Trintech Group PLC, F4Q09 (Qtr End 01/31/09) Earnings Call Transcript

Trintech Group PLC (TTPA)

F4Q09 (Qtr End 01/31/09) Earnings Call

March 04, 2009, 10:30 am ET

Executives

Joe Seery - VP, Finance, Group

Cyril McGuire - Chairman and CEO

Paul Byrne - President

Analysts

Ivan Skelly - Davy Stockbrokers

Daniel Cavanagh

Presentation

Operator

Thank you for standing by and welcome to the Trintech's Fourth Quarter and Fiscal 2009 Earnings Conference Call. This time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions). I must advise you the conference is being recorded today, Wednesday the 4th of March, 2009.

I would now like to hand the conference over to your speaker today, Joe Seery. Please go ahead, sir.

Joe Seery

Thank you. Good afternoon, ladies and gentlemen. I would like to welcome you all to Trintech's fourth quarter and fiscal end 2009 earnings conference call. My name is Joe Seery, VP of Finance Group, and joining me on today's call are Cyril McGuire, Chief Executive Officer of Trintech, and Paul Byrne, President.

We will begin the call with prepared remarks, which will be followed by a question-and-answer session. A replay of this conference call will be available later this evening on the Investor Relations section of Trintech's website, or by dialing 44 for the UK then 1452-550-000, the pass code is 8714337#.

I would like to remind you that this conference call will contain forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 as amended and Section 21E of the US Securities Exchange Act of 1934 as amended.

In particular, forward-looking statements will include, amongst other things, statements related to Trintech's revenues, gross margins, expenses and charges; interest income, US GAAP net loss; adjusted EBITDA; net income; cash flows; acquisition payment, cash balance; DSO days; licensed software products line performance, growth opportunities presented by new product investments and new market segments.

Our focus on EBITDA earnings, cash generation and sales execution, increased opportunities for Trintech revenue cycle, managing software applications and the expected impact of the US economic stimulus package on healthcare IT spending. Management will focus on recurring revenues; plans to continue to have no debt or borrowings, business strategy deposits on new business and overall financial performance, in Q1 FY10 and for the fiscal year 2010.

All forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those stages.

Factors that could cause or contribute to such differences include Trintech's ability to accurately predict future sales; its ability to accurately predict and meet customer needs and to successfully position itself in the market. Its ability to this ensure the performance of its products and services; and its ability to improve the performance of its organization and ensure the long-term health of its business.

Actual performance may also be affected by other factors more fully discussed in our Form 20F for the year fiscal year 2008 and significant filings with the Securities and Exchange Commission which are available on the SEC's EDGAR database and in the final paragraph of our earnings press release issued earlier today which is available on our website www.trintech.com.

We will also comment on adjusted EBITDA results which have been included together with the reconciliation to US GAAP results in the earnings release. The release is also available on our website, www.trintech.com, and can be downloaded in PDF format. Lastly, ladies and gentlemen, please understand that company undertakes no obligation to update information presented in this conference call or ensuing Q&A.

And with that, I would now like to hand over to Cyril McGuire to focus on our Q4 and full-year FY'09 financial results.

Cyril McGuire

Thank you, Joe. As we announced earlier today in our press release Trintech's performance in Q4 and full-year FY'09 was solid, despite the turbulent global economic environment. With underlying revenue growth of 5% and adjusted EBITDA earnings of $460,000 we achieved in the quarter, and revenue growth of 20% and adjusted EBITDA earnings of $1.6 million in achieved for the full fiscal year.

Starting with our revenue performance. Trintech generated revenue of $9.4 million in Q4 and $39.7 million in FY'09 compared to $8.9 million and $32.9 million for the same period in the prior year, which represent a growth of 5% and 20%, respectively.

License revenue of $4.6 million in Q4 and $19.6 million in FY'09 compared to $4.9 million and $16.6 million for the same period last year represented a modest decline of 7% and a growth of 18%, respectively, on the corresponding periods in the prior year. The annual increase was primarily due to the revenue generated from our Movaris business, strong FMS license sales and strong maintenance renewals for all products.

During FY'09 we announced the number of significant new customers across our business, which included market leader such as Microsoft, Intel, Hewlett Packard, Google and Healthcare clients like Valley Baptist Health Systems and Memorial Hermann. We also expanded our relationship for GE with additional follow-on sales in new geographies during the year.

