Datawatch Corporation (NASDAQ:DWCH)
F3Q11 Earnings Call
July 28, 2011 16:30 ET
Dan Incropera – VP & Corporate Controller
Michael A. Morrison – Chief Executive Officer
Murray P. Fish – Chief Financial Officer
James Fronda – Sidoti & Company.
George Marina – Private Investor
Doug Foley – Private Investor
Greetings and welcome to the Datawatch Corporation third quarter 2011 conference call. At this time all participants are in a listen-only mode. (Operator Instructions).
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Dan Incropera, Controller for Datawatch Corporation. Thank you Mr. Incropera, you may begin.
Thank you. Good afternoon, everyone. Thank you for joining us today for the Datawatch Corporation third quarter fiscal year 2011 earnings conference call. I'm Dan Incropera, Vice President and Controller at Datawatch.
Joining me today is Michael Morrison, our President and CEO; and Murray Fish, our Chief Financial Officer and Vice President of Finance.
You can obtain a copy of our earnings release, which was distributed at 4 o'clock P.M. Eastern Time today by emailing us at email@example.com. This release is also available on our website at www.datawatch.com. Let me first outline for you this afternoon's agenda.
Following a reading of our Safe Harbor statement, Michael will provide some general comments and an update on the business. Murray will then present a discussion of our third quarter 2011 financial results. Following our prepared remarks, we will open up the call for question-and-answer session.
Before we begin, I'd like to review our Safe Harbor statement with you. While we do not share projections of our future performance, we do need 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 based on our current expectations, but are subject to a number of risks and uncertainties that could cause actual results to differ materially from current expectations.
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, 2010, its quarterly report on Form 10-Q for the quarters ended December 31, 2010 and March 31, 2011 and other publicly available documents filed with the SEC. Any forward-looking statements should be considered in light of those factors.
I will now turn the call over to Michael for a discussion of business results.
Thanks, Dan, and thank you all for joining us this afternoon. I will turn the call over to Murray surely, but first I want to share some brief comments about our Q3 performance. After Murray provides additional details on this performance I'll comeback and talk about our just completed quarter as well as the overall market and our plans moving forward.
Total revenues for Q3 were $4.41 million, down 4% from total revenues in the same quarter a year ago. License revenue were $2.4 million, a 2% decline from the comparable quarter a year ago.
Net income for the quarter was $213,000 or $0.03 per diluted share compared to net income of $222,000 or $0.04 per diluted share from a year ago.
We ended the quarter with $8.26 million in cash and investments, which was up 17% from $7.05 million at the end of our last fiscal year.
I will now turn it over to Murray to give you more details on our financial results.
Thank you, Michael. Good afternoon. For those of you who may have not seen our results released earlier today, our total revenues for the third quarter fiscal year 2011 of $4.41 million as compared to $4.9 million for the third quarter of fiscal year 2010.
Revenue decreased $180,000 or 4% quarter over quarter. The third quarter of fiscal year 2011, revenues from licenses were $2.4 million as compared to $2.46 million for the third quarter of fiscal year 2010. As a percentage of revenue software license revenue accounted for 54% of revenue for both the third quarter of fiscal year 2011 and 2010.
For the third quarter of fiscal year 2011, revenues from maintenance and services were $2.01 million as compared to $2.13 million for the third quarter of fiscal year 2010. As a percentage of revenue, maintenance and services accounted for 46% of revenues for both the third quarter of fiscal year 2011 and 2010.
Report analytic solutions, report management on demand solutions, and business service management solution product revenues were 79%, 13%, and 8% of total revenues for the third quarter of fiscal year 2011 as compared to 70%, 21%, and 9% for the third quarter of fiscal year 2010.
Domestic revenues and international revenues were 76% and 24% of total revenues for the third quarter of fiscal year 2011 and were 75% and 25% of total revenues for third quarter of fiscal year 2010.
Gross margin for software licenses were 78% for the third quarter fiscal year 2011 as compared to 76% for the third quarter fiscal year 2010. Gross margins for maintenance and services was 67% for the third quarter of fiscal year 2011 and 66% for the third quarter of fiscal year 2010. Overall, total gross margins were 73% for the third quarter of fiscal year 2011 as compared to 71% for the third quarter of fiscal year 2010.
