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Datawatch Corporation (NASDAQ:DWCH)

F2Q2014 Earnings Conference Call

April 24, 2014 8.30 AM ET

Executives

James Eliason – Chief Financial Officer and Treasurer

Michael A. Morrison – President and Chief Executive Officer

Ben F. Plummer – Chief Marketing Officer and Senior Vice President, Strategic Alliances

Analysts

Richard Hugh Davis – Canaccord Genuity, Inc.

David A. Griffin – William Blair & Co. LLC

Chad Bennett – Craig-Hallum Capital Markets

Peter L. Goldmacher – Cowen & Co. LLC

Anya Shelekhin – Sidoti & Co.

Operator

Greetings, and welcome to the Datawatch Corporation Second Quarter 2014 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded.

I would now like to turn the conference over to your host Jim Eliason, CFO for Datawatch. Thank you. Mr. Eliason, you may begin.

James Eliason

Thank you, Kevin. Good morning, everyone, and thank you for joining us this morning for the Datawatch Corporation’s second quarter fiscal year 2014 earnings conference call. I’m Jim Eliason, Chief Financial Officer of Datawatch. Joining me today is Michael Morrison, our President and CEO; and Ben Plummer, our Chief Marketing Officer and Senior VP of Strategic Alliances.

I would like to remind everyone that you can obtain a copy of our earnings release, which was distributed at 4:00 PM Eastern Time yesterday, by emailing us at investor@datawatch.com. This release is also available on our website in the Investor Section at www.datawatch.com.

Let me first outline to you this morning’s agenda. I will begin by presenting our Safe Harbor statement, followed by Michael, who will provide a general update on our overall business with specific commentary around some of the actions we have taken in our go-to-market organizations to improve the execution in Q3 as well as FY 2014 and beyond. I will then provide a summary of our Q2 FY 2014 financial results, along with some key operating metrics.

Finally, Ben will provide an update on the marketing partner initiatives specifically around new programs that have recently been launched during the second half of Q2 FY 2014 and some current metrics around our land and expand sales initiatives. In addition, Ben will also give an update on our latest product release that was just announced at the beginning of Q3 FY 2014. We will then open up the call for a question-and-answer session.

Before we begin, I’d like to remind you that any statements we make that do not describe historical facts may constitute forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such statements are accurate today, April 24, 2014, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from current expectations. We undertake no obligation to update any forward-looking statements.

For more information, I refer you to the descriptions of these risk factors found in our earnings release as well as the company’s Annual Report on Form 10-K for the year ended September 30, 2013, and quarterly report on Form 10-Q for the quarter ended December 31, 2013, along with other publicly available documents filed with the SEC. Any forward-looking statement should be considered in light of those factors.

Finally, I would also like to remind you that to supplement our financial results, in accordance with Generally Accepted Accounting Principles, we will from time-to-time discuss certain non-GAAP financial measures that we believe are helpful in understanding our financial performance and future results. A reconciliation of our GAAP and non-GAAP financial results is contained in the press release issued yesterday and is also available in our filings with the SEC.

Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be considered in conjunction with our consolidated financial statements prepared in accordance with GAAP.

With that, I would like to turn the call over to Michael.

Michael A. Morrison

Thanks, Jim, and welcome, everybody. As indicated in our preliminary earnings release on April 10 in the press release we issued at the market close yesterday, fiscal 2014 Q2 results fell short of the first fiscal quarter and below industry expectations.

Revenue for the second fiscal quarter was $8 million, up 17% compared to Q2 last year. License revenue of $4.4 million was essentially flat with license revenue of $4.3 million in the year-ago quarter. I personally disappointed by these results and the company as a whole is not satisfied with the performance.

We did not execute well from the sales perspective, particularly in our global major accounts group in the last month of the quarter. Notwithstanding the underperformance, we remain positive on the market, the organization, and our technology platform.

