Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Sydney Carey - Chief Financial Officer and Executive Vice President

Murray Rode - Chief Operating Officer and Executive Vice President

Vivek Ranadivé - Chairman, Chief Executive Officer and President

Analysts

Derek Bingham - Goldman Sachs Group Inc.

Yun Kim - Gleacher & Company, Inc.

John DiFucci - JP Morgan Chase & Co

James Wood - Susquehanna Financial Group, LLLP

Brad Zelnick - Macquarie Research

Tim Klasell - Stifel, Nicolaus & Co., Inc.

Mark Murphy - Piper Jaffray Companies

Nabil Elsheshai - Pacific Crest Securities, Inc.

Steven Koenig - Longbow Research LLC

Kash Rangan - BofA Merrill Lynch

Tibco Software (TIBX) Q1 2011 Earnings Call March 29, 2011 4:30 PM ET

Operator

Good afternoon, ladies and gentlemen. I'm Casey. Welcome to TIBCO's First Quarter 2011 Conference Call. [Operator Instructions] You can also listen to this call via the Internet at www.tibco.com. Today's call is being recorded and will be available for playback from TIBCO Software's website at www.tibco.com. In addition, replay will be available through InterCall for one month following today's call by dialing 1-800-642-1687 from the U.S. or (706) 645-9291 internationally. The confirmation code is 48596709.

The following conference call includes forward-looking statements, which represent TIBCO Software's outlook and guidance only as of today and which are subject to risks and uncertainties. These forward-looking statements include, but are not limited to, forecasts of revenue, operating margins, operating expenses, outstanding shares and earnings per share for future periods. Our actual results could differ materially from those projected in such forward-looking statements. Additional information regarding the factors that could cause actual results to differ materially are discussed in the Risk Factors section of TIBCO's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. TIBCO assumes no obligation to update the forward-looking statements included in this call, whether as a result of new developments or otherwise.

The conference call also includes certain financial information that has not been prepared in accordance with generally accepted accounting principles as we believe that such information is useful for understanding our financial conditions and results of operations. For a presentation of the most directly comparable financial measures calculated in accordance with GAAP and a reconciliation of the differences between the non-GAAP and GAAP financial information, please see our website at www.tibco.com. The presenters on the call are Vivek Ranadivé, TIBCO's Chairman and CEO; Murray Rode, Chief Operating Officer; and Sydney Carey, Chief Financial Officer.

I'd now like to turn the call over to Vivek.

Vivek Ranadivé

Hello. Thanks, Casey, and thank you all for joining us today. I will begin the call with a summary and remarks on our first quarter performance. I will next provide an update on the broader market environment we're seeing and pursuing, then I will turn it over to Murray and Sydney to discuss further details.

We started 2011 in our strongest position ever, as our Q1 results will attest. Total revenue grew by 20% over the first quarter of 2010 for a Q1 record of $185.3 million. License revenue grew by 29%, its fastest pace in a decade for a Q1, to $70.1 million. Non-GAAP operating margins came in at 21.9%, a 230 basis point expansion over the same period a year ago, and non-GAAP EPS at $0.16 grew by 33% over the first quarter of last year. Once again, we exceeded our guidance ranges for revenue and profitability.

Last year, I spoke of the tipping point in our business and a new era in Enterprise computing as companies shift from transactional or database-centric architectures to event-driven architectures built around the service parts. This new era has arrived, and the 21st century has begun. Whereas content was king in the 20th century, context will be king in the 21st century.

Context is the ability to bridge fast occurrences with current behavior and understand what is happening at a moment in time. And every one of our prospects and customers today are looking for context as they seek to acquire new customers, deepen their relationships with existing ones and grow and manage their business. For example, we have retailers who want to offer the right promotion to a customer before they leave the shopping aisle. We have utilities that wish to detect a power outage before it actually occurs, and we have banks that want to prevent fraud before it happens.