Our markets performed reasonably well under the difficult economic circumstances with partnership strengthening and good pipeline building. However, the continued economic uncertainty in global markets is negatively impacting our normal sales cycle, with customers becoming more cautious, procurement process is lengthening and general delays in budget approvals which are creating significant challenges to close new business.

Despite the challenging economic environment, we continue to experience good pipeline and prospect opportunities for our products both in the US and internationally, as there is still a growing need for organizations to improve operational efficiency, reduced costs and strengthened financial control and governance platforms.

In general, we would expect to see flat to modest growth in our performance of our license software product line in FY'10 as we continue to invest in targeted sales and marketing campaigns in these challenging market conditions and exploit cross-sale opportunities in our existing client base globally.

Service revenue came in at $4.9 million in Q4 to $20 million for FY'09 compared to $4 million and $16.3 million for the same periods last year, representing growth of 20% and 23%, respectively. This performance was helped by additional service revenue from our Movaris business and an increase in revenue from our ASP and hosted services in our FMS and Healthcare businesses.

Our on-demand services business unit met its annual target and continues to be a robust performer. In addition, our DataFlow Transaction Network currently processes transaction data for over 20,000 accounts in over 5,000 banks in the US.

Finally our Healthcare division continues to grow its SaaS revenue based in the quarter with prospect pipeline continuing to grow with some significant business opportunities being targeted in the coming year.

Finally, it is worth noting that the recurring license and recurring transaction services revenue accounted for over 68% of our quarterly revenue in Q4 and 62% of our total revenue for FY'09. Our business model provides good visibility with a high level of recurring revenue which provides some protection from the swings in the general economy, it will continue to be a key focus for management as we grow our business moving forward.

During Q4, Trintech continue to make investments across all product lines both in terms of research and development for new products and new clients functionality and sales and marketing campaigns as we executed on our sales plan across the broad range of vertical markets and geographies, particularly international market and healthcare opportunities where we believe there are good prospects for growth. We already are focused on unifying our product functionality into a single development platform targeted at the office of finance across multiple industries.

The latest release of our GRC Unity Suite addresses key challenges of providing customers with the tools they need to provide the visibility and financial transparency to fully comply with the ever increasing regulatory requirements while achieving a significant return on investment for the IT implementations.

On the sales and marketing front, during the past year we focused on expanding our foot print in the share services and business process outsourcing or BPO industry where we feel there is a trend by companies to outsource activities and processes to increase efficiencies into operating cost base to drive measurable ROI and profitability.

In this regard Trintech presented at a number of internationally focused tradeshow on shared services where we demonstrated how the Trintech Solution provides the framework for financial transparency, visibility and control within the shared services environment. We are also working closely with a number of world top customers like Accenture, Hewlett-Packard and KPMG who actively targeting middle market plans in the BPO market, where products and solutions like AssureNET and Unity Financial Close from Trintech.

We are also boosting our channel partner capability by investing additional business development and training resources targeted at deepening our distribution network capability for our products and services both in the US and internationally in these key niche markets.

We are confident that these new product investments and increased focus on new market segments are generating a good sales pipeline while these investments will have a negative impact in earnings in the short-term; we feel that will position Trintech in this emerging market opportunity for growth in the medium to long-term.

Now turning to some other key performance metrics in our Q4 and FY '09 results. During the quarter divisions performed to our guidance on the key performance metrics and gross margin, operating costs, tax generation and adjusted EBITDA earnings performance.

Gross margin amounted to $6.1 million for Q4 representing 65% of revenue and $26.4 million for the full FY '09 year representing 66% of revenue in FY09 compared to $6.4 million or 71% and $22.2 million or 67% for the same period in the preceding year.

Gross margins were negatively impacted in Q4 due to the revenue mix between license and revenues. Total operating costs were $6.8 million in Q4 and $29.5 million for FY '09 compared to $6.9 million and $27 million for the same periods in the prior year representing a marginal decline in Q4 and a 9% increase for FY '09 due mainly to the incremental cost relating to the Movaris business.

The volatility of the US dollar against the Euro and it's impact on our Euro based cost in FY '09 generally have knocked out but we continue to see the FX hedge contracts for our incremental exposure does not naturally hedged by our Euro and Sterling revenue streams.

