Jive Software (NASDAQ:JIVE)
Q2 2016 Earnings Conference Call
August 2, 2016 5:00 PM ET
Elisa Steele - Chief Executive Officer
Bryan LeBlanc - Executive Vice President, Chief Financial Officer
Cindy Klimstra - Head of Investor Relations
Kyle Chen - Credit Suisse
Good afternoon and welcome to the Jive Software Second Quarter 2016 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Cindy Klimstra, Please go ahead.
Thank you. Good afternoon and welcome to Jive Software’s second quarter 2016 earnings call. As the operator mentioned, I am Cindy Klimstra, Head of Investor Relations at Jive. Leading the call today will be Jive’s Chief Executive Officer, Elisa Steele; and Chief Financial Officer, Bryan LeBlanc.
We will discuss the results announced in our press release that was issued after the close of market today. This call also includes presentation slides that will accompany our prepared remarks. To access these materials, please visit the Investors section of our website at jivesoftware.com.
Slide 2 in the presentation provides our Safe Harbor statement. During the call, we will make statements related to our business that are considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date.
These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our periodic filings on Form 10-K and Form 10-Q, which are on file with the SEC.
Also, during today’s call, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results available in both the press release and the appendix section of the slide presentation. Please note that when we mention the term profitability in this call, we are referring to non-GAAP operating margin. All results discussed will be year-over-year comparisons unless otherwise stated.
On this call, we will get certain forward-looking guidance on a non-GAAP basis. We do not provide reconciliations of our forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the difficulty in making accurate forecasts and projections regarding, the items excluded from these non-GAAP measures.
Accordingly, such reconciliations are not available without unreasonable effort. For additional information please see our earnings press release that’s available on our website. With that I will turn the call over to Elisa who will review our business performance and strategies. Bryan will then provide details on our second quarter results. We will then take your questions. Elisa?
Thanks Cindy. Good afternoon everyone and thanks for joining us. Let’s begin on our Slide 3. My prepared remarks will focus on three topics. First, we delivered second quarter results that exceeded all of our guidance metrics. Second, we’ve made meaningful progress in delivering on the realignment plan strategies we announced last quarter.
And finally, we’re progressing on the product vision we unveiled at JiveWorld to further advance Jive’s leadership in the enterprise collaboration market. Slide 4 highlights our second quarter financial performance. Total revenue of $51 million was up 5% year-over-year and exceeded our guidance range.
Short-term billings decreased by 9% compared to last year and was also favorable to our guidance range. On a GAAP basis, loss from operations was $6.8 million, an improvement of $2 million, compared to one year ago. Net loss per share was $0.09. On a non-GAAP basis income from operations was $1.8 million and net income per share was $0.02. Last quarter, we committed to becoming profitable in the second quarter based on non-GAAP operating income.
Not only did we achieve that goal, but we also beat our guidance for Q2, non-GAAP net income per share. We are on track and moving forward on the realignment plan we announced in May to achieve our financial goals and optimize our market position. For the first time in our history, as a public company we delivered non-GAAP operating profitability. And we expect to achieve sustained profitability going forward as planned. As we continue to execute our plan, we believe we are on the right path to optimize Jive’s opportunities and position the company for growth longer term.
As a reminder, Slide 5 summarizes the core themes of our plan. First, we’ve taken several steps to sharpen our go-to-market focus. Second, we continue to focus on our cloud business and driving increased customer adoption. And finally, we rebalanced our investments across the company to align with our plan.
We delivered on our stated goal this quarter and we’re laser focused on building traction and driving momentum throughout the remainder of the year.
Turning to Slide 6, I’ll provide some color on the headway we’re making with our sharper go-to-market strategies. As Jive is delivering a modern mobile first interactive Internet that’s out of the box for large and midsized enterprise companies, we’ve moved very quickly to elevate our solution as our top go-to-market priority.