In the past few weeks, we’ve undertaken decisive steps to remediate the sales execution shortcomings of the last quarter. First, we signed one of our most experienced and talented sales leaders to manage the global major accounts group. These are already short up this organization by bringing over to the group our worldwide sales rep in the year in 2013, and having two seasoned major account reps to the group; one from IBM and the other from EMC.

So we believe that we now have the better sales leadership along with the proven account talent to achieve the sales productivity that we expect from the support group. Second, we’ve placed an added emphasis on key deals and execution discipline within the entire sales organization. We are conducting weekly cadence calls around all significant in quarter deals and formal interlock meetings to ensure that marketing, products, sales and technical resources are aligned to support all the key deals.

We have heightened the rigor we applied to our pipeline examination, and as a result, the opportunities in the pipeline are better qualified. We’ve already seen positive results from this increased scrutiny with our ability to quickly bring the necessary resources to their important deals and the acceleration of closed plants for several Q3 opportunities.

Third, we’ve implemented tactical marketing and lead generation program to complement the longer-term marketing initiative that are geared more towards creating a world-class brand then increasing our market awareness in the visual data discovery space. These tactical programs are all targeted towards generating Q3 business, either through cross-sell and up-sell opportunities in our installed base, or through specific program for the partners to leverage their customer basis.

We are confident that these actions along with the other organizational initiatives we have underway will serve us well in Q3 and beyond. We’ve already seen positive results in terms of quickly closing some of the deals that slipped from Q2, but we have our eyes on the fine large price.

The market opportunity available to us continues to be very large. Our technology platform is highly differentiated and extremely valuable. As Ben will tell you shortly, we saw great interest from prospective partners and customers at the recent Gartner Conference, and we are definitely gaining in visibility and promise. With the execution issues behind us, we are poised to recover our business momentum now.

Speaking of momentum, we saw meaningful progress in Q2 with our strategic growth initiative to develop a world-class Partner Ecosystem. We signed up 21 new partners in the quarter, the largest number of new partners signed up in any quarter since I joined Datawatch. The amount of quarterly license revenue contributed by our partners continues to grow reaching 14% of license revenue this past quarter, and our partnership with vendors in the Big Data ecosystem are becoming more meaningful.

Earlier this fiscal year, we began to pursue of our focused strategy to partnering with vendors in the streaming data and motion world, whether it’s streaming ETL, streaming databases, streaming the applications or otherwise. Anywhere there is data in motion, we intend to be the ubiquitous visualization solution for that data.

Said in another way, we intend to do for data in motion what is done for machine data? We are demonstrating that there is tremendous value in visualizing and analyzing data in motion, the same way it’s plunk demonstrating that there is tremendous value of an analyzing machine data. To that end, we’ve already signed partnership alliances with MongoDB, Informatica, Cloudera, Cloudant, Teradata, and Diyotta to further our leadership position in visualizing real-time data in motion.

In addition, we’re currently in advanced partnership discussions with several of the largest vendors in the world that offer streaming ETL solution, streaming databases, and streaming applications. Datawatch is the only company that can enable the visualization of streaming data in real-time. We are committed to fully exploding this differentiation.

As I noted, we continue to build our visibility and awareness with customers and influencers in the visual data discovery market. In our recent successful secondary offering of common stock, it given us the necessary capital to pursue this agenda with more bigger. There’s still much work to do, but we are seeing early signs of progress.

In our fiscal second quarter, we tripled the number of competes in visual data discovery, and we won 75% in that. And some of the losses we do solely, because we’re invited late to the game. It’s important to know here that we were actually invited to the game, which is a significant improvement from last quarter. We are aggressively working to gain the awareness enjoyed by the revenue leaders in the visual data discovery space and awareness, we believe is well deserved based on our – based upon the strength of our technology.

There is tremendous wide space in this market with a multi-billion dollar market opportunity open to all competitors. We at Datawatch are fully committed to achieving market leading growth and executing at a high level to meet this goal. I will now turn it over to Jim Eliason to take you through our Q2 and year-to date financials in more detail. Jim?