In general we are continuing to re-align our cost base globally so as to achieve an efficient and productive operating business model given the uncertain outlook.

On a consolidated basis Trintech recorded adjusted EBITDA net income of $460,000 in Q4 and $1.6 million for FY '09 representing the 5% and 4% net adjusted EBITDA income margin respectively compared to adjusted EBITDA net income of $595,000 and an adjusted EBITDA net loss of $353,000 for the corresponding period in the prior year.

Net adjusted EBITDA margins calculated by dividing adjusted EBITDA income loss by revenue for the relevant quarter a full reconciliation of adjusted EBITDA net income and loss to a net loss is provided in our press release.

Q4 represents our fifth consecutive quarter that the company has achieved adjusted EBITDA profitability.

Under full US GAAP basis the company recorded a net loss of $334,000 in Q4 and net loss of $1.2 million for FY '09 compared with a net loss of $706,000 and net loss $4.3 million in the same period in the preceding year.

Trintech's DSOs were 58 days for Q4 and net cash generated for the quarter was $523,000. Cash generation from operations will continue to be a major focus for management as we aim to be EBITDA profitable for every quarter in FY '10.

Finally, our balance sheet at the end of Q4 and at year end remained strong with group cash reserves of $18.7 million including restricted cash of $1.3 million. We continue to have no debt or borrowings and with the current turmoil in the banking and credit market the company intends to continue with this prudent financial policy.

In summary, we continue to see opportunities for our financial governance, transaction risk management and compliance solutions globally as we expect the benefit in the medium term from a trend towards greater transparency in financial operations increased regulatory compliance and risk aversion while ensuring an efficient operating cost base for our clients.

In the expanding healthcare market we see increased opportunities for our revenue cycle management software applications which aimed to deliver improved revenue recovery and enhanced profitability for our healthcare clients.

In particular, the $787 billion US economic stimulus package is expected to significantly increase healthcare, IT spending in the near future.

Our current exposure to the various credit markets are approximately as following. Corporate retail is 75%, healthcare 15% and financial services 10%. This broad mix gives Trintech some protection against the deteriorating financial services marketplace.

Our operating churn is to drive a sustained growth in EBITDA profitability with a strict control on operating cost basis, given the challenges of the economic environment. We will maintain a strong focus on our recurring revenue streams within our revenue mix for predictability and visibility in our business model.

Our objective is to maintain the current revenue between 60% and 70% of total revenues moving forward.

Looking briefly to the outlook for FY'10, while we are confident about our business in general, we feel it is only appropriately very realistic and prudent our market guidance given the impact of the challenging global economic environment.

We also feel it is appropriate to guide only on the quarterly basis moving forward. In this regard, we are targeting $9 million to $9.5 million revenue range for Q1 FY'10 and the target of adjusted EBITDA net income range of between $300,000 and $500,000, representing a 3% to 5% net adjusted EBITDA income margin.

For FY'10, we are focused on growth and EBITDA earnings and cash flow generations as the business aims to achieve sustained EBITDA profitability.

Management is also very focused on achieving continued sales execution, given our market leading position in our respective markets, by realizing our strategic and operating plans for our organic business in FY'10.

Finally, following shareholder approval of a share buyback at our AGM last year, the company initiated the purchase of our stock at market level, as our board strongly feels that the current Trintech share price does not aptly reflect the true enterprise value of the business.

Trintech purchased 53,402 to American Depository Shares of a total cost of $67,000 during the quarter.

With that I would like to hand it back now to Joe Seery, VP of Finance Group, and he will summarize our Q4 and year end FY'09 financial results with you.

Joe Seery

Thank you, Cyril. In reporting the financial results for the fourth quarter and fiscal year January 31, 2009 I am focusing on the US GAAP results detail in our earnings press release, which was distributed this morning.

I will also comment on adjusted EBITDA results which have been included together with the reconciliation to US GAAP results in the earnings release. Following the sale of the Payment business to VeriFone Holdings Inc, at September 2006, Trintech is required to present its financial results on a continuing operations and discontinued operations basis. The continuing business compromises the FMS and healthcare businesses and the discontinued business comprise the payments business.