We enhanced our demand generation efforts to identify opportunities, track progress, and secure new and existing customer wins. On the marketing side, we’ve introduced new focus programs and initiatives that are tightly aligned with our sales organization. On the sales side, we’ve improved our integrated sales model process, implemented more sophisticated analytics, and prioritized key market segments. We also continue to tailor our solutions for specific lines of business and vertical where we offer unique value.
Our primary line of business targets are corporate communications and human resources. We are gaining more traction in these areas as we leverage our unique work hub, which is the basis of the interactive Internet solution and enhances the use of external applications, maximizes productivity, and solves customer pain points.
An example is, corporate communications professionals who want to keep employees invested in their organization’s mission. Our interactive Internet delivers critical news and information that employees can easily consume via their favorite devices. In fact, 85% of companies surveyed using a Jive Internet report improve strategic alignment at their company. Another example is human resource professionals who want to attract, retain, and develop talent to enable employees to be more productive.
Jive is a great fit for this used case, because our interactive Internet solution engages and empowers the workforce, while fostering a culture of connection that helps to retain talent. 90% of companies surveyed using a Jive Internet report improved onboarding time by an average of 30%. We’re also making progress in establishing Jive as the preferred collaboration solution in healthcare. At JiveWorld, we had a sellout crowd for our healthcare dedicated track that showcased innovative used cases by companies such as MD Anderson, Spectrum Health, Reingold, and The U.S. Department of Veterans Affairs.
Our healthcare team is now steadily increasing awareness of Jive and is building the pipeline of potential opportunities. As a result, we are reporting new healthcare wins expansions and renewals in Q2, which includes the Cleveland Clinic Foundation Med-America, National Institutes of Health, and United Health Group. More than ever, our sales and marketing teams are working together to identify the right opportunities strengthen our pipelines and close deals.
Turning to Slide 7, there is a significant Internet replacement churn happening in the market as companies seek to update their inefficient legacy Internet with digital work experiences that are easy to use and deploy. There is no other solution that can match our ability to address this opportunity and we have a number of differentiators. Jive makes work more visible, searchable, and memorable from any device and therefore increases employee connection and productivity.
We leverage our unique work hub, which makes Jive a secure vendor agnostic hub that leverages a broad range of third-party tools and systems to enable people to work better together. We offer insight and visibility into employee’s behaviors with the industry’s most powerful user centric analytics. We’ve provided advanced intelligent recommendations that make each users experience personalized and contextual.
And finally, we offer simple, out of the box deployment that enables collaboration at scale. Customers tell us time and again how much they value our interactive Internet solution, because we help them stay ahead of the game, whatever their industry, and whatever their mission. We speed learning, knowledge sharing and collaboration that increases an organization’s productivity and reduces time to market. Recently, the University of California, Santa Barbara conducted an independent study of enterprise social networking technology. The research found that company knowledge acquisition was faster for those who use Jive versus those did not over a six-month period.
In fact, people using Jive experienced an 88% improvement in meta-knowledge. That is who knows whom, and a 31% increase in ambient awareness of who knows what. These results highlight the importance of a unified connected solution that meets the enterprises changing needs for people.
Movie to Slide 8, we welcome several new Interactive Intranet customers to the Jive family in the second quarter. These include KIABI, Lorenz Services, Thornton Tomasetti, University of Virginia, Vaco, Vicinity Centres and VimpelCom Eurasia.
Many customers also expanded or they moved their interactive Intenet from Q2, including Anglo-American, Comcast, Commvault Systems, DSTL, Eli Lilly and Company, Intercontinental Exchange, Ministry of Defence, Ricoh Group, and W.K. Kellogg Foundation. In addition, we have significant renewals from one of the nation’s leading healthcare benefit companies, as well as one of the largest credit card issuers in the United States.
Turning to Slide 9, we’re continuing to build our leadership in external communities, as we sell and support our popular Customer Community solutions. Our continued innovation in this market helps customers drive brand mind share, fuel sales, and provide effective online support.
In fact, companies that use our Customer Community solution report that their customers have same community member spend significantly more with them on new and repeat business. This solution remains a natural step to the Jive platform, since many companies today also require Internet to connect externally with partners and customers to deliver improved business performance. We will continue to invest here.
