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Executives

Gary R. Martino - Chief Financial Officer and Principal Accounting Officer

Albert R. Subbloie - Founder, Chairman of the Board, Chief Executive Officer and President

Analysts

Nandan Amladi - Deutsche Bank AG, Research Division

Tom M. Roderick - Stifel, Nicolaus & Co., Inc., Research Division

Eric Lemus

Tangoe (TNGO) Q3 2013 Earnings Call November 5, 2013 5:00 PM ET

Operator

Good afternoon, my name is Keith, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Tangoe Third Quarter 2013 Financial Results Conference Call. [Operator Instructions]

I would now like to turn the call over to Mr. Gary Martino, Chief Financial Officer. Please go ahead, sir.

Gary R. Martino

Thank you. Good afternoon, and welcome to the Tangoe Third Quarter 2013 Earnings Call. We will be discussing the results announced in our press release issued after the market closed today. Again, I'm Gary Martino, Chief Financial Officer of Tangoe. With me on the call is Al Subbloie, Tangoe's Chief Executive Officer.

During the call, we will make statements related to our business that may be considered forward-looking statements under Federal Securities Laws. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. These statements reflect our current views regarding the future and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our most recent quarterly report on Form 10-Q, which is on file with the SEC.

Also, during the course of today's call, we will refer to certain non-GAAP financial measures. There's a reconciliation schedule showing GAAP versus non-GAAP results currently available on our press release issued after the close of the market today, which is located on our website at www.tangoe.com.

With that, I'll turn the call over to Al, and then I'll come back a bit later to provide some further details regarding our financials and our forward-looking outlook. Al?

Albert R. Subbloie

Thanks, Gary. I'd like to thank everyone for joining us on the call today. We are pleased with Tangoe's execution during the third quarter, which was highlighted by the continuing high level of customer demand for our Communications Lifecycle Management solutions.

We had another strong quarter for customer additions, in addition to enjoying significant success and expanding our relationships with large global customers.

Taking a look at our results for the third quarter, total revenues increased 19% to $47.6 million, which was in line with our expectations. During the third quarter, we expect that our non-recurring revenue to be higher. As we have said in the past, our non-recurring revenue is the less strategic component of our revenue. And we have shared that it can fluctuate on a quarter-to-quarter basis depending on timing variables.

From a profitability perspective, we reported adjusted EBITDA of $7.3 million, representing an adjusted EBITDA margin of 15.2%, and non-GAAP EPS of $0.16 per share, which was up 23% year-over-year and compared to our guidance of $0.17 per share.

What is most important is the underlying momentum of our customer adds and the success of our land and expand strategy, which is what drives our recurring revenue growth. We feel very good about our momentum in this regard, which is why we are again providing early guidance for solid growth and profitability for 2014.

We'll provide more color on our outlook in a moment, but let me first review some of the highlights of our third quarter performance. For starters, we increased total spend under management to $26.8 billion, which was up 19%, compared to $22.6 billion in the third quarter of last year and $26 billion last quarter.

The strong growth of our spend under management continues to be driven by a combination of moving deployments into production, with both new and existing customers, along with our continued high retention rates. We also experienced strong new customer activity during Q3, adding 43 new logos from the combination of our direct sales efforts, as well as contribution from our strategic alliance partners.

We are pleased to say that our new logos included 2 multi-million dollar multiyear deals. The first with Sealed Air and the second with CSC through our strategic alliance with AT&T. I also wanted to highlight that our new logo performance doesn't include a number of smaller new logo customers that were added through our newer carrier channel in order to be consistent with prior quarter new logos.

Our customer ad performance during the first 9 months of the year has consistently been above our target of 25 to 35 new customers per quarter. While this metric can vary based on the mix of business with new and existing customers during any given quarter, we believe the expansion in our sales resources and market momentum warrants an increase in our quarterly customer add target range to 30 to 40 new logos per quarter.

During the third quarter, we once again closed transactions with new and existing blue chip customers such as H.J. Heinz, Samsung Infosystems, Qualcomm, AON, GTECH, Ariba, Clear Channel and WorldView fuel in addition to the Sealed Air and AT&T, CSC deals that I just mentioned. Overall, our record sales performance continues to demonstrate the success of our go-to-market strategy and our ability to deliver significant ROI to our customers.

