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Jive Software (NASDAQ:JIVE)

Q4 2013 Earnings Conference Call

February 11, 2014 05:00 PM ET

Executives

Anthony Zingale - Chairman and CEO

Bryan Leblanc - CFO and Principal Accounting Officer

Analysts

Jason Maynard - Wells Fargo Securities

Jennifer Swanson Lowe - Morgan Stanley

Michael Huang - Needham & Company

Walter Pritchard - Citigroup Inc.

Michael Nemeroff - Crédit Suisse AG

Karl Keirstead - Deutsche Bank

Chaitanya Yaramada - Robert W. Baird

Tim Klasell - Northland Capital Markets

Operator

Good day everyone and welcome to the Jive Software Fourth Quarter 2013 Earnings Call. Today’s conference is being recorded. At this time I would like to turn the conference over to Mr. Bryan Leblanc, Chief Financial Officer. Please go ahead, sir.

Bryan Leblanc

Thank you. Good afternoon, and welcome to Jive Software's fourth quarter 2013 earnings call. We'll be discussing the results announced in our press release issued after the close of market today. As the operator mentioned, I'm Bryan Leblanc, Chief Financial Officer of Jive, and with me on the call today is Tony Zingale, Jive's Chief Executive Officer.

During the call, we will make statements related to our business that are considered forward-looking under Federal securities laws. These statements reflect our views only as of today and should not be reflected upon as representing our views of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our periodic filings on Form 10-Q and Form 10-K, which are 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 in our press release issued after the close of market today, which is located on our website at www.jivesoftware.com.

With that, let me turn the call over to Tony, and then I'll come back at the end to provide details regarding our fourth quarter results, as well as our guidance for the first quarter and full year 2014. Tony?

Anthony Zingale

Thanks, Bryan, and thanks to everyone for joining us today to review our fourth quarter performance. Jive ended 2013 on a strong note as we built upon the progress we made last quarter to deliver a record short-term billings performance in the fourth quarter. Our focus go-to-market approach in the second half of 2013 has been resonating with business and IT buyers, both of whom are looking to deploy social business solution as their next generation communication and collaboration platform.

While we still have work to do, I remain confident that our focused go-to-market messaging, the largest and most tenured sales force in our history, our proven track record with blue chip customers and the technology platform that is years ahead of the competition, all combined to position us well for the long-term.

As we look ahead, our goal in 2014 is simple. Build upon the momentum we created exiting 2013 and leverage the investments we’ve made in our products, sales and marketing organizations to drive accelerated top line growth in 2015 and beyond. We believe successful execution against our growth initiatives will create significant shareholder value.

Turning to our financial results for the fourth quarter, we delivered revenue of $39.3 million, which was in the upper end of our revenue range and represent a 21% year-over-year growth. From a profitability perspective, we reported a non-GAAP loss per share of $0.16, which was the midpoint of our guidance range. For the full-year 2013, we reported revenue of $145 million -- $145.8 million or 28% growth and non-GAAP loss per share of $0.55.

During the fourth quarter, we had a high level of business activity as we built off the momentum of our successful JiveWorld Customer Conference, in October. As we shared with you on the last call, the highlight of JiveWorld with the introduction of our Jive Fall Cloud and Jive 7 product release. This represented the largest and most innovative product release in our history.

The feedback from our public cloud customers has been extremely positive and their businesses are immediately benefiting from the innovations in the Jive Fall Cloud release. We increasingly see customers, particularly new customers to point Jive in the cloud in order to get access to the newest features we’re bringing to market each and every quarter, which is a terrific validation of the business value of continued innovation is delivering.

Further evidence of the strength of the Jive Fall -- Jive Fall Cloud release is the fact that so many of our customers are upgrading to Jive’s latest release. In fact more than 50% of customers running Jive 6 or earlier version are in the process of upgrading to this latest release, which is by far the fastest upgrade progression for any of our platform releases.

We continue to focus on meeting the pace of innovation and bringing additional capabilities to market that enable customers to tackle the critical business issues their current technology platform are simply unable to address. We continue to prove the business value of Jive everyday with our customers and when I look at the product roadmap I am more confident now than I’ve ever been that we have a sustainable technology advantage for many years ahead.

Industry analysts including Gartner and most recently Ovum have long rated Jive as the premier social business platform in the market. And our technology leadership has increasingly being recognized by prospects in the marketplace. It is clear that Jive’s comprehensive product capabilities and ease of use simply cannot be matched by our competitors.

And importantly our customers are using the full breadth and depth of our platform to realize tangible business value. As a result, the conversations with customers are becoming increasingly focused on specific mission critical business issues and how our highly differentiated platform can help them address these challenges quickly.

We recently engaged PricewaterhouseCoopers to survey hundreds of IT leaders on their technology related platform for the coming year. The feedback from the survey revealed that alongside the typical spend on security, collaboration technologies along with Cloud, Mobile, and Big Data are the biggest priorities for IT organizations. Jive sits at the sweet spot of these areas and this survey is an exciting independent verification that next-generation collaboration and communication platform are viewed at a strategic priority and must have for many organizations.

