Rally Software's CEO Discusses F2Q 2014 Results - Earnings Call Transcript

|
 |  About: Rally Software (RALY)
by: SA Transcripts

Rally Software Development Corp. (NYSE:RALY)

F2Q 2014 Results Earnings Call

September 5, 2013 5:00 PM ET

Executives

Jim Lejeal - Chief Financial Officer

Tim Miller - Chief Executive Officer

Analysts

Matthew Coss - Piper Jaffray

Nandan Amladi - Deutsche Bank

Pat Walravens - JMP Group

Michael Huang - Needham & Company

Justin Ferbey - William Blair & Company

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Rally Software Second Quarter Fiscal Year 2014 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions)

This conference is being recorded today, September 5, 2013. I would now like to turn the conference over to Jim Lejeal, Chief Financial Officer. Please go ahead.

Jim Lejeal

Thank you, Operator. Good afternoon and thank you for joining us on today’s call. Welcome to Rally Software’s fiscal year ’14 second quarter earnings call. I’m Jim Lejeal, Chief Financial Officer and with me on the call today is Tim Miller, Rally’s Chief Executive Officer.

Before we begin, please be aware we will be discussing our business outlook and we will be making other forward-looking statements regarding our current expectations of future events and the future financial performance of the company.

These forward-looking statements are based upon information available to us as of today’s date and are subject to risks and uncertainties. We encourage you to review our filings with the SEC for additional information on risk factors that could cause actual results to differ materially from our current expectations. We assume no duty or obligation to publicly update or revise any forward-looking statements whether as a result new information, future events or otherwise.

Tim Miller, our CEO will begin by offering you all an update on our business and our quarter results. I’ll return in the call to review our financial results for the second quarter of fiscal year 2014 and finish with financial guidance for the third quarter and full fiscal year.

Unless otherwise noted, our discussion will be on a non-GAAP basis for all costs, gross margin, operating and net income, as well as earnings per share. The primary difference between GAAP and non-GAAP financial information is non-cash stock-based compensation. Please refer to the reconciliation of our financial information on a GAAP basis to that on a non-GAAP basis included in the press release published on our website.

I will now turn the call over to Tim.

Tim Miller

Thanks, Jim, and welcome everyone. Thank you for joining us today. I’ll start by thanking everyone that supported us during our recent secondary offering which we completed in July. We really appreciate the opportunity to update existing investors, meet new investors and generally get the story of Rally out in front of the market.

We committed during our initial public offering road show that we would undertake a secondary offering if circumstances allowed and we are pleased to have delivered on that commitment. Thank you to everyone that helped make this offering a success and welcome new investors.

Once again for this quarter Q2 of fiscal ’14 we reported record results that exceeded our expectations. We are pleased to announce all time record revenues for the second quarter. Total revenue for the quarter grew 45% year-over-year to $19.8 million. Subscription and support revenue for the quarter grew 36% year-over-year to $14.2 million.

We ended the quarter with a total paid seat count of approximately 192,000 seats, which represents a 34% increase over our paid seat count of 143,000 seats at the close of Q2 of last year.

Cash flow from operating activities for the quarter was negative $3.3 million ahead of expectations. During this past quarter we had continued positive momentum in key industries and geographies including but not limited to DirecTV, a leading global automaker, the financial services unit of a diversified technology and financial services company, a consumer credit reporting agency, and a large online retailer. These customer wins illustrate the international growth and expansion into existing accounts that are fundamental to our performance.

Rally is strategically positioned at the center of a large scale Agile transformation taking place at one of the world’s largest automakers. Rally and Agile are an integral part of the company's vision to outpace its competition.

The scope of this transformation spans multiple lines of business, encompasses hundreds of projects and thousands of team members. This automaker turned to Rally to provide cross team visibility to improve access to key information and to align team level data with business level portfolio strategies.

Previously siloed teams managed their efforts individually offering little visibility into program and portfolio level status. In its evaluation of Agile providers the automaker modeled an internal business case that illustrated tens of millions of annual savings by implementing Rally.

The business case showed that Rally’s Agile coaching and products would improve operational speed and provide the ability to prioritize person hours. Rally signed a three-year deal combining coaching services with 500 seats initial order of Rally unlimited edition. This particular account has an identified seat potential of 5,500 seats.