As a matter of fact during the second quarter, we beat the competition with exciting new wins for our Customer Community solutions, including the the Annie E. Casey Foundation, Huawei Technologies, KIC InnoEnergy, Regus, Snow Software, and Veterinary Growth Partners. Renewal on up-sell customers included, ADTRAN, Bandwidth.com, Check Point Software Technologies, Chloe+Isabel, Filemaker, lululemon athletic, PwC, SAP Ariba and Tenable Network Security.
Also, we’re incredibly proud that our own Jive community that we used to support our customers was once again recognized by the Association of Support Professionals. After comparative review by a judging panel, Jive was listed on the exclusive annual list as one of the top 10 best support sites in the world. By using our own product, we are leading the market in providing outstanding support solutions.
We received accolades for successfully creating a cohesive and consistent world-class self-service support experience that significantly increased adoption and improved overall community satisfaction, a big thank you to our products, engineering, and service and support teams in making this prestigious award a reality for Jive.
Ultimately, we believe Jive’s external communities will emerge as dynamic business network that will allow users to collaborate effortlessly between internal and external groups. This means that our Interactive Intranet and Customer Community solutions will come together over time to our secure vendor agnostic WorkHub.
The WorkHub will enable employees, partners and customers to work better together regardless of what external application may use, no other company in the market can offer this differentiated value proposition in support of the digital transformation taking place in the enterprise.
Slide 10 features recent customer success stories, I would like to share, and we’ll begin with Huawei, a new Customer Community solution to win this quarter that underscores our continuing focus on this solution. Honor, an entity of Huawei Group is a leading brand of innovative smartphones and other devices dedicated to younger generation.
To encourage an end-to-end customer experience that’s our – an engagement for their Honor phones, the company created a digital place, where fans could connect with each other and easily access self-service support. Honor’s West Europe division shows Jive to launch their cloud customer communities in France, Italy, and the UK in July. Jive is enabling Honor to unite several social media engagement channels and give people a fun and useful way to engage with the brands, all while lowering customer support cost.
Next, Lloyds Banking Group is a leading UK-based financial services group. The company launched Jive’s Interactive Intranet last year with 1,500 colleagues to determine the best way to use Jive connect, communicate and collaborate to drive engagements. Lloyds created an identity for their Interactive Intranet called Hive, tailored the right tools for their specific needs and implemented a demand-driven approach to increase employee adoption.
Today, they have more than 26,000 users who are collaborating on content and sharing information. Lloyds is now expanding higher to the broader employees base and using it to help make their customers more visible to all colleagues.
And my last story is about the San Manuel Band of Mission Indians who recently expanded to 4,000 employees to help deliver new premium gaming experiences at its casino. In order to drive strategic alignment, San Manuel launched a cloud-based Jive’s Interactive Intranet as part of a cultural transformation to foster more collaboration and connections throughout the tribe.
This mobile enable solutions who keep employees current with leadership position, improved operations, and promoted collaborative culture converting employees cash into the tribe, integrated productivity, accountability and engagement.
Turning to Slide 11, the second element of our plan is our emphasis on cloud adoptions and developments. In the second quarter, we continued to drive cloud deployments for both new and existing customers. We’re pleased that about 60% of new and up-sell sales activity and 85% of new local business were related to cloud adoptions. More companies participating in the intranet replacement cycle are shifting to cloud solution.
As they turn to Jive, they’re looking to replace their outdated Internet with a modern cloud architecture that’s simple to use, provides a streamlined cost structure, and enables easy update to the latest product versions. Our cloud-based Interactive Intranet delivers these critical advantages and paves the way for greater employee engagements and higher productivity by intuitively connecting people, ideas, and information.
Going forward, we will develop our cloud capabilities even further. Our goals are always to speed innovation and deliver new functionality faster, while ensuring increased reliability and flexibility at a lower cost. So our emphasis on the cloud is a key component to our future growth strategy, since modern cloud deployments provide a more impactful, streamlined experience for customers, and a more scalable business model for us.
