Datawatch: The Wall Street Analyst Forum Presentation Transcript

Datawatch Corp. (DWCH)

The Wall Street Analyst Forum

November 28, 2007 10:30 am ET

Executives

Ken Bero - COO

Presentation

Moderator

The next company we have presenting this morning is Datawatch Corporation. And Datawatch Corporation is a leader in Enterprise Information Management, helps companies make better decisions and solve business problems by simplifying access to information. Unique among EIM vendors, Datawatch transforms the massive amounts of data and documents generated inside or outside a company into actionable insights, without any changes needed to existing systems.

Datawatch customers benefit from the right information, in the right context, at the right time. More than 20,000 organizations worldwide rely on Datawatch products including its market-leading Monarch report and data mining solutions. Founded in 1985, Datawatch is based in Chelmsford, Massachusetts, with offices in London, Sydney and Manila.

And presenting this morning is Ken Bero, the COO.

Ken Bero

First, thank you all for attending today, and let you know as the speaker introduced me here, I'm Ken Bero, Chief Operating Officer for Datawatch and effectively the CEO as of January 1st. And with me today is John Kitchen, our CMO, our Chief Marketing Officer and Murray Fish, who is our Chief Financial Officer as well.

And what I'm going to do today is, talk a little bit and explain the words that you see here on the slide about the fact that Datawatch bridged the gap between documents and data, and we do drive better decision-making within organizations. So I'll help you understand a little bit more of what's behind that, why we think Datawatch is unique in the industry, tell you a little bit about the opportunity, and hopefully when you walk out of here, create the level of enthusiasm that we and the management team and that the company have about our solutions and about our positioning in the marketplace.

I'll spend about two seconds here. It's the regulatory Safe Harbor statements. And I should start my presentation with little bit of a cartoon and for everybody, it’s been in the high-tech environment, I am going to guess this will make you chuckle, but I think as we look at it, it really is a metaphor for the Enterprise Information Management market space and the fact that there is convergence going on between two distinct sets of vendors in the space. One of them being the business intelligence side of the market's space, and other one is the content management vendors.

And what you find is that within organizations, those of the two basic camps that exist, and organizations are increasingly demanding of the market that may be able to access information and be able to analyze it from both sides of those given entities. And quite frankly, neither solution, whether you come from the business intelligence side or you come from the content management side, have all of the answers for organizations.

The VI vendors have done a wonderful job in terms of building tools and solutions that allow analytics, but what they have done is, made their solutions database-centric, and so what they are asking folks to do is, actually go into production databases to extract data or actually pulling data out in making complicated data marks, and then they wrap tools around them, that are basically query or scripting types of tools that users find very difficult to work with, and in addition to that, it really doesn't access all of the information that’s necessary to drive your business.

So it doesn’t really give you the capability to, for example, access statements and invoices and a whole set of information that, if you go to the other side of the street, is really that the realm of the content management force. They store that data, they retrieve it, and allow you to view it, and actually keep track of it from a records management perspective.

The thing that those folks lack in their solutions is really the ability to analyze all that data and unlock all of the information and the value that really exists within all of those kinds of documents. And what Datawatch really does is, it sits and it -- actually is able to bridge the gap and combine the capability to give you analytics and a view into both the realms, both from the business intelligence side, the realm that they curiously work in and then from the content management side to actually unlock all the value that exists within that information set that currently is not being able to reanalyze. So, we feel we are in a very good position to, as it says, bridge the gap for organizations and really have tremendous amount of value.

Little bit about Datawatch public company, traded on NASDAQ, founded in 1985. We just released earnings revenues yesterday and $25.3 million for the year which was a 21% increase over 2006, with headquarters in Chelmsford, we do have operations throughout the world, in London, as well as in Sydney and then in Manila. There are about 140 employees worldwide, and the great thing about our business is that we have those desktop [on the web] through enterprise solutions, and our customer base is very, very expensive. We have about 20,000 customers who use our products and our technologies.

There are something in the neighborhood of 400,000 of licenses that exist across the world that are used by customers. So we have a very broad base of customers, and we participate in virtually any market that you could identify. And do have a transition that's going, as I said, I have been announced as the President and CEO effective as of January 1st and the transition results from the retirement of our prior CEO, Bob Hagger.

Very strong Board of Directors, they got one is the CEO and strong corporate governance and ethics, the Board is very active in the business. Demands accountability from the management team and is very good in terms of the mix of skills and background which see there provided tremendous amount of value to the business and to the management team.

So five year financial highlights. You see our fiscal year ends from October 1st to September 30th, so we disclose our year not too long here. For '07, the revenues were $25.3 million with a net income of $1.7 million, so this is 21% growth over last year's performance.

The five year performance from a revenue perspective has been steady, not spectacular, about 5.4 in terms of the compound annual growth rate. The net income growth, you see there is 14.1%, we did have one hiccup last year in terms of earning income and that primarily resulted from the integration of an acquisition.

You see the stock price ranges over the last 52 weeks from about $1.60 at its low up to $6.39. The current share price, this was actually as of Monday and it's up, I think, over a $1 as a result of the announcement yesterday, so I think it's about $5.90 as we were talking this morning. The number of outstanding shares is almost $5.6 million which gives some market cap today of somewhere in the neighborhood of almost of $33 million.

We got a strong financial position. Cash is almost $4 million and that's a $2 million growth from the previous year. The current liabilities there are $8.8 million, over half of those are in differed revenue and that's primarily maintenance revenues, and I would tell you that that's a very stable business. We retained somewhere in the neighborhood of 90% to 95% of our customers run through on board, so that the solutions that we sell are pretty strategic to our customer base. We have really no long-term liabilities, and you can see that our expenses, as a percent of sales, are pretty much in line with what you would expect from the software company.