To acquire this important context, however, businesses must fully leverage the Internet, exploit mobility, operate in real time and harness the resulting explosion in data volumes. TIBCO's middleware platform is uniquely qualified to scale to the needs of business today, provide context from streams of events and provide the connections such that the right information can get to the right person or place at the right time. Customers, old and new, are increasingly appreciating the power of our platform and building a whole range of 21st century context-aware applications.

This first quarter, we had another Central U.S. oil and gas company adopt our platform as the digital spinal cord to accelerate their smart grid initiative which will drive customer interaction and communication for over 800,000 customers system-wide. A new gaming customer came to TIBCO with bidirectional data flow and to capture and correlate real-time consumer behavior, with static information captured over a customer's life, in a channel deal where our software will be embedded as part of a larger solution. A bank, whose mission was to define 21st century customer service and initially chose to work with IBM, called us back two months later to explain that the project was getting too complicated, too complex and too costly. We signed a seven-figure deal one month later.

A state government in Australia signed a deal including TIBCO Spotfire and our Formvine products to help emergency first responders be prepared for natural disasters in a deal cycle that took eight weeks to close, and the list goes on. We are moving from a client/server world centered around the database to an event-driven world built on the service parts. No longer is this just a nice-to-have, it's a must-have. TIBCO is the only company that provides an end-to-end platform for handling events, and with the addition of tibbr, we have now extended the platform into social networking. tibbr is becoming the universal inbox for the event-driven enterprise and now has over 100,000 seats sold. Whereas content was king in the 20th century, TIBCO will prove that context will be king in the 21st century.

I'll now turn it over to Murray.

Murray Rode

Thanks, Vivek. I'll focus my remarks on key Q1 operational metrics before turning it over to Sydney. Once again, we saw a broad mix of demand this quarter, with 108 deals over $100,000 in license revenue as compared to 97 such deals a year ago. Also this quarter, we had 14 deals over $1 million in license versus 10 a year ago. Our average deal size for license transactions over $100,000 was $584,000, in line with historical averages, and our top 10 customers comprised 22% of our total revenue as compared to 19% a year ago.

Looking at the geographic mix, total revenue broke down as follows: Americas had another strong quarter at 57% of the total; Europe, Middle East and Africa came in at 33%; and Asia Pacific and Japan at 10%. The growth in Americas was particularly robust, up 34% over last year. Asia was up about 15% over last year, and Europe came in slightly above last year.

From a vertical market perspective, total revenue broke down as follows: Financial Services, 26%; Telecommunications, 10%; Energy, 9%; Transportation and Logistics, 9%; Government, 8%; and Life Sciences, 6%. In addition, we had three verticals, Retail, Manufacturing and Insurance, register just shy of a 5% contribution. The strongest year-over-year growth came from Transportation and Logistics, Retail and Energy.

Turning to products, the breakdown of license revenue among our major product families was: SOA 55%; Business Optimization, 34%; and BPM, 11%. Our Business Optimization portfolio grew by more than 100% over last year, with particularly strong growth from business events. BPM was up by more than 70%. This traction in business optimization and BPM highlights what we've been describing as a broader shift to event-driven architectures. In addition, tibbr, as Vivek mentioned, now has over 100,000 seats sold, and we're continuing to see a lot of traction in both existing and new accounts in both stand-alone and bundled sales of other TIBCO products. We also released FTL, our new ultralow-latency messaging product, which extends our leadership in this area moving from microseconds of latency to nanoseconds.

Overall, our performance reinforced the broad applicability of our middleware platform and our unique real-time event-driven approach. We saw this in two fundamental ways: our total license revenue growth and the vertical and product diversity of that growth.

With that, I'll turn it over to Sydney.

Sydney Carey

Thank you, Murray. First, I'll provide additional details on our financial performance in Q1, and then I will provide comments on our financial outlook for Q2. I'll review our financials on both a GAAP and non-GAAP basis. A full reconciliation was included with our press release along with an explanation of our non-GAAP measures.