Sales and marketing expenses increased by $143,000 or 10% in the third quarter of fiscal year 2011 as compared to the third quarter of fiscal year 2010. Sales and marketing expenses as a percentage of revenues were 34% for the third quarter of fiscal year 2011 as compared to 30% for the third quarter of fiscal year 2010.
This increase is primarily attributable to higher headcount and related costs, such as benefits and travel problem and increase as in marketing programs regeneration and consulting costs.
Engineering and product development expenses decreased by $27,000 or 4% in the third quarter of fiscal year 2011 as compared to third quarter of fiscal year 2010. Engineering and product development expenses as a percentage of revenues were 14% for both the third quarter of fiscal year 2011 and 2010. The decrease in engineering and product development expenses is primarily due to lower headcount and related costs and external consulting costs.
General and administrative expenses decreased by $60,000 or 6% in the third quarter of fiscal year 2011 over the fiscal year 2010. General and administrative expenses as a percentage of revenues was 21% for both the third quarter of fiscal year 2011 and 2010. This decrease is primarily attributable to lower headcount and related costs and lower professional services fees.
The net income for the third quarter of fiscal year 2011 was $213,000 or $0.03 per diluted share as compared to net income of $222,000 or $0.04 per diluted share for the third quarter of fiscal year 2010.
For the year-to-date results, our total revenues for the first nine months of fiscal year 2011 was $13.05 million as compared to $13.4 million for the first nine months of fiscal year 2010. Revenue decreased by $352,000 or 3% year-over-year.
For the first nine months of fiscal year 2011, revenues from licenses were $7.06 million as compared to $7.22 million for the first nine months of fiscal year 2010. As a percentage of revenue, software license revenue accounted for 54% of revenue for both the first nine months of fiscal year 2011 and 2010.
Revenues for maintenances and services for the first nine months of fiscal year 2011 were $5.98 million as compared to $6.18 million for the first nine months of fiscal year 2010. As a percentage of revenue, maintenance and services accounted for 46% of revenues for both the first nine months of fiscal year 2011 and 2010.
Report analytic solutions, report management on demand solutions, and business service management solution product revenues were 75%, 16%, and 9% of total revenues for the first nine months of fiscal year 2011 as compared to 70%, 19%, and 11% for the first nine months of fiscal year 2010.
Domestic revenues and international revenue was 76% and 24% of total revenues for the first nine months of fiscal year 2011, as compared to 75% and 25% for the first nine months of fiscal year 2010. Gross margins for software licenses were 76% for the first nine months of fiscal year 2011 as compared to 75% of the first nine months of fiscal year 2010.
Gross margins for maintenance and services were 68% for the nine months of fiscal year 2011 and 64% for the first nine months of fiscal year 2010. Overall, total gross margins was 72% for the nine months of fiscal year 2011 as compared to 78% of first nine months of fiscal year 2010.
Sales and marketing expenses decreased by $286,000 or 6% in the first nine months of fiscal year 2011 over the first nine months of fiscal year 2010. Sales and marketing expenses as a percentage of revenues were 32% for the first nine months of fiscal year 2011 as compared to 34% for the first nine months of fiscal year 2010.
This decrease is primarily attributable to lower headcount and related costs such as commissions and travel, lower consulting costs and lower amortization costs.
Engineering and product development expenses decreased by $162,000 or 8% in the first nine months of fiscal year 2011 over the first nine months of fiscal year 2010.
Engineering and product development expenses as a percentage of revenues were 14% of the first nine months of fiscal year 2011 as compared to 15% for the first nine months of fiscal year 2010. The decrease in engineering and product development expenses is primarily due to lower headcount and related costs and lower external consulting costs.
General and administrative expenses increased by $649,000 or 22% in the first nine months of fiscal year 2011 over the first nine months of fiscal year 2010. General and administrative expenses as a percentage of revenues were 26% for the first nine months of fiscal year 2011 and 21% for the first nine months of fiscal year 2010.
This increase is primarily attributable to severance costs of $641,000 related to restructuring to align sales and marketing operations with the Company's new business strategy.
The net loss for the first nine months of fiscal year 2011 was $69,000 or negative $0.01 per diluted share as compared to a net loss of $75,000 or negative $0.01 per diluted share for the first nine months of fiscal year 2010.