Now let me move on to an expansion story of Rally within the financial services business unit of the U.S.-based diversified technology and financial services customer. As with many of our largest customers, this company instituted the technology center of excellence for all nine divisions of worldwide operations spanning tens of thousands of employees worldwide and operating across more than 50 countries.

When looking at options to support this initiative there were two choices, stick with the previously installed and virtually free issue tracking system that had limited functionality or seek out a full service Agile partner like Rally.

With our presence in other divisions there were many Rally supporters. The leadership team advocated for Rally based on a successful pilot of scaled Agile framework, the infrastructure team recommended Rally based on functionality to coordinate across multiple Agile team and the financial team recommended Rally based on integration with their tool of choice in Rally partner Planview.

Another exciting win is with large consumer credit reporting firm and is an example of our land and expand sales strategy. The company which maintains information for hundreds of millions of credit holders recently extended its partnership with Rally and nearly doubled its subscription licenses.

Recently released Rally portfolio manager features were critical to this renewal and upgrade, provide the ability to map its enterprise architecture within Rally. Additionally, our time tracking features enable the company to capitalize a majority of its application development costs and tie work in progress to investment themes.

We see time and again the companies want success with Agile and often start with a few scattered pilots within the development team. The pilots are often successful but still fail to deliver the impact of Agile at scale. As part of our combined product and services approach we guide the Agile adoption with coaching and services to ensure Agile practice, people and technology are aligned with success.

An example is US-based direct broadcast and satellite service provider DirecTV. Looking to improve its time to market and foster innovation, DirecTV work with Rally to align design teams in New York with development and product management teams in California, synchronizing work completed and planned features across multiple platforms including set top boxes, web and mobile.

Last, another key win this quarter is with large online retailers payment group that turned Rally to link development effort with strategic planning using Rally portfolio manager. With Rally this online retailer can focused on improving development team productivity, steering product initiatives using real-time data and building product roadmap linked to business priorities.

In summary, this quarter saw wins from a number of geographies across various industries, some of these large transformational deals start with services engagement and some are the results of initial Rally pilot program success, illustrating our land and expense strategy.

We also continue to see interest in our Rally portfolio manager offering. As we discussed in the Q1 call, Q2 would be a quarter where we undertook the transition of our global sales leadership to Dan Patton our EVP of Worldwide Sales.

I'm pleased to report that the transition is occurring seamlessly and Dan is 80% done with his world tour, a personally meeting every member of our global go-to-market team. Certainly the results of this quarter demonstrate the smooth transition.

With that, I’d like to hand it over to Jim to go over our second quarter financial performance in more detail and our outlook for the coming period.

Jim Lejeal

Thank Tim. I’ll start with a quick reminder that our discussion will be on a non-GAAP basis for all costs, gross margins, operating and net income, as well as earnings per share unless I state otherwise.

As Tim outlined, we posted a great quarter. I’ll start with the review of our key metrics. As we have said, we believe total paid seats are a key indicator of our market penetration, growth and future revenue. We define a paid seat as a seat with a subscription or support contract as of the measurement date.

We ended the quarter with a total paid seat count of 192,119 seats. This seat count represents a 34% year-over-year increase when compared to 143,425 seats under contract at the close of Q2 of last year. The 7,974 seats added in the quarter represent an increase of 4% over the seats under contract at the end of last quarter.

We offer our renewal rate on a quarterly basis to provide insight into our ability to upsell or expand in our existing customer base. We calculate our renewal rate by comparing the number of paid seats of all -- of our existing customers at the beginning of the 12-month period to the number of paid seats for those same customers at the end of such period taking into account non-renewals, upgrades and downgrades.

As of July 31st, our renewal rate among existing customers was 122%. However, we experienced the non-renewal of approximately 3,000 seats in the period by a struggling Canadian-based smartphone manufacturer. Normalizing for this one non-renewal, our renewal rate would have been 126% in line with previous reported periods.

This customer was a perpetual owner of their seats and chose not to renew the maintenance component of their agreement with us. The loss in revenue associated with this non-renewal was quite modest at approximately $200,000 annually.

Total revenue for the quarter was $19.8 million, which represent a 45% year-over-year increase over the same period last year. Subscription and support revenue for the quarter was $14.2 million which represents a year-over-year increase of 36%.