Some key performance data on our first quarter results are as follows: Total revenue was $185.3 million, up 20% year-over-year. We had about a half a percentage point of currency headwind on the total revenue growth. License revenue was $70.1 million, up 29% year-over-year or 30% on a constant currency basis. Services revenue was $115.3 million, up 14% from last year or 15% on a constant currency basis. Our non-GAAP gross margin for Q1 was 74.5%. Our non-GAAP operating income was $40.5 million, up $10 million or 33% from the same period a year ago. This resulted in an operating margin of 21.9% versus 19.6% a year ago. Q1 cash flow from operations totaled $36.5 million, and non-GAAP EPS was $0.16 versus $0.12 a year ago. On a constant currency basis, earnings for Q1 were negatively affected by approximately 4% as compared to the prior-year period.

Turning to our balance sheet. We ended the quarter with approximately $262 million in cash and short-term investments. Deferred revenue, including both long- and short-term components, totaled $207 million, up $20 million from Q1 of last year. DSO came in at 74 days this Q1 compared to 65 days in Q1 of last year. Also during the quarter, we repurchased approximately 1.2 million shares at an average price of $20.06.

Looking forward to Q2, we continue to see our pipeline strengthen with strong demand across all geographies, driven by continued customer interest in our middleware platform. Our Q2 guidance is as follows: We expect total revenue to be in a range of $195 million to $200 million. We expect license revenue to range between $72 million and $76 million. The non-GAAP operating margin is expected to be 23% to 23 ½%. Non-GAAP EPS for the quarter should range between $0.17 and $0.18, with an assumed tax rate of 31%. GAAP EPS should range from $0.08 to $0.09 with an assumed tax rate of 30%. We expect cash flow from operations to range from $48 million to $55 million.

With that, we'll be happy to take your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from Brad Zelnick from Macquarie Capital.

Brad Zelnick - Macquarie Research

Just to hone in on cash flow, you came in, I think, a little bit shy of where we were, and I just want to get a sense of where that was relative to your expectation and any guidance you can give us on next quarter.

Sydney Carey

Sure. We did guide cash flow slightly higher than where we came in at. It was primarily due to our DSO increasing to about 74 days. And as we look forward, we expect our cash flow for Q2 to range between $48 million to $55 million.

Brad Zelnick - Macquarie Research

Vivek, you talk a lot about tibbr. It sounds really exciting. Any anecdotal evidence inside of TIBCO? I imagine all your internal constituents are using the product. Any idea as to how much less you're using e-mail for collaboration?

Vivek Ranadivé

You're correct. We're using e-mail a lot less, and I was just on my way chatting with somebody here, and just chat on tibbr is becoming pretty much a de facto way of communication now. So the e-mail traffic has gone down considerably. We have 100,000 users now signed up, and it's taking off like a rocket. So we're ecstatic about the way it's doing.

Operator

Our next question will come from Yun Kim with Gleacher & Company.

Yun Kim - Gleacher & Company, Inc.

Vivek, I know you talked about the emergence of the retail vertical over the past several quarters. Can you just tell us where we are in terms of the pipeline development for the company and when can we expect to see some sizable uplift coming from that vertical? I think it's been around 5% of revenue for a while.

Vivek Ranadivé

Yes, I should defer to Murray and Sydney on that. But we're seeing a lot of retail business. And Murray, do you want to respond to that?

Murray Rode

I think we've seen it through the latter part of last year and into this year pretty significantly. I don't think retail, for most of last year, was not close to being a 5% contributor. So that's a pretty recent phenomenon. So I think what we think is retail has a potential to become one of the core markets for us, actually.

Vivek Ranadivé

Yes, and even going where we are right now, we’re seeing great strength in the pipeline with regard to retail.

Yun Kim - Gleacher & Company, Inc.

Do you expect that to happen towards end of this year, or do you think it's more of a 2012 event?

