ClickSoftware Technologies' CEO Discusses Q4 2013 Results - Earnings Call Transcript

ClickSoftware Technologies Ltd. (NASDAQ:CKSW)

Q4 2013 Earnings Conference Call

February 5, 2014 9:00 am ET

Executives

Moshe BenBassat - Founder and Chief Executive Officer

Shmuel Arvatz - Chief Financial Officer

Analysts

Nick Farwell - Harbor Group

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the ClickSoftware Technologies Ltd. Fourth Quarter and Full Year 2013 Financial Results Conference Call. All participants are at present in a listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded February 5, 2014. With us online today are Dr. Moshe BenBassat, ClickSoftware’s Founder and CEO, and Mr. Shmuel Arvatz, CFO.

Before I turn the call over to Dr. BenBassat, I would like to remind you that during the course of this call, the Company will be making express or implied forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 and other U.S. federal securities laws. These forward-looking statements include, but are not limited to, the statements regarding future results of operations, including our outlook for full year 2014 revenues and non-GAAP earnings per share, future benefits of products and services, growth and expected expenses, visibility into future periods and pipeline, estimated revenues from cloud services, plans for investments and future rates of growth, growth opportunities having our mobile apps running on Microsoft based Windows phones, our partnership with Salesforce.com, rates of growth and profitability and market demand. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected.

Achievement of these results by ClickSoftware may be affected by many factors, including but not limited to, those discussed in today’s press release and in the Risk Factors section, and elsewhere in ClickSoftware’s Annual Report on Form 20-F for the year ended December 31, 2012, and in subsequent filings with the Securities and Exchange Commission. Except as otherwise required by law, ClickSoftware is under no obligation to and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Also, I would like to remind you that ClickSoftware reported net income and net earnings per share on both a GAAP basis and on an adjusted non-GAAP basis. Today's press release includes a reconciliation of non-GAAP information to the most directly comparable GAAP information and is posted in the Investors section of the Company's website at www.clicksoftware.com.

Dr. BenBassat, would you like to begin?

Moshe BenBassat

Yes please. Thank you. Good morning everyone and thank you for joining ClickSoftware's 2013 fourth quarter and year-end earnings call. As usual, I shall start with key highlights of our progress and a brief overview of the financial results and operational achievements. Shmuel Arvatz, our Chief Financial Officer, would then provide you with a more detailed review of the financial results and we would conclude this call with an outlook for 2014 and a summary before opening the call for your questions.

We are very pleased with the strong results of the fourth quarter which shows that ClickSoftware has turned the corner. We saw a remarkable improvement in our business during the fourth quarter leading to strong results that exceeded expectations. The win rate against the competition was quite convincing and we added a record 19 new customers in the fourth quarter, 10 in the cloud and nine on-premise. For the full year of 2013, we had 54 new customer wins, which is 59% above the 34 new customers that chose ClickSoftware in 2012.

While we're winning new customers of all sizes, our competitive advantage still can best be seen in the large enterprise market and in particular in the telecommunication sector where we signed 11 new telco customers in 2013 alone, far above any of our competitors. These include marquee companies such as Bell Aliant in Canada, [indiscernible] in Belgium, WIND in Italy, Nextel in Brazil, Millicom for several countries in Latin America and Vodafone India.

Deploying workforce management software in large companies is a mission-critical, long-term commitment of millions of dollars beyond the software cost. Therefore, vendor selection involves a much more rigorous, in-depth comprehensive evaluation process and ClickSoftware continues to excel by winning most of them in 2013. If there was any doubt about ClickSoftware's dominance over the competition in the market for mobile workforce management and service optimization, 2013 gave the answer.

Out of the 54 new customers in 2013, [24 or] (ph) 44% of them were new cloud customers. Relative to nine cloud customers in 2012, this is an impressive year-over-year growth of 166%. The velocity with which we are acquiring new cloud customers is one more indicator for our leadership position in cloud offering for our space as we are distancing ourselves and moving further ahead of the competition. While the shift to the cloud impacted upfront license revenues in 2013, we saw significant increase in our base of recurring cloud revenues and expect greater visibility in 2014 as the stream continues to substantiate and grow.