James Eliason

Thanks, Michael. At this point, I would like to give a summary on the company’s financial performance for Q2 fiscal 2014, as well as some other key operating metrics.

Datawatch’s total revenue for Q2 was $8 million as compared to $6.83 million for Q2 of the prior year, an increase of 17% year-over-year. Revenues from the sale of software licenses in the second quarter of FY 2014 was $4.38 million, as compared to $4.3 million in the second quarter of 2013, representing a 2% increase over the prior year. As a percentage of revenue, software licenses in Q2 FY 2014 accounted for 55% of the total revenue as compared to 63% of the total revenue from Q2 2013.

Revenues from maintenance and services in the second quarter of 2014 were $3.63 million as compared to $2.53 million in the second quarter of 2013. As a percentage of revenue, maintenance and services accounted for 45% of total revenues of Q2 FY 2014 as compared to 37% for Q2 of the prior year.

Gross margins for software licenses excluding IP amortization charges were 92.5% in the second quarter of 2014 as compared to 97.7% in the second quarter of 2013. Gross margins for maintenance and services were 82.5% in Q2 FY 2014 versus 78% in Q2 of 2013.

Overall, gross margins once again excluding IP amortization charges came in at 88% for Q2 2014 as compared to 90% in Q2 of the previous year. On a non-GAAP basis, the company incurred a net loss in Q2 of 2014 of $2.79 million, or $0.29 per diluted share as compared to net income of 420,000, or $0.06 per diluted share in Q2 of 2013.

During Q2 2014 as planned, we continue to invest in our go-to-market infrastructure, marketing programs, and R&D, in an effort to accelerate our position in the real-time visual data discovery marketplace. On balance, we are disappointed with the top line performance during the quarter, but we’re encouraged by our progress against many of the metrics that Michael has just mentioned that Ben will be sharing you – with you in a moment.

Moving to the balance sheet, Datawatch’s cash balance at March 31, 2014 was $53.9 million, an increase of approximately $43.6 million, or 423% at September 30, 2013. The increase in cash reflects the recent successful secondary offering of common stock completed during the middle of Q2, 2014, under which we issued approximately 2 million shares of common stock and raised net proceeds of approximately $53.6 million.

Some of the capital provided by this offering is already being deployed around marketing programs, designed to increase the visibility of the Datawatch brand and product platform. The quality of our accounts receivable remains consistent with prior periods with DSOs coming in at 57 days for the quarter just ended versus 57 days at both December 31, 2013, and March 31, 2013. Finally, 73% f our receivable balances occurred as of March 31, 2014.

Lastly during Q2 FY 2014, Datawatch paid off and discharged all of its outstanding indebtedness obligations to both Silicon Valley Bank and Massachusetts Capital Resource Company in the aggregate amount of approximately $4.7 million, which included a prepayment fee of $80,000 related to the MCRC portion of the debt.

In addition, at the time of the payoff under the MCRC agreements, the company incurred a one-time non-cash charge for approximately $821,000 for the unamortized debt discount related to the warrants previously issued to MCRC.

I would like to now share some of the operating metrics on the just completed quarter. As Michael mentioned, Datawatch signed 21 new partners in Q2 of FY 2014, as compared to 18 new partners in Q2 of fiscal 2013.

As pointed out earlier, this is the highest number of new partners adding the single quarter since the current management team has been in place at Datawatch. Our partner OEM channel contributed approximately 14% of the total license revenue in Q2 FY 2014.

As you may recall, the percentage in Q1 of FY 2014 was slightly above 10% and in prior quarters, the contribution from this size of business has historically been in the low single-digits on a percentage basis. We are extremely encouraged by the recent trend upwards in this particular metrics and we will continue to track and report in future quarters.

The average deal size in Q2 of fiscal 2014 was approximately $47,000 as compared to approximately $86,000 in Q2 FY 2013. As we said frequently, we anticipate that this metric will most likely trend downwards initially in the early stages of our land and expand strategy and will certainly be lower than some of the comparable quarters in FY 2013 when this program was not part of our go-to-market strategy.