Vivek Ranadivé

No, it'll happen throughout 2011 and 2012 and beyond.

Yun Kim - Gleacher & Company, Inc.

Okay, great. And then it's been a while since you guys have done a sizable acquisition. What is your current appetite for a large one? If you can just simply update us on your current acquisition strategy?

Vivek Ranadivé

Yes, we're staying vigilant. We're looking at everything out there, but right now, we believe that our stock is still as good a buy as anything. And so we're putting our money where our mouth is with regard to that. We just see great strength in the business if you look across the board to the kind of license growth we've had. So it's a high bar that we've set. And a big acquisition, unlikely. Small technology tuck-ins, more likely.

Yun Kim - Gleacher & Company, Inc.

Okay. And, Sydney, anything out of the ordinary besides just simply a higher number of large deals closing towards the end of the quarter that drove the DSOs higher? Where do you see the DSOs trending? Or do you sign more and more -- higher number of large deals going forward?

Sydney Carey

Well, I guess the 74 days has been in a historical range that we've seen in the past. So I do expect for them to come down some in Q2, but I don't think that 74 days are alarmingly high. We did have a few kind of collections just slip into the first week of Q2. So again, I think it was just a trend that impacted the cash flow for Q1.

Vivek Ranadivé

And it was a shorter quarter, right?

Sydney Carey

Yes, it was also a shorter quarter for us.

Vivek Ranadivé

Yes, so it's fewer days.

Operator

Our next question will come from Nabil Elsheshai with Pacific Crest Securities.

Nabil Elsheshai - Pacific Crest Securities, Inc.

First, I was wondering if you could give a little color on the growth rates within the maintenance and services line list. If anything going on with growth on maintenance versus the consulting, obviously, not as fast as we've seen on the license side, so I just want to understand that a little more.

Sydney Carey

Sure. Our Q1, just to remind everyone, had four fewer days than our Q4, so our maintenance actually came in as expected, with the fewer days impacting the total but not impacting the growth on a per-day metric. And our professional services did come in a little bit lighter, and that was more due to the timing of the execution of some service contracts.

Vivek Ranadivé

So we feel also our licenses grew at about 30%, and our maintenance growth was strong. Our services grew less. So we are a little bit behind on hiring on services, and some of this is my fault. I've just been cautious in terms of hiring. We have huge capacity -- we have huge demand for services, and we have to build up the capacity. So we're in an unusual situation where the license growth was a lot faster than the professional services growth. And we're very focused on recruiting, to start filling that demand.

Nabil Elsheshai - Pacific Crest Securities, Inc.

Right. And then obviously, you mentioned great numbers out of the BPM and Optimization line. I was wondering if you could talk about the kind of level of penetration of those within your installed base and maybe a little more color on what types of those deals. Are they going into an existing customer? Are there new customers? And is it pulling along a lot of the traditional integration products?

Vivek Ranadivé

Yes, Nabil, it's all of the above. The penetration is very small still, so we still have the vast majority of our market ahead of us. Customer up-sell, cross-sell often becomes a catalyst. And it does indeed pull in everything else with it. So all of what you said is true.

Nabil Elsheshai - Pacific Crest Securities, Inc.

Okay. And then last question just on sales hiring. Are you on track there to what you've talked about in Q4? Just any update you can give.

Sydney Carey

Yes, we ended Q1 with 207 quota-carrying hires, and we're continuing to make investments both in hiring quota-carrying and also field enablement.

Operator

Our next question will come from Derek Bingham with Goldman Sachs.

Derek Bingham - Goldman Sachs Group Inc.

My first question is just kind of macro-related. There's obviously been some disruptions in the world over last month or two, and I was just wondering kind of what impact you’re seeing both on -- to the extent they had an impact on Q1 or, more importantly, in the early parts of Q2 and how much that's factored into how you guided.