Excluding the effects of the restructuring charge, the Company's non GAAP net income for the nine months ended June 30, 2011 would have been $572,000 or $0.09 per diluted share. As of March 31, 2011 the Company had $8,262,000 in net cash and cash equivalents an increase of a $1,209,000 or 17% as compared to September 30, 2010. Michael?
Thanks Murray. This past quarter, the first full quarter during this transition period, we set several key objectives for Datawatch as part of our plan to focus the Company on the areas of greatest opportunity to foster our long-term growth.
These priorities include, first, building up a core team in sales and marketing to position us to capture the substantial market opportunity that we see in front of us. Second, reengaging with customers and partners to promote our products and our value in the market. Third, exploring new avenues to maximize our sales through the distribution channel. Fourth, continuing to enhance and optimize our product platform, and lastly meeting with industry analyst to ensure that they understand Datawatch today and recognize what we bring in terms of our differentiated solutions.
We made significant progress towards achieving all of these objectives in this past quarter. We hired 16 new people in customer facing sales and marketing positions. We established relations with many long-time customers and partners and are leveraging their experiences and successes to drive new sales opportunity.
We kicked up several new programs with our distribution channels with a goal of increasing what has historically been a very steady Monarch license revenue stream. Some of these program will come on line during our fourth quarter and should be in contributing to our top line growth in the coming quarters.
We also spent considerable time this past quarter with industry analysts and other influencers, briefing them on the sizable opportunity that we believe Datawatch is poised to take advantage of, and sharing with them how our report analytic strategy is a critical aspect of any business intelligence or data warehousing strategy.
The manner in which we addressed reporting in data integration with our Monarch Report Analytics platform is truly unique in the market. It's imperative that we take advantage of every opportunity to share our story in our differentiated solutions with all of these important influencers.
We truly see Datawatch going forward as a markedly different company than it has been in the past and we want to help our key audiences understand how that that benefits them. Altogether, I believe that our focus in success in addressing our objective this past quarter with meaningful action has put us in a much improved position to generate profitable revenue growth in the coming quarters and years.
As we look forward, we are singularly focused on driving that profitable revenue growth. This all starts with pipeline building, utilizing multiple lead generation programs and initiatives that target both new name prospects and existing customers. In the just completely quarter, we delivered 22 unique lead generation programs and we have 48 programs either currently in process or planned for execution this quarter.
All of this activity is generating good pipeline growth and customer interest in Datawatch solutions. It makes us all the more confident that we will be able build long-term sustainable revenue growth.
We're also investing and targeted geographic expansion to meet current and future customer needs. Earlier this month, we opened an office in Munich to service Germany, Switzerland and Austria, where we already have more than 2,000 customers. We brought on board a seasoned sales leader, Patrick Benoit, to drive our growth in this market.
Patrick is a veteran, with Oracle, Cognos and Applix and understands the value that we can provide both in this geographic market and relative to the traditional business intelligence vendors.
We've made progress extending our partner ecosystem, an important area of the emphasis as I have mentioned previously. In the U.S., we've signed on industry specialists, break-away technologies, Data41 and Cogent to resell and implement our report analytic solutions.
On an international basis, we've entered into several distribution agreements to extend our geographic reach, with shade in South America; Serial and date in Malaysia; and quantalytic in Australia, we have recently entered into an important technology alliance agreement with QlikTech, one of the fasters going vendors in the business intelligent in analytic space.
We are aggressively pursuing additional opportunities to extend our reach and our value to a vibrant partner ecosystem, and you should expect to see additional partnership announcements from us in the coming quarters.
Moving to our technology, we continue to innovate and strength in our product portfolio. This past quarter, we announced the latest release of Monarch Report Manager on Demand with enhanced integration with Microsoft SharePoint.
And after the second quarter closed, we announced the availability of Monarch 11, the most important and impressive release of our flagship product in the history of the company.
Monarch 11 brings self-services reporting in analytics to a whole new level and raises the bar for reporting against data tracking, existing reports and business documents. We are very pleased with the initial reaction to Monarch 11, both from customers and prospects, as well as from the many influencers we've been in contact with. All of this enthusiasm helps fill important visibility and demand for Datawatch and our solutions.
