellent 47 days, down three days from Q1 of last fiscal year.

Now, let us turn to the quarterly revenue details. By geography, our Q1 revenue was as follows, domestic revenue totaled $7.4 million in Q1, up 15% from both Q4 and Q1 of last fiscal year. For international revenue principally Europe and Japan totaled $4.5 million in Q1, down 5% from Q4 and up 20% from Q1 of last fiscal year. From the mix standpoint, our international revenue was 37% of total revenues, consistent with Q1 of last fiscal year. At a product level, our data based products and our integration products represented approximately 2/3 and 1/3 of our business respectively in Q1.

Turning to operating expenses. Our operating cost and expenses totaled $10.2 million in Q1 and included amortization of acquired intangibles and stock based compensation expense of approximately $700,000 combined or non-GAAP expenses of $9.5 million which is consistent with Q4 and approximately $400,000 higher than Q1 of last fiscal year as we continue to invest in our integration business and our innovation project. We had 214 employees at the end of Q1 which represents a decrease of five employees from the end of fourth quarter and an increase of 22 from Q1 of last fiscal year.

Now looking forward, we expect revenues in our second quarter of fiscal year 2009 to be in the range of $10.5 to $11.5 million in GAAP basis diluted earnings of $0.02 to $0.05 per share compared to GAAP basis diluted EPS of $0.03 in Q2 of fiscal year 2008. As part of the emergency Economic Stabilization Act enacted on October 3rd, the research and development tax credit has been extended for two additional years and the Company now expects to have a lower effective tax rate for the remainder of fiscal 2009 and we will recognize a one time credit in the December quarter related to past research and development cost which are now eligible for tax credit from prior quarters. We anticipate that our effective tax rate in Q2 will be approximately 20% and an approximately 29% for the remainder of the fiscal year.

Non-GAAP profitability is expected to exclude amortization of purchased intangibles and stock based compensation expense, together representing approximately $600,000 in the second quarter of fiscal year 2009. With that, we expect non-GAAP in fully tax diluted earnings per share in our second quarter of fiscal year 2009 to be $0.04 to $0.07 compared to non-GAAP diluted and fully taxed EPS of $0.05 in Q2 of fiscal year 2008.

Our non-GAAP effective tax rate for comparative purposes reflects statutory rate of 34% on pretax non-GAAP income. We anticipate cash flows for operations to between $500,000 and $1 million for the second quarter of fiscal year 2009. Cash flows will be impacted by the requirement for two estimated tax payment to do in the second quarter similar to the second quarter last year. Also, as in prior quarters, we will not provide specific guidance beyond Q2.

For EPS calculation purposes, we expect our GAAP basis and non-GAAP fully diluted share accounts for the second quarter of fiscal year 2009 to be approximately $18.9 million and $19.2 million shares respectively. Note that this share account estimate exclude the impact of any future share repurchase.

Now, let me turn the call over to John Farr, CEO of Pervasive Software.

John E. Farr

Thanks Randy. We executed well during the September quarter on both of our core product lines database and integration, resulting in year over year quarterly revenue growth of 17% and our 31st consecutive quarter of profitable operations. Our database revenues increased 15% from the September quarter of last year, aided in part by one relatively large transaction representing approximately $700,000 in revenue.

Our integration revenues increased 19% from the September quarter of last year, in part due to the strong performance of our professional services group. Our revenue growth has resulted in our ability to exceed our own revenue guidance for the past three quarters in a row.

Wait a minute! Isn’t the economy struggling everywhere we look? While no economies or no Companies are immune to tough economies, including Pervasive. But, it is exactly these kinds of challenging times that shine a bright light on our primary guiding proposition, delivering products and solutions to the data management and the integration markets with the focus on lowest total cost of ownership. With average sales prices per unit of around a $1,000 for our database server engines, and around $10,000 for our data integration engines, we are not your stereotypical enterprise software company with a painfully direct sales model relying on a relatively small number of six and seven digit software transaction in the last week of the quarter.