Jive has proven out a number of compelling use cases with our customers where the power of our social business platform can significantly automate and improve business processes. However, what this survey and our discussions with customers have reaffirmed is that there are three use cases in particular which customers are most focused on deploying Jive to solve some of their most pressing problems, portal replacements of any type, social intranet, and external community.

These three use cases target customers who are most likely to have an identified business sponsor with dedicated budget and can realize business value fastest and where we are seeing the most demand in the market. These core use cases have been a key part of the back to basics approach in our focus marketing and sales efforts during the second half of 2013.

Our go-to-market organization is identifying opportunities for these three use cases both with perspective customers and retain our installed base and we see a substantial opportunity for each. Customers have repeatedly tried and failed to use last generation technology platform to deliver the potential benefit that Jive’s portals, intranets and external communities bring to an organization. Faster access to the right information of 360 degree view of the knowledge embedded throughout their employee base and way to empower their customers with a better user experience.

The high failure rate and large [front] [ph] costs associated with older technologies have forced IT organizations to look for new way to move beyond the limitation of legacy systems and towards next-generation cloud-based mobile centric platform that can change the way their companies work and impact their competitiveness in the marketplace.

A great example of a customer recently launching Jive as their social intranet is Porsche. They deployed Jive to help them better communicate and collaborate with their global dealership network as well as consolidate all of their dealer apps into a single starting page. Jive delivers a dramatic improvement over the way the manufacturer and the dealers communicate and collaborate, leading to improved productivity and lower costs.

However, what's most exciting about this example is that by deploying Jive, Porsche’s employees are now empowered to extend the platform to solve additional business problems that weren’t originally envisioned. Within months of going live, the mechanics at the dealership created their own Jive group to collaborate and leverage their collective expertise to address problems as individual -- as an individual mechanic might not know how to fix on their own. This has led to improved customer service, higher quality and shorter time to resolution, none of which was even part of the original business case for deploying Jive. This is but is an example of the viral nature of the social business platform.

A major global pharmaceutical company already using Jive for its social intranet recently expanded its use of the platform to provide end-user support for three internal IT projects, a migration from Lotus Notes to Outlook, a mobile device delivery program, and to bring your own device mobile rollout. By deploying Jive, this customer was able to provide their tens of thousands of employees a central location to access relevant information and material while also empowering employees to answer their own questions.

During these three internal IT projects alone, this customer had more than 120,000 interactions between their employees which translated into 120,000 fewer calls to their help desk and an estimated $3.6 million in reduced support costs.

While we are also seeing very exciting traction with JiveX, our next-generation, cloud-based external community platform that we launched at JiveWorld, we pioneered the external communities market over a decade ago and have hundreds of successful customer deployment where Jive is helping to improve the customer experience and build brand loyalty with substantial reduced support costs.

During the fourth quarter we find new and expanded business relationships with a number of blue chip customers, including ADP, AES Corporation, Bank of New York Mellon, Boston Beer Company, CA Technologies, IHS Global, JM Family Enterprises, Lafarge, LDS Church, Nokia Siemens, Shaw Cablesystems, Scotiabank, Spectrum Health, OSISoft, Windstream, 21st Century Fox, and a seven figure cloud -- Jive Cloud deal with a global networking technology company among others.

We saw particular strength in the fourth quarter in selling back into our installed base, which is a key part of our go-to market strategy and a great indication of the value customers are realizing by deploying Jive. A great example of a new customer win where Jive was selected as the social intranet solution was JM Family Enterprise, an $11 billion private automotive and financial services conglomerate headquartered in Florida. While JM Family Enterprise already had investments in both SharePoint and salesforce.com, they selected Jive Cloud as their social intranet to better communicate, collaborate and support 5,000 associates and partners across five distinct businesses. The key decision points in selecting Jive was our proven social intranet platform that provide a quick time to value with no customization, our ability to integrate with their existing SharePoint deployment and Jive’s expertise in optimizing user adoption and engagement.

Another exciting win in the fourth quarter was an upsell deal with Spectrum Health, the largest not for profit health care system in Western Michigan with a 11 hospitals and 170 ambulatory and service sites.

Spectrum Health initially purchased a 5,000 user pilot in the summer of 2012 as a first wave evaluation of our social intranet technology. After experiencing excellent user adoption and business value, Spectrum Health expanded their relationship with Jive to purchase licenses for all 25,000 Spectrum Health employees in order to dramatically improve the effectiveness of how they communicate, connect and collaborate in support of their 2020 vision to become the national leader for health.

We made significant progress in improving our go-to-market execution in the past two quarters and our primary focus in 2014 is to build upon this momentum. First, after the significant investment we made in sales over the last 12 to 18 months, we have the most tenured direct selling organization that we’ve ever had entering a new year. We recently completed our annual sales kickoff meeting and I can tell you our targeted back to basics approach focusing on portals, intranets and external communities has been enthusiastically embraced by our sales organization.

When combined with our increased focus on selling to both business leaders and the IT organization, we feel our sales team has never been better prepared for success. Another important aspect of expanding our sales reach is leveraging existing partnership and we are seeing good traction with our PwC, Box and Okta relationships.

In 2013, it was an exciting development to have Jive, Box and Okta each working together to bring the next generation cloud enabled enterprise technology stack to market. We are excited by the early success we’ve seen with each of these partnership and we will look to further leverage these relationship as we continue to innovate and replace legacy technologies in 2014.