Our worldwide ending head count as of March 31, 2014, was 172 people, which is essentially flat from the ending head count Q1 FY 2014 and up six people from the year end FY 2013. Weighted average shares outstanding as of March 31, 2014, was approximately 9,565 million shares, while the total diluted outstanding was approximately 10,715,000 shares.

At this time, I would like to turn the call over to Ben Plummer.

Ben F. Plummer

Thanks, Jim, and thanks again for everyone joining. As Michael indicated, we are all focused on accelerating our momentum in the market going forward. To that end, I would like to share some key business initiatives and metrics in the last quarter that we feel will help you see while we’re confident about the second half of this fiscal year and beyond.

First, I would like to bring everybody up to-date on the recent release the Datawatch Desktop 12.3. We believe that this release maybe the most important in the history of the company. As we stated in our press release, 12.3 is clearly focused on providing our customers of best-in-class user experience and enhanced functionality and we believe we have delivered this in much more of our customers and prospects. With support for enhanced Geospatial capabilities or in Python extensions, access to more Big Data sources, and an optional in-memory caching capability, Datawatch Desktop more than rivals any of our competitors’ capabilities and we exceed them in many cases.

This means that on the most basic of data visualization agendas, Datawatch is easier and faster than our competitors. In the area of in-motion streaming data, we continue to extend our later with improvements in chart rendering and data ingestion performance, as well as connectivity to a host of new streaming data sources like IBM streams.

And if not just us say that 12.3 is a game changing release. The industry analysts that we’ve briefed many of whom we saw that Gartner BI Summit, where we were a Platinum sponsor for the first time of validating our position.

So we believe that with 12.3, we are now in a very strong position entering the second half of the year to compete on any visualization agenda against any of our competitors and to win.

Now, I would like to turn my attention to the investments that we’ve been making in the marketing and share some of the metrics around our early stage total development that we are seeing as a result of these investments.

Throughout the first quarter of FY 2014, our marketing team was preparing a series of taxable and strategic marketing activity in anticipation of our capital raise. After the capital raise was released in mid-February, we began to put these programs into action. While I won’t detail every aspect of these campaigns I will note they included increasing our presence at major industry events and developing high value content that is foundational to marketing campaigns like the fast data challenge. We developed a head-to-head video comparison between Datawatch and Tableau.

Additionally, we launch the multimedia advertising campaign. Redirected and increased our spent in digital marketing and increased our field marketing programs globally. These activities are already having an impact and the results were showing up in our marketing final metrics from Q1 to Q2. These results include an increase in website traffic of more than a 150%, four times more click throughs from online searches. And more importantly six times more conversions are occurring on click throughs to our website.

This means that our prospects are taking action by viewing videos, downloading collateral and probably most importantly downloading trial versions of Datawatch desktop. In terms of trial downloads, whether still not at the levels we’ve like to see them. We have seen a steady increase throughout the quarter to appoint where we’re now double the number of our request to try our product then we sell just one quarter ago.

Another area that we’ve continue to investing over the last quarter is our strategic partnerships with companies like Thompson Reuters, TIBCO and IBM. IBM is a great example. The work we’ve done with the enterprise content management group has open doors in other areas of IBM, like the IBM TM1 product and IBM Streams Group.

For instance with the IBM Streams team, one stay understood our capabilities around visualizing streaming in motion data, they committed to join training of our sales teams co-marketing and pipeline sharing. Through these efforts, we are already seeing traction in some deals this quarter. Likewise, by developing a more modern connector for IBM TM1, we’ve been invited to present at the IBM vision conference in May.

These strategic investments do take time, but we are seeing this pattern repeating with other emerging partners like Informatica, where we’ve been ask to take a major role and demonstrating the value of their streaming data solution for the use of visualization at their use of matters.

The final area that I would like to discuss with you is some metrics around our land and expands strategy. As we stated last quarter, we believe this is an important area for us to take close attention to in monitor metrics around. To establish a baseline for these metrics, we rigorously and consistently at the time to set our criteria to classify accounts as expand opportunities and others will be considered land accounts until I’ve met this same criteria.