With Pervasive’s high volume, low priced sales model selling through well developed indirect sales channels. We were quite well diversified by geography, by market and by customer. Our orders are on positioning and value orientations serve us well in difficult times. Our solid core business results have also allowed us to continue to fund our commitment to innovation namely Pervasive Data solutions, and Pervasive Data Rush as well as earlier phase experimentation in our innovation ramps. In this call, I will give you an update on each of our each significant elements of our business.

First, the Database Business. The first quarter highlights in our database business were one, revenue growth, and two, platform expansion opportunity. And as a reminder, PSQL Version 10 is designed to help ISPs, VARs and OEMs successfully embrace new technologies including the new Vista and Windows Server 2008 operating systems from Microsoft, as well as to take advantage of the latest in 64-bit technology for accelerated database performance. With the v10 we continue our proven 25-year track record of delivering low TCO, reliability, scalability, performance, easy to use, and embedability in a secure environment.

The database revenues increased 15% from the September quarter of last year including one, including the relatively large transaction representing approximately $700,000. Large transactions of this nature are not the norm for Pervasive but we will certainly enjoy them when they are there to enjoy.

This particular transaction involved in part a catch up roll of paper of past deployments by one of our partners. And we continue to listen to our customers. One long time customer, Abacus Research, a Switzerland based European applications vendor approached us for assistance in expanding their addressable markets then responded in a request by developing a custom version of Pervasive PSQL version 10 that for the first time runs natively on Mac OS 10. If we see additional demand from Mac OS 10 beyond Abacus, we may create the general release version of this custom built as we continue to serve our customers’ evolving needs as we have in the past 25 years.

Next, let me update you regarding our integration business. In September, Gartner released its Data Integration Tools Magic Quadrant which includes only those companies which posses within their technology portfolio, the subset of capabilities identified by Gartner as most critical from within the overall range of capabilities expected in data integration tools. Pervasive software was positioned in a Visionaries Quadrant confirming the breadth of our technology and the present success of our customers. The report further validates the innovative vision for integration agility that supports a truly diverse set of integration scenarios in multiple industries.

However, the Gartner report does not evaluate one increasingly important criteria and that is cost. In September, we announced that lower research identified Pervasive as the value leader among data software data integration software vendors, in its report titled, “Comparative cost and uses of data integration platform.” The report was based on a survey of customers of the leading integration vendors as well as use of open source products.

More research fed out to discover have data integration platforms are being used in practice. They wanted to get an idea of both the initial and ongoing cost and goals to using different products and report the most cost effective solutions over a realistic period. The report concluded that across the board, Pervasive was found to be the most popular and suitable of all types of data integration project. Now nevertheless, Gartner and Blue research are not customers paying our bills, in our last week we hosted a record attendance of over 120 of our customers here in Austin for our Annual Integration Users Conference. The conference featured a highly interactive setting in which attendees participated in breakout sessions led by both Pervasive technologist and Pervasive customers.

It was designed for sharing best practices and innovative approaches to the data integration challenge. Eight of our customers and partners gave their valuable time to make presentations during the conference including speakers from Inovis, CTI, and ITS and Pfizer Corporation. Attendees gained insight into Pervasive’s integration roadmap including a sneak preview of Pervasive Data Integrator version 10 which is scheduled for release in late calendar 2009. Conference attendees were very favorably impressed with our advancements and future plans around Meta data studio, a key customer request from last year’s conference. And with the increasing third party validation they saw around Pervasive Data Solutions, Pervasive Data Club, and Pervasive Data Rush initiatives, more on these initiatives in a minute. More importantly perhaps, attendees learned how to accomplish more, faster using our products to solve their persistent data migration and data integration headaches today.

Our on going investments in our integration business had enabled us to continue winning new ISD, staff, and systems integrator relationships. In the September quarter, we signed new seven new partners, three of which are in health care space namely Cheramatic Systems Inc., Meta Media, and Advance Plan for Health. In addition, we continue to benefit from new and existing direct end user accounts, many of which are stores initially as referrals from existing channel partners. As a channel based company, we are encouraged by these newer wins and believe that they are aligned with and validate Pervasive’s strategy in winning new channel relationships that are more leverageable and profitable in nature.