Calculated Billings, a non-GAAP measure, which we define as revenue plus the change in deferred revenue closed the quarter at $16.0 million, representing a year-over-year increase of 4%.

As we talked about in our last call there is a wide array of factors that influence calculated billings and quarter-to-quarter fluctuations in the calculated billings metrics should not be taken as an indicator of changes in future revenue. One dynamic is the seasonality of our business where Q4 and Q1 are quarters where we tend to book 30% and 24% of our annual bookings respectively.

Another dynamic that is having a profound effect is the occasional occurrence of a customer electing to contract with us for multiple periods and prepay against the contract as well.

As an example and relevant for this quarter, in Q2 of last year, we closed a seven-figure three-year subscription contract with our largest customer who also elected to prepay against the agreement for a very modest discount. The year-over-year growth rate and calculated billings for Q2 taking into account this prepay dynamic normalized out at 55%.

The impact, as you know, is multiyear in nature. To normalize for last year’s multiyear prepay deals, we need to adjust Q2 of fiscal year ‘13 down by approximately $3.7 million and increase Q2 of fiscal year ‘14 by approximately $2.1 million. Given the multiyear effect of this impact, I will remind us all of these dynamics when applicable in future calls.

Our gross profit for the quarter was $15.9 million compared to $10.6 million in Q2 of fiscal year ‘13 reflecting an increase of $5.3 million or 50%. Total gross margin for the quarter was 80%.

Now, I’ll turn to operating expenses for the quarter. Sales and marketing expense was $8.8 million representing a year-over-year increase of $2.3 million or 35%. This increase was mainly driven by increased headcount across our sales and marketing organizations, increased commissions due to the increase in bookings in variables spend in our lead generation activities.

As a percent of revenue, sales and marketing expense was 44% for the quarter compared to 48% for the same period in fiscal year ‘13. Research and development expense was $4.6 million representing a year-over-year increase of $1.1 million or 34%. This increase was mainly driven by increased headcount as we continue to invest in product development.

As a percent of revenue, R&D expense was 23% for the quarter compared to 25% for the same period in fiscal year ‘13. G&A expense was $3.5 million for the quarter representing a year-over-year increase of $1.1 million or 45%. This increase was mainly driven by increased headcount to support our company's growth and certain legal and accounting expenses related to operating as a public company.

As a percent of revenue, G&A expense was 18% for the quarter compared to 18% for the same period in fiscal year ‘13. Net loss for the second quarter was $1.1 million or a net loss per share of $0.04 per basic and diluted share. Basic weighted average shares outstanding for the period was approximately 24.0 million.

Cash flow from operating activities was negative $3.3 million for the quarter compared to cash flow from operating activities in the prior year's second quarter of a positive $60,000 performance.

Turning to our balance sheet. As of July 31, 2013, our total cash, cash equivalents and accounts receivable balance was approximately $115.7 million compared to $115.4 million as of April 30, 2013 and $32.5 million as of July 31, 2012. We currently carry no bank debt.

We ended the quarter with accounts receivable balance of $11.1 million. Total deferred revenue increased $6.7 million year-over-year to close the quarter at $36.2 million. Compared to Q1 of fiscal year ‘14, total deferred revenue decreased $3.8 million. With respect to headcount, we added 18 employees during the quarter for a total company team headcount of 396 employees.

Now, let’s turn to our outlook for the full year fiscal 2014 and the third quarter. For the third quarter fiscal year ‘14, we currently expect revenues between $18.25 million and $18.6 million representing year-over-year growth of between 24% and 27% over Q3 fiscal year ‘13 revenue of $14.7 million. For the third quarter of fiscal year ‘14, we currently expect a non-GAAP net loss per basic and diluted share between negative $0.22 and negative $0.19 with weighted average shares outstanding of approximately $24.4 million.

For the full year fiscal year 2014, we currently expect total revenues in the range of $72.5 million to $74.0 million representing year-over-year growth between 28% and 30% over fiscal year 2013 revenue of $56.8 million. On July 12, 2013, we announced an update to our business outlook that included our expectations of our fiscal year 2014 subscription and support revenue that we will reiterate today.

