Callidus Software's (CALD) CEO Leslie Stretch on Q4 2015 Results - Earnings Call Transcript

| About: Callidus Software, (CALD)

Callidus Software, Inc. (NASDAQ:CALD)

Q4 2015 Earnings Conference Call

February 9, 2016 16:30 ET

Executives

Bob Corey - Chief Financial Officer

Leslie Stretch - President and Chief Executive Officer

Analysts

Richard Baldry - ROTH Capital Partners

Katherine Egbert - Piper Jaffray

Kyle Chen - Credit Suisse

Jeff Houston - Northland Securities

Daniel Greenfield - Oppenheimer & Company

Chad Bennett - Craig-Hallum

Eric Martinuzzi - Lake Street Capital Markets

Kevin Liu - B. Riley

Operator

Good day, ladies and gentlemen and welcome to the CallidusCloud Fourth Quarter and Full Year 2015 Earnings Call. My name is Whitley and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Chief Financial Officer, Bob Corey. Please proceed.

Bob Corey

Great. Well, thank you operator and welcome to the CallidusCloud’s fourth quarter 2015 financial results conference call. We issued our earnings press release a short time ago and furnished the related Form 8-K to the SEC. To access the press release, please see the Investor Relations page of our website at calliduscloud.com.

With me on the call today is Leslie Stretch, our President and CEO. The primary purpose of today’s call is to discuss our fourth quarter results and annual results as well.

Before we begin, please remember that during the course of this call, we may make forward-looking statements about the operations and future results of CallidusCloud or otherwise that naturally involve many assumptions, risks and uncertainties. If any of the risks or uncertainties develops or any of the assumptions prove incorrect, actual results could differ materially from those expressed or implied by our forward-looking statements.

For a discussion of the risks associated with our forward-looking statements, please refer to the text in the company’s press release issued today and to our periodic reports filed with the Securities and Exchange Commission, including our most recent 10-K and 10-Q filings. We disclaim any obligation to update any forward-looking statements.

On today’s call, we will refer to both GAAP and non-GAAP financial measures. The financial figures discussed today are non-GAAP unless stated that the measure is a GAAP number. All revenue numbers are GAAP. Please refer to today’s press release for a reconciliation of the GAAP to non-GAAP financial performance and additional disclosures regarding these measures.

Additionally, in conjunction with the release of our earnings report, we have posted on our website at calliduscloud.com under the Investor Relations tab additional charts that turn to identify performance metrics that we believe will aid in understanding and evaluating our performance over time.

With that said, I will now turn the call over to Leslie.

Leslie Stretch

Thank you, Bob. Good afternoon, everyone. Firstly, I would like to briefly recap fiscal year 2015. Secondly, I will review the main achievements of the company in Q4 2015. And finally, I will close my prepared remarks with a brief commentary on business drivers and our outlook for 2016 and beyond.

Before I begin though, I want to thank all of the CallidusCloud team for their efforts in a record breaking year, highlighted by a 42% increase in annual contract value bookings over the prior year, 38% SaaS revenue growth and record non-GAAP profitability. In the year, we also generated cash at a record level. We signed over 500 new customers, made progress in our international business and converted 11 existing large commission customers to the cloud. We have record revenue and record bookings with our systems integrators and independent software vendor partners. We made progress in our salesforce.com, Microsoft and Workday partnerships and also moved our SAP relationships forwards. We entered joint initiative for revenue sharing with Accenture and Deloitte became our fastest growing SI partner. It was our best year on record for cross-sell and up-sell and we signed 81 multi-product deals in the year, up over 40% from 2014.

A record number of telcos and financial services companies now use one or more of our solutions. In fact, 150 of the world’s top financial services companies use our solutions from Fidelity to AIG, AXA to Aetna, State Farm to WellPoint. 75 of the world’s top telcos use our solutions from Verizon to Vodafone to AT&T and Sprint, for Mobistar to Etisalat. A number of the world’s top technology companies are customers from VMC to Lenovo to Intel.

Turning to Q4 specifically, we have the largest SaaS bookings quarter in our history. I was delighted by the efforts of our sales team across the globe. We prosecuted cloud deals in Latin America, Asia-Pacific and EMEA in Q4. We had another excellent quarter for our incentives platform. Key Q4 wins included a leading multinational financial services corporation and a 7-figure incentive commissions deal; a new win at AT&T in Mexico for commissions; Cushman & Wakefield, a global commercial real estate services company for commissions; Henry Schein, a worldwide distributor of dental and medical supplies for commissions; and Rackspace, a cloud computing services leader where we replaced the competitors single threaded commission solution with a multi-product solution. BBVA Compass, a major regional bank; Ooredoo, Algeria, a telecommunications leader; Alcoa, a global leader in metals technology; and AssetMark, a leading provider of investment solutions, these were just some of the commissions wins in the quarter, many selecting multiple products alongside the incentives platform.