Speaking of customers, in Q3, we continue to add to our impressive global customer base. We had key wins in the financial services industry with Citibank in Egypt, Standard Chartered in Singapore, and Royal Bank of Canada. We had a Blue Chip names in the U.S., such as UPS, Hewlett-Packard and Foxwoods. We now count 99 of the Fortune 100 as customers, as well as 95% of the Fortune 500.s
In an example of our industry penetration, last week U.S. News & World Report ranked the top 17 hospitals in the nation. All 17 of these prestigious medical centers are Datawatch customers. The scope and breadth of our customer base is an impressive advantage for us and one we intent to leverage it over time.
In summary, we made good progress this past quarter, transitioning to a growth strategy that positions Datawatch for long-term financial and operational success. We have much more work to do, but I'm encouraged by our progress and the response we are receiving from customers, partners, and the industry.
So we continue to move forward with this transition, we will undoubtedly face challenges in market dynamics that could impact quarterly results, I strongly believe, however, that with our product platform, our strategy and the new talents that we've added, we will transform Datawatch and build with solid growth trajectory. One that enhances long-term shareholder value. I'm looking-forward to speaking more regularly with the investment community about our plans and our progress.
And with that, I'll turn the call back to Stacey, if there is any question.
Thank you. (Operator Instructions) Our first question comes from James Fronda with Sidoti & Company.
James Fronda – Sidoti & Company
Hey guys, how are you?
James, how are you?
James Fronda – Sidoti & Company
Pretty good, pretty good. Thanks. I guess, you said you hired 16 sales people during the quarter, is that correct?
Sales and marketing, yes.
James Fronda – Sidoti & Company
Okay, okay. And I guess for that number of the selling expenses, I mean do you think that will stay relatively flat going forward or do you think that will creep up a little bit, you are looking to hire more guys?
We are planning to continue to invest in sales and presales folks, as well as the marketing support, fragment support, so that number will creep up.
James Fronda – Sidoti & Company
Okay. And I guess the market you're going after, I mean are you looking to sell to newer clients, or you're looking for existing clients for upgrade, what's the story there?
We've got both opportunities.
James Fronda – Sidoti & Company
We've got great opportunities in our install base, it's very large and there is a great opportunity to up-sell then into the broader portfolio, but a large percentage of our marketing spend right now is to attract new name prospects into the fold and we closed several this past quarter. There is a good chunk in the pipeline. So we've got a, I can't give you a percentage on what the mix will be going forward, but we've got good opportunities both in base and with new name prospects.
James Fronda – Sidoti & Company
Okay. And I mean, I've noticed the cash is still creeping, I mean, do you have any intentions or any idea what you're going to do with that?
We have no plans for it at this time.
James Fronda – Sidoti & Company
Okay. All right. All right. Good quarter guys. Thank you.
(Operator Instruction) Our next question comes from George Marina, Private Investor.
Thanks for taking my call Michael.
Hi George. How are you?
Good. Thank you. I had few questions, on your pipeline strengthening with strategic enterprise opportunities, are there some various vertical OEMs in this pipeline? Or this is all direct sales?
It's all direct that when I referenced pipeline earlier I was referencing the direct pipeline. We do have opportunities in the OEM world that we are pursuing as well. Those partnerships will play out over the next several quarters, but aren't reflected in the current pipeline.
And on the installed base, you had mentioned earlier about you had 90% odd of fortune 100 and fortune 500 companies in your portfolio. What -- in terms of your install base with these companies, is there a lot of low hanging low hanging fruit there or what sort of further penetration is available there?
Well, there is – the vast majority of those customers are Monarch desktop customers. So there is – and some have hand full of copies and some have thousands of copies. They all have the potential to take advantage of the rest of our portfolio to automate the practices that they have been pursuing with Monarch over the years to make the work products available over the web for distribution in the self-service consumerization of it. So, we've got a – we've got several programs in place to try to educate our customer base and attract them to move to the broader portfolio.
Okay. On your German press release, a couple weeks back there you had mentioned that the Monarch report analytics have some particular value to companies implementing and working with SAP, what is your – what are those particular values if you can speak to that. Also, what's your go-to-market strategy to integrate with SAP products?
To get to your first question, I mean SAP is fairly well known for having some challenging reporting in that broad portfolio, their reporting products and reporting vendors have built up a multi-billion dollar industry around SAP, ERT implementations – we SAP delivers to market with the tier 3 application, 4,500 CAN reports with their application.