Another key strategic focus for Jive in 2014 will be to sign additional partnership that can meaningfully expand our ability to attack this market on a global basis. We are directing our efforts to targeting partners with substantial breadth and depth who can provide complementary technology and services that will make our solutions even more compelling and impactful to customers.

We believe the priority customers are placing on deploying new communication and collaboration platform that can fundamentally change how they get work done, coupled with our unmatched technology leadership position in the social business market makes Jive the ideal partner in this growing strategic market.

To summarize, we’re seeing tangible results from our -- from the refined go-to-market messaging and we expect to build upon the growing momentum we achieved in the second half of 2013 as we start the New Year. We remain focused on investing in our products and sales and marketing organizations and as I shared at the beginning of my remarks, I believe we’ve the opportunity to make further strides in 2014 and beyond.

Before I turn it over to Bryan, I wanted to provide an update regarding our senior leadership team. Jay Larson, our President of Worldwide Field Operations will be leaving Jive on March 31 to pursue opportunities to become a CEO of a private early stage company. Over the last 19 months Jay has helped to expand Jive’s global sales organization, expand Jive’s business in Asia Pacific, sign partnerships with PwC, Box and Okta, and launched our business value go-to-market messaging. I'd like to thank Jay for his hard work and I wish him well in his future endeavors.

John McCracken, our Senior Vice President of Worldwide Sales will continue to run our sales organization as he has for the past five years, while we conduct a search for Jay’s replacement. I have always been and will continue to be actively involved in working with our sales team and ensuring that we continue to build upon the progress we made in our go-to market execution in recent quarters. We are fortunate to have a deep bench of sales managers at Jive and I'm confident we’ve the leadership team that we will continue to build on our growing momentum.

With that, let me turn the call over to Bryan.

Bryan Leblanc

Thanks, Tony. Jive ended 2013 with a strong fourth-quarter performance. Let me begin with a detailed review of the quarter and then I'll finish with our outlook for the first quarter and for the full-year 2014.

Total revenue was $39.3 million for the fourth quarter, up 21% year-over-year. Breaking this down further, product revenue, which is again the fastest growing segment of our revenue was $35.8 million, an increase of 25%, while Professional Services revenue was $3.5 million, which was down 11% year-over-year.

Our revenue mix has continued to shift towards product revenue due to the increasing percentage of public cloud deployment and lower Professional Services revenue due to the improved out-of-the-box functionality of our product offering. As we’ve seen in the past, we anticipate that Professional Services revenue will continue to fluctuate from quarter-to-quarter.

Our short-term billings, which take into consideration the change in short-term deferred revenue, were $53.1 million representing 16% year-over-year growth. We believe short-term billings is the most appropriate billings related metric driving the underlying growth of our business. Total billings, which includes changes in both short-term and long-term deferred revenue were $58.9 million, representing 13% year-over-year growth. We saw a strong multi-year prepaid deal activity in the fourth quarter that was well ahead of our expectation. Total billings are important because they ultimately drive cash flow, though as we noted last quarter the timing and presence of multi-year prepaid deals makes this metric inherently difficult to forecast.

Let me turn to the supplemental metrics that we share on a quarterly basis. We ended the fourth quarter with 876 customers, compared to 855 at the end of last quarter and 800 in the year-ago period. The 21 net new customers added during the quarter represent the second highest quarterly total for the year and an increase from the third quarter. Continuing to add high-quality names to our customer list is a priority. However, our ultimate goal is to drive billings growth and in any given quarter our sales resources may be focused on new customers or selling back into the existing customers based on the opportunities in our near-term pipeline.

Our dollar renewal rate for customers that spend over $50,000 annually was again over 90% when excluding upsells and over 110% when including upsells. This is at a best in class level for a SaaS company and the fact that companies not only renew, but continue to expand their deployments at the time of renewal reinforces the significant business value we generate for our customers.

In terms of the mix of our business, internally focused communities represented 72% of our product revenue for the quarter and externally focused communities represented the remaining 28%. This compares to a 69%-31% mix respectively in the fourth quarter of last year.

With respect to how customers are deploying our social business platform, 65% of our product revenue for the quarter was related to public cloud deployments and the remaining 35% was related to private cloud deployments. As Tony mentioned, we are seeing increased customer interest in our public cloud offerings due in part to the fact that we're bringing significant highly differentiated product innovations to market every 90 days. We anticipate that our mix of business will continue to remain more heavily weighted towards public cloud deployment.

From a geographic perspective, the U.S. generated $30.3 million of revenue for the fourth quarter, representing 77% of our total revenue and international generated the remaining 9% -- $9 million or 23% of our total revenue. The average annual subscription value of our customer base at the end of the fourth quarter was $173,000, an increase of 19% compared to a $146,000 in the year-ago period.

Headcount ended the year at 673 compared to 527 in the year-ago period. The increase in headcount in 2013 was primarily related to investments in our go-to-market and services organization.

Moving down the P&L, our non-GAAP gross profit was $26.9 million, representing year-over-year growth of 24% and a non-GAAP gross margin of 68%, which is up from 67% in the year-ago period. Our gross margin expansion is due to our increasing scale and the successful migration of our existing customers to our own global data centers, which we completed in the fourth quarter.