Our investments in the integration business has enabled us to achieve year over year quarterly revenue growth of approximately 10% in Q3 and again in Q4 and now 19% in Q1 by both expanding the existing relationships within large companies, as well as continuing to develop new ISD, SAAS, and system integrator relationships.

Now, an update on Pervasive’s innovation initiatives. We have talked for several quarters now that Pervasive Data solutions initiative. Pervasive data solution is significant and it represents the first time we have focused on selling our integration offering as solution as opposed to the two. The initial solution delivered by our data solutions team about a year ago now, is called Pervasive DataSynch for QuickBooks and SalesForce CRM. And in Q1 we introduced Pervasive DataSynch for QuickBooks and Microsoft Dynamics CRM. The DataSynch solution delivers users reliable real-time synchronization of data between QuickBooks and either SalesForce CRM or Microsoft Dynamics CRM. Whether it is for use On-premise or for use on demand delivered via the Pervasive Data Club our own platform for 24/7 on demand multi-tenant hosting of our Pervasive Data Solutions. With more than 30 subscribers added in the September quarter, total DataSynch subscribers have grown now to more than 100 and related annual subscriptions amounting to more than 100,000. We know we are on to something here and we are now picking the interest of many of our installed based of ISD customers.

In October, we announced that Montreal based Technology Solutions is partnering with Pervasive to deliver on demand integration between [35:32] future plan on demand product management solution in SalesForce CRM. Pervasive will deliver and host the integration on the Pervasive Data Club, our on demand multi-tenant platform for delivering path integration that expands a full range of integration scenarios, including the SaaS to SaaS, On-premise to SaaS and On-premise to On-premise.

Delivering the future plan, SalesForce.com integration with Pervasive Data Club allows pervasive to support line up customers with the single code based that is easy to implement, managed, support and scale. The hosted integration solution is a natural addition to the current portfolio of Pervasive developed packaged integration as a service solutions, including Pervasive DataSynch on demand and Pervasive integrated credit card processing for QuickBooks Merchant Services.

With the reaction we received from other customers at our Annual Integration Users Conference, we expect there will be an increasing demand for our installed based, for our Pervasive Data Club on demand integration as a service delivering capability. For more information on data solutions, please visit PervasiveDataSolutions.com.

Another of our innovation initiatives involves our work on Pervasive Data Rush which is focused on solving a soon to be striking and very apparent pain in the software market. We have discussed this initiative in the past, but I want to be sure that our new listeners have the advantage of some background. Chip and server vendors such as SUN, AMD, IBM, HB, and Intel have transformed the S & T in high performance computing landscape with their recent introductions of 4, 8, 16 and 32 core systems. The problem for decades, most applications was built to perform data intensive processing was not architected with 8, 4, or even 2 cores in mind.

Software developers must change their implementation methodologies now and get ready for the new world of parallel programming. Before the disconnect between hardware capabilities and software design leads to massively under-utilized computing power on the data server. Gartner recently take multi-core and hybrid servers as the number one most constructive technology through 2012. They believe multi-core servers who have a broad impact on the entire computing industry. Affecting the speed with which data get processed, applications deployed and so on. They believe programmers will have to learn parallel coding and how to write applications for the unpredictability of machines leveraging multiple quarters.

In our Pervasive Data Rush, Pervasive Data Rush is our framework that allows developers to quickly build highly parallel, data intensive applications that take full advantage of multi-core SMP platforms. Our Data Rush team announced exciting benchmark test results last March working with HP demonstrating near linear processing scalability on a 32 core HP integrity server. Add to that our recent work with Sun Microsystems, demonstrating exciting scalability on their quad socket SunSPARC T2 Enterprise T5440 server with 32 course and 256 threads.