Turning to Slide 12, just last month, we announced latest release of our cloud-based Interactive Intranet and Customer Community solutions. This new release further improves our ability to make work visible, searchable, and memorable for many device. I’ll reviews three key highlights of the release, beginning with personal analytics.
We invested in analytics to provide community managers that are metric to measure engagement within their drive community. Our new release also offers user-centric analytics and social graph that provide every users their own personalized data-driven insight. This technology helps people make faster, more informed decision to enable personal productivity.
A second highlight in this release is smart profiles that streamlined access to an organizations knowledge base powered by Jive’s intelligent recommender engine with advanced technology, drives prudent content to increase individuals engagements within the network. The recommended intelligent content tailored to each user people gain important information that directly impacts their efficiency on the job.
And the third highlight is the enhanced social monitoring functionality that were all extending – excuse me, that we’re extending to our customers digital workplace. This function powers marketing and customer support organizations, as well as advocate by accessing billions of conversations spanning on 186 languages surfacing up only the relevant conversations pertinent to the brands and providing a seamless approach to address questions in real. In doing so, companies can better manage their brands all within one place.
Overall, this latest release represents another important milestone to bring employee, customers, and partners together in one unified WorkHub. It enables customers to cultivate a more productive and aligned business network and ultimately into the business performance.
I also want to mention that we were pleased that several customers upgraded their hosted and on premise appointment in the second quarter, and some of these customers included Chubb Insurance, Logitec, McAfee, PWC, PRNewswire, SAIC and Schneider Electric Utilities.
I would now like to make a few comments about the changing competitive landscape in enterprise collaboration. The market has become increasingly diverse with both large and small players validating the market need and the future growth opportunities. Jive’s market position is unique and we have always taken a people centric approach to our product experiences.
We have now introduced a full collaborative network solution based on the enterprise social graph which is a data model that represents the interconnection of relationship throughout a company network. Building on this our integrated work hub provides a unified collaboration experience across companies large complex network. This makes it much easier to find and work with people information and customers, making companies more agile, productive and innovative.
In comparison, large staff members are not optimized for full collaboration because of the requirement to only work in that stack, which is not realistic today. On the other end of the market, team based communication apps are optimizing to a small group dynamic, which has limited use cases and as they gain in popularity they create even more fragmented silos of information than ever before.
Customers appreciate that Jive provides a fully integrated unified collaborative experience for their employees and customers. They acknowledge that people are using a variety of platforms and that they’re increasingly deciding which tools and apps they wish to use on their own. With Jive, the ecosystem can fully align and create a unified single digital work place.
As a matter of fact, after intense competitive evaluation one of the most well-recognized consumer brands in America with approximately 200,000 global employees recently made the decision to replace their current approach with Jive for tens of thousands of employees because they require a full solution to get their work done. Jive works well side-by-side with other tools, including Office 365, Google for Work, SharePoint, Dropbox, Fox, Ignite Marketo and many others.
Jive actually unlocks additional value in a business investment in these tools by making them easier to use across the whole company with visibility and search functionality not attainable without Jive. The result is that Jive work hub is the agnostic enterprise foundation for a unified digital workplace. We feel working with Microsoft has a clear market opportunity.
Microsoft estimates $10 billion market around SharePoint integration to loan that is generated by Microsoft Partner by extending both Office 365 and non-Microsoft app into a single digit workplace we have the unique ability to coexist. For those customers who are choosing Google for Work as their alternative to Microsoft are also viewing Jive as a complementary technology that offers incremental business benefit.
Our ability to work with both Microsoft and Google provides customers a full working solution and creates a meaningful competitive advantage for us that we intend to continue to develop going forward. So with that setting as our landscape, let’s turn to slide 13 for a summary of Jive’s vision. There is no doubt that work today is getting more fragmented and complicated.