Non-GAAP operating loss was $10.5 million for the quarter, which was in-line with our $10.5 million to $11.5 million guidance range. Non-GAAP net loss per share was $0.16 for the quarter based on 68.8 million shares outstanding and was in the middle of our guidance range for a loss of $0.15 to $0.17 a share. On a GAAP basis for the fourth quarter of 2013, gross profit was $24.7 million, operating loss was $22 million and net loss per share was $0.32 based on 68.8 million shares outstanding.

Let me quickly run through the summary of our financial results for the year. Total revenue for 2013 was $145.8 million, up 28% year-over-year. Non-GAAP gross margin was 67% compared to 65% in the year-ago period and non-GAAP operating loss of $36.3 million compares to a loss of $26.2 million for the same period in 2012.

Moving over to the balance sheet, we ended the quarter with cash, and cash equivalents and marketable securities of $141.7 million, down sequentially from a $152 million at the end of the quarter. From a cash flow perspective we used $4.3 million in cash from operations for the fourth quarter and invested $5.1 million in capital expenditures, leading to a negative free cash flow of $9.4 million. For the full-year 2013, we used $3 million in operating cash flow and invested $13.9 million in capital expenditures resulting in a negative $16.9 million of free cash flow.

Short-term deferred revenue was $112.4 million at the end of Q4, which was up 28% or $24.7 million from the end of 2012. Short-term deferred revenue was up 14% sequentially, which reflect the combination of fiscal year-end seasonality and solid execution from our sales organization. Looking to the first quarter of 2014, we’d expect short-term deferred revenue to be flat to slightly down from the end of 2013.

Total deferred revenue was $147.3 million at the end of Q4, up 26% or $30.3 million year-over-year. On a sequential basis, our total deferred revenue balance was positively impacted by roughly $6 million due to strong multi-year prepaid deal activity that I mentioned earlier. At the end of 2013 our backlog was $36.7 million, up from $31.3 million at the end of 2012. Backlog is defined as the amount of subscription revenue under contract that is not yet invoiced and therefore it’s not reflected on our balance sheet.

With that, let me close with Jive’s outlook for 2014, starting with the full-year. We are targeting revenue of $170 million to $175 million or growth of 17% to 20%. While we’re not breaking out our revenue guidance by line items, I would note that we expect our product revenue to continue growing faster than our total revenue. We are also introducing annual guidance for short-term billings, which we expect will grow approximately 20% in 2014.

As I mentioned earlier, we view short-term billings as the most appropriate metric for evaluating the underlying growth of our business. We are not guiding the long-term billings due to the unpredictability of prepaid multi-year deal. While we will continue to sign multi-year deals and view them as another validation of the strategic value Jive’s customers are generating, it is difficult to forecast when they will close, and when the customer will choose to pay upfront or annually.

Our cash flow guidance which I will review in a moment assumes that multi-year prepaids will run in the mid to high single-digit millions on a quarterly basis. So as I just remarked there maybe variability around that level. From a profitability perspective, we are expecting our full-year non-GAAP operating loss to be between $27 million and $32 million leading to a non-GAAP loss per share of $0.39 to $0.46 based on 70.5 million shares outstanding. We expect free cash flow will be between negative $15 million and negative $20 million.

Turning to our guidance for the first quarter of 2014, we're targeting total revenue of $40 million to $41 million non-GAAP loss from operations of $8 million to $9 million and non-GAAP loss per share of $0.11 to $0.13 based on 69.2 million shares outstanding.

In closing, Jive delivered solid fourth-quarter results. We are pleased with the momentum we are seeing build in the business and in our outlook for 2014. We are even more excited about our market position for the long-term and are confident that our product platform and go-to-market messaging position us well to become the pure play winner in this multi billion dollar market opportunity.

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

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We will go first to Jason Maynard with Wells Fargo.

Jason Maynard - Wells Fargo Securities

Good afternoon. I really want to focus my question or questions kind of on next year and Tony maybe get your assessment walking into ’14; how you feel about product markets a bit around portal replacement, how do you feel about product meeting that functional need for the customer? And then just with Jay Larson’s departure and McCraken stepping back into the role, how do you feel about the field and their capability to sell into that opportunity or maybe if you could easily tackle those three parts of the question.

Anthony Zingale

Yes, sure, I understand. So, as I said during my remarks, we feel better than ever about the focused approach in particularly the portal replacement piece of the equation in addition to the total internet and external communities for largely customer support. There are tons of portals inside many large enterprises for HR, Communities, Corporate Communications, Marketing Sales, Customer Service you name it and the Jive platform is super well equipped to be able to handle those portal capabilities and so much more. But what it provides the field is a very focused landing point into the organization with a clear business sponsor, with a clear budget and a clear replacement opportunity to perform what we do exceptionally well when we talk about the part of our product line that addresses internal communities. So we feel extremely good about that and you’ve heard in many of my examples the portal replacement or even the social internet which is the step beyond that, we’re very good at land and expanding. We believe the portals are a place to land and then expand to the social internet and even external communities after that. With Jay’s departure, John’s been here four or five years plus and has really been the individual behind sales in particular. Jay focused more internationally in partnerships and business value messaging and a variety of things including sales, but John has been here for a while, he’s seen the company’s evolution over the years, he knows the market well. John’s team underneath him particularly in the Americas has been with him both here at Jive as well as at Mercury Interactive. So, while disappointed that Jay is going to move on and pursue CEO opportunities in his career. We believe that John is well positioned based on the solid close we had at the end of ’13 we feel good about our momentum, our team, our product and our focus going into ’14.