We were pleased to announce that Tangoe begun delivering a full suite of Telecom Expense Management software and services to Siemens Australia, one of the leading providers of technology solutions in the region. Despite using a different software-based solution for more than a decade, Siemens selected Tangoe after a comprehensive vendor review process to provide a fully hosted TEM solution, which will allow them a unified view of all of their expenses across its fixed and mobile environment of thousands of devices. We view this win as further evidence of the recent sales traction we are having in international markets and our ability to leverage the investments we have made over the past 18 to 24 months.

We continue to view international markets as a significant growth opportunity, given our estimate that they account for more than half of the $425 billion in global telecom spend, which we view as a predominantly greenfield opportunity.

During the third quarter, international spend was $6.5 billion of Tangoe's total $26.8 billion of spend under management and it grew 18% on a year-over-year basis. In addition, we closed international based deals with Coca-Cola, UniCredit Bank through AT&T, Brazil-based bank of Itaú through IBM and Australia-based air services among others. As a reminder, the majority of our international spend under management and revenue continues to come from international locations of U.S. domiciled companies. However, we are pleased with the ramp we are seeing on selling international-based logos globally, which over time will add to international revenue.

Another key driver of our growth is our ability to increase cross-sell and upsell activity with customers that have come to Tangoe through previous acquisitions.

For example, during the third quarter, we expanded our relationship with Shell through AT&T, Procter & Gamble through HP, Kaiser and JPMorgan Chase. It is also important to remember that in each of the customer examples I just referenced, there remains additional opportunity to further expand our relationship as we continue to deliver value.

In regards to the overall expansion of our business with our strategic alliance channel partners, during the third quarter, we closed a number of bundled deals across our entire suite of solutions, including under our new co-selling arrangement with SAP.

During Q3, we started co-selling together and we're pleased to have successfully closed a large deal with John Deere, one of our acquired customers. As a reminder, last quarter, we announced the collaboration agreement with SAP, under which Tangoe is integrating through multiple phases, its mobile TEM and MMS software suite, with the SAP Mobile Secure portfolio, including SAP's MDM solution, Afaria.

In addition, as I mentioned earlier, we are excited to announce that our strategic alliance with AT&T resulted in securing a multiyear multi-million dollar deal with Computer Sciences Corporation, a global leader of next generation IT services and solutions, with approximately 80,000 -- 87,000 employees serving clients in more than 70 countries.

Under the relationship, Tangoe has partnered with AT&T, who will manage CSC's internal network, as well as its managed network services portfolio with commercial clients. We believe that this deal will strengthen our strategic relationship and visibility with AT&T, highlighting the value proposition of Tangoe as the white label CLM provider of choice for the world's largest outsourcers, system integrators and carriers.

We also continue to expand our carrier partner channel. Most recently, with European-based Orange, which is currently one of the largest mobile providers in EMEA. Similar to the Rogers Communications relationship we announced last quarter, Orange agreed to add Tangoe's Managed Mobility Services, or MMS, offering to its portfolio of solutions. This will enhance Orange's ability to, support mobile enterprise customers across Europe.

In addition, we expect our commitment to product innovation to further extend our leadership in the industry and drive additional market gains. Specifically, during the quarter, we announced the expansion of our MMS offering with enhanced mobile support services, which are designed to ensure that client's mobile products and services work when employees need them to and that challenges will be addressed quickly and proactively. We believe that expanded support services for our customers globally are very important as enterprises demand solutions that enable them to better manage their employees mobile computing devices access to the corporate network, while maintaining control and security of corporate data, applications and infrastructure. Furthermore, we announced the availability of our BYOD advisory service, another component of our comprehensive MMS suite for global enterprises, which helps guide customers through the assessment, execution and transition phases of implementing a BYOD model.

During the third quarter, we also announced the release of version 13.2 of our mobile device management software, which included support for Apple's iOS 7 and application virtualization capabilities. This version is being offered as part of Tangoe's MMS offering, which delivers managed services for the entire solution suite that optimizes and manages the life cycle of mobile enterprise communications resources including strategic advice, full Lifecycle Management, expense control, usage management and support. These MMS-related announcements are in addition to the ones we highlighted last quarter, including forward and reverse logistics capabilities and the availability of our mobile life cycle advisory service. We are very proud to be positioned as a visionary in Gartner's new 2013 Magic Quadrant for MMS and believe this highlights Tangoe's ability to provide ongoing innovation and expand the value-added service -- services enterprises needed to navigate and manage the rapidly changing mobility market.