Demand in the enterprise software market continues to be a mix of on-premise and cloud licensing. Our ability to offer a best-of-breed solution, both on-premise and in the cloud, is a key competitive advantage for ClickSoftware as the shift to the cloud is developing gradually and not in a destructive manner. We have a strong pipeline of new business opportunities for the year ahead consisting of a healthy mix of on-premise perpetual licensing and cloud SaaS-based opportunities.

On the product side, we continue to introduce new innovations in the cloud, mobile and artificial intelligence technologies that serve to sustain our comprehensive advantage. The partnership with Salesforce.com is already quite productive, demonstrated by early wins and a very impressive early pipeline with more to come in Q1 of 2014.

Our financial performance in Q4 was good by just about every metric. Our revenues in the fourth quarter were a record $30.7 million, an 8% year-over-year growth and 32% above prior quarter. By the very nature, the 10 new cloud customers we signed this quarter contributed marginally to our record level of $30.7 million revenues, which makes the revenue level we achieved this quarter even more impressive. This came with a nice non-GAAP net income of $2.3 million and $0.07 EPS.

Cash at quarter end was $58 million, an increase of $2.3 million relative to the end of the prior quarter. Short-term backlog and deferred revenues for the next 12 months increased to $42.7 million at the end of the fourth quarter, a significant growth relative to $32 million at the end of the quarter – at the end of the last quarter. Again, this amount does not reflect some revenues from a long list of new cloud customers that we signed in the later part of 2013 and are still in early stages of deployment or a rollout.

Let me now review selective wins in the fourth quarter, covering briefly the customer's operation and size. Some cloud examples. In North America, ClickSoftware added several major cloud contracts, one of them is Tremco for its network in roofing contractors. [indiscernible] Denmark is an example of a cloud based in Europe. TSA Group [indiscernible] company in Australia, would be using an integrated suite of software cloud solutions for scheduling and mobility.

Getting back to my note earlier on the telecommunication industry, in India, ClickSoftware won two telecommunication companies, Vodafone India, the third largest mobile network provider in India with over 150 million subscribers, and CP Technologies which is India's first private Internet service provider.

In Europe, ClickSoftware added two major telecommunication companies. In Italy, WIND Technologies, which is part of VimpelCom, one of the world's leading integrated operators, [indiscernible] leading mobile operator in Italy. In Luxembourg, we won Millicom Group, a telco company servicing 47 million customers in 13 countries in Central America, South America and Africa under the Tigo brand. In Brazil, ClickSoftware added Nextel. And finally, Bell Aliant, one of North America's largest regional telecommunication provider, also joined as a ClickSoftware customer.

Two other very interesting wins in North America demonstrate ClickSoftware's growth in additional industry verticals. In the home healthcare industry, Click was selected by Seasons Hospice, a community-based organization with creative solutions that add quality to end-of-life care. In the public sector, ClickSoftware added a major city department in the United States. We also had some other wins, was a repeat from, repeat [all of this] (ph) from existing customers such as MGTS in Moscow Russia, Siemens Healthcare and Training in the United States.

Our product development team continues to enhance the existing products and reach our app stores with new apps and develop innovative ways to leverage mobile technologies, predictive mathematics and learning, social media and artificial intelligence into our products. Specifically, our ClickButler technology that embeds AI in mobile personal assistance is making substantial progress with every new release, deepening and broadening the way personal assistance increase productivity of the users, improve compliance and eliminates time wastage.

On the partner front, we continue to ensure high level of integration that facilitates generating business together with our partners. For example, we again passed the strict testing of SAP premium qualification process. Also, we are building detailed integration with IBM MobileFirst work like platform and with Salesforce.com AppExchange and their S1 mobile platform. Additionally, we will shortly have mobile apps running on Microsoft-based Windows phones, a device which seems to attract interest in the business world.

Before I pass the call on to our CFO, Shmuel Arvatz, let me congratulate Zvi Piritz and Stephen Timms on their new roles as presidents; for Zvi, President of EMEA and APAC; and for Steve, President of the Americas. Both Zvi and Steve have been with us for a long time. They know our space, customers and partners and of course our employees and the way we work. Each one of them has an instrumental role in our success so far and I just wish them success in their new positions.

With that, I would pass the call on to Shmuel.