Based on these criteria, our breakdown on land versus expand deals for Q2 was 88% land and 22% expand. From our revenue prospective land deal is represented 67% of revenues and 33% of revenues came from expand opportunities

Now, let me put some color on this metrics, when early stages of our development of visual, as a visual data discovery provider. These results point to a higher level of initial adoption by customers reflect in the higher percentage on land deals. These results also point to the potential leverage, we can achieve in revenue as the smaller land deals begin to expand.

Additionally, these results also point to the impact of deals will have on average deal side as land deals tend to be smaller. As the leverage begins to come from expand opportunities, we should see a ship back toward larger average deal sizes. But as I said, we are in early stages of developing this business model. On a go forward basis we’ve look to provide other meaningful statistics on this component of our overall business strategy.

So to wrap up, we’re now in full slice with a variety of campaigns and programs that are design to increase Datawatch’s visibility and the visual data discovery market. Through these efforts and the continued work we are doing with strategic partners like Thompson Reuters, TIBCO and IBM. We are starting to see early indications that our marketing funnel and visibility are increases. Our focus must turn now to converting this funnel of pipeline and ultimately revenues. There is a still a great deal to do, but we believe our strategy and approach are on target while encourage by these early indicators.

With that I’ll turn it back to Michael for closing comments.

Michael A. Morrison

Thanks, Ben. In closing we have a very clear plan in place to deliver the results that we and our shareholders to be proud of the second half of the fiscal 2014 and beyond its our duty to fully exploit the opportunity in front of us and we are planning to do just that.

With that Kevin let’s open up the line for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question today is coming is from Richard Davis of Canaccord Genuity. Please proceed with your question.

Richard Hugh Davis – Canaccord Genuity, Inc.

Great, thanks. You guys talk about doubling the downloads improving pipelines and partnerships with, and frankly incredible guys in their ecosystem. And then I guess one other thing that I think everyone like to get a sense of this. How material are those things to your business. And I guess the way I would think about it is the simple question is it, logical to assume that the disappointing March quarter is an outlier.

And then should as a investor should we expect kind of a gradual resumption to kind of growth that you would expect from leaders in this industry. The guys in the space that are really rocking and growing 50% a year and obviously that’s not more asking, but if you kind of think about longer term. Do you see any structural reason it doesn’t sound like, but you see any structural reasons why this is not a – it could be materially successful business that’s really just trying to put some meat on the bones that’s all thanks?

Michael A. Morrison

So, Richard is Michael here. The short answer to that question is we don’t look at – we do look at the March quarter is an outlier. In terms of what we are doing, we not by the way of excuse, but we then add this visualization market versus four to six months for two quarters. We expected to better the last quarter, we’re building a good foundation we still think that and feel very strongly. We got a great technology solution and the great organization going after a very half market.

And all the pieces are in place to get there its disappointing this past quarter, but there is nothing fundamentally that we saw in the last month of last quarter this is now we’ve been judged our opportunity in the market, we think we got a very good opportunity and we’re all committed as an organization to get beyond. The challenge of the last quarter and get this organization growing in line with the marketplace. And I don’t know if you want to add anything to that Ben but…

Ben Plummer

Your question around material impact of the business, I mean, I believe the partnerships that we began to develop outside of the once we talked about it in the past with IBM in terms of IBM Streams Group, Cloudant, the TM1 organization, Big Data effectively open new markets for us that we weren’t touching prior. Their validation of the solution, I believe could certainly have a material impact on our capabilities in those parts of the industry.

In terms of just the early metrics around the marketing activity that’s going on, it’s encouraging the uptick has been quick. As I stated in prepared comments, I think our goal now and our focus has to be on concluding that early stage staff into real pipeline. So as that starts to happen, I think we’ll have a much better indicator of what kind of impact that will have in the business.

Richard Hugh Davis – Canaccord Genuity, Inc.