Before handing it over to Gary, I wanted to mention that we continue to make great progress on our new on-demand Matrix CLM platform architecture and are planning on making detail technology and services announcements in December, which will outline the rollout plan for 2014 and 2015. These announcements will include a combination of exciting new functionality in many of our existing products, incremental new products and several new adjacent markets with additional market growth opportunity for Tangoe. These announcements will be the largest, most comprehensive technology expansion in Tangoe history.

So, in summary, we are pleased with the company's strong execution during the third quarter, particularly our new logo of momentum, large multi-million dollar deals and new partnership opportunities. We are optimistic about Tangoe's growth outlook and are confident in our ability to continue growing market share due to our scale, integrated offering, global capabilities and commitment to innovation.

As Gary will detail, we believe we are well-positioned to continue delivering solid revenue growth and margin expansion, based on the combination of our momentum and business model, that provides us with a high level of visibility into our future financial performance.

With that, let me turn it over to Gary to provide further financial details.

Gary R. Martino

Thanks, Al. Our business continues to perform well, and we are benefiting from continued demand for Tangoe's integrated CLM solution. I will first provide you with additional details on our third quarter performance, and then we'll conclude with our outlook for the fourth quarter and full year 2013, as well as our preliminary view on the full year 2014.

Starting with the P&L. Total revenue was $47.6 million, up 19% year-over-year and in line with our expectation. Our recurring revenue was $42.6 million, an increase of 18% year-over-year and representing approximately 90% of our total revenue. Our non-recurring revenue represented the remaining $5 million of revenue for the third quarter, an increase of 25% year-over-year.

Our third quarter results were negatively impacted by approximately $0.5 million of non-recurring revenue that we forecasted would occur during the third quarter at the time we provided our guidance. As we have said in the past, our non-recurring revenue can fluctuate on a quarter-to-quarter basis depending on timing variables. And we now expect our fourth quarter non-recurring revenue to be higher than previously expected, as a result of these timing factors.

Irrespective when we look at the full year 2013, we continue to expect solid growth in both recurring and non-recurring revenue. And now drilling down further into some of the drivers of revenue. Our spend under management for the quarter was $26.8 billion, which was up approximately 19%, compared to the third quarter of 2012. As Al mentioned, we once, again, had a strong new logo quarter, where we added 43 new customers, excluding the newer carrier channel, primarily due to the growth in our sales force and an increase in our overall scale. We now expect to add 30 to 40 new customers per quarter, compared to our recently raised target of 25 to 35 per quarter.

In addition to winning new customers, we continue to see momentum in retaining and expanding existing customers. Also in addition to customer expansions that Al highlighted earlier, our overall revenue retention rates remained above the 90% level during the third quarter.

And now, we turn to expenses and profitability for the third quarter. Our GAAP gross profit was $26.3 million versus $21.9 million from the same period during the previous year. Our GAAP operating income for the quarter was $1.3 million, compared to $936,000 during the third quarter of 2012. Our GAAP net income per share was $0.04 for the third quarter of 2013, based on 40.9 million fully diluted shares, compared to $0.01 per share results on 41 million fully diluted shares in the year-ago period.

Taking a look at our results on a non-GAAP basis, our gross margin percentage was 56.3%, which is up from 55.3% in the same quarter last year, and our highest since becoming a public company. This performance reflects the efficiencies we are achieving in our operations.

Non-GAAP net income, which excludes stock-based compensation expense and amortization of intangibles associated with acquisitions, among other things, was $6.7 million for the quarter, an increase of 24% on a year-over-year basis. Non-GAAP net income per share was $0.16 based on 40.9 million fully diluted shares and represented a 23% year-over-year increase, compared to $0.13 per share on 41 million shares in the year-ago period.

Third quarter adjusted EBITDA was $7.3 million, which presented a year-over-year increase of 21% and adjusted EBITDA margin of 15.2%.