The nature of our solution where we take advantage of those CAN report some of those CAN reports are valuable. But SAP users often times find that that they need to combine the data from one or two or more those SAP reports, or be able to interact with the reports., where they can't do with just the CAN report that comes out of SAP. Our ability to layer over the top of those CAN reports and activate them or bring them to life, make them dynamic is very useful.
And the nature of the buying practice in that market place, where it's a very disciplined buying practice where they put software vendors through the pacers and we have a solution that the holds up particular well there. The two of those combined it gives me a lot of confidence that there is a big opportunity there and we – as I know that we have 2,000 customers in that region, in Germanic region and we have not had a direct presence there in many years, putting people on the ground to proactively exploit the opportunity is a – I believe it's a good opportunity there.
Okay. Any particular go-to-market strategy to because obviously the SAP market is a use markets?
There is no particular strategy with respect to SAP itself. We are in some early stage conversations with some key SAP implementation partners, where I think we can provide a tremendous amount of value to their business, where they can provide a much quicker value to their any user customers by implementing a report analytic solution like ours. And while there is nothing to report now, there is some promising conversations underway.
Excellent. And that would be – one more quick question, on your long term goals as your mix evolves into, you know, maybe more OEM business etcetera, what are your long-term goals in terms of growth and operating margins?
Without putting a specific number on it, I think we have an opportunity to take what we've got today and grow it into a much more meaningful organization. It's too early, I mean we're just five months under my belt here, it's too early to put targets on it like 50 million or 100 million or any other number. But there is a very promising opportunity and as I look at the market we address where the used cases are so ubiquitous across the company. We've got – what we do is take existing reports and business documents that company struggled with and struggled getting value of it and we make those useful dynamic intelligent and allow them to get value out of those reports, there is a world of opportunities, everyone of our customers in every prospect. So, I have brand ambitions, but again I don't want to put a financial metric on it quite yet.
Okay. Thank you for taking my questions.
Our next question comes from Doug Foley private investor.
Yeah, good morning guys.
Hey, Doug. how are you?
Good. Listen, thanks I just wanted to say I've been really impressed, the financial metrics of course haven't moved a lot yet, but you guys are clearly outstanding still, when you look at the marketing program, staffing, market positioning and so forth, it's very clear that you have a lot of people working very hard to move this thing forward and from the investment side, that's exciting. I wanted to ask just a couple of quick questions, one is going back to the 16 new staff under sales marketing and I know you've been bringing in some new people, if you were to turn the clock back 6 months or 12 months, is that what the same staffing level in sales market you've been are those all in addition to or can you give me sense of how much it's grown?
There is a modest increment of people, so it's probably less than five.
So, it's mostly a churn.
Yeah, all right. And I know or I'm assuming that you're bringing in veterans in terms of the BI space in general, but can you give me a sense Michael, how what the learning curve is in terms if you bring someone this month, how long it typically takes them to start ramping up in terms of being productive and anything you can share on that?
Well, first, we are bringing in folks that have been in the space that have been very successful in the space that know they can get it. That said, we do something that's quite unique, I mean, the traditional BI space where it's virtue of relational database and we'll connect to it and extract from it and then we will build our solution. We have a different value propositions, so there is a bit of learning curve there, but good people, good sales and presales people picking up fairly quickly, we've had – the typical ramp time, I think a new sales person in the BI or performance management space in general is 9 to 12 months, I believe ours is going to be less than that.
It's too early to provide metrics, but it certainly won't be more than that. I wouldn't be surprised if it's the same.
All right, it sounds good. Any other feedback that you can share when you are talking to industry analysts and growing out with the, I guess, new message about Datawatch, where you are positioning the company and positioning with your reporting tools. Are they surprised or they excited, are their eyes, you know, are they lighting up or what kind of feedback you are getting?
What I'm getting fairly consistently is and I said this to a talk the other day that, you know, the first half hour you're talking to them, you are getting an uplink stairs, but somewhat puzzled looks and after you talk long enough and it starts to sync in, what we do is a time so obvious, but yet so unexpected in the marketplace that it takes a little bit of time to sync in and when they start to get that – also you can take data that's in a PDF and make it useable or you can reach into a content management system and pull out the nuggets of information you need to push into a warehouse or push it into BI report or combine it with another report. Once they get that the life bulb goes off and they start, when I was over in Germany with the Bark, who is Barks like the Gartner group of Germany. They are most well respected industry analyst from firm in that country in that area and after a while he got and he said, I had five calls as past week and each one of them I can see where your product and product solution could have it played into it.