The Pervasive Data Rush engine and library crunch its huge volumes of data quickly by simultaneously harnessing a large number of those threads. HP and Sun, like other hardware vendors, must demonstrate to their markets that multi-core servers are effective for developing, integrating and deploying applications to harness the complete capacity of multi-core processing.

The Data Rush team also enjoyed its first lighthouse customer deployment last March teaming with systems integrator PeopleForce to deliver lightning fast matching for a very large master data management solution. Add to that now, our second lighthouse customer deployment for TC3 Hill which was recently profiled on information week. TC3 or total claims capture and control, provides Healthcare payers with a Total Claims Management Solution that seamlessly and electronically integrates internal claim management systems with external loss control progress.

We are combining the power and the capabilities of Pervasive Data Rush, Pervasive Data Profiler and Pervasive Data Integrator to deliver lightning fast claims data preprocessing through TC3. Historically, TC3 analyzed sets of tens of thousands of healthcare claims from customers. Impressed with the savings generated by TC3’s innovative true claim code-aided application which analyzed the claims by flagging build charges that were big pits or improperly coded, customers asked TC3 to apply its analysis to a larger set of historical claims resulting in files containing tens of millions of claims.

However, there was a catch. TC3’s existing methods for preprocessing on files of that magnitude were estimated to take days to run. Taking to ensure their ability to meet expanding customer requirements, TC3 turns to Pervasive Data Rush. Pervasive Data Rush engine uses a data flow based architecture to exploit pipelining, vertical partitioning and horizontal partitioning to rapidly crunch through massive data sets on off the shelf multi-core servers.

For the TC3 preprocessing application, Pervasive Data Rush is in depth from a process orchestrated in Pervasive data integrator and its through put capacity and capability allows it to chew through millions of claims in hours versus days. The new preprocessing system takes advantage of Pervasive Data Rush’s engines ability of scale across all course available, in this case, executing on an AMD [Barcelona] 16 core, 64 bit server containing four quad-core processors in running Windows Server 2008.

And we continue to work with our lighthouse customers and perspective channel partners like PeopleForce and TC3 and grow increasingly excited by the market opportunities presented by our Pervasive Data Rush initiative. As with Pervasive Data Solutions and Pervasive Data Club, our Integration Users Conference attendees last week also stood up and noticed Pervasive Data Rush in a different light. What a difference a year and some real world customer validation can make. Now, it is the time to add senior leadership to the Pervasive Data Rush team.

In Q1, we begun a process of looking for that certain individual who is best suited to help us broader define our go-to-market strategies and grow a new business which is already blessed with proven technology, reference able customers and outstanding engineering team and a commitment to future investment. We are looking for that ideal senior leader who will spend his or her every waking hour defining our next steps so that we can be best positioned to capture the opportunity Data Rush presents to Pervasive and its shareholders.

We hope to have this position filled very soon. For more information please see pervasivedatarush.com. In closing, every company experiences some headwinds in a tough economy. Pervasive is no exception. However, our relative price to performance value proposition does provide an interesting competitive advantage in a difficult economy. Pervasive continues to enjoy this and many other competitive advantages including solid improvement product lines, a well-developed channel and operating leverage, a strong balance sheet, a serious focus on innovation and consistent profitability in products to cash flow.

I will now open the floor for questions.

Question-and-Answer Session

Operator

(Operator instructions) Your first question comes from Mark Murphy from Piper Jaffray.

Mark Murphy - Piper Jaffray

Congrats on a great quarter, John. I wanted to just try to dig in to the $700,000 database deal. You had commented that it is a catch up royalty for past deployment. I am wondering if you could maybe just explain that a little deeper and what kind of a customer is this that is up for that kind of a transaction and then, are there potentially other deals like this in the pipeline for FY09 or this, I guess it sounds more like kind of a one-time event?

