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Executives

Justine Stone - Investor Relations Coordinator

William C. Stone - Chairman and Chief Executive Officer

Normand A. Boulanger - President and Chief Operating Officer

Rahul Kanwar - Senior Vice President and Managing Director of Alternative Assets

Patrick J. Pedonti - Senior Vice President, Chief Financial Officer

Analysts

Peter J. Heckmann - Avondale Partners

Mayank Tandon - Needham & Company

Ross MacMillan - Jefferies & Co.

SS&C Technologies Holdings, Inc. (SSNC) Q4 2013 Results Earnings Call February 11, 2014 5:00 PM ET

Operator

Good afternoon my name is Said and I’ll be your conference operator today. I would like to welcome everyone to the SS&C Technologies and fourth quarter 2014 conference call. At this time all participants are in listen only mode. Later we’ll conduct the question and answer session. We will be taking questions in the order we receive them. Please note that this conference is being recorded and will be made available on SS&C’s website, www.ssctech.com.

I would now like to turn the call over to Justin Stone Investor Relations Coordinator.

Ms. Stone you may begin your conference.

Justine Stone

Welcome and thank you for joining us for our Q4 and 2013 earnings call. I am Justine Stone, Investor Relations Coordinator for SS&C. With me today is Bill Stone, Chairman and Chief Executive Officer; Norm Boulanger, President and Chief Operating Officer; Rahul Kenwar, Senior Vice President and Managing Director of Alternative Assets; and Patrick Pedonti, Chief Financial Officer.

Before we get started we need to review the Safe Harbor statement. Please note that various remarks we make today about future expectations, plans and prospects, including the financial outlook we provide, constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and can also be accessed on our website.

These forward-looking statements represent our expectations only as of today, February 11, 2014. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so.

During today's call we will be referring to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to comparable GAAP financial measures is included in today's earnings release, which is located on our Investor Relations section of our website at www.ssctech.com.

Thank you and I will now turn the call over to Will.

William C. Stone

Thanks, Justine. I'll start with a brief review and then I’ll turn it over to Norm to cover some operational highlights, Rahul will give us an SS&C full update, and Patrick will take us through the financials.

As you could see 2013 was another strong year for SS&C with record revenue, revenue EBITDA, record operating cash flow and record earnings per share. In Q4 our revenue grew to $182.5 million an increase of 6.3% over the same period a year ago. Q4 revenue from software enabled services was 77.1% of total revenue. Once again in 2013 we delivered record adjusted revenues of 28.9% with $712.8 million while increasing our adjusted operating margins to 38.8%. We were able to pay down $239 million in debt and end the year at 2.4 times leverage.

This leverage ratio is almost two full turn of leverage improvement since the GlobeOp acquisition in June of 2012. In 2013 we also continued our approach to adding to our capabilities with target acquisitions of Prime Management Limited a service provider for the insurance linked securities market and we completed the integrations of SS&C portion in GlobeOp.

We added offices Los Angles and Luxemburg and expanded our presence in Mid-Western Evansville. And we were also recognized for numerous awards including being named to the FinFET 104th American best small companies list for 2013. We announce the collaboration with University of Southern Indiana to build the curriculum and a concentration in investment accounting. USI has an award winning accounting program and SS&C is actively growing our business there and we’ve reached the headcount of a 110. We hope to double this in 2014.

Now I will turn it over to Norm.

Normand A. Boulanger

Thanks Bill, we closed out 2013 with a solid quarter. As I looked at this past year I am proud of SS&C's many accomplishments. We executed at a high level in 2013 growing from revenue and maintained industry leading margins. Acquisition synergies remained on track as our integration activities for the portion in GlobeOp acquisitions are essentially complete and to-date we achieved approximately $17 million in synergies.

In our view we have only begun to scratch the surface on the exceptional cross selling opportunity presented by these businesses and we expect these opportunities coupled with solution enhancements we have in the pipelines to increase the values we delivers for our customers

Our SS&C Globe Op Institutional Asset Management business capped a strong 2013 performance with solid Q4 results. We have lined up a strong executive management team by adding Christy Brenner through the PORTIA acquisition and also Bob Schwartz the SS&C’s Chief Technology Officer from GlobeOp and hiring Tim Reilly from PwC to manage our institutional organization.

Investment in our technology enabled us to roll out new products and services. We continue to evolve our mobility strategy delivering innovative cloud-based services through the mobile app and web-based portal. Our mobility strategy remains a focus in 2014 will continue to differentiator.