So, there is an education process that needs to happen. There is generally an awareness that Datawatch has been out there for a while, but not really in the awareness of what we do and now that we are reengaging with them and we were telling them our story, it takes a little bit of time, but they get it, and they see where the opportunity is. It's a constant process to keep in their face and keep repeating and staying on their agenda, but it's very positive because at the end of day, I mean, all the analyst independent of us are sounding the – they are all taking about self-service reporting in how important that is in the market today, and how the market went to it in a extreme with the enterprise platform place. And the end users have historically had challenges and difficulty getting any value out of them and pendulum swing back to the business user to self service BI and that's our sweet spot. So where the market's going is where we performed the best.
We still have a lot of work to do, to get out into the marketplace, get our message out there, get known better, and get on some folks' radar screen, but can see where, if we do that right the stars are aligning for what we do.
That's great. Do you – when you look forward over the next 12 months are there some of these industry analyst reports where Datawatch might pop up where it hasn't been, is there a Gartner magic quadrangular and operating report you think that you might start appearing where you have been in the past.
We probably won't be in the Gartner magic quadrant and quarter one of it, one of the good and bad of it is that in Gartner, you need to, you look at quarter and then get the BI quadrant and the platform quadrant and I briefed at least a half dozen Gartner analysts insight done here and they also – a person will tell me that the challenged with you is that you don't really fit into one year. You are kind to BI and you are not a kind of data integration and you are not – and you are kind of ETL but you are not, which is good and bad, I mean, the bad part of it is, it's hard for this for analyst to sort of track it down or to put us in the certain space.
And the good part is, we do something that's very unique and once the awareness of our approach gets out there, I think there is going to be tremendous uptick because our message is we are not in alternative to BI, we are not an alternative data warehouses, we are not an alternatives to ETL, and complemented it all because there is reports of it that say the 80% of the data in organizations doesn't live in relational databases, now it's PDF, it's in content management system, it's in social media. And all of that needs to be, you know, analyzed as part of the corporate decision-making process. We can help all the traditional players get at that, not all of that, but a good chunk of that data that doesn't easily lend itself to getting itself inside the relational data base or a data warehouse and I think the overall market is not entirely attuned to it quite yet, but I'm confident it will be in the next 12 or 24 months.
Yeah, you know, that sounds you're building a great foundation here to start with, so congratulations and I'll let someone else hop on.. Thanks guys.
(Operator instructions) We have another question from Mr. George Marina.
Hi, I had another area I wanted to kind of walk on for a minute is the R&D, correct me if I'm wrong, but from memory, I think there was a third-party individual that was sort of hired by Datawatch to help develop new software and I wanted to learn about the current R&D team up keep and the technology fresh and the strategy of acquisition. What I understand from you and others is that while your product is very good, still a long way to go for perfection in the years ahead. And just, you know what your strategy is for that and all that?
Well, on the R&D front, Harvey Gross is our Chief Technology Officer and Head of Engineering in product management. So we've got a vibrant engineering organization who is, as I mentioned earlier, we just released Monarch 11. And if you haven't seen it, you ought to take a look at it. It's available free trial zone download for 30 days off our website. It's really impressive. And we're getting a good uptake from that by the way from a lot of the lead programs that we're running.
The organization is – we've had three or four other new releases of the portfolio components this past year. We've got several more on the immediate horizon. My view of Datawatch and our == the opportunity in where we're going. If you look at the three legged stool of the software company, it's sales and marketing and products. Product is the least of our work. We have a very, very impressive product that customer's love, I mean, customers are passionate, they're very loyal. In the software world there is always a lot of stuff you can do it with software. Sometimes too much, I mean you don't want to go report. So there is always areas to improve, but we've got, we've got a very, very solid product foundation, that's not going to be any kind of headwind for us as we look forward, it's really the other aspects of the business that we put the energy and where we can really get the leverage out of it.
Gentlemen, there are no further questions at this time.
Well, thank you Stacey and thank you all for your interest in Datawatch. Please feel free to contact me if you have any questions, and we look forward to speaking with you as we complete our fiscal year.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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