John Farr

There was a limit to how much I can say about that particular transaction because as I said, there was a catch up element to it meaning that this particular customer was catching up on their reporting [avenues] that they had previously deployed under one of our contract. And so, compliance in nature and so we learn about these kinds of transactions or past deployment from time to time and it just comes about either very honest customers who had an inadvertent over deployment and they are reporting that to us now or we find them out of what I would call very good account management and learning everything that the account manager needs to know about a particular customer and being able to connect dots to know that maybe an inadvertent over deployment has occurred.

So, the key I think for you guys, Mark, is that this was indeed a larger than normal transaction but it was capturing demand for past deployment as opposed to perhaps selling demand for future deployment.

Operator

Your next question comes from Neha Bhargava from RedChip Company.

Neha Bhargava - RedChip Research

My question is related to your sales compensation as you have already replaced your manual system of managing variable compensations. So, what are the other changes that you intend to incorporate for the betterment of this compensation?

Randall Jonkers

Well, you are talking about our use of exactly software for our sales compensation?

Neha Bhargava - RedChip Research

Yes.

Randall Jonkers

That has a whole lot to do with our business. That is, we are using that as an internal half. We like using exactly as the customer. We like using our customers' products because they are based on our technologies also. Our accounting system is customers' accounting system running on our database and exactly as sales compensation management in fact running on our data integration tools. So, we enjoy using our customer applications and if there are other applications that suit us well for the size of business that we are, then we would certainly consider them and we would consider our customer applications first and foremost.

Operator

Your next question comes from Patrick Walker from Walker Smith Capital.

Patrick Walker - Walker Smith Capital

I missed the splits on the international or I may put them down wrong. Can you give me the original revenue again, revenue by region for the quarter?

John Farr

Yes, just one second. Domestic revenue was $7.4 million, it was up 15% from both Q4 and Q1 and international revenue was $4.5 million, down 5% from Q4 but up 20% from Q1 of the fiscal year.

Patrick Walker - Walker Smith Capital

I think last quarter you had mentioned something about Japan having, I believe, an odd seasonal trend to it.

Randall Jonkers

Yes, so Japan does have seasonal trends. It used to stronger for us. It tends to be stronger in the March quarter that is the typical yearend for Japan.

Patrick Walker - Walker Smith Capital

And last time that was better in June, right?

Randall Jonkers

And then again, it has a seasonally good quarter in September because that is the end of the fiscal year of our partner in Japan. So, I think the June quarter was relatively stronger than we had thought. September was kind of as we expected but I expect that December out of Japan will be down slightly and that is contemplated in the Q2 guidance that we gave this morning.

Patrick Walker - Walker Smith Capital

And why is that?

Randall Jonkers

Again, the seasonality. I mean…

Patrick Walker - Walker Smith Capital

That is the typical seasonality, correct?

Randall Jonkers

Yes, the typical seasonality is strong in March and September and relatively weaker in June and December.

Patrick Walker - Walker Smith Capital

True and can you comment on the adoption trend on V10 and what is the new Microsoft release?

Randall Jonkers

Yes. So, it is still going quite well for our version 10. We continue to add ISDs, our ongoing ISDs increasing number of those ISDs are reporting roll piece now on version 10 each and every quarter but I think what is your real question might be is, are we seeing any demand generated specifically by Windows Server 2008 which Microsoft released in the spring and then we released version 10 dot 10, supporting the long Windows Server 2008 release. We released our product in June.

We are still seeing the levels of demand and adoption that we had seen prior to June, prior with version 10, prior to June with version 10 prior to the release of Window Server 2008. The bottom line there is that we believe that the small businesses will adopt Windows Server 2008 which will be a positive catalyst for Pervasive but that adoption will take place relatively slow and steadily over a series of years. The point there is that the kinds of businesses that we are talking about here are generally small businesses and they generally do not rush out and buy a new operating system just because Microsoft released this one.

They will wait until they refresh their hardware cycles, their hardware on their desktops and on their server realms at which point they will consider application upgrades running on then current OS and their current database. So, that kind of, we are not seeing real database demand yet prompted solely by Windows Server 2008 operating system demand.