Shmuel Arvatz

Thank you, Moshe. 2013 was a productive year in which we continued to make progress towards achieving our strategic goal. As Moshe indicated, we saw a record number of new customers in 2013, particularly in the second half of the year and we are extremely encouraged by the trend we are seeing in the market. While the transition to a cloud model impacted our short-term revenue, we did experience modest year-over-year growth and enter 2014 with strong momentum.

We invested heavily in R&D and sales and marketing during 2013 which impacted our profitability during the year. However, we believe that the investment level peaked in Q4 2013 and are confident that we can profitably grow our business going forward. These investments will enable us to rapidly accelerate growth in 2014 and further penetrate the underserved workforce management and service optimization industry around the world.

Before I begin reviewing the financial results for the quarter and full year, I would like to inform everyone that in this call, unless otherwise noted, when discussing results of operations I will refer entirely to the non-GAAP figures. Non-GAAP figures differ in certain respect from Generally Accepted Accounting Principles and exclude share-based compensation, amortization of intangible assets, changes in deferred tax and certain special tax charges. The differences between the GAAP and the non-GAAP results are detailed in today's press release which is posted in the Company's website at www.clicksoftware.com.

Beginning with the review of the quarterly results, revenue for the quarter was $30.7 million, a new record for us, up 8% year-over-year and 32% from the previous quarter. Bookings in the quarter were very strong, and as a result, book-to-revenue ratio was significantly more than 1. During the quarter, we booked one license deal worth more than $1 million.

The split of revenues is $10.9 million from software licenses, which is up slightly year-over-year and represents 36% of total revenue. Services revenues were $19.8 million, or 64% of total revenues, up 13% year-over-year. The geographical breakdown was as follows; $13.5 million from the Americas or 44% of revenue, $14.3 million from EMEA or 46% of revenues, and $2.9 million from Asia-Pacific or 9% of revenues.

Moving on, gross profit was $19.3 million, representing a gross margin of 63% compared to $18.7 million or 66% in the same quarter last year. The decrease in gross margin was mostly due to a lower margin generated by our service activities and costs associated with our cloud offering. Operating expenses for the quarter were $17 million, up 19% year-over-year. The increase was mostly due to higher expenditures in research and development and sales and marketing, increased 14% and 25% respectively year-over-year.

As of the end of the year, we had 602 employees, up by 93 employees from the end of 2012. The employee growth throughout the year was mostly on professional services and sales and marketing. Operating income for the quarter was $2.2 million compared with $4.4 million in the same quarter last year, a decrease of 49%. This represents an operating margin of 7% for the quarter. Currency impact on the operating results was about $900,000 negative this quarter. This calculation is made in constant currencies as prevailed in the fourth quarter of 2012. Net income for the quarter was $2.3 million or $0.07 per diluted share compared to $4.2 million or $0.13 per diluted share in the same quarter last year.

Now, I will turn to the full year results. Total revenues for 2013 grew 3% to $103.2 million. This was lower than the growth rate we had forecasted at the beginning of the year and was mainly due to the rapid shift to cloud based sales. This shift occurred faster than we anticipated and impacted our financial results particularly earlier in the year. The business world is moving to cloud-based solutions, customers are looking to pay lower upfront license fees, starting with smaller initial deployment sizes and expecting shorter sales cycle, a natural occurrence when shifting to the cloud.

During the year, we booked three license deals worth more than $1 million. This compares to five deals worth more than $1 million in 2012 and seven deals in 2011. This is in line with the industry's trend of smaller upfront contracts. License revenues for the year were $28.7 million or 28% of total revenues, down 17% year-over-year. Services revenues for the year were $74.5 million or 72% of total revenue.

As we have done on previous year-end reports, let me now give you a further breakdown of the service line. Revenue from management and support contracts for the year were $31 million, a 17% increase compared to 2012. Revenues from consulting services were $43.5 million, up 12% compared to 2012. So the total revenue breakdown for the year was about 28% licenses, 30% maintenance and support contracts, and 42% consulting services.

Geographically, we decreased in the Americas but grew in EMEA and in AIPAC. Our largest market was in the Americas which accounted for sales of $50.6 million, a decrease of 16% year-over-year, representing 49% of total revenue. It is notable that the shift to a cloud model was faster in the region and therefore had a greater impact on revenue. EMEA revenue increased by 30% compared to last year with revenue of $42.8 million, representing 41% of our total revenue. Asia-Pacific contributed $9.8 million or 10% of total revenue, an increase of 14% compared to 2012. In 2013, we established a local presence in Russia and Brazil which we anticipate will contribute to our top line in 2014.