These requirements have resulted in the presentation of financial results showing fourth quarter at fiscal year 2009 revenue of $9.4 million and $39.7 million and adjusted EBITDA net income of $450,000, and $1.6 million in the fourth quarter and for our fiscal year 2009, and a net loss for the fourth quarter and fiscal year 2009 for continuing business of 334,000 and $2.2 million, respectively.

Revenue for the year ended January 31st, 2009 was $39.7 million, compared with $32.9 million for the year ended 31st of January 2009 an increase of 20%. Revenue for the fourth quarter ended January 31, 2009 was $9.4 million, compared to $8.9 million for the corresponding quarter in the prior year, an increase of 5%.

Software license for the year ended January 31, 2009 was $19.6 million, compared with $15.6 million for the year ended January 31, 2008 an increase of 18%. This increase was primarily due to revenues generated from the Movaris business acquired February, 2008. Strong FMS license sales and strong maintenance renewal for all products.

Software license revenue for the quarter ended January 31, 2009 was $4.6 million, compared with $4.9 million for the corresponding quarter in the prior year, a decrease of 7%. This decrease was primarily due to weaker FMS license sales in the quarter, in North America and EMEA.

Due to economic uncertainty in this market, negatively impacting our normal sales cycles with customers becoming more cautious, procurement processes lengthening and general uncertainty creating significant challenges to build new business. This fall in revenues was partially offset by strong maintenance renewals from existing customers and customers from the Movaris business.

Service revenue for the year ended January 31, 2009 was $20.1 million, compared with $16.3 million for the prior year, an increase of 23%. The increase was primarily due to revenues generated from the Movaris business, an increase in revenues from ASP and hosting services in our FMS and Healthcare businesses and strong FMS service revenues.

Service revenue for the quarter ended January 31, 2009 was $4.9 million, compared with $4.0 million for the prior year, an increase of 20%. This increase was primarily due to an increase in revenues from ASP and hosting services in our FMS and Healthcare businesses, strong FMS service revenues and revenues generated from the Movaris business.

Total gross margin for the year ended January 31, 2009 was $26.4 million, an increase of 19% from $22.2 million for the previous year. The overall gross margin percentage fell by 1% in the 2009 fiscal year to 66% from 67% in the prior year.

Total gross margin for the fourth quarter ended January 31, 2009 was $6.1 million, a decrease of 4% from $6.4 million in the corresponding quarter in the prior year. Gross margin percentage decreased to 65% in Q4 of the 2009 fiscal year, compared to 71% in the prior year. The decrease in margin and margin percentage was due to lower license revenues and a higher percentage of lower margin service revenues in Q4 of the 2009 fiscal year.

Total operating expenses for the year ended January 31, 2009 were $29.5 million, an increase of 9% from $27.0 million in the previous year. This increase was due to costs related to the acquired Movaris business.

Total operating expenses for the fourth quarter ended January 31, 2009 were $6.8 million, a marginal decrease of 1% from $6.9 million in the prior year. The impact of costs related to the Movaris business in the quarter was offset by reduced costs in other areas of the business due to restructuring changes in prior quarters.

Adjusted EBITDA operating expenses for the year ended January 31, 2009 were $26.1 million, an increase of 10% from $23.8 million in the previous year. Adjusted EBITDA operating expenses for the quarter ended January 31, 2009 were $6 million flat compared to adjusted EBITDA operating expenses of $6 million for the same period in the prior year.

Restructuring expenses were $252,000 and $98,000 for the year and quarter ended January 31, 2009, respectively. These charges related primarily to employee termination costs as a result of the company re-aligning its cost base in the current difficult economic environment.

The provision for income taxes was a credit for $356,000 and $243,000 for the year and quarter ended January 31, 2009. The tax credit was primarily due to a deferred tax credit in the US resulting from the finalization of the purchase accounting related to the acquisition of the Movaris business.

Adjusted EBITDA net income was $1.6 million for the year ended January 31, 2009 compared to an adjusted net loss of $327,000 for the prior year. Adjusted EBITDA and net income of $460,000 for the fourth quarter ended January 31, 2009 compared to an adjusted net income of $595,000 for the corresponding quarter in the prior year.