And then a quick follow-up, do you have any sense as to where Gartner, I mean, I know it’s kind of consumer reports for tech guys. But where they will put you guys in whatever quadrant way whatever they are not rolling these days, and they published anything and dropped you into the spot yet?

James Eliason

That’s a great question. So Gartner did publish their magic quadrant already for this year. We relate to the game obviously because the Panopticon acquisition took place late. There was some criteria that we did not meet in terms of just revenue and those types of things based on the Panopticon performance in the prior year. We are a laser focused, it’s the best way to describe it on establishing our self on that quadrant this year.

We did get mentioned in the report as a vendor to watch and those types of things. But we’ve done a lot of work at the Gartner Conference getting their analysts up to speed and what we are doing. We’ve had other analysts in and we’re focused on getting customers engaged to speak with themselves. I wish I had some crystal ball that tell me where they might put us next year, I’ve been doing this for a long time, I’ve never gotten that right yet at any company I’ve been at. But my belief is, we spend a very good chance of cracking on to the quadrant in some area next year for sure. So we’ll keep you updated on any progress we see ourselves making and as we know something we’ll let you guys know.

Michael A. Morrison

And just to add to that, what Gartner evaluated was Panopticon independently and Datawatch independently that their evaluation began before we acquired Panopticon. So we didn’t look at the combined organization, the timing didn’t workout well for us. I think we are all confident here we’re going to be on the quadrant next year, where we end up is anybody’s guess. But that’s a good perspective to have as far as what they look to add in coming up with the current quadrant that’s down on the street.

Richard Hugh Davis – Canaccord Genuity, Inc.

Got it. Well, thank you very much.

Operator

Our next question is coming from Bhavan Suri from William Blair. Please proceed with your question.

David A. Griffin – William Blair & Co. LLC

Good morning, guys. It’s David Griffin on for Bhavan. Thanks for taking our questions. Just a couple of quick ones, first, I was hoping you can give us kind of an update on the traction you’re seeing in verticals after the real-time used case, historically you’ve been pretty strong in financial services. Any update on how things are trending in oil and gas in Telco?

Michael A. Morrison

So, David, it’s Michael here. So we are getting some good traction in both Telco and not so much in oil and gas, but energy more broadly, especially this with around the Smart Grid. And when you look at what’s driving both of those, it’s all around, there is term today the Internet of things, sensors and machine data and trying to pull together all sorts of data point from different sources.

In Telco and in Smart Grids the need to do that in real-time or more real-time than it has been possible over the past, it’s very important. So we’ve got some good nothing materially reported on right now, but a lot of good traction both with end user prospects, as well as with partners getting after that marketplace.

Ben Plummer

Yes, this is Ben. I would add one additional area that we are starting to see traction in and this is actually did help extensively about the 12.3 release in the area of logistics. A lot of folks want to track shipping and trucking activity in real-time, optimize routing and delivery performance and those types of things with our new Geospatial capability of globally mapping longitude and latitude into the product. We are now able to support these types of Geospatial logistical applications as well. We have several of those in place as well right now.

David A. Griffin – William Blair & Co. LLC

Great, that’s helpful. Just one more from me, I’m hoping you talked us a little bit about the product roadmap for the Desktop, any incremental color on the features that we can expect to see in future releases?

James Eliason

I mean, we can give you some high-level visibility into it. I mean, we just finished the 12.3 release as I said, I think that was a game changer for us as a company. We’re really focused on taking the legacy Panopticon product set and moving it into the general market capabilities. That meant enhancing easy use and adding more general purpose functionality.

As we look out to the future of the year, it will probably around modernization of the platform we did. We took some initial steps in this release of delivering HTML file capabilities in the product. We will continue to enhance those capabilities. We’ll also be doing some hardening of the server environment going forward, and that specifically around bringing the data variety component and the real-time components closer together.

Looking out over a year, I think mobility will be a big play for us as well in the HTML file work we’ve done in this release certainly helps us there. So those are some high-level things.