Jason Maynard - Wells Fargo Securities

Where do you stand, you obviously hired it was at the end of last year. Where do you feel like you stand right now at least in term of your messaging to the market and actually building pipeline and a strong funnel around the portal replacement internet external community opportunity?

Anthony Zingale

Yes, we don’t talk about the size of our pipeline but it's better than it's ever been as we enter a new year, obviously fourth quarters are strong in enterprise software and so you do a lot of business and the pipelines usually comprise, that’s not the case here as we look at the full-year of opportunities. We have been benefiting from the focused messaging around portals and internets and customer external communities for some time. I think Elisa’s arrival is going to take our messaging to another level and make it even more crisp and even more finely tuned in the programs that we invest and to build pipeline and establish Jive’s brand on a more global basis directly and indirectly through our partners are going to be well served by our experiences both in the enterprise world when she was at NetApp and most recently at Skype. So, we feel we have a running start, but now over the period of time things are going to get even more focused with respect to our pipeline building activity.

Jason Maynard - Wells Fargo Securities

Okay. Thank you.

Operator

Our next question with come from Jennifer Lowe with Morgan Stanley.

Jennifer Swanson Lowe - Morgan Stanley

Hi, thank you. I guess, I wanted to just touch on the outlook for ’14, and you mentioned that the application of short-term building the growth of 20% but the investment levels remain fairly high. So, if you think about, with that expense growth and the investment levels into the business; how do you think about that 20% growth is the hope that, that certainly will be higher than 20% over time and that’s what you’re building for or is there a period where maybe you pull back on the investments a little bit and sort of manage a little bit more touch profitability. I’m just curious to hear your thoughts on the balance there.

Anthony Zingale

Well certainly everything that we’re doing is building for an increase in the momentum and the growth of the business, and we’re obviously starting the year and we’re setting guidance ranges and we’re booking obviously past ’14 into ’15 as well with the investments that we’re making, some of these things obviously take time. I think we feel good about the size of our sales and marketing investment right now. You’ll remember the last two years, ’12 and ’13 we built out the products organization, the engineering organization. We continue to feel good about the level of investment we’re making there and we look at 2014 as an important stepping stone to building on what we believe is, not only a big market opportunity but obviously increased momentum for Jive in that market as well. And I think that reflects the levels of investment that we have made in ’13 and continuing those on into ’14. And I think we’ve got a good mix of R&D and sales and marketing investments in the P&L right now, and so I’d say that we feel well positioned leaving’13 and moving into ’14.’

Jennifer Swanson Lowe - Morgan Stanley

Okay. Thank you.

Operator

We’ll go next to Michael Huang with Needham & Company.

Anthony Zingale

Hello Michael.

Michael Huang - Needham & Company

Hi, can you hear me?

Anthony Zingale

Yes, we can hear you now.

Michael Huang - Needham & Company

Something wrong with my headset here. So, as you look at 2014, I wanted to kind of get your view on what the assumptions are around closed rates and maybe length of sale cycles given some of the early traction that you’re seeing around its focused messaging and portal replacements. Does that change how you think about how quickly you get deals done and ultimately how you convert them as well as the opportunities?

Bryan Leblanc

Yes, this is Bryan. I think we obviously are baking that expectation of what we’ve already been seeing into how we think about 2014. You’ll remember we changed that messaging in the August -- July-August timeframe last year until we got a couple of quarters to see that build through. I think that all of that is working as we intended it and I think the sales cycles themselves really haven't changed much in the Q3, Q4 timeframe. So what we’re seeing obviously in 2014 is more of the same along those line.

Michael Huang - Needham & Company

Okay, got you. And then in terms of your kind of 21 new customers that you added in the quarter, I was wondering if you could just touch on who you competed with the most and maybe if you could just talk generally around the cross section of these customers and how they, how they compare with kind of what you were seeing last year? Thanks.

Anthony Zingale

I would maybe tune your question a little bit with respect to the competitive landscape which is largely the same group of companies. Remember Jive’s platform is the only one that extends across internal communities as well as external communities. So internally we’ve rhetorically seen Microsoft and IBM that hasn’t changed and in those 21 new customer adds I assume you should assume that we saw some combination of either of those companies present as well as maybe salesforce.com sometimes. Externally none of those companies are present. It's a collection of smaller private companies that we compete with and as well as last generation portal companies when we do external communities even open source kinds of offering for external communities. So, it's internally that it's Microsoft, IBM and Salesforce and largely has not changed over the last three, four, five, six quarters. It's the same collection of competitors largely.

Michael Huang - Needham & Company

Got you. And in terms of the cross section of those new wins, were the customers any bigger, smaller, any kind of trends that you could just serve from just looking at the mix of customers that you added?

