Keynote Systems (NASDAQ:KEYN)
Q2 2013 Earnings Call
April 30, 2013 5:00 pm ET
Kirsten F. Chapman - Managing Director and Principal
Umang Gupta - Chairman and Chief Executive Officer
Curtis H. Smith - Chief Financial Officer and Secretary
Matthew L. Williams - Evercore Partners Inc., Research Division
Sarkis Sherbetchyan - B. Riley Caris, Research Division
Welcome to the Keynote Systems Second Quarter of Fiscal 2013 Results Conference Call. My name is Ellen, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded.
I will now turn the call over to Kirsten Chapman, Ms. Chapman, you may begin.
Kirsten F. Chapman
Thank you, Ellen. Good afternoon, everyone, and welcome to Keynote's conference call for the second fiscal quarter ended March 31, 2013. I'm here today with Umang Gupta, Chairman and Chief Executive Officer; and Curtis Smith, Chief Financial Officer.
Hopefully, you have seen our press release that was distributed over the major wire services. For your convenience, the press release has been posted to our website at www.keynote.com. The replay of this call will be available by telephone by dialing (888) 843-7419, passcode 34598660#, or by webcast at the Investor Relations section of our website at www.keynote.com.
I would like to remind you that statements made during the course of this call that are not purely historical are forward-looking statements regarding the company or management's intentions, hopes, beliefs, expectations and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ from those in the forward-looking statements are discussed in today's press release and in the company's most recent annual and quarterly reports filed with the SEC.
Today, we have provided detailed guidance on our quarterly press release. This guidance assumes no acquisitions, no material changes in interest rates or foreign currency exchange, no impairment of goodwill or intangibles and no other significant or extraordinary transactions. We will not comment on this guidance during the quarter, but may provide an update to this guidance in the event of a material change during the quarter.
Before the company reviews the financials, I will review definitions for some metrics the company provides which are not in accordance with generally accepted accounting principles, commonly known as GAAP. Non-GAAP net income is calculated as GAAP net income or loss adjusted for the provisions or benefit for income taxes, cash taxes from ongoing operations, stock-based compensation expense, amortization of purchased intangibles and any unusual items.
In the first quarter of fiscal 2012, the change of fair value of acquisition-related contingent consideration was considered an unusual item. Non-GAAP net income per diluted share equals non-GAAP net income divided by the diluted weighted average shares outstanding for the period. Adjusted EBITDA is defined as earnings before interest income, taxes, depreciation, amortization of purchased intangibles, stock-based compensation and other income or expense net and any unusual items.
In the first quarter of fiscal 2012, the change in fair value of acquisition-related contingent consideration was considered an unusual item. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of the net revenues. Free cash flow is defined as cash flow from operations, less cash used to purchase property, equipment and software.
During the call, Umang Gupta, Chairman and CEO, will review recent accomplishments; and Curtis Smith, CFO, will detail the financial results and provide guidance for the next quarter. Then Umang will deliver closing remarks and open the call for questions.
It's now my pleasure to welcome Umang Gupta. Please go ahead, sir.
Thank you, Kirsten. Welcome, everyone. For the second quarter of fiscal 2013, we posted revenue of $29.3 million, GAAP net income of $0.02 per diluted share and non-GAAP net income of $0.09 per diluted share. While the results reflect the operational challenges we discussed during our April 15 call, we would like to emphasize the following: For the second quarter of fiscal 2013, we posted $4.6 million of free cash flow, one of the strongest quarters in several years. For the first half of fiscal 2013, as a whole, we delivered solid results with revenues of $63.2 million, non-GAAP net income of $0.42 per diluted share and an adjusted EBITDA margin of 18%. And the Board of Directors confirmed the previously announced 17% increase in the quarterly cash dividend to $0.07 per common share to be paid in June.
Today, we also announced that our Board of Directors has authorized the repurchase of up to $10 million of Keynote's common stock over the next 12 months. We have a long history of returning capital to our shareholders. In fact, our dividend and stock buyback programs should return over $200 million to stockholders.
Looking forward, we believe we have compelling market opportunities in all 3 of our businesses, and we are committed to capturing them through improved operational effectiveness and through exciting new product offerings.