We rolled out major releases of our platforms including our private equity platform, TNR Solution, SS&C PORTIA and our long service and our rotational solutions LMS. Key deals for the quarter included a large institutional asset manager selected our primary PORTIA performance contribution solution; a Canadian insurance manager, a global investment manager in the U.S. hedge fund expanded its relationship with us for our reconciliation technology; an international bank selected us for small trading capabilities; a Canadian asset manager contracted us for ASP and business continuity services; the largest bank in Australia selected our client reporting solution and we closed couple of PORTIA deals on Middle Eastern [family] office, a Hong Kong based asset manager, the U.S. asset manager and a U.S. independent corporate dealer. And I’ll turn over to Rahul.

Rahul Kanwar

Thanks, Norm. 2013 has been a very strong year for SS&C's alternatives business. Revenue increased 48.6% over the same period in 2012, we ended the year with $566 billion in assets under administration an increase of 30.7% over $433 billion at the end of 2012. In Q4 we continued our efforts to offer investment products to our customers. We added EMIR trade repository solutions to services, EMIR which stands for European Market Infrastructure Regulations places great reporting and reconciliation requirements on derivative users in Europe. Initial reaction to our offering has been positive and we now have 20 customers signed for the service.

Similarly we continue to build technology and interfaces to support the OTC central steering requirements and have enhanced this offering in Q4. We launched NX4 reporting and the Buzz Berry light services to help customers comply with the requirement of the alternative investment fund managers directed of AISMD in Europe. We have number of customers already and are continue to build our pipeline for these new services. We continue to invest in our sales organization in 2013 adding a number of new sales people and our new management and training program which is started to yield results.

Sales performance was strong in Q4 with a number of larger organizations selecting SS&C. Some highlights include the asset management division of a large bank selected SS&C to provide fund administration services for several fixed income funds; a New York based multibillion dollar healthcare focused private equity firm selected SS&C for fund administration services; a large global macro manager in Europe selected SS&C for middle office, fund administration and regulatory services; and a billion dollar plus manager based in New York selected SS&C to take over fund administration for its event driven strategies.

We’ll now turn it over to Patrick.

Patrick J. Pedonti

Thanks Rahul. Results for the fourth quarter 2013 our revenue were $182.5 million, GAAP net income of $26.9 million and diluted EPS of $0.31. Revenue in Q4 increased by $10.8 million or 6% over Q4, 2012. We had strong license revenue from PORTIA, AHS and [solution] product and year over year 7% growth in our software-enabled services business.

Foreign exchange did have a negative impact on our revenue in Q4 by approximately $800,000. Adjusted operating income in the fourth quarter was $72.2 million, an increase of 6.1% or 9% from the fourth quarter of 2012 operating margins increased to 39.6% from 38.4% in Q4, 2012. We made a significant progress and implement a global PORTIA acquisition cost synergies and as Norm mentioned we generated approximately $17 million of savings in the year 2013. In addition margins significantly improved in our fund administration in our PORTIA businesses.

Consolidated EBITDA was $76 million or 41.6% of revenue, this is an improvement of 8% or $5.9 million of Q4, 2012. Net interest expense for the quarter was $8 million and includes $1.4 million of non-cash amortized financing cost and OID. Interest expense increased due to the $239 million debt pay down since the fourth quarter of 2012 and the June 2013 re-pricing of the credit facility that reduced the interest spread by 1.75%.

We recorded a tax provision of $14.1 million or 34% in the quarter. For the full year the effective tax rate 19%. The full year tax provision was impacted by several onetime extraordinary benefits including prior year R&D credit, reduction in the UK rates reduced our differed tax liabilities and additional release is of reserves. We expect the GAAP effective tax rate excluding onetime items to be between 26% and 28% for the full year 2014.

Adjusted net income was $46 million and adjusted diluted EPS was $63. The adjusted net income excludes $21.6 million of amortization of intangible assets, $2.4 million of stock based compensation, $1.4 million of non-cash debt issuance cost and $800,000 of unusual gain. The effective tax rate used for adjusted income in 2013 was 30%. For the year we ended with revenue of $712.8 million a 28.9% increase. Adjusted operating margins increased 32% and adjusted EPS increased 38.7% as we grew the business integrated the 2012 acquisition for GlobeOp and Portia and paid down $239 million of debt.

On the balance sheet and cash flow as of December 31st we had $84 million of cash on the balance sheet, $782 million of gross cash for net debt position of approximately 697 million. The business is showing very strong cash flow characteristics with operating cash flow exceeding adjusted net income. We generated $208 million of operating cash flow for the year ended December 31st a 55% increase for the 2015.