For example, Blue Cross Blue Shield of Arizona, a leading health insurance company, chose CallidusCloud for incentives with its mobile learning and producer pro for on-boarding. We also had three more conversations to the cloud in the quarter bringing our total conversion count to 11 in 2015. The current conversion pipeline is strong. Our configure, price and quote and sales execution business continued to perform strongly, with key wins including BuildingLogix, a building energy management company; Comlink, a telecommunications service provider, logistics, safety and risk management company for the fleet industry; Maroline Distribution, a distributor of high-end kitchen appliances; and Mimecast, an international cloud-based e-mail management company; Nihon Kohden, a global manufacturer of medical electronic equipment; Stanco Painting, a construction contractors company; and ViaWest, a hybrid infrastructure solutions company all bought CPQ. For Litmos mobile learning, we signed Prudential, Hilton, Stanford Center for Clinical Research, Hitachi, Monterey Bay Aquarium; Glassdoor; Bridgewater, an American investment management firm, and DiscoverOrg, a leading sales and marketing intelligence website selected our Litmos mobile learning platform.

For customer feedback solutions, Intel, Google, U.S. Foods, Country Road Group, an Australian clothing retailer, and Everton Football Club in England all selected Clicktools. For lead management solutions, ReachLeads, a B2B lead generation business; Car Technologies, a global SAP consulting company; and Walmart Plc, the world’s best selling underfloor heating brand all selected our lead management solutions.

Now, I want to briefly review our growth drivers and outlook for 2016. Beginning with our partner retail system, our channel delivered a record breaking performance in Q4, growing its contribution by 60% year-over-year. We continue to add partners to expand our reach, whilst increasing our investments with our existing alliances. In December, we hosted all our major partners in Las Vegas and announced a program of new incentives and enablement initiatives designed to drive the adoption of Lead to Money in our channel.

I personally met with all our key partners: Accenture, Deloitte, OpenSymmetry, salesforce.com, Sugar CRM and others. Our new incentives drove partner execution in Q4 already and I believe will continue to have a positive impact in 2016. The Partners Summit was really one of the best channel meetings I have ever attended. The event followed on the heels of our High Tech Summit earlier in the quarter, where thought leaders from Deloitte sponsored the event and joined me for a keynote around our predicted analytics capabilities.

We formed the new joint venture revenue share initiative with Accenture to drive success and our refresh partnership with Deloitte is proving to yield super results as I said. They are our fastest growing partner in 2015. OpenSymmetry had a great Q4 with CallidusCloud partnering and one of the largest financial services cloud implementations ever. We have added new channel personnel already in Q1 to further extend our geographic reach and accelerates our partnerships with independent software vendors, systems integrators and consulting partners. I believe that leverage through a strong and diverse partner ecosystem is a key driver for us and this is a vital investment focus.

Let me now talk about the cross-sell and up-sell opportunity ahead of us. Cross-sell and up-sell activity is strong. In particular, we often signed customers for one solution and then follow-up by replacing a competitor with another. This was the case in several key deals in Q3 and Q4 and I see this trend continuing in 2016. The single product vendor simply cannot compete with the value we have innovated for today’s smart cloud customer. Our competitors operate at lower levels in accounts where by definition there is less strategic intent, less influence and ultimately less budget. The journey from a point solution to a suite has strengthened us competitively and our financial results speak for themselves.

Other drivers of our growth in 2016 include our expanded product roadmap, our new commissions platform, and our expanded insurance portfolio. We must also highlight our learning product suite. We have added the first of many content capabilities with BridgeFront and in almost every incentives opportunity I get involved with highlights a rapid mobile learning opportunity. For example, at a recent C-level meeting in Japan, it was made clear that a new incentives rollout meant there is a need for fast mobile training of many thousands of agents. Cue Litmos for cross-sell, it’s a perfect cross-sell opportunity. This type of opportunity makes us more relevant, more strategic and more useful to our customers than the single point product vendor. Our Internet of Things strategy announced in London in January is just beginning to bear fruit. But one customer planning to connect 100,000 devices to our configure price and quote solution this year. Our embedded cloud analytics solution Thunderbridge is getting traction as customers struggle to get answers with expensive on-premises analytics tool kits. Our vertical product strategy, led by Producer Pro, had a superb first year with deals in every quarter since its launch in 2015.

Now, let me update you conversions to the cloud. As I mentioned, our license line of business is now very small indeed and our maintenance business has reduced again as a result of conversions to cloud. Conversions showed great momentum in 2015. As I mentioned, we executed 11 conversion deals compared to four in 2014 and one in 2013. We see momentum continuing in 2016 as more and more consumers see the benefits of Software as a Service on the cloud. I expect our conversion momentum to continue impacting maintenance further this year. And I can tell you that we have already executed one mid-six-figure conversion deal in Q1, again in the insurance space. Our professional services business will deliver a slightly improved revenue performance this year over last year. But as we scale, we continue to look increasingly to the partner ecosystem to deliver more and more implementations. This is precisely the target model that we have been aiming at.

Let me just mention our industry leadership. Again, we were positioned as leader in the Gartner Sales Performance Management Quadrant in Q1 for the third year. We continue to win awards for our products innovation. I want to talk about our vertical market strength and diversification. Our SaaS solutions have found favor across industries, giving us a uniquely diversified position in our space. Our specialized vertical solutions address the needs of insurance and telco, in particular. And these two industries show common characteristics of resilience. No competitor in our domain has invested more to meet the needs of these most demanding of industries. And this strength will serve us well in the coming years.