Anthony Zingale

I would say no trend other than the continued trend at Jive to attack larger enterprises where the value of the social collaboration and communication platform really comes to bear with large numbers of employees and you heard the examples that I mentioned on the call whether its portal or JM Family Enterprises or Spectrum Health, you name it. So it's 10s of 100s of employees and externally millions of page views. So that continues to be the representative sweet spot of customers that our channel is very capable of attacking and that trend continued in the fourth quarter.

Michael Huang - Needham & Company

Okay, great. Thanks guys.

Operator

We’ll go next to Walter Pritchard with Citi.

Walter Pritchard - Citigroup Inc.

Hi, thanks. You mentioned in the script looking at driving incentives based on total billings and I’m wondering it does feel like the market is still pretty early. I’m wondering how you thought through that process of calibrating the metrics you’re focused on and specifically total billings instead of new customers given where the market is.

Bryan Leblanc

Right, yes, this is Bryan just to clarify. I don’t think we talked about incentives or how we [inspect] [ph] the sales force that wasn’t part of the talk track there. However with respect to that question, we’re not looking to change the way the sales force sells that way. What we’re doing is responding more to the way that the customers are buying from us and it's hard when you’re in a sales cycle to know whether or not kind of a multi-year deal is going to get pre-paid upfront or it's going to windup being something that gets kind of paid on an annual basis. That’s the variability that we’re talking about there. We continue to push obviously in the sales organization to grow the amount of new business billings that’s measured by both upsell and the installed base as well as new logos. And obviously when you look at the way we think about the business the metric that we have the most control over in terms of short-term billings and -- the new business or whatnot is the short-term billings number versus the long-term billings number which is the one where there is variability and the way that customers ultimately will conclude a sale versus that kind of annual value that you see on the short-term side.

Walter Pritchard - Citigroup Inc.

And I think there’s another way to get out what I am trying to figure out here is, I looked a year ago you were adding double or so the number of customers per quarter that you’re adding right now. What does it take to get back to that sort of customer add, is it a product thing or it is sort of how you’re running the sales force, you’re trying to figure that out. It does feel like with 800 and something customers in a market at this stage that customer count over the next five years should be dramatically higher?

Anthony Zingale

This is Tony, for the previous question, we’re really focused on the larger enterprises. So Fortune 2000, the Fortune 5000 and for example a customer like Citigroup which has 300,000 employees where we might land and expand. As we’ve said repeatedly, landing a particular group around a particular use case is as valuable to us as the next group at Citigroup that then uses us for another use case. And yes, while adding new customers is important. We are focused as Bryan said really on the billings number and the short-term component of that billings number that we provided some visibility into on a full-year basis. So it's both for us, it's both internal -- customers we’ve already landed and then expanding. As you can see from our upsell rates, it's very lucrative. You said it's a new market, it absolutely is. It is rare that we sell all the seats or all the external communities at the first bite of the apple we usually land and expand. And if you land in large enterprises of the scale and size I described they can be as lucrative as the new customers. Having said that we are interested in new customers and we drive our sales force to land new customers but we’re really interested in the accumulation or aggregation of both as it comes out in our billings number. So yes, we hope to get to several 1000 customers over the period of time, but right now we’re focused on achieving the plan, the growth plan that we put forward and we can do it two ways, new customers as well as landing and expanding existing ones and the combination thereof, that’s what we’re riveted on.

Walter Pritchard - Citigroup Inc.

Great. Thanks.

Operator

We’ll hear next from Michael Nemeroff with Crédit Suisse.

Michael Nemeroff - Crédit Suisse AG

Hi, guys, thanks for taking my questions. Tony, I just want to ask about Jay Larson leaving and McCracken taking over. It sounds like that’s a temporary position as you look for someone to replace Jay as the worldwide field operations leader. But when Jay came in there were lot of organizational changes that happened and in a part of some of the weakness in the operating results in the beginning to middle of last year was blamed on some new things, there were different prophecies that were changing. I was just wondering whoever you bring in, looked to say that that’s not going to happen again where it won't be another couple of quarters of just the uneven performance of whoever you pick the new sales leadership role get their feet wet?

Anthony Zingale

Yes, I mean, I understand your question. Jay came in and made a lot of good positive change in the organization, the international focus, the partnership focus, the structuring and partnering behind our telesales group together with our geography based selling organization. And as I said in my prepared remarks, John McCracken has been here kind of start to finish as Jive went to the enterprise and really beheld its organization. So, John has been an integral part of this and part of the great I think equalizer to any change will be John and his leadership and the management that we now have had in place for some time. Again back to my prepared remarks. We have the most tenured sales organization we’ve ever had and we feel very confident in the place that we are now running in the market with respect to the focus on portals and social internet and external communities. And as we move to the mainstream, we continue to focus on those things going forward. As we look for a new leader, yes we’re looking for someone in the position of overall field operations and certainly we’ll be looking for an individual that will add more value to the equation that we already have in place not necessarily looking for someone to re-architect and re-build it off, but merely accelerate it's growth even further as we move into the mainstream. We feel we have validated now as we enter 2014 many of the question marks we had a year ago about the market, international, partnerships, the balance between business value selling and selling to IT. We feel we all have, we have that all in hand together with the markets most innovative platform which is the Jive Fall Cloud release and Jive 7 we feel we’re in a very good position and by bringing on a new overall field operations leader we hope to accelerate things not rebuild things.