I mean, there is a lot of detailed featured functions staff, but I think those are the things we are going to focus time and attention. And the other area would be, we did a lot of this work the last quarter as around connectivity. We’ve added a lot of new streaming databases to the product set this quarter. We’ve expanded the team that does that work and it’s opening up new opportunities as well as lot of new big data sources, so we’ll continue to add and expand those as well.

David A. Griffin – William Blair & Co. LLC

Great. Thanks a lot guys.

Operator

Thank you. Our next question today is coming from Chad Bennett from Craig-Hallum. Please proceed with your question.

Chad Bennett – Craig-Hallum Capital Markets

Hey, good morning, guys. Couple of questions from me, I guess in the pre-announcement you talked about, I believe $1.5 million that slipped, and I think it was largely due to the global accounts organization. And you mentioned, I think at the time of our 25% of that business has been – had been closed. Can you give us an update if you’ve made anymore progress there on the slip deals?

James Eliason

Sure, Chad, it’s Jim. That’s correct. At the time of the pre-announcement we had about 25% of that $1.5 million close. Since then we’ve a little bit of progress, I would say, we probably have a third of those deals closed as of today. But the rest remain active deals in Q2, but not yet closed.

Chad Bennett – Craig-Hallum Capital Markets

Okay. And just kind of – I think I’m asking the same question probably a different way that other guys have asked before me. But I guess, in the last quarter call you talked about pipeline doubling. We are talking about click-through rates is doubling and conversions going up whatever they are going up. And we signed 21 partners this quarter, we signed 18 a year ago.

And I know that’s early in the Panopticon deal, but we’ve essentially done $8 million in revenue for four quarters and $4 million Asian license revenue. I am always a little skeptical of software partnerships creating real growth of our software companies. I guess, when should we expect to see any real optic in the business considering all the metrics that have been rattled of in all the partnership that you’ve signed and what’s the real incentive for a partner to really produce so that will be my next question?

Michael A. Morrison

So, Chad it’s Michael Morrison here. Look, we have been building the foundation we’ve been talking for the last couple of years about this. We’re transformational play it’s a lumpy business for a small microcap company. We feel we’re putting all the right foundational pieces in place for. Is that inflection point under this quarter or next quarter to the quarter after, we can – I can tell you right now with the level of confidence. I can tell you with a level of confidence we’re going to get there, it’s a big market.

I think anyway on this call would recognize that it’s a half market it’s where the companies are going in terms of the analytics. We think we got the – the right people here, the right solution set to really take advantage of it. But there is a lot of foundational work to put in place and work to do in order to you that. So, but your question I don’t know when the inflection point will hit, but we feel confident we’re going to get their sooner as oppose to later.

Chad Bennett – Craig-Hallum Capital Markets

Okay. Last one from me of the deals that you’re closing and winning. You talked about you’re capabilities in realtime are in-motion data, what’s kind of the mix I don’t know if you have this data between feels you’re winning because of realtime or in-motion focus deals versus just general visualization deals you have any data?

Michael A. Morrison

We do and in fact, so I’d mentioned we triple the number of competes, which is still a very, very small number, but you can see the momentum building is of the deals that we’ve competing on and especially the once that we won very few of them had a real time and media component to it. It was a visualization opportunity, our go-to-market strategy is to educate the market on what we can do beyond just the basics of visualization and that’s what you’re going to see on our website today that’s sort of that comparison of how we play against that who is proceeded the leading player in the market today.

On the visualization just like you see and how you developing we do very, very well when you get to the next phases of with a more meaningful phases getting a data variety and getting a real time data in-motion, we’ve got a significant lag up. So, our sales organization has been trained in school to present that even when the sales situation is just a – if I could call this basic visualization agenda to talk about our architecture and ultimately any company is going to need to be able to handle data in-motion. So even if you’re compete today had nothing to do with data in-motion, why would you investing an architecture I can support that. And that is a significant reason why we are winning, we think just on the basic visualization, we can go toe-to-toe and do quite well.