I want to talk about our international opportunity. We had a good start to 2016, actually a great start. I have just been around the world in January, stopping in London, in Frankfurt and Tokyo. Whilst in Europe, I was joined on stage at our User Group meetings by Telefónica, Mimecast, Unified, [indiscernible] and Accenture. We met with over 400 customers and prospects whilst on tour. And I frankly see opportunity everywhere. We have begun to work in our upgraded UK and brand new German data centers this quarter announced in London and Frankfurt. And we expect the first customers to deploy in Q2 of this year. There are many and varied drivers now that are taking customers to the cloud for both growth and efficiency reasons. And I believe the opportunity landscape for us has never been better. The credibility of our solutions has never been higher either. Our competitors have weak strategies, tend to lose money and enjoy mediocre growth. By contrast, our strong balance sheet and cash flow backed up by strong profitable growth add to our reputation as the leading innovator in this space.

Let me update you on our productive sales capacity. We have already added, we believe, enough productive sales capacity to achieve our growth goals in 2016 and we will continue to add to that capacity steadily through the year just as we did in 2015. Our partnerships are strong across the board and our customer reference list is spectacular. Recognition for our product suite has never been better and we have resilience in diversification in product, partnerships, vertical and geographic markets. We continue to innovate all comers and are frequently copied by others as we do this, a clear sign we are leading in market. We continue to build vital roadmap innovations. We are also buyers of differentiated technology and we expect to continue our strategy of tuck-ins. Momentum is strong as evidenced by our accelerated year-over-year gross annual contract value bookings growth of 42% that I managed at the beginning of my remarks. Furthermore, I believe we will achieve $0.30 to $0.35 SaaS growth in 2016, whilst we make money.

I will now hand over to Bob to go through the quarter and the year by the numbers.

Bob Corey

Okay. Well, thank you, Leslie and good afternoon again everyone. Before I begin my detailed comments, I too would like to thank each and every employee for their hard work that has contributed to our record success in Q4 and the full year for 2015. I would like to remind everyone again that the financial figures I discuss today are non-GAAP unless I state the measure is a GAAP number, all revenue numbers are GAAP. As previously noted, please refer to today’s press release for a reconciliation of the GAAP to non-GAAP financial performance and additional disclosures regarding these measures.

During the quarter, I am very pleased to report SaaS revenue of $32.6 million, an increase of 34% over last year, including about $876,000 of BridgeFront revenue. Excluding the BridgeFront, SaaS revenue increased 30% over last year. Remember, Q4 this year has a higher comparable to Q4 last year as last year now includes a full year – a full quarter rather of revenue from the Clicktools acquisition. Total Q4 revenue increased to a record of $46.8 million, including BridgeFront, an increase of 23% over last year. Excluding BridgeFront, total revenue increased 20% over last year. Key metrics with which we evaluate our operating performance are; SaaS revenue growth, as I just mentioned, increased 34% in Q4. SaaS deferred revenue was a record $71.5 million, an increase of 20% over last year. This includes about $1.6 million from the acquisition of BridgeFront. Cash flow from operations was about $5.9 million in Q4. Our enterprise customer retention rates continued to be over 90% based upon the number of contracts. Our targeted productive sales capacity is sufficient to achieve our projected SaaS revenue growth rate as we enter 2016.

As Leslie previously said, we continued to hire productive sales capacity at a decent clip, while we stay true to our financial goals. Our investment in sales and marketing will continue to trend at about 31% to 33% of revenue for the year. Additionally, the normalized SaaS billings growth rate for Q4 was 33%. Remember, the normalized SaaS billings growth rate adjusted for the effect of multi-year billings in each period. We continue to see increasing momentum in our business as evidenced by another strong bookings quarter in Q4 and our annual ACV bookings increased 42% over last year. That’s up from 35% increase in 2014 and a 29% increase in 2013. Our non-GAAP earnings were $0.08 per share on the high side of our guidance of $0.06 to $0.09. Our team continues to be laser focused on executing to the plan of SaaS revenue growth and delivering a world class customer experience, all while delivering predictable leverage to our reported earnings.

Okay. Let’s move on to some more specific results for Q4. Unless I mention otherwise, the percentage increase or decrease are as compared to the same period of the prior year. Looking at the recurring revenue business, total recurring revenue, which includes SaaS and maintenance revenue for the quarter, was about $36 million including BridgeFront of about $876,000. That’s a 27% increase from last year and up sequentially from Q3 by $1.7 million. SaaS revenue totaled $32.6 million, and increased 34% compared to $24.4 million last year, while maintenance revenue declined by 14% to $3.4 million. Maintenance revenue has decreased due to customer conversions to our Lead to Money suite in the cloud. We anticipate maintenance revenue to continue to decline as customers convert to the cloud. We estimate that maintenance revenue will range from $2.7 million to $3.3 million per quarter in 2016.

Excluding BridgeFront, our SaaS revenue was up 30% over last year. Remember again in Q4 last year includes a full quarter of revenue from Clicktools, making the year-over-year comparisons more challenging. We exceeded our annual guidance of SaaS revenue growth of 30%, excluding the Clicktools acquisition. During the quarter, the mix of contracts with annual terms increased from 85% in Q3 to 88% in Q4. I am happy to report that our non-GAAP recurring revenue gross margin exceeded our expectations at 78%, up two percentage points from the 76% reported in Q4 last year. For the full year, recurring revenue gross margin was 77%, again ahead of our expectations of 75% for the year. We do project our recurring revenue gross margin will remain above 75% throughout 2016.