For the full fiscal year 2014, we expect subscriptions and support revenue in the range of $58.0 million to $58.8 million, representing 32% to 34% growth over fiscal year 2013. For the full year fiscal year 2014, we currently expect a non-GAAP net loss per basic and diluted share between negative $0.95 and negative $0.90 with weighted average shares outstanding of approximately $19.9 million.

This concludes my prepared remarks. And I’ll turn the call back over to Tim.

Tim Miller

Thanks Jim. Thanks again for everyone's support and attention during our secondary offering. Like I did last call, I want to thank every Rally Software team member across the globe. Your dedication and vision, commitment to our core values and commitment to our customers’ success make our company what it is. Thank you.

We will now take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question is from the line of Mark Murphy with Piper Jaffray. Please go ahead.

Matthew Coss - Piper Jaffray

Hi. Good afternoon. This is Matthew Coss on the line for Mark. Congratulations on the performance above and beyond the updated guidance you gave in the quarter. I just wanted to ask a few questions, one, on quota-carrying sales heads, how are plans to acquire sales reps going versus your internal expectations?

And then on the deal side, around the scope of the automaker, you laid out a pretty nice scenario with 500 seats and a potentially 5500 seats. Are you seeing any sort of indication that there are more deals like this in the pipeline and are companies with good reference customers that you have, are they more apt to move to a large implementations with you like this automaker is progressing towards?

Tim Miller

Sure. This is Tim here. So first of all, we are absolutely on track in our quota-carrying sales hiring. On a broader level regarding sales, Agile is continuing to become more mainstream. We are increasingly involved with customers on company standard conversations. These are larger transformations. They have more visibility throughout the organization and they are higher in the organization.

So we continue to see this trend. And I think the added piece from the prepared remarks were we have multiple groups involved with making those decisions. And another one of the examples, we have the leadership team, the infrastructure team, the finance team, all select Rally. So that’s part of these larger transactions for us.

Matthew Coss - Piper Jaffray

Okay. Great. And then just one quick follow-up on the transactions, I think you said the automaker was for unlimited edition. And are you seeing more of these larger deals go for the unlimited seat edition and what are doing to ASP?

Tim Miller

Absolutely. We’ve seen that trend over the last two or three years. It is common to land with our enterprise edition and upgrade to our unlimited. But larger companies that have larger initial transactions tend to go to unlimited.

Matthew Coss - Piper Jaffray

That’s all from me. Thank you.

Operator

Thank you. Our next question is from the line of Nandan Amladi with Deutsche Bank. Please go ahead.

Nandan Amladi - Deutsche Bank

Hi. Good afternoon. Thanks for taking my question. Was there any change in the buyer behavior or average contract length during the quarter? We’re just trying to do sort of a billings comparison, Jim I know you gave us an adjustment. DSOs were down significantly as well. So we’re just trying to figure out what might have gone wrong in the quarter there?

Jim Lejeal

This is Jim, Nandan. So DSOs came in at 63 days for this quarter as compared to 62 days last quarter. So down a day but comparatively to the year prior absolutely down. No noticeable trend difference in contract length although I will tell you that the very large deals that I gave you the details of for Q2 of last year certainly had its effect.

I’ll say to you that we will have a similar dynamic in Q3. Although I cannot give you the full details of how to normalize the quarter until we’ve completed it but I would say for deals closed in this particular quarter, there was not a significant longer trend. The overwhelming period length of contracts we sign with our customers is one year in length.

Nandan Amladi - Deutsche Bank

Okay. Thanks and a quick follow-up. I know Tim you said Dan Patton is settling in and finished with most of his world tour. Any early indications of any sort of, I think change in approach or enhancements he is making to your sales process that you could describe?

Tim Miller

So as I mentioned, deep review, North America, Europe, Asia, we are strengthening our go-to-market efforts in Australia by adding a local sales leader that -- and we are currently interviewing candidates. We also hired a sales leader in Singapore to lead our go-to-market efforts in Asia but no material changes are planned for the sales org at this time.

Nandan Amladi - Deutsche Bank

Okay. Thank you.

Jim Lejeal

Thanks Nandan. See you next week.

Nandan Amladi - Deutsche Bank

Yeah. Look forward to it.

Operator

Next question is from the line of Pat Walravens, JMP Group.