Turning to the balance sheet. We ended the quarter with $42.3 million in cash, down from $44.1 million at the end of the second quarter due to the fact that we used approximately $10 million of cash to make payments on deferred purchase price obligations for acquisitions. As a result, there's approximately $2.7 million remaining of deferred purchase price obligations at the end of Q3. And we expect to end the year with a balance of approximately $1.4 million. We generated $5.9 million of cash flow from operation and $5.1 million in free cash flow, compared to $6 million and $5.4 million, respectively.

In the third quarter of 2012, as we have mentioned in the past, quarterly cash flow can have variability as the number of moving parts and our trend of strong and growing cash flow remains the same.

I'd like to now finish with some thoughts regarding our financial outlook, starting with the full year 2013. We are tightening our total revenue range and expect revenues to be in the range of $188.8 million to $189.3 million or growth of 22% to 23% year-over-year. Our new midpoint of $189.1 million is towards the low end of our previous guidance range of $189 million to $191 million.

While we are very pleased with our record sales performance over the first 9 months of the year, and we expect another solid performance in the fourth quarter, our updated revenue view is due primarily to the timing on some of our larger more complex customer rollouts into a lesser extent how quickly we expect to deploy some of our most recent customers.

From a profitability perspective, we expect 2013 adjusted EBITDA of $29.7 million to $29.9 million, which represents an adjusted EBITDA margin of approximately 15.8% at the midpoint and growth of 33% to 34% on a year-over-year basis. We expect full year 2013 non-GAAP net income per share, which excludes stock-based compensation and amortization related to acquisitions, among other things, to be approximately $0.65 based on approximately 40.7 million fully diluted -- weighted-average diluted shares outstanding and a tax provision of approximately $1.1 million.

Finally, we expect free cash flow to be in the range of $22 million to $23 million for the full year 2013, which represents a 12% free cash flow margin at the midpoint and growth of 47% to 53% on a year-over-year basis. This compares to our previous guidance of $25 million to $26 million, and reflects the variability in working capital that I noted earlier.

And now, turning to the fourth quarter. Total revenue is expected to be in the range of $49.9 million to $50.4 million or growth of approximately 14% to 15% year-over-year. Adjusted EBITDA is expected to be in the range of $8.4 million to $8.6 million, representing an adjusted EBITDA margin of approximately 16.9% at the midpoint. Non-GAAP net income per share, which excludes stock-based compensation and amortization related to acquisitions, among other things, is expected to be approximately $0.18 based on approximately 41.3 million weighted-average diluted shares outstanding and a tax provision of approximately $400,000.

As we looked beyond this year, we wanted to provide some preliminary thoughts on 2014. While we have not yet completed our 2014 planning process, we are comfortable setting total revenue expectations in the range of $220 million to $224 million, which represents, an increase of 17% to 18% compared to our current 2013 guidance.

I would remind you that our last meaningful acquisition was our Symphony acquisition closed during August of 2012. As such, in evaluating Tangoe's growth for 2014, consider that their contribution is, both in our full year 2013 and our full year 2014 results. We believe we are well-positioned to drive upper teens total revenue growth based on the expansion of our sales force, increased momentum of upselling and cross-selling with existing customers, continued traction with our strategic alliance partners and ongoing international expansion. In addition, as we have shared in the past, we do not plan on making additional material acquisitions in the near-term. Our focus remains on driving growth and technology innovation. Further, I would add that we continue to have a high level of visibility into our future revenue. Last year, we similarly provided our out year guidance a quarter earlier than most companies based on the same visibility.

And now, moving to our initial views on profitability for 2014. We expect adjusted EBITDA to be in the range of $37 million to $39 million, representing an adjusted EBITDA margin of approximately 17% at the midpoint. This would represent over 100 basis points of margin expansion on a year-over-year basis, compared to our current adjusted EBITDA guidance for 2013 and assumes ongoing investment in sales and marketing implementation resources in our new matrix platform to fuel our long-term growth. We plan to provide further details regarding our expectations for 2014 during our fourth quarter earnings call, but wanted to provide this early view into our expectations for solid growth in both revenue and profitability continuing into next year based on the momentum of our business and expansion in our sales channel.

With that, we'd be happy to take any of your questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Nandan Amladi with Deutsche Bank.

Nandan Amladi - Deutsche Bank AG, Research Division

Nice job on the customer adds. How do we gauge the size of these new customers that are coming on? Obviously, the numbers consistently gone up and you've just increased your guidance range for that?