And for the year we used our cash to pay down $239 million of debt brings a total that we paid down to since the GlobeOp acquisition $375 million. We purchased 23,900 shares in the fourth quarter for $943,000. We used $48.3 million for CapEx and capitalized software which is approximately 2% of revenue. In 2013 we paid $21.6 million in cash taxes compared to $28.8 million in 2012. And our account receivable DSO was 45 days as of December 13 compared to 48 days December 2012 which significantly improved our working capital.

In finance our activities recorded proceeds from option exercises of approximately $28 million and a tax benefits related to those option exercise of $24 million. Our LTM EBITDA for covenant purposes at December 31 was $292.8 million and with the net debt balance that gave us the leverage ratio of 2.4.

On outlook for 2014 our current expectation for the first for the full year is revenue in the range of $755 million to $775 million which represents the growth of 5.9 % to 8.7%; adjusted net income of $195 million to $204 million and outstanding dilutive shares increasing approximately 3% to a range of $88 million to $88.5 million. In addition in 2014 we’ll receive the full benefit of the corporate reorganization we did and we’ll be using an effective tax rate of 28% for the full year. For the year we expect cash from operating activities to be in the range of $220 million to $230 million; capital expenditure to be approximately 2.3% to 2.8% of revenue.

Excluding the effects of one-time items we had in 2013 we expect tax payments to increase about $15 million to $20 million in 2014. We will use all excess cash flow to fund potential acquisition, buyback shares in the open market and pay down debt. Our current expectation for the first quarter is revenue in the range of $183 million to $187 million, adjusted net income of $45.5 million to $47 million and diluted shares of $87.2 million to $87.4 million.

And I'll turn it back over to Bill for final comments.

William C. Stone

Thanks, Patrick. We are pleased with the performance of our business and we look forward to posting strong numbers for 2014. And with that let's open it up for questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Bryan Keane from Deutsche Bank. Your line is open, please go ahead.

Unidentified Analyst

Hi, this is [He Shabagra] calling on behalf of Bryan Keane. Pretty solid operating margin. On the revenue side licenses and professional services was pretty solid but maintenance and software-enabled services seemed a bit weaker than our expectations. Just wondering should we see -- on the last call you had some mentioned some acceleration in the next year and with the longer duration contract, longer contracts coming online. So just wondering if you could provide some more color on that front?

William C. Stone

I'll take that first. But I think that we are pretty confident in our professional services line that we have a number of large projects going on and we are -- we have strength in our consulting group. So we would expect consulting to go up perhaps 10% in 2014. And as far as maintenance is concerned and we've had two pretty strong quarters Q3 and Q4 on license revenue that's usually what generates maintenance revenue. And we are not getting CPI plus two or three and CPI is almost zero. We are only getting very little lift in our maintenance from annual increases. So I would see that remaining somewhat muted but moving up with the addition in licenses that we have had. Norm would you add anything else

Normand A. Boulanger

No, I think these are two drivers, and licenses are obviously the key to the growth of the maintenance line and we have done a better job I think of getting strong relations from the contracts that's going to help. I do think as the rate environment changes we will start getting some of the traditional that we've had in maintenance in the past that we haven't experienced really in the last couple of years really.

In the time when the deals are so important right, so getting these deals signed and getting the run rate hit the books is the driver behind the outsourcing numbers. And the deals we have that were challenged is a good on that.

Unidentified Analyst

Okay. Thanks for that color. But just as we look at software-enabled services and going through the year so should we see the software-enabled services growth improve through the year through 2014?

William C. Stone

Yeah we do believe that business will improve and I think that we have to have lots of businesses that come on in 2013 and we see a lot of deals in our pipeline that should help us in 2014. And as Normand just said it's getting those deals closed and getting that revenue to begin to get our financial state -- Rahul would you have any…?.

Rahul Kanwar

I think that's right. As we pointed out last quarter we have more large opportunities at this time than what I can remember and our job is going to be to close those contracts get them implemented as Doug pointed out to get revenue to start hitting out books.

Unidentified Analyst

Good, thanks for the color.

Operator

Thank you. Our next question comes from Peter Heckmann from Avondale Partners. Your line is open, Please go ahead.

Peter J. Heckmann - Avondale Partners

Good afternoon gentlemen. Patrick could you comment on your guidance for shares outstanding, seemed a little bit higher than I expected do you expect some share -- employee share agreement is that the primary reason for it?