Pat Walravens - JMP Group

Great. Thank you. And congratulations to you guys. I guess, can you -- I'll just give you both my questions upfront. Tim, can you talk a little bit about what a right to deploy contract is and what you’re seeing with those? And then Tim or Jim, 45% growth, that’s really terrific, one question I get often from investors is how should they think about the growth outlook past this year and if you could just address how we should think about that that would be really helpful? Thank you.

Jim Lejeal

Yeah. Thanks, Pat. Why don’t I start -- I will start with both of them, Tim and then you jump in if I -- if you feel a need to add it, so thanks Pat. This is Jim. Think of a right to deploy as a -- I guess, if you look at it from the accounting perspective, it is just an effective way to release the upper cap of the seats that a customer might deploy for their -- of seats that they are going to purchase on behalf of their – say their development environment, their product creation teams.

So, we’ve noticed a trend from time to time where customers will incrementally purchase the number of seats that they intend to immediately deploy. And they ration these seats that they have purchased. And they will come back to us and purchase on a repeating basis incrementally so a hundred seats on a quarterly basis as they progress through time.

A right to deploy is a way to release the upper cap of number of seats purchased by a customer for a subscribed period and allow them to more freely deploy seats to the organization. And then at the end of the subscribed period they renew at the number of seats they’ve provisioned. And we found it when we put this deal in place it accelerates the deployment if you will of the provisioning of those seats, happy to go into more detail if you want that.

With respect to the 45% growth year-over-year performance -- I would caution all of us to be quite cautionary about that growth. It’s quite impressive absolutely, but in part this was driven by meaningful over performance in our perpetual revenue line, meaningful over performance in our services performance line. So both SKUs are meaningfully over and I think looking at our historical growth rate is a way to think about our growth rates on a go-forward basis. Certainly the guidance is intended to inform you.

Pat Walravens - JMP Group

Great. Thank you.

Jim Lejeal

Yeah.

Operator

Our next question is from the line of Michael Huang with Needham & Company. Please go ahead.

Michael Huang - Needham & Company

Thanks very much. Jim, just a follow up on the last comment around over performance on perpetual. I thought that you guys had talked about raising perpetual pricing pretty meaningfully which was going to drive or ultimately drive a mix shift to subscription and away from license. But yet you had a really, really strong license quarter. I was wondering if you could help understand or drill in to a little about the dynamics there. And then just in terms of the out-performance maybe you could help us understanding how much of that was coming with kind of new customers and how much was coming with existing?

Jim Lejeal

Yeah. So, I’ll start with the first question and hand it back to Tim for the second. We announced in Q1 of this year a perpetual price increase. And the way that we’ve layered that in and communicated it to our customers was the price increases was announced in Q1 and all deal activity in Q2 was grandfathered to older pricing.

So in effect, the ultimate price increase did not take fully effect until the beginning of Q3. We believe, and I’m speculating here that this caused a mad rush, if you will, of purchasing that SKU for customers that have already purchased it. We do have a small subset of customers that both buy from us our perpetual license and our subscription license, if you can believe it.

And I believe that the price increase stimulated purchasing in Q2 meaningfully as a result of this hard to edit price increase on Q3 in and the factoring or the -- I guess, a way to think about the amount of price increase that we put in place is if you did an equivalency for the cost that it would -- the number of years it would take you to subscribe to a seat and the amount you are paying for a perpetual seat. We raised the price from just a little bit over three years equivalency to nearly four years in equivalency. So about a 30% price increase. I will turn it to Tim for the second half of your question.

Tim Miller

Yeah. We don’t break out new versus existing customer sales or revenue for that part. But I will give you a little more insight because of this powerful land and expand model, it is customary to sell a relatively small transaction and then continue to sell significant transactions quarterly or annually after that.

So, you can imagine a 500 seat initial order could double every year over a several year period of time we get into the thousands but in any one quarter, we do internally track sales to our existing customers and sales to brand new customers and those numbers are roughly in line with what we model. So, nothing out of the ordinary.

Michael Huang - Needham & Company

Okay. Great. And then just a question around the kind of the new seats added in the quarter. So, it was below kind of what you added in Q1, and I am assuming that part of that is due to seasonality. And I guess I would imagine that, that kind of net new seat numbers is impacted by the non-renewals well but was wondering, I mean, is there anything else that we should be kind of understanding with respect to the number of seats that were kind of added net in the quarter and as you look out into Q3 and Q4, I mean, how should we kind of be expecting that metric to ramp? Thanks.