Patrick Walker - Walker Smith Capital

Okay and I guess really, my question would be more directly stated, how would you rate the adoption of V10 relative to past versions, version 8 and version 9 or to the, I remember the most?

Randall Jonkers

Well, let us see. Qualitatively and even quantitatively, I would say it is performing as well as or better than version 8, two versions ago and much better than version 9 which was the version we had been on for almost 2 ½ years prior to the introduction of version 10 last fall and that is where a number of reasons. I mean…

Patrick Walker - Walker Smith Capital

The version 9 was the more incremental development, wasn’t it?

Randall Jonkers

Version 9, if you recall, our database has multiple APIs, one of which is the transactional card, transactional API. The other is more of a relational API and there is more work on V9 around the relational API which was relevant to some of our customers but fewer of our customer spend is the transactional API. So, the version 8, the focus was on transactional relevant to most or all of our customers. The version 9 was focused on relational which were relevant to fewer of our customers but still important and in version 10 was a mix of both as well as 64 bit computing and distant longhorn platforms split which is relevant to all.

Patrick Walker - Walker Smith Capital

Deferred revenue, if I am not mistaken is a record; it was a record for the last say 12 or 14 quarters is that right?

Randall Jonkers

When you say record, you got to take me back 14 years. So, I am not going to say record. It is 1994 but it has been a better number that we have had for quite a while.

Patrick Walker - Walker Smith Capital

Does that reflect anything about the new business initiatives? I mean, should I read an increase on some of the new initiatives there?

Randall Jonkers

No, I would read the relatively strong quarter in integration business.

Patrick Walker - Walker Smith Capital

Okay and lot of that for ongoing service…

Randall Jonkers

Some of that, doing professional service work that requires acceptance where we have already noted, any expectations received, continued renewals of the integration maintenance and support. So, that is how we would read that.

Patrick Walker - Walker Smith Capital

Okay and it sounds like you are looking to expand the team on the significant way on the Data Rush side.

Randall Jonkers

Significant for us, yes. When I say that it is time to, we have that 7 or 8 very good engineers and technical people on that team and one of those guys who is equally talented but he is one guy and given all the things we are seeing and the feedback we are getting from our customers and prospects is we were probably actually late. I mean we need to higher up sales and marketing side and as I mentioned in the call last quarter, we started the process of identifying a general manager to take the lead role. I do not really want to fill out the next year of the sales and marketing staff in that team until I have that GM, I said GM's responsibility to do so and we are in discussions with a very, very good candidate and we hope to pull that person across the finish line.

Patrick Walker - Walker Smith Capital

Yes, if you start hiring sales people, I am going to start asking new questions about the quota.

Randall Jonkers

That is alright.

Patrick Walker - Walker Smith Capital

And what kind of revenue you think you can get, the December..?

Randall Jonkers

I can deal with those questions. That is what new businesses were all about.

Patrick Walker - Walker Smith Capital

Well, that is great. The December guidance on the top line and corporate, any revenue from Data Rush at this point?

Randall Jonkers

The way I will answer that question, Patrick is that we have plans for revenue in the six-digit range for Pervasive Data Rush in the fiscal 2009 time frame. You will remember that we will very likely be selling Data Rush as subscriptions. So, subscriptions do take longer to build massive revenue to the point that outside world can see it in a noticeable way.

Patrick Walker - Walker Smith Capital

Okay, well that is great news.

Operator

At this time, you had no further questions in queue; I would like to turn the call back over to Mr. Jonkers for closing remarks.

Randall Jonkers

Alright, well I will just wrap it up by saying we do these calls every quarter and I am sure it is easily discernible that we do read from scripts and sometimes when you read scripts the pure enjoyment of what we are doing here may not come shining through but I will tell you that this Company is having a blast and really having a good time bringing new products to market, really having a good time doing better with what we have. We are doing exactly what we are set out to do well over two years ago and we will continue working for you, our shareholders.

Thank you for your time this evening.

Operator

This concludes today's conference call. You may disconnect.

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