Operating expenses for the year were $62.4 million, up 21% year-over-year. Going forward, we do not anticipate any growth in operating expenses in 2014, which will enable us to leverage the top line growth. We will continue to review our expenses in order to align our cost with the expected top line growth in 2014.

Operating loss was $2.7 million compared to an operating income of $10.5 million or 11% in 2012. Currency impact on our operating results for the year was about $1.4 million negative. This calculation is made in constant currencies as prevailed during 2012.

Tax expenses amounted to $642,000 in 2013, resulting mostly from tax liabilities associated with our subsidiaries outside Israel. Net loss for the year was $2.5 million or $0.08 per share. Our book-to-revenue ratio was about 1 for the year. As a result, our short-term backlog as of the end of the year was $42.7 million, up $9.5 million from the end of 2012.

Turning to the balance sheet, our cash reserves comprised of cash, cash equivalents and investments at the end of the year totaled $58 million. This is down 2% compared to $59.4 million at the end of 2012. During the fourth quarter, we generated $1.9 million from operating activities. For the full year, cash flow from operations was $6.4 million. During 2013, we paid out $6.7 million in cash dividends. DSO as of the end of the year were 66 days, down from 79 days at the end of September, in line with our target model.

In terms of guidance, looking forward into 2014 we expect top line growth of 8% to 11% with revenues in the $111 million to $115 million range. We also expect non-GAAP fully diluted earnings per share to be between $0.06 to $0.12.

In summary, 2013 was a transition year during which we continued to build our infrastructure for our cloud and mobility offering. We remain confident in our growth prospects and are working to achieve our full potential. I would now like to turn the call back to Moshe for closing statements.

Moshe BenBassat

Thank you, Shmuel. We certainly had a strong finish of 2013, and judging by our backlog of $42.7 million, additional estimated revenues from cloud wins that are not yet included in the backlog amount, and the overall pipeline, it is fair to say that the momentum is continuing into 2014. In fact, we're at advanced stages of concluding several major contracts during the first quarter of 2014. At least two of them are major cloud wins.

Regarding the competitive landscape, the very substantial list of new wins I communicated today, and specifically the larger ones, provide convincing evidence that ClickSoftware is way ahead of the second and third place competitors in our space. The trend of large enterprise organizations considering SaaS offering cloud-based solutions is on the rise and our ability to offer a best-of-breed solution, both on-premise and in the cloud, is a key competitive advantage of ClickSoftware. The velocity with which we are winning cloud customers clearly proves that ClickSoftware is executing very well the transition of large companies to cloud-based solutions.

In summary, we are very pleased with the strong results of the fourth quarter which showed that ClickSoftware has turned the corner. With that, we will now move to questions and answers.

Question-and-Answer Session

Operator

(Operator Instructions) The first question is from [Michael Adiamor of Morrison Capital] (ph). Please go ahead.

Unidentified Analyst

Congratulation on the fourth quarter there. The deferred revenue grew a lot year-over-year, both short and long-term deferred, down a little bit sequentially, but how much of the year-over-year growth there relates to the SaaS business, cloud business?

Shmuel Arvatz

The majority of the growth was due to one specific customer which prepaid their maintenance and support upfront for a couple of years and this is the majority of the increase. This occurred in the third quarter of 2013.

Moshe BenBassat

I think that Shmuel was referring both to the deferred revenue. Are you talking about the backlog and deferred or just the deferred?

Unidentified Analyst

I was just talking about deferred, but yes, I mean if you can give a sense of that $42.7 million, how much of that is maybe cloud related?

Moshe BenBassat

Talking about the backlog, very small amount includes the cloud revenues, which means potentially we still have a very nice amount, which is like – if you may, you may call it soft backlog – there is a need that when you sell cloud solution to a large company, justifiably they say, look, why should I pay you for all this let's say 1,500 technicians when I'm still in the rollout of the first 200. So they start small, it's really difficult to get commitments, certainly to get money for larger amounts and it takes some time until a large customer gets to the point where he is really paying the monthly services that you would expect from a large customer.