Organizations are struggling to keep up with accelerating cases of technology as they seek to improve their competitive positioning. In addition, people are working in more ways from more places with more information and tools than ever before. Business leaders know they must provide their workforce and customers, technologies that are real time mobile, global, and heterogeneous if they want to stay competitive. It has to be simple, productive, secure, and contextual.
Building on the vision we announced at JiveWorld this year, we envision that digital workplace that connects employees, customers, and partners in a single virtual work hub. Jive will not simply be a place or a destination, it will evolve into a pervasive virtual workplace. For users, it would remove the barriers of working in different isolated platform and allow central access to content, people, and information across the network.
For businesses, the virtual workplace would safely and securely enable collaboration of all types with the protection in control is required. We believe this will be a very powerful approach to help companies better understand their ecosystem as a whole and use this network to enhance their competitive differentiation. In support of this vision, industry analysts from top firms such as Gartner, Forrester, and IDC also see the market adopting collaborative tools and technologies to enable the digital workplace.
Gartner recently stated in its July high cycle for the digital workplace a 2016 report that by 2020 75% of businesses will become or prepare to become digital businesses. Analysts anticipate that companies will need to fully address the needs of today’s digital savvy workers by implementing technologies that can help them more easily connect people, teams, and companies in a secure business network.
Any place, anywhere, and at any time. This is good news for Jive as it reflects the healthy demand for our solutions and reflects strong alignment with our digital work hub vision. In summary, we delivered a quarter that exceeded our guidance. As we continue to execute our plan for improved performance in the shorter term, we are also strategically positioning Jive for continued industry leadership.
A great deal of credit for this quarter’s performance goes to our Jive sales team. They stayed the course during the period that brought a lot of change to the organization. Their efforts to work together with discipline and passion was clearly evident in the results. And I want to thank all of them for their strong performance. I’m also grateful to all of our Jivers for their continued dedication to our business and our company.
There are so many talented people at Jive who have stepped up to our challenges and are working to capture the most promising opportunities for the longer term. Thank you Jivers. We are committed to maintaining sustained non-GAAP operating profitability. We are committed to serving our customers, and to building shareholder value.
And with that I’ll turn the call over to Brian.
Thanks Elisa. Starting on slide 14, I will review our Q2 financial results in more detail and discuss our guidance for the third quarter of 2016. As Elisa mentioned, second quarter performance exceeded our expectation that we outlined on our last call. Short-term billings in the second quarter came in at $43.4 million, down 9% year-over-year, primarily due to a lower level of new business bookings, compared to one year ago.
Our short-term billings guidance range of negative 10% to negative 15% anticipated this lower level of new business bookings. Our results were favorable to guidance due to a combination of higher new business bookings and professional services billings that both came in slightly ahead of our expectations.
In Q2, early renewals as a component of short-term billings returned to a normal quarterly range and were within our expectations. Since implementing our plan in the middle of the second quarter there have been indications that our focus on large and mid-size enterprise business is headed in the right direction. It’s still early days in our new go-to-market process,, but the enterprise market opportunity is clearly there and we are working to leverage our competitive differentiation to return to growth.
While sales execution improved in Q2, competitive pressures remained about the same. And continue to impact overall in new logo sales, upsell bookings and renewal activity. As we indicated last quarter, we expect the year-over-year decrease in short-term billings that we’ve experienced in the first half of 2016 and the fourth quarter of 2015 will result in a modest revenue decline over coming quarters.
Turning to profitability, our net second quarter net operating loss was $6.8 million on a GAAP basis. On a non-GAAP basis, we achieved profitability for the first time in our history as a public company by generating $1.8 million in non-GAAP operating income in Q2. As a reminder, our non-GAAP operating income excludes $4.1 million of restructuring charges in the second quarter.
Our non-GAAP operating income performance was favorable to our guidance range of $0 million to $1.5 million. We expect our go forward quarterly non-GAAP expense run rate to be in the range of $47.5 million. As a reminder, this run rate includes approximately $1 million of transition experience that we expect to drop from the quarterly run rate as we enter fiscal 2017.