Patrick J. Pedonti

And I think the growth in shares is pretty similar to 2013. I mean we do an annual auction grant for employees in the fourth quarter. So that’s obviously having some impact and we’ve recently got significant exercises by employees and that impacts us and the stock price rising also impacts diluted shares. So those three factors are contributing to but we would expect to about a 3% rise.

Peter J. Heckmann - Avondale Partners

Okay that’s fair and again that number would reflect no anticipated share repurchase activity.

Patrick J. Pedonti

That’s correct.

Peter J. Heckmann - Avondale Partners

Okay and then perhaps for Bill…

Patrick J. Pedonti

Well we assumed in our guidance at least it's in our net income guidance is that we reduce the cash to pay down debt so that could be offset by stock purchases which actually would be more accretive to EPS.

Peter J. Heckmann - Avondale Partners

Fair enough. Perhaps Bill or Rahul if you could available update on the build out of LA and Luxemburg and on the administration side.

Rahul Kanwar

Sure this is Rahul. I will take that. I was just in Los Angeles last week that build out is going very, very well we are making good progress on our largest customers there we’ve got a number of new customers that we are looking at. We’ve got a good sized operation there now and we feel good about our prospects in LA.

Luxemburg similarly we are starting to see some pipeline from some foreign clients as well as new clients, we hired couple of sales people in Luxemburg that are now starting to generate pipe as well and so we’ll make a progress on both front.

Peter J. Heckmann - Avondale Partners

Are there any major regulatory developments that you have heard in the last three four months that you would highlight as essential demand drivers for outsourcing or things that generally we should be aware of as we have may be at landscape?

William C. Stone

Well as Rahul spoken in the comments there is a EMEA that’s just popped out, AIFMD and the wave SS being implemented throughout Europe it's logging a lot of consternation in the front business in Europe all things that give people uncomfortableness this is we’ll have outside expert do it rather than do it in house and have to hire the expertise and then maintain the expertise and that’s something that we’ve been able to do pretty well.

So we see a lot of opportunity in our Regulatory Services Group and I think we are trying to figure out way to leverage that further.

Peter J. Heckmann - Avondale Partners

Great, thanks for the color I’ll get back in the queue.

Operator

Thank you. And our next question comes from Mayank Tandon, Needham & Company. Your line is open please go ahead.

Mayank Tandon - Needham & Company

Thank you Will wanted to get a sense of the big deal pipeline I think in the past you quantified that may be if you could give us a sense of the number of big deals you have in the pipeline and sort of your best estimate in terms of what real picture looks like in terms of winning those opportunities?

William C. Stone

Yeah I would say that last year we felt like we had may be up to 10 of those deals and we would say that we won a couple of those and a couple of others we are still struggling. Couple of others have not chosen anything else but they’ve kind of gone in the hibernation and a few more has come in. So you know I would say that we are probably at the same level as we were a year ago. I don’t think we have an [inaudible] to the point where they were at this time last year but we have a number of $7 billion to $20 billion private equity and hedge funds plan.

And we are easily confident that we are going to win a number of those, what I would like to have is more clarity as the date we are going to win because there is a lot of work that goes into showing them exactly how what they do now who is going to get transferred? what we do and what responsibilities they are going to keep what responsibilities we are going to keep? How many people they are going to keep? How many people they want to have us at door and so it's a whole series of things and we have lots of conversations going on with lots of big boys.

Mayank Tandon - Needham & Company

Let me ask you this how important it is to win some of these deals to hit the midpoint of your guidance? I look at your guidance you are having I think it's about 7% organic at the midpoint. I just want to get a sense of how important is it to win these deals to get to that range?

William C. Stone

Well as you can well imagine Mayank that we get to that rate a lot faster if we win those deals. We definitely know SSNC is a very good manager of its business so we have add a very good earning sense in getting our earnings right even as we have been fractionally caught up on our revenue. I mean we have a little bit of a headwind with the FX and like he earns $1,000 revenue in Q4 and I think Patrick can confirm this but several million dollars for the year that was a lot softer in the FX than in 2012.

But you know we have a big pipeline we have an excellent sales force, we are counting on them and we’ve got some really talented sales managers like Puneet Pestonji in London, Fred Jacob here in New York, [Aiman Grave] in New York, we got Mark Branely in Boston, John Simon in Boston and we got a lots of talented people that we have a lot of confidence in and we have high expectations and I am confident they are going to deliver far.