Vivek Ranadivé

We're really not seeing any impact, Derek. We're seeing a very strong pipeline. We had our strongest Q1 ever, and we're continuing to see very, very strong demand, so we're not seeing anything. But obviously, we are being cautious with the Japan situation, the government shutdown and so on, so we've shown some conservatism in that. But we're seeing great strength across the board.

Derek Bingham - Goldman Sachs Group Inc.

Okay. I was wondering if you could -- had any comments on -- competitively, you've been growing at a pretty impressive clip of late, and so it would seem that you're taking some share out there. And just kind of what your latest thoughts are on when you do take share, who it tends to be from most often?

Vivek Ranadivé

The market is really narrow, so it's just us and IBM and Oracle. And we're seeing most of the -- I think we see IBM more than anyone else, more than Oracle, a lot more than Oracle. And it's probably taking market share from both, more from IBM than on Oracle because IBM is -- you see IBM more. You see Oracle less. We had a situation with the bank recently that I mentioned, and IBM was the incumbent. We won the technical evaluation. The CEO of IBM called the CEO of the bank, and they went with IBM. Two months later, they called us and said that it's been a disaster to work with IBM and would we please come back in. And so we signed a seven-figure deal weeks after that. So I think it's really a three-horse race right now: us, IBM, Oracle. And IBM is still incumbent. IBM’s the largest player. So most of the market share we take is from IBM.

Derek Bingham - Goldman Sachs Group Inc.

Okay. And I just had one last housekeeping one. Sydney, could you remind us how much or kind of what proportion of where your cash is onshore versus offshore?

Sydney Carey

Yes, we've got about approximately $100 million offshore of our cash.

Operator

Our next question will come from John DiFucci with JPMorgan.

John DiFucci - JP Morgan Chase & Co

You put up really strong growth metrics, especially the license line. And you talked a lot about what's driving that as far as products, but you mentioned, I think, Vivek, one of the deals you closed was through the channel. I'm just curious if you're starting to see more traction through SIs and if maybe you can talk a bit about that.

Vivek Ranadivé

We're starting to see a lot more traction through SIs. Both people like EADS who are actually picking our product and offering it as part of the solution, as well as the guys like Infosys and TCS, who refer deals and then we work jointly with them. These guys have trained -- as I've said before, they've trained 10 times as many people as they had a year ago, so that automatically creates a lot more pull-through for us. So we're continuing to invest in that channel. There's a lot more opportunity for us in that channel. We're still in the early stages, but there is a lot of leverage we're getting from that.

John DiFucci - JP Morgan Chase & Co

Okay. If I could, two for Sydney. Sydney, on cash flow, it looks like there was a $6 million negative swing in the contribution for prepaid expenses. I guess if you could just talk briefly on that?

Sydney Carey

Yes, that was just normal timing of events, so there's nothing unusual there really going on.

John DiFucci - JP Morgan Chase & Co

It was a year-over-year swing. I'm sorry I should have said that upfront.

Sydney Carey

Yes, again, it was just a timing. There's nothing unusual going on there.

John DiFucci - JP Morgan Chase & Co

Okay. And then you said, you mentioned that maintenance, you had four days less in this quarter. But just when we’re looking at it in the model, could we assume that maintenance grew sequentially?

Sydney Carey

Yes.

Operator

Our next question will come from Kash Rangan with Merrill Lynch.

Kash Rangan - BofA Merrill Lynch

Since your growth is starting to pick up, how are you planning to grow the sales headcount? I would suppose that with a license growth of 20-plus percent, 29%, you should be looking to increase sales capacity right around that percentage. And I think also you made a comment about services headcount. How should we be thinking about the growth versus any near-term margin sacrifice that you might have to endure in order to keep sustaining this kind of very impressive growth rate?

Vivek Ranadivé

Kash, those are great questions, and we are on track to meet our target for the year in terms of sales headcount. Sydney, how many people have we added and what are we at now?

Sydney Carey

We're at 207, up from 196 as of Q4, and we're trying to track to about 220 by midyear.