Now I will review each business. First, our Internet Cloud business. For the second quarter of fiscal 2013, Internet revenue was $15 million compared to $14.4 million in the same year -- quarter a year ago. The increase reflects our flagship Web Measurement subscriptions growing 15% on a year-over-year basis.
This quarter, new Internet deals included option.com, Barclays bank, CARFAX, Cancer Research UK, Car and Driver, Deloitte Consulting India, First Republic Bank, Lane Crawford (Hong Kong) Ltd., Nestlé Deutschland AG, Tommy Bahama and Vodafone Netherlands. The e-commerce market continues to evolve and expand, and we are taking advantage of that with a continually evolving and expanding product line.
At the upcoming 2013 Velocity Conference in June, we plan to launch a next-generation real monitoring -- Real User Monitoring solution to complement our synthetic monitoring offerings. This product, to be called Real User Perspective, provides on-demand web performance data exactly as it is being experienced by actual website users. Delivering actual information, Real User Perspective measures actual end-user experience for key business transactions, not just for individual pages, as in the case for competing products. When combined with Keynote's synthetic monitoring services, Real User Perspective offers our customers a differentiated and unique value proposition.
Now onto a review of our mobile cloud business. For the second -- for the fiscal second quarter, total mobile revenue was $14.3 million compared to $16.2 million for the same period a year ago. This reduction came about as a result of $1.5 million lower mobile telecom revenue and approximately $450,000 lower mobile enterprise revenue.
While Curtis will speak specifically to the mobile revenues by customer type, I would like to give you some overall color on our mobile business. First, our mobile telecoms business. To provide a bit of perspective, from the time we purchased SIGOS in 2006 until now, this business had more than doubled. This growth has come from 2 significant drivers. First, in the expansion of our customer footprint from SIGOS's original routes in Europe, the fast-growing emerging markets of Asia Pac and Latin America. Today, we have almost 300 mobile telecommunication customers worldwide, up from over 50 customers in April 2006, when we acquired SIGOS.
The second driver is the transition from 2G to 3G technology in Western markets and more recently, to 4G. As the transition to newer telecom protocol evolves, network operators are providing a greater variety of countless services to consumers, especially those that are based on the capabilities of advanced smartphones. This has resulted in our customers requiring more testing and more monitoring for these new services.
We believe these factors will continue to be effective growth drivers in the future. In fact, the move towards 4G is still in its infancy, and there are more than 1,000 network operators worldwide today that comprise our addressable market.
During the last quarter, our new telecom customers included Mobitel in Bulgaria, Millicom Tigo in Honduras, Aurax in France and airtel in Ghana. Despite the project acceptance volatility experienced during the quarter, we saw increases in GlobalRoamer revenue and in maintenance and support renewals. This is a good sign as GlobalRoamer is often a precursor to SITE purchases, and maintenance renewals indicate product stickiness among our customers.
In June, we will conduct our SIGOS User Conference in Nuremberg, Germany at which we expect to have one of the largest turnouts of our customers from around the world.
Now onto our mobile enterprise business. As previously discussed, this market is nascent and industry advocacy adoption growing steadily. A recent IDC report notes large and small companies, as well as managed service providers, are leveraging the cloud to lower cost for testing when the investment demand for on-premise solutions is too exorbitant. Additionally, mobile testing is fast becoming a must-have for companies seeking to transact business across the mobile channel.
While our mobile enterprise bookings have fluctuated over the past few quarters, we are seeing a healthy pipeline of forecasted deals, and these opportunities are coming from both existing and new salespeople, which is a positive development.
During the quarter, we formed a strategic distribution partnership with the Aricent Group, a global telecom technology services company. Also, we won many new enterprise customers, including Ask.com, Auto Trader, BBVA Compass, bebe stores, Bed Bath & Beyond, Citizens Bank, Estée Lauder, Guthy-Renker LLC, IKEA, JPMorgan Chase Treasury, Matel, Microsoft Bing, Oracle MyProfile, Royal Caribbean Cruises Limited, Ciett FA, the Pep Boys and Tc Loan Service.