So, all-in-all, quite a number of the large customers we signed as cloud revenues, the revenues from them is not yet reflected in the official backlog because they have no signed contract. The backlog is only signed contract, it's not any kind which is still not full in commitment.

Unidentified Analyst

Then, in terms of your guidance for fiscal 2014, do you envision the sort of traditional on-premise software revenue to grow in fiscal 2014 or does most of the growth, most of the software really comes from the cloud business?

Shmuel Arvatz

We expect growth in all line items. The cloud should grow faster than the on-premise revenue.

Moshe BenBassat

And starting the next quarter, we will start breaking the reports, the financial reports that we give into the cloud comportment as well.

Unidentified Analyst

All right. So your report, will that be a cloud revenue number or a cloud bookings number?

Shmuel Arvatz

Cloud revenue.

Unidentified Analyst

Okay, great. And then just last question, did you say that the operating cost from the fourth quarter, we should assume that it is another run rate going forward or do you see some streamlining from that?

Shmuel Arvatz

It depends on the assumption on the range we gave between $111 million and $115 million. However, we don't see any higher quarter than Q4, and more than that, we see the overall number, the overall operating expenses in 2014 flat or lower than 2013.

Unidentified Analyst

Okay, thanks a lot. Good luck.

Operator

The next question is from Nick Farwell of Harbor Group. Please go ahead.

Nick Farwell - Harbor Group

I just want to follow-up on one comment you made. You indicated that the competitive profile shifted or at least intimated that it shifted, given the change in the delivery to a SaaS platform and you indicated you had two major competitors. Other than TOA, could you – or perhaps it isn't TOA – could you profile those two competitors and talk a little bit about how you're differentiating yourself from them?

Moshe BenBassat

I prefer not to mention names. You know I guess and the public knows a little bit [indiscernible] and also, I would give some reasons that differentiates us, but before going into the reasons, I was referring more to people who were talking about a close race between us and the competition, and quite frankly the results that we have shown this quarter and the real position in the market, this is not a close race, this is not a close race. We are far, far ahead of second place or third place and others.

Now the main competition, and in fact as we report about some major wins in the cloud business probably the next earnings call, we are assembling the reasons. We go and ask customers why did you select ClickSoftware, and typically the reasons that we hear are, first of all is the value that we give to the customer because tremendous business value is generated by the quality of the optimization algorithms and ClickSoftware products are the best in this space.

Now with most other products, at first it seems like they are doing the same, they [indiscernible], they do appointment booking, they show map displays, and the like. But when you get into the automatic decisions which are made by the computer, there's a tremendous difference, and as I mentioned in the call, when a large company is considering buying such software product, they go into invest evaluation. I mean they ask for value data, they ask you to run it, they compare, they take us into separate room, they go in between the rooms, and eventually as the number of wins that we have this quarter show, we won just about every one of them when it came to the large customers.

True, even there we'll lose a customer or a competition, and even there we will have a small company who does not place enough emphasis on the optimization, but overall, when it comes to the optimization, the value is so substantial that we clearly have a very strong advantage.

Another area is that we are really the domain experts in this space and our staff is expert in managing service industry operations and they carry big knowledge of the industry. So, in addition to software, we offer education workshops on industry's best practices which customers frequently mention in reference call as to why they selected ClickSoftware over the competition. So we're not just programmers, I mean we are the domain experts, we are business experts, or some other people would say, we are the McKenzie of the service sector.

Last but not least is the mobile apps. So first we have mobile apps for all business throughout in the organization. The technicians, the scheduler, the crew manager, the dispatcher, the forecaster, the executive, working with his tablet with [decimals] (ph) on it and so on and so forth, and it's very rich, far richer than anybody else have in this space. And on top of it, we also have MobileFirst. So we can start with mobility if you wish to give your mobile technicians or mobile workforce first the ability to follow a process using mobile devices and then expand into optimization, or vice versa, or by both of them. I will not go through the whole list of reasons, but there are at least 10 reasons why customers choose ClickSoftware over the competition and it's not a close race.

Nick Farwell - Harbor Group

Just to follow up then on another question with respect to the fourth quarter, technically, growth and maintenance services in PS moves up rather modestly or changes modestly on a sequential basis. It increased $1.2 million in the fourth quarter. To what degree might that have been a finalization of say specific or several contracts or is that incremental growth going to be sustainable into 13?