Vivek Ranadivé

Yes, so we're on track to meet that 220, so we're hiring aggressively. And we are behind in terms of services hiring. And so we're being cautious in terms of the EPS guidance that we've given because we do need to invest much more heavily in both sales, sales training and in services. The demand for services is huge right now, and we're just leaving a lot of opportunity on the table. And as you pointed out, we had almost a 30% growth in licenses, and the services significantly lagged that.

Kash Rangan - BofA Merrill Lynch

Got it. So you've dialed in the proper level of investment into your earnings guidance, so on the flip side, we should expect to see this growth rate guiding to license growth rate beyond Q2. But I guess you're still targeting high teens to 20%-plus license growth I would imagine, considering that you've put up these kinds of numbers against tough comparisons.

Vivek Ranadivé

Yes, we see a huge opportunity, Kash. And as you pointed out, we've had accelerating growth, and we need to have the capacity to meet that growth, and we will keep investing in it.

Operator

Our next question will come from Derrick Wood from Susquehanna.

James Wood - Susquehanna Financial Group, LLLP

So clearly, you had very, very strong growth on the BPM and Optimization product side. You back out the SOA product revenue, and it looks like it was down year-over-year. Now I know this is a fairly lumpy business, so can you just talk about what kind of demand trends you're seeing out of that business and then maybe to what extent success in your other products can drive subsequent demand for the SOA platform?

Murray Rode

Yes, so SOA was actually not down year-over-year. It was just slightly up. But clearly, the really outstanding growth was from Business Optimization and BPM. And I think what we've seen a little bit, if you look back over a number of quarters, is in any given quarter, you can have one part of our three major product families lead the growth and drag along other products. I think what we're -- we have seen Business Optimization be a very strong lead in past quarters. I think this quarter, we really started to see the traction and the pickup in the BPM business. So I think we saw that as a particularly positive sign looking across the portfolio. And I think FTL now, too, gives us additional new growth potential in the core middleware of the SOA business.

Vivek Ranadivé

Yes, in fact, just on that, Derrick, we just announced FTL, the Faster Than Light ultralow-latency messaging product, and we are very, very excited about this. We pushed the barrier beyond microseconds into nanoseconds. And for those of you who have known us for some time, we have over 1,000 Rendezvous, EMS customers. And it's the same EPI. So this is a automatic up-sell into that customer base with a product that's truly leapfrog in terms of what we've done with it.

James Wood - Susquehanna Financial Group, LLLP

Great. I mean, I guess heading on the BPM business then, you had a major new product that came out last year, and I imagine it’s starting to percolate through the sales cycle. So can you give us a sense for how that product cycle is tracking, what kind of pipelines are out there and then maybe what you're seeing competitively?

Vivek Ranadivé

Yes, we're having very, very strong success with BPM. It is a sensational product, and the pipeline is the strongest it's ever been in this area. And the growth numbers, I think, speak for themselves, Murray, right so?

Murray Rode

Yes, I think that's really what started the growth this quarter. I think, too, the new product is, the ActiveMatrix BPM product, is doing well, has a rapidly growing pipeline. We also see strength with our existing iProcess product as well. So across the board, BPM is showing good traction.

James Wood - Susquehanna Financial Group, LLLP

Great. And could you, lastly, just give us a sense for what kind of revenue exposure you have in Japan?

Vivek Ranadivé

Yes, we do very little in Japan, and so we don't really have that much exposure over there.

Murray Rode

Yes, it's well below 5%. It's just a few percent, really, exposure in Japan. And this upcoming quarter, I think it's even just the way the pipeline lays out. It's even less than that, really.

Operator

Our next question will come from Mark Murphy from Piper Jaffray.

Mark Murphy - Piper Jaffray Companies

Sydney, in terms of maintenance renewal rates, in the quarter, did the actual renewal rates improve directionally during the quarter?