We are pleased to note that DeviceAnywhere Free now has over 5,000 registered trial users in less than 4 months of availability. What's more, DeviceAnywhere Free is doing exactly what we had intended, exposing the mobile developer in QA communities to how easy it is to conduct mobile testing from the cloud. As a result, we've already generated hundreds of additional trial requests for our full-service testing unit suite.
We also have some exciting product developments underway. Over the next quarter, we expect to announce DeviceAnywhere 6.0. This is a comprehensive update to our flagship quality testing product. Features will include expanded support for HP's quick test processing environment, extending the user's skill set to supporting testing on real devices; improved support for IBM's rational testing environment, enabling the user to transform the existing desktop into a true, automated testing environment for mobile devices and tablets; DeviceAnywhere reports, enabling organizations to quickly develop scripts that can be used within short, agile test cycles; mobile script portability, enabling test scripts to work across multiple devices for more reliable and faster test automation.
In addition, we are in the final stages of unifying Mobile Device Perspective and DeviceAnywhere onto a single hardware and software agent platform. Taking advantage of the best of both technologies, we will enable monitoring and testing on one agent platform and expect to create greater efficiency in our R&D and device production activities.
With that, I'd like to turn the call over to Curtis. Curtis?
Curtis H. Smith
Thank you, Umang. I will review our financial results, and then I will discuss our outlook for next quarter. For the second quarter of fiscal 2013, compared to the second quarter of fiscal 2012, total net revenue was $29.3 million compared to $30.6 million. Total Internet revenue was $15.0 million compared to $14.4 million a year ago. Web measurement subscriptions grew at a rate of 15% on a year-over-year basis, however, this growth was slightly offset by scope reductions we had experienced with load testing engagements, which impacted both our other subscriptions and engagements revenue.
The total mobile revenue was $14.3 million compared to $16.2 million a year ago. As announced on April 15, mobile telecom revenue was impacted by 4 contracted SITE Systems projects, with revenue totaling approximately $1.6 million that were not accepted by our customers in the quarter. These are systems that already had been sold in prior quarters, but a project acceptance was necessary to achieve revenue recognition. Additionally, the revenue accounting headwind we have discussed in the past was $756,000 this quarter.
Looking at the mobile revenue breakdown by customer type. Mobile telecommunications revenue was $8.9 million compared to $10.4 million in the same quarter a year ago, reflecting the delayed customer acceptance on-site contracts I just discussed. Mobile enterprise revenue was $5.4 million compared to $5.9 million in the same quarter a year ago, reflecting the previously referenced nonrenewal of a large North American mobile handset manufacturer's monitoring project that was based on our MDP service.
For the second quarter of fiscal 2013, our total costs and expenses of $29.3 million were lower than both the March 2012 and December 2012 quarters, which were $29.8 million and $29.7 million, respectively. GAAP net income was $322,000 or $0.02 per diluted share compared to $334,000 or $0.02 per diluted share a year ago.
We recorded a $204,000 income tax benefit, primarily due to the retroactive reinstatement of the R&D tax credit. Non-GAAP net income was $1.8 million or $0.09 per diluted share compared to $3.9 million or $0.21 per diluted share. Adjusted EBITDA was $3.3 million or 11% of revenue compared to $5.2 million or 17% of revenue.
In the second quarter of fiscal 2013, cash provided by operating activities was $5.9 million compared to $4.6 million a year ago. We generated $4.6 million in free cash flow compared to $3 million in the second quarter of fiscal 2012.
For the 6 months ended March 31, 2013, compared to the 6 months ended March 31, 2012, revenue was $63.2 million compared to $63.7 million for the same period last year. Total operating expenses were $58.9 million compared to $57.5 million for the same period last fiscal year, which included the $2 million onetime benefit related to the change in estimate of the acquisition-related contingent consideration recorded in the first quarter of fiscal 2012.
Net income was $2.3 million or $0.12 per diluted share compared to net income of $4.5 million or $0.24 per diluted share for the same period last fiscal year. Non-GAAP net income for the 6 months ended March 31, 2013, was $7.8 million or $0.42 per diluted share compared to $9.9 million or $0.53 per diluted share for the same period last fiscal year. Adjusted EBITDA margin for the 6 months ended March 31, 2013, was 18% of revenue.