Shmuel Arvatz

So, we provide this breakdown on a yearly basis. So I will refer to the yearly basis. The [indiscernible] grew 17% more than license, was due to the lower or weakness in the license. 17% is based on the on-premise reduction that we saw and related maintenance and support and the 17% is actually, it represents our around initial plan that we had at the beginning of the year. There is no surprise that licenses growth were below what we expected and the result, the maintenance as a percentage of total revenue was higher this year than it was in the previous years.

Moshe BenBassat

If I may, there's another observation to make and actually you will see it in 2014. When you sell a cloud-based solution which is a monthly service fee to a large company, again not to a small one where you go up and running within a week, when you sell it to a large company, it takes time to deploy it, and during this time, you are getting the services revenues but still you're not getting the cloud services revenues until they start using it for the full force. You will get some amount of the services of the cloud revenues.

So there could be a situation by which we show higher increase in the professional services while we are deploying the solutions for the large customers, and only when you finish the rollout, this is when you start seeing like an annual hundreds of thousands of dollars fee for the cloud-based. So it's a transition period and actually for the number of cloud customers new to investor's community will be able to assess what's going to happen by the end of 2014 as far as the cloud revenues.

Nick Farwell - Harbor Group

I guess I was a little confused because as we all estimate what the mix might look for maintenance service and PS, I had expected given the implementation of – the front-end implementation of either on-premise or SaaS implementation, that the PS actually would have grown a little bit faster than the maintenance, which it didn't. And so when I look at fourth quarter being up $1.2 million, which is probably the largest delta I have seen in quite some period of time or I've observed in quite some period of time, I was just wondering if there was something unique about the fourth quarter mix of business and if that is some statement about the sustainability at a new level that we should impart in our 2014 estimates?

Moshe BenBassat

Don't read anything into it. It is just a data point. And finally maybe just everybody to notice, we have like close to $30 million in repairing, maintenance and support revenues. That's a very impressive number that is churning over to 2014.

Nick Farwell - Harbor Group

Absolutely. To look at a company that's shifting its mix of business, and not that it doesn't have a maintenance component to it, but to be able to have maintenance up to the degree you did and given the amount of pressure on maintenance and to a lesser extent PS over the last 18 months, two years, to be up I think it's 14% or so, it is a herculean achievement it seems to me in the current environment.

Moshe BenBassat

Yes, it was – overall, it was a good year. Thank you, Nick.

Nick Farwell - Harbor Group

So may I ask one other question about 2014, and that is, what is the tax rate, Shmuel, that you're embedding in your sort of expectations? I realize it's a modest non-GAAP EPS number, but what are you using as an embedded tax rate?

Shmuel Arvatz

About 20%.

Nick Farwell - Harbor Group

Okay. And then the last question is, I'm guessing from your earlier comments that if you are budgeting the whole your OpEx for the year flat to maybe even down a little bit, I noticed your headcount declined slightly in the fourth quarter, that would suggest that if you hit the upper end obviously of your revenue expectations, we're going to see some rather substantial operating leverage manifested in higher EPS. Is that what you're intimating to us?

Shmuel Arvatz

That's correct.

Nick Farwell - Harbor Group

Okay, thank you.

Operator

(Operator Instructions) There are no further questions at this time. Before I ask Dr. BenBassat to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available two hours after the conference ends. There is a question. One moment please. The following question is a follow-up from [Michael Adiamor from Morrison] (ph).

Unidentified Analyst

I know you talked about the number of customers increasing rapidly in 2013, you talked about some of the initial purchases being smaller, but I guess a little bit about the size of the customers there, the purchases are smaller but are the customer sizes that you're dealing with the same as it's always been?

Moshe BenBassat

It's a rule when I talk in earnings call about customers, I don't talk about the small ones with five or 10 or even 50 resources. When I say major customer, it's probably several thousands, certainly above 1,000 resources, and when I say large customers, maybe I'm referring to something in the ballpark of 700 to 1,000 resources. So considering with the list price including, and you may take into account some discount, you are talking about customers that will give you every year, for the duration of the – as long as they are our customers, several hundred thousand dollars per year in terms of SaaS revenues, which of course is a very nice contribution to the overall revenue stream. So that's why we always say, it's short-term, the transition to the cloud is hurting the top revenues, top line, but in the long-term, it certainly would benefit the Company, less fluctuations and very nice steady stream of revenues.