Turning to professional services and license revenue, combined professional services and license revenue for the quarter was $10.8 million, up about $1 million from last year. Professional services makes up the lion share of the increase with revenue of $10.6 million, up 10% over last year. License revenue this quarter was about $200,000 compared to $100,000 of license revenue last year. We will continue to close a small number of on-premise license contracts in future quarters and anticipate license revenue to average between $100,000 to $200,000 per quarter in 2016.

Professional services gross margins improved to 28% in Q4 as we completed some lower margin implementations late in Q3. We are maintaining our gross margin guidance to trend between 22% to 26% throughout 2016. Also, we expect professional services revenue to increase moderately in 2016 as we focus our resources on best practices for successful implementations and shift more implementation services to our channel partners.

Commenting on overall operating expenses, overall operating expenses were $26.3 million, an increase of 23% from last year. Operating expenses as a percent of revenue was 56% in line with last year. The increase in absolute dollars compared to Q4 last year reflects our continued investments across the board to support the growth in our business. Sales and marketing expense was $13.5 million, an increase of 14% over Q4 last year or 29% of revenue. The increase of $1.7 million primarily reflects increased sales and marketing personnel, the increased marketing events and programs and commissions associated with the increased bookings. With the increasing demand we are seeing for our SaaS products, we will continue to invest in this area to support our revenue growth.

Research and development expense was $6.4 million for the quarter, an increase of 31% over Q4 last year and represented 14% of revenue this year compared to 13% last year. We continue to expand our worldwide engineering investments to support our internal innovation and product development. We expect R&D expense to remain around 12% to 14% of total revenue throughout 2016 to support product development for our growing customer base.

G&A expense was $7.2 million, an increase of 54% over Q4 last year and represented 15% of revenue compared to 12% last year. As a result of our rapid growth, we have begun investing in our infrastructure building a scalable operating platform for the future. This includes the implementation of our CRM and billing platforms, enhancements to our ERP suite and our new corporate headquarters.

Turning to non-GAAP operating income, our non-GAAP operating income for the quarter, reflecting the leverage in our financial model, increased 62% to $4.7 million or 10% of revenue compared to an operating income of $2.9 million at 8% of revenue last year. Our full year operating income of $12.7 million at 7% of revenue for the year increased by $4 million or 46% over the same period last year.

In reviewing our non-GAAP EBITDA, EBITDA for the quarter increased 60% to $6.3 million or 14% of revenue compared to $4 million last year at 10% of revenue. Year-to-date EBITDA increased 35% to $18.6 million, or 11% of revenue compared to $13.8 million last year at 10% of revenue. Our non-GAAP operating income for the quarter increased 88% to $4.4 million or $0.08 per fully diluted share compared to the prior year of $2.3 million or $0.05 per fully diluted share. The BridgeFront acquisition did not have a measurable effect on earnings per share. This is our 10th consecutive quarter of positive earnings per share. Q4 net income per share is calculated based on 58.1 million diluted weighted average shares outstanding.

Reviewing the balance sheet and cash flows, cash and investments were $97.2 million at quarter end. This is an increase of about $60 million from last year primarily due to completion of our secondary offering in Q1 2015 and record positive cash flow from operations. Cash flow from operations in the quarter was about $5.9 million. Cash flow from operations for the year increased to 189% to $26.5 million compared to $9.2 million last year. DSOs and accounts receivable improved to 79 days from 82 days last quarter.

Our balance sheet is as strong as it’s been in the history of the company. And our cash and investment balance now represents approximately 13% of our market capitalization with no bank debt. SaaS deferred revenue was $71.5 million, an increase of $2 million sequentially and up $12 million for the year. Total deferred revenue increased sequentially by $2.6 million to a record $79.8 million and up $8.2 million for the year. Total deferred revenue increased more than SaaS deferred revenue in the quarter due to the timing of renewals on existing maintenance contracts. We exited the year with about 901 employees, an increase of 27 people from the prior quarter, with hirings across the boards.

Okay. Now, I would like to move on to the forward-looking financial outlook. I want to remind you of the Safe Harbor language provided at the beginning of the call. For Q1, we are projecting total revenue to be between $47.8 million and $48.8 million, representing an increase of approximately 20% to 23% over last year. This includes about $750,000 of revenue from the BridgeFront acquisition. We anticipate maintenance revenue to be about $3.2 million in the quarter and license revenue to be nominal at around $100,000 and $200,000 in the quarter. As you know, Q1 is always an active quarter for us by hosting our C3 EMEA Customer Conference in London and Frankfurt, holding our President’s Club for a record number of top performing sales reps and the kick in of employer taxes with the beginning of the new year. All these activities impact our guidance for operating income and earnings per share in Q1. And as a result, non-GAAP operating income for Q1 is expected to be between $2.6 million to $3.6 million, with non-GAAP fully diluted earnings per share of $0.04 to $0.06. Lastly, we are projecting cash flow from operations to remain positive.