Now onto a review of our balance sheet. Our cash and short-term investments were $57.9 million at March 31, 2013, compared to $49.9 million at September 30, 2012. Net deferred revenue was $15.9 million at March 31, 2013, compared to $16.7 million at September 30, 2012. Total shares outstanding were $18.4 million at March 31, 2013, compared to $17.9 million at September 30, 2012.
As we accelerated the dividend payment that would have been made in March 2013 into the December 2012 period, we did not make a dividend payment this quarter. However, the Board of Directors confirmed a quarterly cash dividend of $0.07 per common share, which will be paid on June 15, 2013, to common stockholders of record at the close of business on June 1, 2013.
Finally, and in addition to the dividend increase, the Board of Directors announced a $10 million stock repurchase program to be executed over the next 12 months. The repurchase program will be funded using Keynote's working capital. The timing and amount of any repurchases of common stock will be determined by Keynote management based on its evaluation of market conditions, regulatory considerations and other factors. This program does not obligate the company to purchase any particular amount of common stock, and purchases may be commenced or suspended at any time without prior notice.
Now for our guidance for the third quarter of fiscal 2013. Total revenue is expected to range from $28 million to $31 million. GAAP results are expected to range from a net loss per share of $0.04 to net income per diluted share of $0.08. Non-GAAP net income per diluted share is expected to range from $0.04 to $0.16.
This guidance assumes the following: Mobile telecom project acceptance volatility, professional services engagement scope reductions and mobile enterprise bookings and revenue volatility may continue during fiscal 2013; total costs and expenses, excluding stock-based compensation and amortization of purchased intangibles are expected to be approximately the same as the second fiscal quarter; total stock-based compensation expense and amortization of purchased intangibles is expected to be approximately $1.8 million; depreciation is expected to be approximately $1.5 million; no impairment of goodwill or identifiable intangible assets; interest income and other net is expected to be $50,000, assuming no material changes in interest rates, foreign exchange rates and currently planned uses of cash; cash taxes paid from ongoing operations is expected to be approximately $200,000; diluted weighted average shares outstanding are expected to be approximately the same as the fiscal second quarter.
With that, I would like to return the call to Umang.
Thank you, Curtis. We believe the challenges we face in the previous quarter were short term in nature and do not diminish our confidence in the long-term prospect of our business. While we will take into account greater project acceptance volatility in our forecasting process, we feel good about the opportunities in our target markets. The key to success is solid execution, and we are committed to driving growth in fiscal year 2014 and beyond.
Finally, I'm excited to welcome Erik Prusch, President, CEO and Director of Clearwire, to our Board of Directors. He has led software and wireless telecom companies through rapid expansion, operation scaling and growth financing. We believe his guidance will be most valuable, especially as mobile market adoption increases.
I would now like to open the call up to questions. Operator?
[Operator Instructions] The first question comes from Joe Fadgen with Craig-Hallum.
I'm here for Chad today. I want to get into the Internet lines a little bit. It looks like your web measurement subscriptions' growth actually came in a little bit better than we were anticipating for this quarter, while the other subscription engagements were a little bit lower. I guess, going forward, on the Internet business overall, is there any change to how we should think about the overall growth rates? And then I guess kind of within those segments, is -- I guess, how are you -- how should we think about those going forward?
In general, as you know, we give guidance a quarter at a time. And generally, we don't try and get so granular down to each individual segment level. So it's hard for me to give you guidance specifically for that, for the quarter. All I can say is that in general, the -- what we've said in the past holds, which is we believe that over the long term, this is a business, I covered the Internet business, that can grow at 10% to 12% per year. This year, our overall subscriptions growth is actually healthy. It's about, so far, 15% year-over-year for this comparable period. But the engagements growth has not been much at all. And there were 2 reasons: There was a problem in the first quarter as it related to our CEM engagements, customer experience engagements; and then in the second quarter, as it related to our load testing engagements. And the combination of the 2 has caused engagements and then some associated subscription revenues that come with it, that did not grow much at all. My expectation is that for at least the second half of this year, we may very well still see subsequent productions in these engagement areas. As far as subscriptions go, it's hard for me to tell you on a quarter-to-quarter basis. It can change -- seasonally, it can change. One big customer can reduce their revenues in a particular quarter, and then they could spike up in another quarter. So I hesitate to make any commitments or forecast for a quarter-to-quarter basis. But for the year, as a whole, we still feel comfortable about the expectations of growth for subscriptions, but not necessarily for engagements this year. Going forward, and I'm not talking about 2014 and beyond, I believe we should be over some of the specific issues that have dubbed us in the CEM area and/or the engagements, the load testing area. We've had some individual issues that have affected us, some personnel changes, et cetera. We've made some changes from a cost viewpoint relative to CEM, and many of those changes are behind us at this point. And so while we might see some remaining impact of that personnel changes over the next 6 months, I'm hopeful that certainly in 2014 and beyond, we'll be back to the races on the engagement side again.