A full reconciliation of our performance on our net income an adjusted net income basis is contained in the press release issued earlier today. Within the operating cost base the depreciation charge for Q4 of fiscal year 2009 was a $168,000 and $742,000, respectively. The amortization charge was $652,000 for the fourth quarter and $2.5 million for the full fiscal year 2009.

We incurred a share-based compensation charge of $174,000 in the quarter and $919,000 in the fiscal year 2009. Interest income in the quarter and fiscal year 2009 amounted to $55,000 and $320,000, respectively. The result of foreign exchange gain of $79,000 and $331,000 in Q4 and in 2009 fiscal year arising from unrealized exchange gains. Basic and dilution net loss per equivalent ADS for Q4 and in 2009 fiscal year amounted to $0.02 and $0.13, respectively.

Now turning to the balance sheet, at the end of January 2009 Trintech has total assets of $57.5 million. Net cash amounts to $18.7 million including restricted cash balances of $1.3 million. Working capital was $8.6 million and current liabilities were $17.6 million at the end of the year.

Net cash generated for the combined continuing and discontinued operations for three months ended January 31, 2009 were $523,000. Cash deductions were very good in the quarter with DSOs of 58 days. The AR provision has been increased to $257,000 at year-end to account for any potential bad debt in the AR balance at the end of the year.

We have the natural foreign currency hedged between revenue and expenses for the majority of our transactions. We have hedged our projected future exposure I will refer at July 31, 2009.

Out total headcount at the end of Q4 was 223 compared to 231 at the end of Q3 of fiscal 2009.

Looking ahead to Q1 of fiscal year 2010, let me preface my comments on our business outlook while stating that these comments are based on current expectations. These are forward-looking and involve a number of risks and uncertainties. Actual results may differ materially. I would like to draw your attention to the opening comments made at the start of this call in reference to the use of forward-looking statements during this call and factors which could adversely affect actual performance.

Guidance is for the first quarter fiscal year 2010 only. While its revenue visibility remains unclear we would expect based on current pipelines, current revenue for Q1 to be in the $9 million to $9.5 million range. We expect license revenue for Q1 to be in the $4.5 million to $4.7 million range. We expect services revenues for Q1 to be in the $4.5 million to $4.8 million range.

Based on the expected revenue mix we expect Q1 gross margins to be in the 64% to 66% range. We expect this year's EBITDA operating expenses will be between $6 million and $6.3 million for Q1.

These costs exclude an expected depreciation charge of approximately $170,000, an expected charge for the amortization of purchased intangible assets of $650,000, and expected share-based compensation charge of $150,000 and an expected tax charge of $100,000 for Q1. We also expect the year-end interest income of $40,000 for Q1.

Consequently, given the continued investment in our stated growth areas, we believe that our US GAAP net loss for our business will be between $800,000 and $1.4 million loss in Q1. Adjusted EBITDA income will then be in the range of $300,000 to $500,000 in Q1. This can be calculated by adjusting net income for the expected interest tax depreciation, amortization, stock compensation charges.

We expect our net cash movement for Q1 to be in the range of $500,000 to $800,000 cash outflow, excluding acquisition related payments. Acquisition payments are expected to be approximately $3 million in Q1. These payments mark the end of our acquisition or obligation.

Net cash balance at the end of Q1 is expected to be in the range of $14.9 million to $15.2 million. We expect our DSO days range in Q1 to be between 65 to 70 days. With that I would like to hand back to Cyril.

Cyril Mcguire

Thank you, Joe, and now I would like to open the call up for Q&A. Operator?

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. (Operator Instructions) Your first question comes from the line of Ivan Skelly from Davy. Please ask your question.

Ivan Skelly - Davy Stockbrokers

How are you doing guys? I have just a couple of questions if you do not mind. The first one is on the increase of our debt from in terms of the cash crash in regards just the, if you could talk a little bit of organic, are you seeing any of those bad debts come through, or see the rationale other than also just the economic air like at the moment, and just from the margin pressure, that you talked about Trintech mix change, moved to the lower margin revenue. Is that a trend you expect to continue into the next year or it would be something expected correct itself over time. And then just one last thing if at this time I know you protect to I think must take a visibility risk on how you are adopting to this or any plans going forward to increase the diversification across sectors, thanks?