Turning to the guidance for the full year of fiscal 2016, we are reaffirming our guidance for the fiscal year 2016 to total revenue of $210 million to $215 million. This represents 21% to 24% total revenue growth over last year. This includes about $3 million of revenue from BridgeFront. Further, we are projecting SaaS revenue growth of 30% to 35% for the full year. Our revenue growth in 2016 will increasingly be tied to the success of our SaaS business. While customers convert our Lead to Money cloud, our revenue per maintenance will continue to decline. And as the cloud becomes more broadly adopted, our on-premise license revenue will continue to moderate.

We are issuing guidance for non-GAAP operating income for the full year of $17 million to $19 million, representing 8% to 9% of revenue and 34% to 50% improvement from 2015. Accordingly, our non-GAAP fully diluted earnings per share will be between $0.25 to $0.29, representing 25% to 45% leverage over last year. As I mentioned, we continue to project generating positive cash from operations for the full year.

I would now like to open the Q&A session. Operator, would you please prompt for questions?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Richard Baldry of ROTH Capital Partners. Please proceed.

Richard Baldry

Thanks. When we look on a sequential basis, both the recurring cost line and the services cost lines declined even as your revenues are climbing. So, could you sort of walk through where the leverage is coming from? And then should we expect to see sort of start the year with some incremental capacity and both of those things maybe dropped though GMs to start the year and kind of leverage back as the year grows out from under that? Thanks.

Bob Corey

Yes, okay. Yes, Rich, it’s Bob. Thanks for the question. So, on the services side, we had some medium large implementations in Q3, they were using contractors and other resources on, but as I mentioned in my prepared remarks were lower margin projects. So, we completed those projects and you will see that cost to moderate going out into Q4, right? So, that’s some of the benefit there. The recurring revenue cost really is a matter of leverage across the datacenter, continuing to look for automated ways to manage the datacenter to do customer support and services as well as increased revenue for the quarter increased to the actual gross margin percentage uptick to 78%. We expect to see as we go into ‘16 the professional services margins to remain in that 22% to 26% gross margin line like I made in my prepared comments. The recurring cost should trend out as we invest in turned up slightly, if you will, as we invest in our new datacenters in Germany and London like Leslie mentioned in his prepared remarks. However, we think for the full year, we are going to be north of 75%, our recurring revenue gross margin again based on higher volumes and revenue and customers leverage across the data centers.

Richard Baldry

And maybe for Leslie, there has been a lot of valuation pressure in the space. We have seen some pretty dichotomous discussions about the demand side of the table from different companies, could you kind of step back and talk about let’s say the broadest discussions you and the pipeline, are you seeing any softness out there longer sales cycles or do you feel like each company is sort of on their own navigating in those waters, you still feel very comfortable with how those things are trending within your own specific experience? Thanks.

Leslie Stretch

Well, I think given our size versus the total time here, there are no excuses. I just did my 12th or 13th turtle navigation of the world for the company. And as I have said in my prepared remarks, I see opportunity everywhere. And I know the sales guys will be saying, well Leslie is always optimistic, but actually I am about qualified opportunity. I am all about qualified opportunity. And the thing is cloud is taking off in Europe and we are tightening in Europe, but our guys there have the bit between their teeth, we were surprised in Latin America cloud up-take. We had serious cloud up-take in Latin America from where we were. And even in APAC, we have good cloud up-tick, not to mention is North America. So I think every individual company has to navigate their own way and not get crowded into this, this crowd theory of everything is a struggle. We have got real qualified opportunity. And we love to sell into trouble. In 2008, we grew the SaaS business very fast to update in 2008 to ‘12. I personally love the sell into trouble almost more than growth. What I hate is even keel everything is good. So I see just immense opportunity. We are nowhere near our potential in cross-sell and up-sell. But I do think there is one thing that’s making a big difference right now, particularly in the commission space. Our customers are beginning to contrast our financial strength with our competitors very, very dramatically. It’s really important to them that we are a company with a disciplined management team that makes money. It’s become more important to our customers than I thought it would when we weren’t making money. So I think that is a great contrast by pulling all our sales guys to use that in everyone of their calls. It’s important to customers to see strength in the management team and strength in the financials, the balance sheet and the income statement. And I think we are in a great position there and we design that deliberately. So with that contrast of performance with some of these other companies who are just spending out their backslides to growth. So that makes a big difference. International new products, we are firing on all cylinders there. We have got a great opportunity set, diverse partners. So we are all about action. We didn’t get through Christmas and take a big breather. We went straight around the world, I am still on high from it and I am going to go around the world again before the end of the quarter, so ton of opportunity for us. We are not stupid. We are realistic, it’s not all easy. But again, size versus total addressable market, every sales force in the world needs something that we have got, and we got to go out there and sell it to them.

Operator

Your next question comes from the line of Katherine Egbert with Piper Jaffray. Please proceed.

Katherine Egbert

Good afternoon. Leslie, just a follow-up on some of the comments you just made, you talked about cross-sell, one thing we have seen with some other companies is they are very good at landing and having a tougher time expanding, can you talk about sort of your ability to up-sell and cross-sell the installed base, any data points you can provide?