Albert R. Subbloie

Nandan, I appreciate the question, it's Al. A couple of things I shared in the past. And we normally will call out our larger 7-figure transactions, we kind of, historically, done that. And we had 2 nice ones in the last quarter. So obviously, I'll remind everybody that there will be a rollout plans for these deals. Our average ASP if you look at it annually, then any quarter could be up or down should be generally consistent with what it's been, historically, on the new logos. So it's generally when you take the fact we can do a multi-million deal, but we could also do a $50,000 to $100,000 annual deal. You can have some swing in either direction quarterly, but overall as the year plays out with the volume that we're doing, the ASP should generally be in the consistent range that we've been sharing.

Nandan Amladi - Deutsche Bank AG, Research Division

Okay. And then a quick follow-up, if I might. Yes, you've trimmed the guidance for 4Q with -- you said, roughly have $0.5 million revenues -- recurring revenues that was supposed to come in 3Q. In spite of that, why do you feel like you have to trim 4Q guidance?

Gary R. Martino

I think we feel good about the guidance that we provided, first of all. And I think that we shared that, even though we've had a great amount of sales activity in this year. I think, as you know, the recurring model is a lot of the sales activities that you have now, obviously, provides revenue for the following year. So I think based on that and the flow of activity and rollout, I think as we shared, we've had some of the larger deals have gone to longer rollouts, which we should realize the overall revenue is just over a longer period of time and some slight delays on the normal day-to-day implementations. Frankly, just because of the sheer volume that we've had.

Operator

Our next question is from Raimo Lenschow with Barclays.

Unknown Analyst

This is actually Stephan [ph] in for Raimo. Kind of following up to the previous question. If I go back and look at that you've could consistently beat on the new customer acquisitions and kind of how do I have to think about that going forward because I think I would have expected a little bit more of a meaningful revenue contribution coming from those that you booked like 2, 3 quarters out and kind of are the implementations going as expected? Or can you just provide a little bit more commentary around that?

Albert R. Subbloie

Yes. Raimo, thanks for the question. Yes, we've always -- I think we've always said that there's variability in the bookings to revenue based on rollout plans, implementation timeframes. And on the call today, we're sharing with everyone that certainly some of the larger prior deals, the rollouts are -- they're basically taking longer to rollout and a lot of that may be the customer having just internal they're working on other things so there's reasons, but they're taking longer and the sheer volume, the translation, the variability of that, a little greater than we expected. So we wanted to, basically, state that on a call to everybody, which has affected, obviously, to a small degree our Q3.

Unknown Analyst

Got it. And then if I could just follow-up on -- could you comment maybe about what you're seeing in the international markets and more specifically, I think, you guys closed a smaller acquisition last quarter and kind of how that's progressing? And how -- what do you expect the contribution of that?

Albert R. Subbloie

Yes. So let me take both of those separately. I'll start out with the small acquisition. I'll remind everybody, it was a small one-time revenue services company. The main goal of Tangoe was to have presence in the German market. And presence that knows the domain. The main objective of that, there's a customer base with the hope that will take certainly some time that we would upsell the recurring model into those customers. And that's got, certainly, a ramp associated with it, which we would expect to take a good year to be able to really ramp to that. But we're pleased, it's very small, as you know, and it's part of our overall strategy of incremental growth throughout EMEA and it's a piece of a larger puzzle for us.

Gary R. Martino

And I think in our prior quarter we shared that we closed that deal, I think it was mid-April. In the third quarter, it added approximately $100,000 of non-recurring revenue. And I think we shared that we look for it to add slightly more than that on a quarterly basis for the rest of the year, but not material number and all non-recurring. I think the objective was to get this great group of folks who know the domain, have a large set of customers. And then as well, talk to those customers about our other products.

Albert R. Subbloie

To your second question, the international expansion is going quite well, pretty much across all regions. EMEA is certainly ahead because we started earlier. We also did the larger ttMobiles acquisition over there as a base a while ago and we've been growing the sales organization and the operational staff throughout EMEA. And that's going well. APAC was a little bit newer, so a little more than a year that we've been expanded there. We continue to expand going well and Latin America is about 6 months at this point. I want to remind everybody that our international spend that we state, a good portion of that spend historically, is from U.S. domiciled company, so that really as far as our revenue is considered domestic revenue and the international logos that we're closing, which is obviously, probably the last 18 to 24 months is certainly a ramping revenue. We're excited about that growth opportunity, but it is relatively new, but it is a good growth opportunity at the market and we're pleased with the traction that we're getting.