Cyril McGuire

Okay, number one firstly it is on the bad debt provision all quality obviously is void for any regulatory procedure to be a risk of collection and we can, we review pretty robustly every single account. We have told to our customers, we have 600 of them but we are close to the model and we did increase submission at the end of the year because we did see some slow down and specifically in the US retail market and where we historically were strong both, our business are significantly diversified over the last and two year sort of where we are ranking that business down and probably one of the small aspects of our business.

So what and that we would say specialty retail but are you people waiting out in this small jewelry store for example are and small homeware stores would be under lot of pressure and you are seeing that I think another coverage.

We are finding that we are doing more business in US retail and with this clients like Wal-Mart for example or McDonalds there have been seen the increase in our business. So overall we are pretty balanced on that we do think we have adequately provided for our for any exposure at the year end.

We think the way we manage our business gives us loan of exposure any where in the sense of position there quite small as a percentage overall revenue and yet it just reflects we do not see our businesses in anyway being high risk in itself.

Second issue was the margin pressure and the business has gravitated bit more towards services and currently we expect our trends, to continue so that why on Q1 guidance, Joe gave was in the range, to the range we experienced in Q4.

And so I would say that we are focused very much on revenue, EBITDA, margins, cash generation and also gross margin and interpreter order as our key metrics. So we are not concerning in any way that there is a change in margin. It just means we have to, make appropriate changes in our business model to reflect the demand of our customer from us.

And lastly, in terms of sector risk obviously, from time-to-time have had exposure to the financial services.

Now, we said on the call historically that at the start of last year we reduced our exposure to the financial services market quite dramatically. In fact we pulled back all of our investments in that market that to very small handful of people servicing existing customer only.

So we went to that strategy to employ very little or minimal exposure to financial services now.

Other than that as I said, the retail space is a market where we do see some issues and so with both even retailer base all software tend to be considered mission critical or core software. So that the customer delivering difficulty at those chapter 11 for example, we always get core protection in that circumstances because we are consider to be core and mission critical to the operaton. So we do not see that as a specific risk other than bankruptcy itself.

And lastly broader commercial market was very well diversified. In the last 12 months we have expanded in healthcare which has been pretty robust performer and if you look at our customer concentration we do not have any one very large customer dominating our revenue streams but our three largest customers currently all of healthcare space and by which is obviously the least and impacted so far and industry lease there. And we also found stock and sector risk in the US by expanding geographically across Europe and Australia.

So, overall we think we are quite a low risk in terms of our revenue streams given the broad geographic spread and broad spread across industry segments and in the, US itself.

Ivan Skelly - Davy Stockbrokers

Alright, that's great, Paul. Thanks.

Operator

Your next question comes from Dan Cavanagh. Please ask your question.

Daniel Cavanagh

Hi guys.

Cyril McGuire

Hi, Dan.

Daniel Cavanagh

Just a quick question on the composition of the expenses, R&D was up 19% year-on-year and sales and marketing and both, general and admin took a bit of a hit. And is there a timing issue with that or are we seeing new run rates in those sorts of spend.

And secondly, just on the Healthcare sector, obviously, while you said that the US stimulus package will encourage an IT spend in that sector. In the short-term, are you seeing any changes in nature of spend in those areas and any changes in the dynamics of the market?

Paul Byrne

Yes, Dan Paul again. On the expenses issue, R&D coped up primarily because we acquired Movaris, and Movaris came with a very strong R&D organization and a very strong sales organization.

However, we synergized the sale organization instantly into Trintech, so that was really to get the sales and marketing cost down across the board. But we didn't synergize the R&D, because frankly from our perspective and those guys are very well qualified, super guys in terms of product development.

And then, we have synergized something around the R&D function and that’s part of our cost reduction plan. But generally, we didn't believe it was inappropriate to increase the R&D, because we see a lot of demand coming (inaudible) for more integrated solutions and bringing the solutions together on one platform, and we are in the middle of that project at the moment in process and we were making appropriate investments as new modules are available to our DSO.

We felt that it was appropriate investment to make given the dynamic changes in the marketplace. We are also doing a lot of work with some of the bigger players in the market on partnerships, and we had to invest some R&D just to get the partnerships up and running.

So, we were expecting R&D this year to be roughly the same as Q4, annualized. And same in terms of marketing and G&A, and all the synergies have been finished in those departments now. And there is some small spillover into quarter one, but basically the Q4 number is pretty much where its at and for FY'10.