Leslie Stretch

Yes. I gave one kind of anecdote in my prepared remarks when I was in Japan, it was pretty clear to me that when you are rolling commissions out to thousands of agents in a big industrial strength insurer, there is a huge training requirement. With some of the companies out they are looking at 20-year-old and 30-year-old technology believe it or not to complete that requirement where we have got Litmos Mobile Learning. There is the conjunction with Configure Price and Quote. We did 80-plus multi-product deals last year and more than ever, up 40% from the prior year. Cross-sell and up-sell was great and I don’t say for the sales guys, the guys who are traditional commission sellers or CPQ sellers, they will be embarrassed to throw out mobile learning or marketing automation or sales enablement. We have 15 SaaS products that we can get out there, gamification is just a great opportunity. Nearly 200 customers have purchased multi-products. We have got 4,000 other subscription customers to go after before we start bringing in the new deals. So I think it’s an important part of our strategy to be diversified from product to suite. The journey from product to suite very important to us, great opportunity for our sales guys contrasting the competition. And we get disruptive value and the competitors accuse us of discounting. They always complain about discounting. Well, it’s a free market, right. But the reality is we tend not to discount. We tend to bundle additional value.

Katherine Egbert

Okay. Thanks for the comprehensive response. And then secondarily, there were some turbulence in of the stocks since Salesforce made an acquisition in the CPQ space in December, can you just address your competitive position and what you make of that deal?

Leslie Stretch

Sure. I think tonight, I am actually going to the basketball with eight executives from Salesforce and see what they think. But it’s a pretty good partnership for us. But as I have always said, you have to be involved with others and I would love to just orbit around Salesforce, but the reality is we have to work with Microsoft, with SAP, with Oracle, with IBM, with many others. And we are just beginning to work with Sugar as well. But we love working with Salesforce. They are a mature, sensible commercial outfit that’s out there making money. And so that particular situation here we have 15 SaaS products, we have currently four on the ISV Force program, in the CPQ world, only a tiny percentage of our revenue was in that ecosystem, we were after the other ecosystems. So for us, nothing has changed. We have a year good year with Salesforce. I expect an even bigger year this year. But I am calling to my sales guys and to the alliances guys to let’s have a big year with Microsoft and with SAP and Workday in the suite as well. We deliberately play with everybody, but we love working with Salesforce.

Operator

Your next question comes from the line of Michael Nemeroff with Credit Suisse. Please proceed.

Kyle Chen

Hi, this is Kyle Chen in for Michael Nemeroff. Thanks for taking the question and congratulations on the strong quarter. Leslie, just to piggyback off Katherine’s question, can you remind us what percent of bookings come from, that are partner influenced and if you can specify relative to the Salesforce channel?

Leslie Stretch

It’s a real spread. We don’t really specify individual players. We are not one of those companies, I have heard other companies, one of our competitors depends on one ISV Force deal, it’s all about 55%, 60%, 70% of their deals. That seems crazy to me. We are very well diversified, very great partner. But as I have said, I listed a whole slew of other companies with very big ecosystems that you have got to pay attention to. We are about growing across the broader market. So it’s a good partnership, makes good money for them and for us. It’s going to make more this year.

Kyle Chen

Got it. And Bob, just looking at the SaaS deferred revenue line, it looks like sequentially in Q4, there was a, I guess a smaller increase than we were I guess expecting, but contrasting that with your commentary relative to bookings growth, I guess was there a larger than typical percent of book but unbilled revenue that didn’t hit the balance sheet, some color there would be helpful?

Bob Corey

No. There were no large percent on booked but unbilled. The trend on the deferred revenues has to do with some of the multiple year billings that were recorded in prior years and quarters, right. So we have long-term and short-term deferred revenue, right. So if we book a – billed a multiple year booking, it’s a three-year billing, right, all of that goes to deferred revenue at the time we bill it, 2 years goes to long-term deferred and simply get re-classed into short-term deferred as time passes, right. So you don’t see that as additional billing hitting or incrementing the deferred revenue because 3 years is already in there, right. Short-term deferred, however is growing at about 33% in Q4 this year and Q4 last year.

Kyle Chen

Got it, that’s helpful. And I guess just lastly, can you give us an update on your contracted backlog, usually we get an update every Q4?

Bob Corey

That’s a good question. So now we let that up. Our contracted and what we call our cumulative ACV is about $139 million, that’s up 38% year-over-year and continues to expand.

Kyle Chen

Got it. Thanks very much.

Operator

Your next question comes from the line of Jeff Houston with Northland Securities. Please proceed.

Jeff Houston

Hi, Leslie and Bob. Thanks for taking my questions. Bob could you repeat what the actual dollar amount was for deferred revenue in the fourth quarter?

Bob Corey

$71.5 million was the cumulative deferred revenue.

Jeff Houston

Got it. Okay.

Bob Corey

That’s just SaaS only, right? That’s your question?

Jeff Houston

Right. Yes. And then separately, Leslie you talked about 11 conversions in 2015 and one so far in ’16, could you remind us of how many legacy customers do you have, I think it’s right around 100 and what is the rough sizes and industry mix of those conversions? Just trying to gauge a sense of how much of a tailwind could be coming from those conversions in ‘16 and beyond?

Leslie Stretch

Sure. We are still approaching 90 to 100 on-premises customers probably dominated by financial services, but really dominated by insurance, large insurers. And there are some telcos in there as well who are ready on their slate to move to cloud. That’s kind of the mix, few technology companies, few manufacturers, but that will be the mix.

Jeff Houston

Great. And last question for me is looking at the cash balance right around $100 million, what is your appetite for M&A at this stage or are you more at the point where you are digesting, I guess some of the recent acquisitions?