Jim Lejeal

Yeah. Thanks Mike. And so this is Jim and my answer there is that it absolutely is seasonality that we are experiencing here. We -- I think we have done a really good job in past communications to you all about the seasonality nature of our business. Q4 and Q1 represent 30% and 24% bookings respectively in a period as I said in my prepared remarks. Q2 and Q3 represent 22% each quarter respectively for full year bookings and I think all of your other observations are correct. It’s seasonality.

Michael Huang - Needham & Company

Okay. Great. Thanks guys.

Jim Lejeal

Yeah.

Tim Miller

Yeah.

Operator

Thank you. Our next question is from the line of Justin Ferbey with William Blair & Company. Please go ahead.

Justin Ferbey - William Blair & Company

Hey, guys. Thanks for taking my question and congrats on the quarter. I just, quickly want to hit on the competitive landscape if I could, when you guys are on the road, you showed some statistics around the percentage of time where you saw competition and new deals. I am just curious, over the last few quarters have you seen any meaningful change there? And then also was curious specific to that automaker, can you take a little bit about who you competed there and sort of how you won that deal?

Tim Miller

Sure. So, first I will answer the automaker question. This was a case where we were competing with IBM, as we communicated previously, the previous two quarters we had a 100% hit ratio and winning every deal we believe that we competed against them with. This year -- this quarter we did see a drop in that and we lost a few smaller transactions, we won the larger transactions and netted out about 92% of the dollars associated with that. So, there is a little bit of increase from competition from IBM, just to sort of calibrate. For fiscal 14 year-to-date we have won 98% of that associated with competing.

The other stat that we often talk about is how many deals are competitive? We continue to consistently see roughly 85% of our deals are non-competitive. Of the 15% that are competitive we went roughly 35% of the deals but we take 70% of the dollars. We win the larger deals predominantly. We lose because of price, we win because of functionality. We win because of scalability and we win because of our sales model.

Justin Ferbey - William Blair & Company

Okay. Great. And then, it’s great to see more of these kind of sort of non-traditional software and hardware deals. I’m just curious when you look at your pipeline how much of it is more of a traditional software companies versus the automakers and the retailers, and the manufacturers of the world, any kind of qualitative counter there would be helpful?

Tim Miller

Yeah. As you know we believe and see everyday that software is leading the world. We increasingly and will continue, I believe, to increasingly see the blurring line between hardware and software, and we talk about one of our customers on the road show that has many thousands. I think its 10,000 software developers in an organization that would, you be shocked to hear that they even had a 1,000.

So we get to see inside these companies and we really don't differentiate between embedded or hardware companies versus software because it is increasingly playing a very significant role in their differentiation and actually what the product does.

Justin Ferbey - William Blair & Company

Okay. And then just one final one. In terms of bookings mix and upsell versus net new customers, what does that look like this quarter maybe versus last quarter and the year ago period?

Tim Miller

Again, we don’t break out bookings to existing customers versus bookings to new customers in a quarter.

Jim Lejeal

Yeah. I think in the past, Justin, we have offered some stuff with anecdotal but on a disciplined metric release basis, we are -- at this time, I think we are looking not to go into that detail.

Justin Ferbey - William Blair & Company

Okay. Fair enough. Thanks guys very much. Congrats again.

Tim Miller

Okay.

Jim Lejeal

Thanks, Justin. Thank you.

Operator

(Operator Instructions) And there are no further questions in the queue. I would like to turn the call back over to management for closing remarks.

Jim Lejeal

Well, thank you. This is Jim Lejeal and I just wanted to end the call by inviting everyone that will be attending the Deutsche Bank Tech Conference next week in Las Vegas that will be there, where we have opened up a full dance card to meet with you personally and if that’s not possible then please reach out to us and we will do whatever we can to meet with you personally. And later in the year, Tim will also be attending a Tech Conference by Deutsche Bank in Florida and I should be in New York and attending and presenting meeting with you all at the Morgan Stanley Conference. So look forward to meeting with you. And thank you very much for all of your support and attention and please reach out to us if you need us.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!