Mayank Tandon - Needham & Company

Hey great that’s helpful color. Just two quick questions for Patrick, I believe you said $17 million in synergies in 2013 I think you also achieved some back in 2012. So where are you in terms of hitting that $25 million target and is there upside to that given that you already achieved most of it 18 months into the acquisitions?

Patrick J. Pedonti

Alright right now so there was 17 million that is that we got in the P&L in ’13 so that include action that we took in ’13 and in ’12. Right now we’ve got locked in about somewhere around $20 million in savings that is a minimum we would expect for 2014. So I mean we are working hard to get the rest of the $4 million to hit this $25 million target, obviously the last $4 million is the hardest but we think there is a lot opportunity to hit that number and over time exceed it.

Mayank Tandon - Needham & Company

Patrick what is embedded in the margin guidance for 2014 in terms of both gross margins and operating margins or EBITDA margins?

Patrick J. Pedonti

For the synergies?

Mayank Tandon - Needham & Company

In total what are your expectation in terms of margins you haven’t given specific guidance you just gave a sense.

Patrick J. Pedonti

I think our targets at the midpoint are to improve operating income by about 50 bip.

Mayank Tandon - Needham & Company

Great and just finally on the interest cost, what is can you remind us what the blended cost on the debt is?

Patrick J. Pedonti

It's I mean it obviously depends on where LIBOR is but at current LIBOR rate it's about 3.2% blended.

Mayank Tandon - Needham & Company

Okay so in terms of the interest cost we should take that #697 million that you mentioned and 3.2 would be the cost of that debt.

Patrick J. Pedonti

You should take the gross number, I think the $697 million is net of cash.

Mayank Tandon - Needham & Company

Got it.

Patrick J. Pedonti

I think the gross number is….

William C. Stone

697 plus 84, 782.

Mayank Tandon - Needham & Company

782, appreciate that, thank you.

Operator

Thank you and our next question is from Sterling Auty from JPMorgan. Your line is open. Please go ahead.

Unidentified Analyst

Hi this is [Jack Nader] in for Sterling just one question on our side. The acquisitions of Globe Op and PORTIA both really improved your international footprint over the last year to 18 months. Are you guys looking at 2014 to make any further investment to expand the international footprints and if so what are those?

William C. Stone

Yeah we were always looking to grow our footprints whether it's domestically or internationally. We are very methodically opportunistic on acquisitions Prime is out of Bermuda and we are looking at any number of opportunities across Europe and also in Asia as well as here in North America. Interest rates are also low, private equity has tremendous cash, prices have firmed, SS&C is very disciplined.

So would we do an acquisition? Of course we would. Would we do a big one? Yes we do a very big one. Do we have one in our sights? I wouldn't tell you that I would expect anything imminent. So I think we are happy with what we are doing with GlobeOp, we are happy with what we do PORTIA and what we are really happy with what are products suite looks like and what we have as opportunities to go on a march across the international markets as-well-as domestic markets. It's all about execution and if we execute we will do fine.

Unidentified Analyst

Okay. Thank you. And actually just one quick follow-up from -- you mentioned the 50 basis points in operating margin expansion and just what you do think where is that going to come from? Is that only going to come from the synergies from GlobeOp and PORTIA or is there something more specific that's going to help you get the expansion?

Patrick J. Pedonti

Well I think there are more things. We are focused on a couple of areas other than the cost synergies I mean we look at cost across the company all the time, so there is cost reduction efforts are going on across the board. We are also focused on employee productivity and using our technology more so that our cost -- our cost per employee as our potential revenue goes down. And then we are also looking at lower cost areas to have operational centers instead of New York City or Connecticut or Toronto.

William C. Stone

2014 you will see us concentrate more effort on driving our resources to both our Mumbai office in India and Evansville, we think that's going to help us. We are automating operations all the time and Bob Schwartz has taken a look at the IT structure across the company. So I think there is lots of areas for us to get margin expansion.

Patrick J. Pedonti

And lastly I think we've already found new space in Boston that we are getting to consolidate some of our offices in Boston, that's several hundred thousand dollars in rent expense. And we've already had a study that's going on for over nine months. And looking at all of our data cost and we are going to roll that out. It looks like that's going to have a significant reduction in our data cost. So there is a lot of things in this business that are very attractive from a cost standpoint that we have the chance to tweak and we are constantly tweaking.

Unidentified Analyst

Great. That's very helpful. Thank you.

Operator

Thank you. Our next question comes from Ross MacMillan from Jefferies. Your line is open, please go ahead.