Gary R. Martino

And just to revisit what I said, we had actually provided input that in Q2, that, that acquisition had delivered approximately $100,000 of non-recurring revenue. And that for Q3 and Q4, we would expect that to be slightly higher than that, say, several hundred thousand of non-recurring revenue per quarter.

Operator

[Operator Instructions] We'll take our next question from Tom Roderick with Stifel, Nicolaus.

Tom M. Roderick - Stifel, Nicolaus & Co., Inc., Research Division

Gary, I just wanted to follow up on the notion of some timing challenges relative to what I think you said was about $500,000 in recurring revenue. Can you go back and talk about what sort of led this, some of these timing challenges, what type of revenue that is that would be driven by timing issues? And then as we looked into Q4 in the context of your guidance, what's the best way to sort of split up the recurring versus the strategic consulting business within our model? In other words, what's the kind of exit growth rate that you expect for this year on the recurring side, because if I can run strategic flattish up slightly, I guess I'm going to get mid-teens or a little bit above that for recurring growth. So maybe you can kind of help me understand the issue of timing. And then how we ought to think about the organic recurring growth in the fourth quarter.

Albert R. Subbloie

So. Just to start with the non-recurring discussion as most folks know are non-recurring line, which we yield pretty good margins on, is typically a consulting business and that consulting business specifically in the areas of sourcing and audit which is contract negotiation and working with carriers, those contracts typically kind of have a base fee associated with the effort. And then there's typically incentive fees associated with those efforts. And those incentive fees are based on a number of items in terms of getting carrier credits and carrier proposals. So that's why you can have some timing on those incentive fees. And that's more generally when we talk about that variability, that's the variability with regard to non-recurring. With regard to the overall guidance for Q4, we, obviously, don't split out the total revenue when we give it. We just thought it will be important to give directionally that we expected the non-recurring to be up. And obviously, we're providing guidance, overall guidance based on the visibility that we have.

Tom M. Roderick - Stifel, Nicolaus & Co., Inc., Research Division

Okay, got it. Maybe thinking out to next year, it's hard for us to see the visibility that you see. You talked about couple of nice big deals with CSC and Sealed Air and some others. Perhaps it doesn't show up in the balance sheet just yet from a deferred revenue standpoint, any metrics you can point us to that will give us comfort that, in fact, the recurring line is set to accelerate as we go into next year but seemingly what the guidance implies, I suppose. But any metrics or other qualitative commentary you can offer?

Albert R. Subbloie

Yes, thanks for the question, Tom. I mean, Gary will give more detail on this if anyone had a question, but our deferred revenue is just not a proxy. We're mostly monthly-billing company. So that's not an indication. We've done our best. We give some guidance on new logos. We are continuing to grow the sales force. I haven't given a number on that, but we did grow the sales force in Q3. We will continue to grow that in Q4 and grow it in an exciting way or all through next year. Our new logo counts are up, to a point where we were very comfortable raising the range of those. We do have variability in deal size, but overall, as the year progresses, our average deal size on the new logos should be generally consistent. And we feel very good about the existing business of upticks as well. I tried to give you some color on actual account names that we're selling that required upticks. We're feeling good about that business across the board. Overall, I'll be very clear, we're very pleased with our sales performance. Now the variability in this and I'll remind everybody is the variability would be, there could be timing differences of when those bookings, depending on project timeframes, which were sometimes outside of our control when they roll in. If you have a very complex international customer that's putting out literally 4 different regions, sometimes a region will hold off and say, we're going to do this 3 months from now. That can certainly happen across the board, especially on the middle and the larger deals.

Gary R. Martino

And just thinking about the overall model of the recurring model, I mean obviously if you could just think of that broadly speaking. The deals in Q1 can have some impact on this year, same with Q2, as you get further out into the year. From a revenue delivery standpoint on the year, there's not as much impact on this year's revenue. And overall, if you think about the model, the sales from this year has a much greater impact on next year than it does on in-year revenue basis. So if you put a little delay in there, then obviously, it's even less of an impact on this year.