Sydney Carey

Our maintenance renewal rates have remained pretty constant at that 92% to 95%, and we didn't see any change in that in Q1. Again, we had a shorter quarter. We ended the quarter on the 27th. And so depending on when the quarter ends can impact the timing of renewals. But we didn't see any change, really, to the renewal rate.

Mark Murphy - Piper Jaffray Companies

Okay. And then also just following up on a couple of earlier questions, why exactly did some of the collections slip into early Q2? Or kind of what was it that caused the collections activity to be less predictable than it has been in the recent past?

Sydney Carey

Again, it was just the timing of filling in the collections. There really wasn't anything material to why that happened. So again, the 74-day DSO has been in a range that we've been in historically. Last year, DSOs were very good, but we’re not in a range that we haven't been in.

Vivek Ranadivé

Our license revenues are dramatically up. There was a lot of pressure on the team to just keep closing the deals that we have coming in, and there were three days less in the quarter. So it's a variety of factors, but I think it's within what we've always done.

Sydney Carey

Yes.

Mark Murphy - Piper Jaffray Companies

Yes, okay. And then, Vivek, also, I'm wondering maybe how you feel just about the texture of the deal pipeline moving forward. Specifically, is it mixing -- is the mix shifting more towards larger deals than it did, say, last year? And then also, just in terms of the financial services piece of the pipeline, does it feel generally like -- would it be logical that at this point in the cycle that the financial services portion of the pipeline is maybe going to flatten out a little and that the kind of the uplift in the growth that you're seeing will be in the other verticals?

Vivek Ranadivé

I think what we're seeing is strength across the board. And yes, there's new verticals, like retail and government, that are showing a great deal of strength. But we also have a lot of opportunity in the financial vertical. They continue to spend money. And then this FTL announcement, that's a huge catalyst for growth in that vertical as well. And the deal sizes are potentially getting bigger. We prefer the smaller deals, but customers are now coming back to us and saying look, we just want the whole platform and will you license it to us. And they're throwing out big numbers to us. And so the deal sizes are starting to look bigger. We're trying to keep it small and spread it out, but it would be accurate to say that if you look at the pipeline, number one, the pipeline is the strongest we've ever seen it, and number two, there are deals in it that are larger in size.

Operator

Our next question will come from Tim Klasell from Stifel Nicolas.

Tim Klasell - Stifel, Nicolaus & Co., Inc.

Just a couple of questions. On tibbr, what other products does that help pull along, and a part for that is -- that product, it’s been out for a little while, but it seems like about a year and a half or so at least as far as the beta. What's causing the acceleration there? Because I certainly sense some acceleration with that product set.

Vivek Ranadivé

We actually GA-ed it only like two months ago. So we had it in beta internally for a while, with some partners. We didn't really GA the product until, I think it was about two months ago. And so in two months, we've signed on 100,000 users, and it's just an amazing product. It's become an inbox, universal inbox. We believe that we'll have it on 10 million users within the next five years, and we're on a path to achieve that kind of growth. And what's interesting about it is we have customers like CIBER that were never customers, and they're using it. And then we have customers that are existing customers, like MGM casinos, and they are adding it on. And both types of customers are then going back and buying other parts of the TIBCO stack in order to make sense out of the events and do things with it. And so it works both ways. And so we can sell into our existing customer base. We can sell it to new customers who will then buy new products from us, and then we can sell it into our existing customer base, and they, too, will then buy other products as a result of that. It's a corporate event tracker. It becomes also an inbox. And we have customers where they pulled out things like Chatter and Yammer because those things were too restrictive. It's offered on premise. It's offered in the cloud. It allows you to follow people and allows you to follow subjects. It's very easy to use. You can call live. We've had customers literally deploy it in a matter of a couple of hours. We've had customers who said they wanted to start with 50 copies, and they come back to us a day later and say we want to make it 10,000 copies. So this is -- it's taking off like a rocket. We have such huge demand for this product. It's another area where we are behind on hiring. The key to our growth is having what we call a community manager. That's a person who manages the community in each client, and we need to hire many more of those. So we're very excited about the way this is going.