Michael Nemeroff - Crédit Suisse AG

That’s very helpful Tony, thanks. You mentioned in that answer the three different focuses that you have or we’ll place more emphasis on the portals, the social internets and the external communities. If you could maybe give us a sense for where you see the most low hanging fruit of those three and which ones are going to take a little bit longer to play out?

Anthony Zingale

Well, I would put on equal footing, external communities where there is a real clear executive sponsor, usually the head of customer service or sometimes the Head of Corporate Comms or the CMO themselves with a clear identified budget to build customer community or a partner community. And again as I said earlier in an answer to a previous question, the large incumbent software suppliers aren’t present in those campaigns or those sales proceeds. So that one is a low hanging fruit and by the way we’re the pioneer of those space. We now have the cloud based JiveX offering. We feel very good about our capabilities in being able to complete there very directly. And then the other low hanging fruit one is the portal one and while the word portal might not be as cool as the word social or next generation communication, there are portals everywhere inside enterprises, for HR, for Communications, for Marketing for sales, clear executive sponsor, clear budget identified, clear last generation vendor providing the capabilities for these portals that are largely not being used very effectively. So, that one probably a little more competitive because of the incumbencies and the replacement market claim that surrounds it, but that’s low hanging fruit as well. The big price is the overall social internet which is where you get to touch every employee inside the company. And as John has kind of backed to the question from Walter that’s the big price from the large corporate enterprises. But we try to land in those low hanging fruit cases or use cases first and then expand to the large social internet opportunity if that all makes sense. But it's the two ones I described first that is the low hanging fruit.

Michael Nemeroff - Crédit Suisse AG

That’s also helpful Tony. And if I may, one for Bryan. Just looking at the cash flow guidance for the year for 2014, just trying to understand the -- what the CapEx implications are on that guidance for the year?

Bryan LeBlanc

Sure, I would say that the CapEx that we’re anticipating 2014 probably about flattish to 2013 levels if that’s helpful and just kind of size it out for you. We did about $13.9 million in 2013.

Michael Nemeroff - Crédit Suisse AG

That’s helpful. Thanks Bryan. Thanks for taking my question. Thanks.

Bryan LeBlanc

Thanks. Sure.

Operator

We’ll go to Karl Keirstead with Deutsche Bank.

Karl Keirstead - Deutsche Bank

Great thanks. My questions are to Bryan on the billings and DR guide. So Bryan, first of all, thank you for giving us that short-term billings guide, obviously don't often see that, so that is appreciated. My question is really two-fold. One is on the Q1 guide the short-term DR will be flat to slightly down. If I'm not mistaken, it was up 3% and 7% in the last Q1s respectively. So I'm curious if you're accounting for something in the business that might be a little bit off the normal seasonality in Q1? And then secondly a related question is, if short-term DR is flat, that would equate, I think, to about 10% short-term billings growth in Q1. You got a 20% for the full-year, so that means we need to see some acceleration in the back half and I’m wondering what you might be accounting for there? Is that just easier comps or is there something a little bit more fundamental? Thank you.

Bryan Leblanc

Yes. So on the seasonality, I don’t know -- we don't think about it on an average basis. We are obviously looking at it based on what we can see and I think our intention of giving you that starting point for the Q1 numbers was that we got everybody on the same page, the reason that we wanted to do the short-term billings guidance was we wanted to make sure that people (indiscernible) appropriately. Your commentary around that growth rate in Q1 relative to the overall annual growth rate is exactly right. Obviously we are seeing the impact of our go-to-market change as we go through the year, that change obviously takes effect partially in Q1 and then obviously in Q2 and Q3 as well. So that the reacceleration, if you will, or that growth rate as it grows through the year is what gives you that annual number at the 20% level and we intended to put it out there in both way -- with both Q1 and for the year so you had a chance to see how we saw both the start and obviously where we’re going to end up.

Karl Keirstead - Deutsche Bank

Okay, good. That's helpful. And thanks again for the guideline.

Bryan Leblanc

Sure.

Operator

Next we will go to Heather Bellini with Goldman Sachs.

Unidentified Analyst

Hi its (indiscernible) sitting in for Heather. Thanks for taking my question. Just one question on the market. What (indiscernible) pricing point you own the 20% growth that you guided to and how (indiscernible)?

Anthony Zingale

This is Tony. I only got part of your question. You’re breaking up. Can you try to repeat that?

Unidentified Analyst

Sure, sure. What do you (indiscernible) markets have hit an inflection point.

Anthony Zingale

You know what -- it’s subjective. The inflection point, I mean, we think we continue to believe we have always said it's a large market with a number of other companies in the space with us. Jive is, as we said in our prepared remarks, according to the Gartner group and Ovum more recently over in Europe the market leader, we feel that as the market had continued to move to the mainstream of the early adapters and early innovators that we saw in prior years. Again a question that was asked earlier around the sales cycles, they remain largely unchanged. The competitive landscape remains the same as it was. At the end of 2013, although Jive has the premier platform [stroller] [ph] customer base, the more tenured sales force selling these types of very focused solutions into the marketplace. So we have guided for the year. We feel very comfortable with that guidance we talked about continuing to invest in our business to build additional growth this year and beyond. So we feel we're doing the right thing to take advantage of the market opportunity in front of us without saying when does it (indiscernible). We feel that we’re making good progress on penetrating the total available market that's in front of us.