The way we presented into the market that as you evolve into the next generation analytics you’re going to need more varieties of data, you’re going to need more streaming in-motion data. We can support that nobody else can’t that plays a big part and people making that ultimate decision.

Chad Bennett – Craig-Hallum Capital Markets

Okay, thanks guy.

Michael A. Morrison

Thanks, Chad.

Operator

Thank you. Our next question today is coming from Peter Goldmacher from Cowen & Company. Please proceed with your question.

Peter L. Goldmacher – Cowen & Co. LLC

Hi, guys. I want to ask you a little – for a little more detail on your marketing effort. So, how well has really done a great out timing the market for visualization and you guys are coming in spent some benefiting from that from the several marketing budget and you’re sending the message a little bit thing look not just on visualization. If you want re-visualization, and set probably underlying data toward it and can you give us any your thoughts on how the market is responding from your messaging with this taking the this overall message and you can repositioning it, I don’t want revenue answer when your sales does it and out still then, and we reposition that several message what’s the customers response like?

James Eliason

Yes, it’s a great question. So Michael just indicated most of the deals that we were handled over the last quarter and most of the competes that we’ve been and we’re since making this transition have been on base line visualization item in. That still tends to be way customers are evaluating or tie into companies like ourselves and Tableau. So, I think we are doing much better job of being associated and getting pulled in and we need to continue to keep that going that’s why a lot of our marketing efforts are just around, finding those penetration points on base visualization agendas.

Now when our sales teams actually getting and pitch that the full solution if you will. The best way I can simplified is it we dealing with an end user community. The realtime message probably don’t resonate quite as well with them, Because they have a certain set of problems however the variety message it has actually driven wins in some of the deals we’ve seen over the last few quarters and people have thought about it to be walking the door.

So, I think the variety messages is resonating quite well in the basic user community, when we engaged IT, the realtime message takes through very, very quickly that’s become apparent to us is IT is going to the folks responsible for managing those message queues and streaming data flows and take databases and what have you. And data folks who know where the problems of I and try to attack them. So they tend to be outside the business is a bit more. So, we would actually if you will tuned up our go-to- market a bit to incorporate more IT messaging around realtime. And that’s what we are seeing that resonate right now. I believe that will continue. So if we can get that visualization audience, we will do quite well if we bring variety in end user community and real-time and at the IT community.

Peter L. Goldmacher – Cowen & Co. LLC

Okay. Thanks, Ben.

Ben Plummer

Yep.

Operator

Thank you. Our next question today is coming from Anya Shelekhin from Sidoti & Company. Please proceed with you question.

Anya Shelekhin – Sidoti & Co.

Good morning. Just a couple of questions from me. First of all, G&A expenses dropped significantly from the prior quarter, and it seems like there is more emphasis on cost management. Could you provide some color on that?

James Eliason

Yes. This is Jim, Anya. I would say the SG&A definitely is going to focus on accepting the team there. A bit was going on there also is, we had a transition within our international finance organization. We had operations in the UK and operations in Sweden with Panopticon. So that’s been kind of move forward the new organization, so that’s a bit of it there as well.

Anya Shelekhin – Sidoti & Co.

Okay. So do you expect G&A expenses to stay around this level going forward?

James Eliason

Yes, Yes.

Anya Shelekhin – Sidoti & Co.

Okay, great. And then second question, could you provide some detail on the $1.3 million in other expenses for the quarter? What specifically is included in that number, I know these are one-time charges?

James Eliason

No. The biggest piece of the 1.2 is that one-time non-cash charge in their payoff of the MCRC debt. And then there is bit of severance in there as well with some of the reorg.

Anya Shelekhin – Sidoti & Co.

Okay, thank you. That’s all from me.

James Eliason

All right.

Operator

Thank you. There are no further questions at this time. I’d like to turn the floor back over to management.

Michael A. Morrison

Thanks, Kevin, and thanks again for joining us this morning. As always please contact us if you got any additional questions and we’ll talk to you next quarter. Thanks.

Operator

Thanks you. That concludes today’s teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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