This new expense run rate represents an initial decrease of approximately $5.6 million from our quarterly spending run rate in Q4 of 2015. We expect to sustain non-GAAP operating profitability going forward as we continue to position ourselves for top line growth over the longer term.
Now, I’ll discuss the supplemental metrics we share on a quarterly basis. We ended the second quarter with 997 customers, compared to 981 at the end of last quarter, and 977 in the year ago period. The sequential net increase of 16 customers as a result of higher gross customer ads, primarily from SMB customers and slightly fewer last logos, compared to the last couple of quarters.
Customer count is generally a leading indicator of future growth. However, as we said last quarter we are focused on stabilizing revenue rather than driving customer count. As we prioritize selling our interactive Intranet solutions to large and midsize enterprise companies to drive a better ROI, we are investing less in the SMB market. As a result, we expect this recent go-to-market strategy shift could cause more volatility in the number of new logos going forward.
We believe our renewed emphasis on the enterprise will result in more upsell, expansion, and cross-sell opportunities that will drive future revenue growth. Our renewal rates in the second quarter for customers that spend $50,000 annually was in the mid 80% range when excluding upsells, which was consistent with expectations.
For the third quarter of 2016, we expect renewal rates excluding upsells to be in the low to mid 80% range as we see early signs of stabilization in our base renewal rate. Renewal rates when including upsells was in the low to mid 90% range as the amount of renewals was stable and the amount of upsells was down sequentially. For the third quarter of 2016, we expect renewal rates including upsell to remain in the range of our second quarter results. Over time, we believe our strategy to prioritize large and midsize enterprise companies will improve overall renewal rates.
Moving to Slide 15, in terms of business mix, Jive-n which is predominantly represented by the interactive Intranet solutions, represented 77% of our product revenue for the quarter, and Jive-x, which is predominately represented by our customer community solution, represented the remaining 23%, compared to a 76%, 24% mix respectively in the second quarter of last year.
For revenue mix on products versus services, products remained flat at 91% this quarter, compared to last year and services, comprised 9% of revenue and was also flat versus one year ago. With respect to how customers are deploying our enterprise collaboration platform, 71% of our product revenue for the quarter related to hosted and cloud deployments and remaining 29% related to on premise deployments, compared to a 67%, 33% mix in the second quarter of last year.
From a geographic perspective the U.S. generated $37.6 million of revenue for the second quarter, representing 74% of our total revenue and an increase of 5% on a year-over-year basis. International generated $13.4 million of revenue, representing the remaining 26% of our total revenue and increasing 4% on a year-over-year basis. Headcount in the second quarter was 617 down from 713 in the prior quarter and compares to 694 in the year ago period.
Turning to Page 16 and moving to the balance sheet. We ended Q2 with cash and cash equivalents and marketable securities of a $108.7 million, compared to $120.2 million at the end of Q1. From a cash flow perspective in the second quarter, we used $10.4 million in cash from operations and $400,000 in capital expenditure and capital leases, which led to a negative free cash flow of $10.8 million.
Compared to the prior year our free cash flow was a negative $6.1 million. CapEx was at a lower level than previous quarters due to the completion of office build outs in our San Francisco and Israeli offices in Q1 as well as the lower level of purchases of new equipment for our hosting centers. Total deferred revenue was $126.4 million at the end of the second quarter, down $21.5 million from Q2 2015 and down $11.6 million sequentially.
Short-term deferred revenue was $116.2 million a decrease of 6%, compared to the year-ago period. Long-term deferred revenue was $10.2 million at the end of Q2, compared to $14.1 million at the end of Q1. Long-term deferred revenue is driven by the level of multi-year prepaid invoicing and we continue to anticipate that we will see fewer of these arrangements over time as the market for enterprise solutions continues to evolve.
Turning to Slide 17, we will provide quarterly guidance as well as our thoughts on the remainder of the year. For the third quarter of 2016, we are targeting total revenue of $49 million to $50 million. Short-term billing change is expected to be in the range of negative 8% to negative 3%, as a result of lower new business bookings and lower services billings, which I mentioned earlier.