Unidentified Analyst

Okay, great. Thank you.

Operator

We will go next to Steve Ashley with Robert W. Baird.

Chaitanya Yaramada - Robert W. Baird

Hi. This is Chaitanya Yaramada for Steve Ashley. My Question is around partnerships you mentioned, you would be focused on both current and forming future new partnership. Could you just gave us a little bit more color on those initiatives in terms of strengthening your existing partnerships and also what types of partnerships you hope to sign going forward?

Anthony Zingale

So we feel very good about the partnerships that we have in place as I referenced during the call. I mean we see great traction with what I call that the cloud alliance type partnership with Okta and Box, and then the more global large traditional global -- some integrated partnership with PwC where we have seen traction both in the United States and in particular in the Asia-Pacific region of the world. We think that going forward and the reason we referenced what we did reference is that this technology platform as it moves to the mainstream, certainly becomes kind of referencing the PwC data about what's on the shortlist from an IT agenda point of view with CIO. This technology blends itself very nicely to the larger, more global software and infrastructure providers in the world. And so we see opportunities to partner further with those companies. We are not there yet, we have something to talk about. We are certainly to disclose it, but we see that there is an opportunity for complementary software and services to be combined with the Jive platform to even operate a larger value proposition to the target kind. This is case, the CIO and the business leaders that we’re selling to so, that’s what we’re referring to. I can't name any names here, but I assure you we are working very diligently on partnering further beyond the successful partnerships we referenced on the call.

Chaitanya Yaramada - Robert W. Baird

Great. And then, if you can just give us some color on where you ended last year in terms of the sales rep headcount and what’s your hiring plans are for this year?

Bryan Leblanc

Yes. This is Bryan. We don't give out the specific number in terms of headcount and whatnot, but we’re making quarterly ads like we usually do and we will continue that process through 2014, like we did in 2013.

Chaitanya Yaramada - Robert W. Baird

Great. Thank you.

Operator

And our next question will come from Tim Klasell with Northland Securities.

Tim Klasell - Northland Capital Markets

Yes, good afternoon guys. Just two quick questions. One, obviously more of your customers are going to the public cloud solutions, but are you getting any push back particularly internationally overall and security concerns given all the noise you’ve had from the NSA? And maybe some of those preferring are looking more at maybe a private cloud deployment as a result?

Anthony Zingale

Tim, this is Tony. So one of the strength of the Jive platform and our hybrid if you will, delivery model is that we can satisfy all of those requirements around the world, specifically NSA aside, which is not an issue that comes up in our sales proceeds or with our clients. There are comprehensive security checks that are done, since we sell so heavily into regulated industries like financial services and healthcare particularly companies in Germany I referenced Porsche who is part of the Volkswagen group who uses Jive in Germany. There are worker counsel requirements that are super important that that we are able to satisfy with maybe an on-premise capability. Our cloud customers are also concerned about security and they do comprehensive checks. But as we move into 2014, the capabilities around cloud solutions are becoming well understood encryption that rest and secure mobile gateways and these types of things are becoming standard parts of the Jive offering, the Jive Cloud offering that allows our customers to feel more comfortable in those areas. Many of our regulated industry customers have in fact in place to our cloud for the first time in the second half of 2013 and we see that as positive progress. But we believe for some time we're going to have a hybrid model where we support on-premise installations for those clients and regulated industries or for those clients in Germany where worker counsel laws are fundamentally important and so we feel we’ve an advantage in our ability to offer both delivery models to our clients. One last point we’ve never had an NSA request here at Jive. Those requests have been largely, if not all, are for consumer social intranet -- social networks.

Tim Klasell - Northland Capital Markets

Okay, great. And then one quick follow-up. Obviously, your sales strategy is bearing fruits, but you can always sort of tweak and improve things. I’m sure if you’re looking at your sales comp or your sales strategy as you do your annual reviews and set the territories and what have you -- what areas where -- do you want to tweak to maybe even improve in performance?

Bryan Leblanc

Yes, this is Bryan. We don’t get into obviously the details around our sales comp or sales comp model. When we’re looking at a year, we’re obviously looking at where does it make sense to grow territories or does it make sense to grow our presence, we focus a lot on messaging in the markets, which Tony talked about in the three key plays and how to make sure that we go-to-market in an efficient way. And those are the things that we kind of based together, but we’re obviously not trying to massively tweak the comp models. We got because, they’ve been in place for several years. They have been working well with the sales force. So we’ve seen a reason to go and really tweak those.

Tim Klasell - Northland Capital Markets

Okay, great. Thank you.

Operator

And with no further questions in queue, I will turn the call back to Bryan Leblanc for any additional or closing remarks.

Bryan Leblanc

Thanks so much everyone for being on the call. We look forward to seeing you out at our various Investor Conferences and we look forward to talking to you in the May timeframe for Q1 results. Take care everyone.

Operator

Ladies and gentlemen that will conclude today’s conference. Thank you again for your participation. You may now disconnect.

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