Okay. And then one more from me real quick, just kind of a housekeeping thing. It looks like you had a pretty good collections quarter with your AR coming down to about looks like 15.5. Is it -- would it be fair to expect to see that maybe tick up -- bounce up a little bit again next quarter? Or is this kind of a normalized level, do you think?
Curtis H. Smith
Yes. So it was -- you're right, it was a very strong collections quarter for us, both out of our SIGOS business and over here on the U.S. side too. And we typically do have strong collections in the March quarter. One thing that did happen with AR in the March quarter is that, typically, once we get more acceptances, and we noted that 4 [ph] of these didn't come in, but that AR goes up a little bit higher than we expect. So yes, you're right, we would expect that AR to tick back up in the June quarter.
The next question comes from Matt Williams with Evercore Partners.
Matthew L. Williams - Evercore Partners Inc., Research Division
I just wanted to dig in a little bit more on some of the issues you've talked about on the load testing side of things. I understand the CEM may have been a little bit more personnel-related, but just wanted to sort of dig in more to what's going on with the load testing weakness, so to speak, and how we should maybe think about that just giving -- knowing that we're heading into a period that is seasonally a little bit better for the load testing business.
So let me explain. Basically, the load -- you're correct, in the CEM business, they were fundamentally -- that's a business that's been in decline for the last 6 years. And we've been managing its decline quite responsibly, I think, always making sure we're breakeven or better. And I think this year, with all the changes we've made, we expect that, that will remain that way, as far as the CEM business goes. As far as the load testing business, please note that we started with a high bar. In 2012, load testing grew compared to 2011 by almost -- by a little over 30%, as I recall. So in 1 year, we managed to get kind of 2 years' worth of growth because typically, we expect growth to be about 15% a year. So that's point #1. We just had a very high bar across this year in terms of growth. Having said that, we've had a couple of things that have happened in the load testing area also that are people-related. One had to do with some issues relating to one key individual on the consulting side that were personnel-related to that person and that changes have been made as a result of it. We certainly have been able to make sure that we put the right people in place to replace that individual's capabilities and still be able to get the benefit of that individual and the rest of our business. And so those changes have to be made. Number one, we've had some changes in the sales side, and I'm talking about in our national account manager sales, where one of our sales people was especially very good at selling these very, very large load testing deals. And so all it takes is one large load testing deal not to happen again, to basically affect the numbers. So that really happened in this particular case, some changes in account management that occurred. And then lastly, there were some product-related issues having to do with load testing. The load testing business fundamentally depends upon our ability to provide very high-scale load test, and in 1 or 2 of these situations where the scale got to an extremely large level. They were affecting our infrastructure. We had to make some changes to our infrastructure to be able to achieve that level of scale. We have made those changes. We are pleased to see the results of those changes. They're pretty much all behind us, and we feel pretty good about being ready to achieve the requirements of our customers' scale testing in the upcoming holiday season.
Matthew L. Williams - Evercore Partners Inc., Research Division
Okay, great. And then one more, if I may, on the mobile side. You touched on the ongoing integration between, I believe, MDP and DeviceAnywhere. Just any update around that, any further details you can provide there. And then I guess any other commentary around the free product and how that's gaining some traction for you as well.