Non-GAAP income from operations is expected to be in the range of $1.5 million to $2.5 million. Resulting in non-GAAP earnings per share of $0.02 to $0.03 based on $80.3 million weighted-average diluted shares outstanding. As we provide general color on the remainder of 2016, our comments take into account, the steps we are taking to address our short-term billings trajectory and stabilize top line revenue growth as well as our expectations on renewal rates in the second-half of 2016.
Due to the lagging effect of short-term billings on our product revenue, we believe that Q4 of 2016 total revenue will be roughly flat or slightly down on a year-over-year basis. This would translate to slightly positive year-over-year total revenue growth for the full-year 2016. We continue to expect by the fourth quarter, we will remain at mid single-digit non-GAAP operating profit levels on a run rate basis as we head into 2017.
With regard to free cash flow, we are targeting free cash flow for Q3 to be in the negative range of $8.5 million to $7.5 million. And we anticipate that the second-half of 2016 will be approximately in the same range as the second-half of 2015. In summary, we are pleased that we delivered on expectations in the second quarter. We remain committed to being a sustainably profitable company on non-GAAP basis and are very focused on improving our long-term revenue growth performance.
Now before we answer your questions, I’ll turn the call back over to Elisa.
Thank you, Bryan 2016 remains the year of execution for Jive. With the steps we’re taking to implement our plan and our product vision, I’m confident we’ll be further advancing Jive as an industry leader and positioning the company for growth over the longer-term.
And we’re ready to take any questions now.
We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Kyle Chen with Credit Suisse. Please go ahead.
Hey, guys. Thanks for taking my question and congratulations on the results. I guess Elisa to start off, clearly a lot of changes at Jive over the last two quarters. Do you feel that the company has – appropriate level of stability post alignment and also in your view has the sales force restated a configuration or developed the sales motion that you feel the scalable, repeatable or is there more work to do in your opinion?
There’s always more work to do Kyle for sure, but we are really pleased without the sales organization as come together that we’ve had realignment in the organization and I don’t think the team has taken their eye of the ball. We’re able to deliver the results this quarter and we’re doubling down to continue track record of progress. So I feel good about the sale organization. I feel good about the mix of pipeline that we’re looking at for the rest of the year and we’re going to continue to focus on execution.
Great to hear and I guess how would you characterize the current demand environment? Are you seeing evidence of any demand or budget constraint for collaborations solutions and have you seen any change relative to RFP volumes or velocity?
I think we see across the market solving different types of collaboration problems, whether it’s individual, team, departments or companies. Companies are looking for outsource the solution. This is the best time ever in this market as you’re having more entrance, more solutions, more choices for customers that because customers really need to make these decisions to hold on to their work force and to make them more productive.
So in terms of demand, I think the market is showing us that these solutions are really needed in the enterprise and we’re getting more opportunities to have those reduces customers. We don’t really look at RFPs as an indicator of demand. It’s more about the business problems that leaders are trying to solve cross functionally in company.
So some of our opportunities come from RFPs, but more often not frankly, it comes from companies wanting to make culture change and companies wanting to embrace employees and customers in the digital world.
Great, and then I guess Bryan, a question for you. Given the increase in mix shift to cloud, how should we think about the impact to the revenue model versus on premise, specifically product revenues versus licenses?
So the revenue model for on prem versus cloud is the same, they’re both ratable. So there is no difference to the revenue model. Obviously, the advantage for us from a cloud standpoint is that customers were always on the latest version, it certainly giving them the advance to get on our quarterly basis, multiple times a year, access to what we’re doing from an innovation standpoint. But from revenue and a cash flow standpoint, the model for on prem and the model for cloud are neutral. They are – they operate at the same way.
Got it. Thanks very much. Congratulations on a result.
[Operator Instructions] We have no further question at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Elisa Steele for any closing remarks.
Thank you very much for joining our call this quarter and we look forward to our next conference call. Take care.
The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
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