Unidentified Analyst

What kind of a gross margin should we think about on the SaaS business or the cloud business?

Shmuel Arvatz

At this stage, we will not break it down. Obviously still revenues are relatively small and of course the operation in the cloud is not gaining the economies of scale, but as we go in 2014, this will improve and maybe in 2014 we can elaborate more on that.

Moshe BenBassat

If I may, one last comment on this, during 2013 and actually earlier in 2012, we continued to work on the architecture of the cloud-based solutions for large customers so that we can get the maximum cost efficiencies when we go and buy CPU from Amazon and the like. While the number of resources is below, you don't really get that much benefit from these cost efficiencies, but we have invested lot of mathematics in how to do it in the best possible way and are still doing, so that by the time these customers really ramp up to thousands of technicians and customers in the cloud, we should be able to show some nice cost efficiency performance. But it's still early to judge and we will try and give some more details as 2014 progresses and we have clear picture as to the number of resources which have already been rolled out and how we are performing in terms of financial performance.

Unidentified Analyst

And then just a clarification question. Can you give the change in the regional data for the Americas and Europe for the full year, change in revenues for the full year?

Shmuel Arvatz

I will give you not the change, but you know what – one moment.

Moshe BenBassat

While Shmuel is looking, we have the numbers for the full year 2013, and going forward, I believe it would still be fluctuate distributing roughly around 45% annually, around 45% in the Americas, around 45% in Europe, and 10% Asia and the Far East. It could go 5% up or down at any given quarter, but again, the overall this is what we see in terms of distribution.

Shmuel Arvatz

So in the Americas, revenues went from $50.1 million in 2012 to $50.6 million in 2013. EMEA revenue grew from $32.9 million to $42.8 million. And in Asia-Pacific, the revenues increased from $7 million to $9.8 million.

Unidentified Analyst

And do you think for the change in the Americas, is that partially due to the faster evolution of the cloud business?

Shmuel Arvatz

That's correct, which is more significant adoption rate in the Americas is faster than other territories right now.

Unidentified Analyst

Correct. Thank you.

Operator

The next question is a follow-up question from Nick Farwell. Please go ahead.

Nick Farwell - Harbor Group

Shmuel, I have forgotten what the currency impact was for 2012. Do you have that off the top of your head?

Shmuel Arvatz

No, not in front of me.

Nick Farwell - Harbor Group

Okay. And if it's a loss of $700,000, I realize that's in constant currency and so it's a rather complex number, but in effect, what do you think that actually impacted EPS since it's, I'm guessing, it's not really the $700,000?

Shmuel Arvatz

No. In fact, we actually [indiscernible] revenue, cost, salaries, payrolls. Most of the impact by the way is because of the strengthening of the Israeli shekel against others, say, U.S. dollar.

Nick Farwell - Harbor Group

Right, but you also have a lot of dollar-based comp.

Shmuel Arvatz

Dollar-based does not impact, it does not impact the formula.

Nick Farwell - Harbor Group

Okay, so are you embedding some currency impact or guessing or somehow trying to include that in your outlook for 2014?

Shmuel Arvatz

There are assumptions for currencies in the budget lens. Any deviation of this assumption to the actual will result in currency [influx] (ph), to the good and to the bad.

Nick Farwell - Harbor Group

Okay, thank you.

Operator

All right, I'm just going to repeat the instructions for the replay. Before I ask Dr. BenBassat to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available two hours after the conference ends. In the U.S., please dial 1-888-326-9310; in Israel, please dial 03-925-5904; and internationally, please dial 972-3925-5904. Dr. BenBassat, would you like to make your concluding statement?

Moshe BenBassat

Yes. So in summary, as far as the competitive differentiation, I would say it's not just about the data processing, it's about business optimization at all levels which generates substantial business value and that's why customers select ClickSoftware. Thank you all for joining our quarterly earnings call. Have a good day and let's look forward for a great 2014. Good day. Bye-bye.

Operator

Thank you. This concludes the ClickSoftware Technologies fourth quarter 2013 financial results conference call. Thank you for your participation. You may go ahead and disconnect.

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!