Tom M. Roderick - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Maybe one last one for me. You've lapped now the Symphony deal by over a year, you've been generating cash throughout this year. What's your appetite for further M&A now that you've taken about 1 year off from anything meaningful?

Albert R. Subbloie

Well, I think, Gary reiterated if you listen to the comment he made, we still right now, I think, we'll remain generally quiet. I always will caution that something great and opportunistic came up, of course, we have to look at it, but that's not our plan right now. We're very focused on continuing to drive expansion in the sales force here in the U.S. and overseas. We're going to continue that really throughout next year. We have a lot of great technology innovations going on. You'll be hearing more about those in December. It includes new markets, new products and enhancements to existing products. And we're continuing our global expansion strategy and it's keeping all of us busy. We're continuing to grow the implementation teams to keep up with the volume, in terms of being able to manage those projects effectively throughout the globe. So we're keeping busy here and right now, M&A isn't a high priority for us.

Operator

We'll take our next question from Terry Tillman, Raymond James.

Eric Lemus

This is Eric Lemus on for Terry. Most of my questions have been answered, but just looking at the overall growth rates for the CLM market and the MMS space, in general, how do you guys see that growing and others, Gartner's estimates out there? But how do you guys see that growing overall and do you guys expect yourselves to achieve that 20%-ish type growth on a consistent basis?

Albert R. Subbloie

Yes. So let me -- I'll try to take that as best as I can. The CLM market is been -- we've been in the market for many years here and there's an overall top line opportunity there, but I'll remind everybody that there's still a huge greenfield opportunity within just the overall size of the market. Our ability to tap that growth is our ability to execute really globally through that process, and I think that is much our execution, performance as it is market growth itself. So. And we have a huge greenfield in front of us, as I've shared with everybody. Having $26.8 billion out of $425 billion is very small. And when you add up all the competitors together, it's really approximately, maybe 20% -- at most 25% of that market is saturated, which means we've got 75%, 80% greenfield opportunity in front of us in the CLM market. There's no doubt that MMS is a relative new market. Mobile is clearly going through a tremendous amount of change. When you think of Tangoe, we're sort of the infrastructure management play around the assets, the expenses and the usage. And in mobile, I would venture to say the next several years, the MMS market at the top line should be a faster growing market. We're in the early days right now of that overall total solution, even though we've been in the mobile TEM and MDM market for a while. MMS itself, again, by Gartner putting a lot of energy as a third party into promoting that, and we're clearly seeing some of that develop within our pipelines. A little bit early to call our view of the longer-term growth in that market because it's, again, a market that's only been termed at probably in the last 9 months or so, but we're pretty bullish about the overall opportunity of the mobile space. In December, you'll hear more about us from a product perspective. And certainly, additional ways that we're going to expand the product set to go after that marketplace.

Eric Lemus

Great, that's a good perspective there. And then, as my last question, given your increased global capabilities, are you guys seeing more opportunities or deals in the pipeline where you're being mandated to do a global rollout versus just a U.S. or other finite regions.

Albert R. Subbloie

Yes, there has been an increasing trend towards globalization within the enterprise. Across the board, that would be both fixed and mobile. Although mobile is probably in the last year, you could definitely see an uptick in companies that want to tackle it globally. There are 2 flavors of that. A company made by that solution globally upfront, if they do that, it's usually a phased rollout, which then goes back to the reference of some of the larger accounts those phases can move around a little bit. Rarely does a company buy a global deal and roll it out within 1 phase, because you're dealing with multiple regions altogether. And same thing on the fixed side, no doubt there's a trend towards centralization. That has been trending like that for about 2 years or it seems like the trend is increasing with an emphasis on mobile.

Operator

Ladies and gentlemen, this concludes today's question-and-answer session. At this time for closing remarks, I'd like to turn the conference back over to Mr. Al Subbloie.

Albert R. Subbloie

Well, I just want to take a minute to thank everybody for joining the call today, and we'll be working very hard through the fourth quarter. We look forward to updating everybody on our progress in the February earnings call. Thanks for joining.

Gary R. Martino

Thank you, everyone.

Operator

Ladies and gentlemen, this concludes today's conference. We appreciate your participation.

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