Leslie Stretch

Well, I think as I mentioned in the prepared remarks, tuck-ins is our approach at the moment. You don’t do anything transformational with $100 million believe it or not. And that’s kind of not in our bag this year. It’s all about decent little tuck-ins that put the suite together helped with integrations. I guess that’s how we see things. But the other side of that is we raised the money at the time we said to people, this is about completing a journey to a nice strong balance sheet. And I am really surprised that the effect that it’s having in competitive situations. We have competitors out there, one of them public, that’s burning cash, that’s got debt, that’s got very little money, it’s kind of not worth very much as a company. We have got competitors like that. When our guys go up against them, there is no reason that they should be winning any business at all apart from the fact that their technology is weak. There should be no reason. And so it’s a really strong position. So, we want to make the most of that and not erode it by kind of sending the money in a kind of flavored manner. We like having that money. We will do a few weak tuck-ins.

Jeff Houston

Alright, thank you.

Operator

Your next question comes from the line of Brian Schwartz with Oppenheimer & Company. Please proceed.

Daniel Greenfield

Hey, this is Daniel Greenfield sitting in for Brian Schwartz. Thanks for taking my question. On the last call, you had mentioned you weren’t doing any pricing promotions to get customers off computing products. I am just curious if you have revisited that strategy at all this quarter? And will you provide any qualitative updates on the current pricing trends?

Leslie Stretch

Yes, we – I don’t know if we have ever done a special pricing promotion to move somewhat of a competitors’ product. And I think what I said on the last call was that we don’t focus on replacements actually. There is so much new business out there. That’s a focus on contrasting and comparing the competitor and replacing trying to dig that out. It doesn’t seem like a good thing. When replacements happen, they come to us and they are very well-qualified and they are very disgruntled customers. So, they tend to come to us. So, we kind of don’t focus on it. So, we don’t need to do any replacements at all to grow our business. There is a massive opportunity out there in the market. So, we tend not to do price. When we are in head-to-head new business deals, what makes the difference is the combination of commissions, configure price and quote enablement. Even our competitors admit now that those things are important combinations they talk and talk about their alliances with all of the CPQ players. They talk about their enablement alliances, their marketing alliances. But only a couple of years ago, they institute all that, they said it wasn’t relevant. It’s kind of interesting change in the strategy changes as the wind changes direction of those guys. So we don’t need to go after them with a pricing story. We have bundle added value and we make money while we do it. They don’t.

Daniel Greenfield

Great, thanks.

Operator

Your next question comes from the line of Chad Bennett with Craig-Hallum. Please proceed.

Chad Bennett

Thanks for taking my questions. So, I heard you mentioned one 7-figure deal in the call. Were there any others in the quarter?

Bob Corey

No, there is one 7-figure deal and there was a smattering of good solid 6-figure deals in the quarter.

Chad Bennett

Okay. And what was dollar multi-year deal impact in last Q4 deferred revs?

Bob Corey

You know that number offhand?

Leslie Stretch

We will have to go look that detailed number up, Chad. We will get back to you on it.

Chad Bennett

Okay, no big deal. And then – so if I look at the guide which is great to see that reiteration today for good, healthy and profitable growth and look at kind of where you exited the year from a SaaS revenue standpoint where you exited last year from a SaaS revenue standpoint and kind of factor in BridgeFront for a full year. Your kind of turns business if that’s what you want to call it kind of revenue you got to recognize throughout this year. It’s probably $18 millionish last year to get to where you ended up and now it’s net out BridgeFront maybe it’s $20 million, $21 million. So, I mean, the guide is a guide and I think guys are fairly confident in it, but I imagine you have a lot more salespeople entering this year than you did last year, cross-sell, up-sell is a lot bigger, channel partners are growing and multi-product is growing. I guess, to sum it up, do you feel like you have really good visibility and comfort heading into the guide this year maybe versus a year ago?

Leslie Stretch

I don’t know about versus a year ago, I mean, I will comment and then let Bob comment, I don’t know about versus a year ago. I think that when you see everything that’s been going on in the market and all other print serve have been coming out, you do – it does make you qualify and look at things very carefully. And yes, I feel good. I mean, I feel our opportunity set here, the opportunity landscape is really, really good for us. And obviously, we are coming with a bunch of backlog, but we have got to do more.

Bob Corey

Yes, Chad, it’s Bob. We do feel comfortable about our guide for this year. And like Leslie said, plus a lot of the things you mentioned, the trends give us better comfort on what we are guiding this year that we see in our business, the momentum we see in the business. So, we look at the elements that contribute to the revenue for our operating plan and then look at our guidance as well and we feel very comfortable about it. Remember, this is the guidance we came out with for total revenue coming out of Q3, right? So we continue to look at it and update it, etcetera and we are very comfortable with it.

Chad Bennett

Okay, thanks.

Bob Corey

Alright, cheers.

Operator

Your next question comes from the line of Eric Martinuzzi with Lake Street Capital Markets. Please proceed.

Eric Martinuzzi

Thanks. Nice quarter and good to see the guide reiterated. I want to focus on the international growth driver for your business. First off, what was the mix here, U.S. versus international just in 2015?

Bob Corey

Yes, there is no real change there really. It’s like the 20% international and 80% in U.S. or North America.