Tim Klasell - Stifel, Nicolaus & Co., Inc.

Okay. So we think 10 million users in five years. If I look at your standard price sheets, is this going to become a reportable line, or will you break this out as a separate product set? And where is it being reported right now?

Vivek Ranadivé

I think over time, what we want to look at doing -- and we haven't really gotten to the bottom of this, is that we're starting -- we think we'll start having more and more cloud subscription revenue, and we might start looking at that without maintenance. So we think it's a huge opportunity, both in terms of revenue but also in terms of what other products you can sell to back into it.

Tim Klasell - Stifel, Nicolaus & Co., Inc.

Okay, great. And then just a quick question on the retail vertical. Should we expect a little bit of seasonality there? I've seen it in other companies where the retail prefers to buy in the first half of the year as in the second half of the year, they get tied up with the holiday season and not want to make substantial changes to their infrastructure. Is that something we should expect, or do you think you'll...

Vivek Ranadivé

It's still a small part of our total business, and the things that we're doing there, they're not based on -- they're fundamental. So what people are doing is fundamentally changing their architecture. They don't want -- what's the point on making you an offer six months after you go home and you getting a coupon in the mail. They don't even want to wait until you leave the aisle, let alone until you leave the store. And these companies -- the opportunity is huge, and they're moving from that database to an event-driven architecture. So we're not seeing that cyclicality, but it's a small part of our business right now.

Operator

And our final question will come from Steve Koenig from Longbow Insurance.

Steven Koenig - Longbow Research LLC

It's Longbow Research. If I could do one question, one follow-up, that would be great. The initial question is -- perhaps, Vivek, you could comment on both multi-element deals and also cross-selling, what products to what base? Any particular trends you're seeing this quarter or last few quarters that are noteworthy that you'd like to comment on?

Vivek Ranadivé

Yes, one of the most underexploited elements of our portfolio is that we've now got Spotfire integrated with our BPM and Business Events products. And that represents a huge, huge up-sell, cross-sell opportunity for us. So we see or we expect a lot more momentum in that business. And so you go from having dozens of sales people to having over 200 sales people in that. So that's one huge opportunity. But really, across the board, we're seeing that we can go into a customer that's bought SOA and then go sell them BPM, go sell them Business Events or, conversely, a customer that buys BE then backs into buying BPM and the rest of the stack. This is a huge opportunity for our company, and so far, we've been focused on the land grab and getting as many customers as possible. And now our focus will start shifting to getting much better at doing that kind of up-sell, cross-sell. And Spotfire is a good example of how we hope to do that.

Steven Koenig - Longbow Research LLC

Great. And then related to that, the follow-up would be what kind of -- are you seeing any initial traction with Silver, or is it still early days? Is there meaningful revenue yet? And if I could just toss in, I’d also love your comments on -- I mean, Q1 is usually a time in which software companies see sales turnovers. Was it the same as usual or lower or higher this year?

Murray Rode

Yes, Silver, I think the broader Silver platform is still early days as you say. I think we continue to feel very positive about the overall cloud story that we have today and the combination of products and what that represents for an offering as we go into the future. So now we have core infrastructure under the Silver banner, and we also have Spotfire as a cloud product under Silver, and then things like tibbr and the Loyalty Lab solutions. So there's a really good mix of products going forward there. In terms of the sales turnover, it was pretty typical, a little bit lower than past years, I believe.

Operator

At this time, I will turn it back over to Vivek for closing remarks.

Vivek Ranadivé

We will conclude this call. Thanks, everyone, for joining us, and have a good day.

Operator

Thank you for joining us. We will now conclude TIBCO's Q1 2011 Earnings Conference Call.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Tibco Software's CEO Discusses Q1 2011 Results - Earnings Call Transcript
This Transcript
All Transcripts