And lastly, in Healthcare, we are seeing changes in the Healthcare market and in the US, I mean all customers are broad range of people, their revenue streams have changed. Obviously, any of our customers with a large elective and surgery practice or like in terms of payor paid for insurance company paid for procedure basing that business come under pressure. Obviously, they have seen changes in the Medicare rates to potentially reduction in the Medicare reimbursement coming in this year, and both have seen a significant increase in charity cases and people's inability to pay cases coming through their front door, which means they need to be tighter on the the registration process and tighter on the patient accountability piece of the charge.

Another change in nature of the people use our product, in makes our product much more core to our customers' needs in terms able to manage the cash flow on revenues in terms of maximize every dollar you get from insurance company. And also been able to appropriately and accurately calculate, how much the patient is liable to pay for it. And in the process so, that’s actually brought us closer to our customers in the sense of being able to help them more and increase the ROI in the current climate, and we see that coming through in the pipeline. We have had a significant increase in the number of people coming to our websites, coming to us directly looking for information on our products and looking for us to meet with them and discuss with them ways, which we could improve their efficiency, specifically around maximizing the returns from the insurance companies, given that the insurance companies are cutting back generally and their elective surgeries have gone down. So they need to maximize whatever they can get from existing contracts.

So we hope all the conducts fits into our pipeline and fits into revenue, but the interest level has gone up dramatically in the last, probably five or six months.

Cyril McGuire

And Dan, I would just add to your earlier comment. Obviously, given the uncertainties in the market, understandably management is focused on what is actually under their direct control. And clearly, if you look at the three expense lines, as Paul mentioned, we are targeting extremely strongly that the G&A line and we have reduced that and we will continue to put pressure on that line.

The other two, which are clearly more productive; the R&D and sales and marketing, obviously we are continuing to make measured investments in the R&D side, and that does gives us a competitive edge in the market. And then on sales and marketing, clearly we are streamlining that on the front of the acquisitions, and increasingly putting some more resources into the channel side of the business, where we see we can get better bang for the buck and also better geographic coverage on a global basis working with some of our large global partners.

And so as I said, management is as I said actually and always under their direct control and we are making sure that we stretch every dollar we do have on the expense line and reducing it if at all possible.

Daniel Cavanagh

Can I just ask an additional question.

Cyril McGuire

Go ahead.

Daniel Cavanagh

Paul, you mentioned then about the increase in the product pipeline. You have seen strong interest in the product suite. And touching on the comment earlier about the increased geographical spread of the business. And do you see longer-term, how do you see the mix in the geographical spreads. And probably more importantly, how do you see the spread of the currencies, let's say by the end of FY '10.

Paul Byrne

Okay, so, well I think I am down like last year we had a very strong year in Europe in the EMEA region, and we got a solid business in 30 states specifically Australia. And that have compensated for some weakness in the US.

Now funny enough in the next six months we should have trend potentially reversing that we think US registers would be in a significant cost cutting volume you read in the newspaper with all of the people who lost their jobs unfortunately. So, now what we are seeing is that now that companies have cut their cost, they are now looking for ways to improve efficiency and more importantly put the profit in place and less people to work with. And that we are seeing bit of bounce back in demand in the US.

Whereas Europe is now going through the whole cost reduction process that US went through six months ago. So, we think in the next quarter with a more dollar revenue and less sterling revenue coming or Euro revenue coming in quarter four. At the backend of the year we see the things leveling out to where it was and going in Q4. So, our aim will be to maintain the same level of currency base revenue stream as we had for last year, and we just did predominately US dollar based. So, we don’t see as a risk for the business but would you see a bit of a cyclical trend there in the next six months with a more of a lift in the US first followed by a bit of lifting Europe right on to year.

Daniel Cavanagh

Okay. Thanks guys.

Operator

(Operator Instructions).

Cyril McGuire

Any final questions?

Operator

There are no further questions at this time, sir, please continue.

Cyril McGuire

Okay. I would like to thank everyone very much for joining us today on the call and look forward very much to updating everybody again on our progress in our conference call for Q1 fiscal 2010. And with that thank you.

Operator

That does conclude our conference for today. Thank you for participating. You may all disconnect.

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