Yes. So let me comment on the -- great questions, Matt. On the MDP and DeviceAnywhere, remember, both these -- both the MDP products, which we've had at Keynote as a product in 2003 and the DeviceAnywhere product, which has been out in the market since about 2004, I believe, have both provided real device monitoring, and in their case, testing. But on the Keynote side, we never did testing. But we did do monitoring, and they did monitoring too. And so when the company -- when we bought the company, we left it alone for about a year. We simply said let people buy MDP separately, buy a DeviceAnywhere separately and they made separate product decisions. But longer term, we always had a plan and we put into action last year, and we're getting to the tail end of it now to combine this hardware into a single hardware platform. So literally, with the identical hardware, whether it's an iPhone or an Android or whatever, you'll be able to create -- an agent will be created, physically an agent box that can be put at either the customer premises or in our cloud and that can do both monitoring and can also do testing. Same box using the same scripts, by the way. This is wonderful because up to now, most of our customers who wanted to do monitoring, couldn't do self-service scripting. But the customers who wanted to do testing, obviously insist on self-service scripting because they're doing all the changes of test, et cetera, on their own. So by combining these 2 into a single agent, we are now able to offer customers self-service monitor -- self-service scripting for their monitoring, which we think will actually have a very positive effect long term on our monitoring business. But in the short run, it does require us to give people notice that we're going to go from one product to another. You can sometimes affect people's buying decisions. Sometimes people end up saying, "Okay, you know what, maybe we'll just use the DeviceAnywhere product to do monitoring since you're going to use DeviceAnywhere scripting anyway later on." So all of that has been affecting us. But I'm hopeful that some time in the next 3, maybe 6 months or so, certainly by the fall this time, so somewhere around August, September, we should be able to deliver this combined agent platform that will have a much more positive effect long term in our monitoring and testing business. As far as the second question goes, my recollection of your second question, it has to do with DA Free. We feel very pleased with the DA Free uptake. We've had, as I mentioned, almost 5,000 registered users who came to download DA Free. From that, you have a puddle of people who actually ask for a free trial of the regular product. And then from those free trials, we have a chance to sell people on the regular product. And from our viewpoint, it's going pretty good. I think long term, the real benefit of DA Free is really in just the lead generation and marketing and buzz creations that occurs. And it's doing very well from our viewpoint. And we hope this will impact us positively in the coming months and quarters in the line called DA Developer. Because most customers buy DA -- get DA Free. And then the most logical path for them is to get DA Developer. Some of them might go to DA Enterprise, but more often than not, DA Developer. And as you know, the DA Developer line has been going down for the last few quarters since the founders of DeviceAnywhere had actually deemphasized that in favor of the enterprise product. We've actually reemphasized the developer product, and we are hoping to kind of ramp that -- start to ramp that up again. We haven't seen that result yet, but certainly, the early signs of what are happening are very good from DA Free.
The next question comes from Sarkis Sherbetchyan with B. Riley & Co.
Sarkis Sherbetchyan - B. Riley Caris, Research Division
Has there been any progress in getting the deferred SIGOS projects accepted?
Out of the 4 projects -- there were 4 projects I mentioned, 2 of them were big ones, 2 of them smaller ones, 1 of the smaller ones has been accepted. There are 3 other remaining projects. All 3 are scheduled to be accepted in the current quarter. And we have no additional news to report at this stage.
Sarkis Sherbetchyan - B. Riley Caris, Research Division
Okay. And then the guidance for the upcoming Q looks sort of flat. So why is there no incremental pickup expected for SIGOS given we should see the $1.6 million or so in delayed revenues, but anything else expected to be completed in the quarter?
Yes. So ultimately, if you take a look at our SIGOS business, historically, for example, the December quarter is very, very good. Then generally speaking, the second -- the March quarter is definitely less than that. And then the kind of June quarter might even be a little less than that. Because what's going on is, we're essentially delivering the products that we sold in the big December quarter and the March and December quarter -- and the March and June quarter. So right now, if you take a look at our business, we clearly had a down quarter expected, but more down than normal from March as far as SIGOS goes. We went from $12.26 million to $8.8 million. While we don't provide individual guidance, I can tell you, based on what we announced today, given our overall guidance that we do expect SIGOS to tick up in the coming quarter compared to the previous quarter. Now how much it ticks up will depend upon a, whether all 3 of these remaining deals are accepted, and we hope they are; and then whether no other deals are deferred. So that's the key. We have to give ourselves enough flexibility to give guidance, and we've given a wider range of guidance precisely because we always want to be cautious on this question going forward, relative to project volatility.