Eric Martinuzzi

Okay. And then I know I think it was last summer or maybe it was last spring, it was a relatively recent change you had a change up there in management. Talk to me about how that has evolved and do we have the managerial level kind of set and it’s all about bringing in the right reps or is there still kind of channel management hire or vertically focused hires, is there still an elements of upper level hiring going on internationally?

Leslie Stretch

Yes. No, there is no upper level hiring going on. What we actually did was send over a leader from the U.S. that we had a lot of confidence in. And actually we kept the UK, Northern European and the German managers in place. So we wanted to give them someone – an investment lens that we trusted someone that could help them move forward as they were building a series of business. So that’s the motivation for that. And they did very well. As I have said, we just went there in January and we did London and Frankfurt, and we had – I met with atleast 200 or 300 customers and we have 400 and 500 there. It was the quality of the customer’s present was spectacularly good. I mean really good, good executive meetings, great cross-sell and up-sell and good new business. And we have got a very warm reception to the German data center as you would expect and also to the improvements in the London data center. So they have got all the tools they need now to just knock it out of the park and I have a lot of confidence in the country managers and in the leadership there.

Eric Martinuzzi

Is it safe to say that the SaaS revenue growth just coming off a smaller base is greater for the international business than it has domestically?

Leslie Stretch

That’s the arithmetic, yes.

Eric Martinuzzi

Okay, alright. Thanks for answering my questions.

Operator

Your next question comes from the line of Kevin Liu with B. Riley. Please proceed.

Kevin Liu

Hi, good afternoon. I just had a few questions around the opportunity in conversions. One, are you guys kind of make more of a concerted effort incentivize folks to move on to the cloud over the course of this year. And then just maybe anecdotally in terms of the conversions you have done today, what’s kind of in the up-sell or cross-sell opportunity there that you have been able to realize?

Leslie Stretch

So, firstly I think there is a very, very big incentive in place already to move to the cloud and that is they get to tap into the broader suite. Remember, it’s only one product that was ever sold historically on-premises, the old commissions platform. So there is a very big incentive to upgrade particularly in the insurance space where they get access to Producer Pro and so on. So that’s the big incentive. We don’t need – I don’t think we are going to do anything artificial to move the last or remaining customers over anymore quickly and they want to be moved. But I think the big thing here is the customer decides. The customer has choice and they see the benefits. Each time they come to a group of users and they meet with other users, who have made the transition, the benefits are obvious, very clear, crystal clear. And I think that’s the way we are going to continue to do it.

Kevin Liu

Got it. And I think you said something along the lines of those 15 other SaaS products that could be sold with kind of the core platforms here, maybe talk about what your partners are focused on currently. And then just in terms of doing some sort of new revenue share agreements with Accenture and others, can you just talk about how those have evolved relative to what you were doing in the past and why that creates a bigger opportunity for you going forward?

Leslie Stretch

I think it’s important. So I think right now, the partners are focused on a small group around sales performance and around the incentive commissions platform. Some partners out there in different ecosystems are interested in the CPQ solutions, some sales enablement, some in on-boarding some in Litmos mobile learning. So it’s a real mix here. In terms of the Accenture partnership, what’s important is that we have a – there is a real financial share there in success. And it wasn’t like that before. It was about them doing well with the implementations. That was their big incentive. Now they can share in the recurring revenue stream. Our pipeline is up 40% with Accenture. I don’t know if it’s all just to do with that joint initiative. I think it’s a bit of both. So let’s see how it proceeds this year, but great start.

Kevin Liu

Alright. Congrats on a great quarter and thanks for taking the questions.

Leslie Stretch

Thank you.

Bob Corey

Thanks Kevin.

Operator

[Operator Instructions] Our next question comes from the line of Katherine Egbert with Piper Jaffray. Please proceed.

Katherine Egbert

Hi, just wanted to follow-up real quick. Can you talk about of the conversions I mean I think you said you did 11 this year, I mean is there any plan to sort of run this business off and maybe just sort of convert everyone who has left to cloud?

Leslie Stretch

I thought I put you to sleep with my previous long answer. We were just saying actually to the previous question, I think it’s going to take a natural path. And I think a big catalyst is bringing the users together at C3 where they see other companies in their space and industries and the benefits that they have got. In the insurance space, Producer Pro is proving to be a very powerful catalyst. We did 19 Producer Pro deals last year. I mean that was huge given that we have just announced the product in C3. So that has a specific catalyst to it. And I think the other thing that’s happening is people don’t – people do have concerns over CapEx and don’t want to buy licenses and servers and storage and all the rest and hire people to run it. That’s a great catalyst for us to go and say it’s time for us to move on. And we found into cloud and I think we have also found a number of our larger customers on-prem, actually are not running the on-prem environment themselves it’s in the Tata data center, it’s in the Cognizant, it’s in the third-party data center already because almost by default in the cloud. So I think the secular trend will help us. I don’t feel right now we need do anything unnatural, create a kind of corrosive discount. It’s to move them over and disenfranchise other customers. I think we have got great compelling story and it will happen naturally through this year and it will go into 2017 as well.

Katherine Egbert

Alright. Thanks.

Operator

There are no further questions in queue.

Leslie Stretch

Alright. Thanks very much for joining us, everyone. We look forward to seeing you all soon and talking to you again.

Operator

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.

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