Ross MacMillan - Jefferies & Co.

Thanks a lot. I guess a question for Will or Norm just on the demand environment. You had commented last quarter about how it taken a little bit longer than you expected to close some of the larger deals. We've had a strong equity market, AUM is up across the board, key firms are exiting investments they made in the '08-09 vintage. It feels like you should get pretty healthy environment for selling. I'd just love to get your high-level comments on the environment right now? Thanks.

Ross MacMillan - Jefferies & Co.

Just from my perspective this is Norm. We see pretty good demand across the board for our services and our products but challenge is getting them closed, that's a little frustrating but that's part of the game getting things closed and the contract process and the auspices of the firm. But the overall demand for our product and services in alternative and asset management and insurance markets they are actually really pretty good.

William C. Stone

Just to give a little more color to that. We have a number of products that are really best in class across all of the different markets. That's our performance attribution product, it's also our reporting product they are both world-class products that we integrate into all of our systems and services. We also have a number of opportunities in our global wealth platform which is the SAAS based RIA or high network obviously global wealth that we are very excited about its capability.

You know Alex Marasco runs that business for us he ran Security APL prior to coming to us. He understands that, he understands unified managed accounts business like no one else. We have high expectations of Alex and what he can do with the global wealth platform.

Ross MacMillan - Jefferies & Co.

That’s great and may be just a follow up you mentioned I think Patrick mentioned professional services which was a stronger line item than we expected in the Q4 and then the gross margins on that line were very strong and it sounds like you plan to grow that above the corporate average in 2014. What’s driving that very strong demand for professional services and corresponding very high utilization rates and very high gross margins?

William C. Stone

I’ll take it first, Norm and then you can add to my comments. But you know we have proprietary know-how, so depending on how you are managing your investment organizations we have increasingly shown how we can streamline it, we can allow you to go into additional asset classes -- we can build out a derivatives process for you, we can build out a bank loan processing process for you, we can take a look at your mortgage processing and figure out how you can bundle some of your mortgages securitize them.

So there is a lot of expertise that we bring the bare and I think as we go out and see more of our customers execute better and getting in front of them I think we’ve been able to really win some large business process review and other things where clients were buying entire blocks of time from us 3,000 hours or 1,500 hours. They take it to use on a series of projects that they need and it's something that I think will continue in 2014.

Ross MacMillan - Jefferies & Co.

And does that as a precursor for product sale do you think or is it really a separate exercise a separate business?

William C. Stone

We hope it's a precursor for product sales.

Normand A. Boulanger

Yeah I think it is right, it's strictly our large customers are looking for a solution based consulting organization that can really help them solve their operational problems and since we have our own operations we run they really have unique expertise to bring to bear. That’s going to require as we determine the solutions on this consultant engagement it's going to require them to buy some software prospects plus execute those efficiencies in automation.

So I do think this is a good driver for the license business in the license business the stronger as we pointed out earlier that’s going to drive more consultant services. But really what are seeing is organization's trying to focus on really solving their operational challenges in a broader basis and looking for a partner that can deliver the expertise across the spectrum of tools that they have to achieve those goals and that’s going to drive additional sales which will then in turn lot more result in revenue.

Ross MacMillan - Jefferies & Co.

That’s great thank you very much.

Operator

(Operator Instructions). And our next question comes from [Eric Lenness] from Raymond James. Your line is open please go ahead.

Unidentified Analyst

Hey guys, thanks for taking my question. Most of my questions actually have been answered. But just real quickly as far as your sales head count as we enter to the year you guys see yourselves adding to your capacity there, so is that more going to be front end loaded, back end loaded or just stretched out the year. Thanks.

William C. Stone

Yeah we hope to add 20% 30% to our sales force which is at about 110 right now, so we hope to be at a 130 or 140 by the end of the year and probably we’ve hired a few in Q1 we’ll try to hire a few more in Q2 probably in eight to 10 in Q3 and may be eight to 10 in Q4. So probably a little more back weighted then we are still absorbing what we hired in the last two quarters of ’13.

Unidentified Analyst

Great, thanks guys.

Operator

Thank you. And I am showing no further questions at this time. I would like to hand the conference back over to Mr. Stone for closing remarks.

William C. Stone

So again we really appreciate everybody on the call. We are working hard for our shareholders as we always do and hopefully we will be able to talk to you about positive results at the end of Q1 sometime in late April or early May. Thanks again.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program for today you may now disconnect and have a wonderful day.

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