Sarkis Sherbetchyan - B. Riley Caris, Research Division
Understood. And finally, how did DeviceAnywhere do relative to your internal expectations in the quarter? So how strong is the pipeline heading into the back half of fiscal '13?
So from a revenue viewpoint, DeviceAnywhere actually did better than we expected somewhat. From a bookings viewpoint, it was about what we expected. So DeviceAnywhere clearly was not responsible for our shortfall last quarter. I can tell you that. Having said that, going -- but I want to emphasize that DeviceAnywhere had volatility in its bookings. Many of the bookings we've got last quarter involve either maintenance renewals or SaaS deals. And by the way, the current bookings forecast, at least the internal pipeline of bookings, is extremely healthy for DeviceAnywhere. It's been one of the best I've seen. But at the end of the day, most of these are SaaS deals and/or maintenance deals. So what's going on is, we're sort of shifting this business from being a license-oriented big-whale business, which has a lot of volatility to a SaaS-oriented business. And while that's good for us in the long run, I would hesitate to say that even the high bookings will necessarily result in higher revenues next quarter because they may be all SaaS deals being amortized for a 12-month period. So all I can say is, right now, it's a work in progress. We continue to work at it. We are seeing generally positive signs in pipelines, but the proof is in the pudding. And I'll let you know at the end of the quarter how we did on it.
[Operator Instructions] The next question comes from Mike Latimore with Northland Capital Markets.
This is Ryan MacDonald on for Mike Latimore. Just my first question was around SIGOS bookings. I think they typically grow on about the 15% range on a yearly basis. How confident are you that you think you can reach that 15% bookings growth this year? Or do you think that will come in a little bit less?
Yes, my guess, I think in the past, we have, by the way, grown about doubled every 5 or 6 years. So I'd say 12% to 14% to 15% has been the general range for that booking. To give you some perspective, in 2005, the overall bookings of the business was EUR 12 million before we bought it. And in 2012, calendar 2012, it was slightly over EUR 30 million. So basically, over a 7-year period, they went up 2.5x. So yes, that's in the kind of 14%, 15% range. Having said that, if you really look at the chart, you'll find that there are certain years where bookings actually are flat. And in other years, they go up hugely, by as much as 25%, 30% sometimes. So in any given year, I wouldn't necessarily count on a 15% slight clockwork growth rate. So back to the current year, we do not give guidance for the year as a whole, but all I can tell you is that the internal goals for the folks at SIGOS, at least, definitely call for growth this year compared to last year. And if last year was EUR 30 million, their goal internally this year certainly is at least 10% of that in terms of growth and possibly more.
Okay. And then do you have any -- could you provide an outlook for gross margin going forward for the year?
Curtis, do you want to talk gross margins?
Curtis H. Smith
Yes. So we don't give specific gross margin guidance for the rest of the year. We did comment on next quarter, though, our revenue guidance was essentially in line with where our revenue came in this quarter. And then we also noted that we expect our costs and expenses to be approximately the same as this quarter. So if you put that together, then we're expecting the gross margin to be roughly in line with where it was in the second fiscal quarter.
Okay. And then just one final question, any expectations for -- in terms of FX impact for the remainder of the year?
Any FX impact so far?
Curtis H. Smith
No. So if you look at the FX for the year, if you just look at the March quarter, for example, this year, average FX in the quarter was about $1.32, a year ago it was about $1.31. So we didn't -- essentially flat, no change there. In the June quarter, average FX was about $1.30. And right now, we're at about $1.32. So we really don't expect much of a change from the June quarter to the June quarter a year ago.
[Operator Instructions]. And we have no further questions at this time. I'll turn the call back to Mr. Gupta for any closing remarks.
Thank you, all, for joining us today and for your continued interest in Keynote. We would present at the JMP Securities 12th Annual Research Conference on May 15 in San Francisco and at the B. Riley 14th Annual Investor Conference in Santa Monica on May 21. We look forward to speaking with you soon. Thank you.
Thank you. Ladies and gentlemen, this concludes Keynote Systems Second Quarter of Fiscal 2013 Results Conference Call. Thank you for participating. You may now disconnect.
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