This is a one slide, I will spend a little bit of time on and this is where we think that we are undervalued and we have got significant upside potential. What we have done here is really take a couple of other folks whose transactions have occurred over the last year in our spaces, so Applix who was acquired by Business Objects.

Business Objects was acquired by SAP. Cognos was acquired by IBM and then Mobius was also acquired this past year. And you can see that when you take a look at their market caps and divided by the outstanding annual sales, their ratios are quite a bit higher than ours. And so I think that our messages ring very true in the market. We got compelling reasons for customers to buy, I think we're just an unknown and again we believe that we have got significant upside potential with regard to our valuation.

We are positioned well for the EIM market opportunity and that's really broken into two segments. The first one as I said is the content management space which has got projected compound growth rate of almost 13%, and the BI market space as well with growth rates that are almost 7% there. And again what the marketplace and the customers are demanding is the conversions of these two markets and they need the ability to take a look at all of the data that exists within their organization and we are in unique position of being able to provide those solutions.

And again this is -- as I said, it really starts to talk to the problems that no one from either the BI camp or from the content management side, from a vendor perspective really has all the solutions for business entities. The content management people again did a wonderful job at storage, retrieval, display, they just can't mine the data and really transform it into actionable information, that is something that we do.

And from the business intelligence side, they have tended to be more database-centric in terms of their solutions, but quite frankly their tools are pretty difficult for end users to take advantage of. You really almost have to have some programming capabilities to take advantage of scripting and query analytics to be able to do anything with it. So it's great for high-end and sophisticated users, but when you get out in the environment and there are lots of users who are just not that technical, but need to have access and the ability to work with the information within the organization, they need some tools that are little bit simpler to use.

Our solutions, and it's a recurring thinker that we just bridge that gap and we really are able to transform existing business documents and reports into live actionable data so that people can use it. They are easy to install and easy to use. They don't require programming skills, so folks that use our solutions do not have to go back to IT and put request in to get reports out and/or information in terms and tables and other things that they need to do their job, they can sit there, create models on their own, people are up and running in fairly short order. It's very intuitive to use and they are very easy to implement.

This slide really speaks to what the key differentiator is at Datawatch and unlike the business intelligence folks who go after the database and give you tools from a query and scripting perspective to gather information. What we do is actually report mining, and so we go at it from a different perspective. We actually are able to take out information from static reports, static documents, static invoices, repurpose it. We can combine it with other information from other reports. We can join things together, we can export, we can import, we can move the data around and we really take information that is, as you would view statically in really one view of it, and turn it into actionable information that you can do any number of things with.

The value of our solutions are again that they are easy to implement and what we do from a sales perspective is really folks, on the fact that we leverage the millions and millions of dollars and man hours that have been invested in the generation of reports, documents, and statements. So, our positioning with corporate customers is that you have already done the heavy listing. We are not going to ask you to try and create a data mark which is complicated to do, it often doesn't work and is very difficult and expensive to maintain. You've done all of that and essentially you've got the data mark, they are in the statements and the documents and reports that applications already generate, we just got to leverage off those existing investments.

We've got a strong revenue generation model, every organization that uses Microsoft is really a potential desktop customer of ours, and the reason for that is, when you think about using Excel, much of the information in the analytics that goes on, people have to manually key in information to be able to get it to a point where they can actually do analytics. We will automate that process. So we will take data from reports and automate that process of loading Excel and give the analytic tools that users really need to increase their productivity.

And once we get Monarch into accounts, it really sets the stage for the requirement for web-based enterprise implementations. Once you get multiple copies of Monarch at the desktop level, then it becomes the question of security web-based access from outside the organization, one version of the truth, so that those issues start to come into play. The fact that managing multiple desktops can be an issue from the IT perspective, it is much easier to have it centrally controlled and centrally administrated from a web-based server perspective. And so again the desktop implementations lead to very often the conservation about enterprise implementations.

We compliment or we enhanced virtually every ERP, CRM or home grown application, as well as the BI implementations with tools that just make it easier for essentially the non-technical type of user to do the job. It is very difficult for example, for SAP, who generates lots of reports, lots of canned reports that come out their system. So if you're going to report on your desk, and you only need pieces of it, well, you need to sit there and manually re-key information from the SAP report into Excel before you can actually do your job. That’s not a very helpful solution, and not to mention the fact that it is pretty difficult for you to actually use the SAP query and analytic tools to put it in a format that you can use.

Our solutions will allow that issue to go away and it’s a much easier implementation to go ahead and take information automatically from the reports that SAP splits out, repurpose them and give you analytical tools that you really need.

We, as I said, compliment enhanced existing archives and document management systems. These are the systems that historically have not had analytic capabilities, so we are having a whole new breath of value to these solutions. We’ve recently integrated our products with IBM, content OnDemand, as well as Hyland solution, the suite of solutions and I really started to get some traction. We've got some referenceable accounts now where we installed the capabilities and the accounts, and quite frankly are thrilled with the work that we have done.

Our solutions are pretty strategic, and have long service lives, as I mentioned, when you talk about the maintenance renewal streams, our retention level is 90% - 95%. So, once these solutions are installed, people use them, they become part of the overall corporate process. There is training that gets involved and so we become integral to their business. And we are there to stay and we provide value over a long period of time. And then finally, we are the inventor and the worldwide leader of the report mining technology.

Let me switch a little bit and talk about the proposition, I guess, before I get into the operations. I'll tell you a little bit about the sales proposition which we believe is compelling and it's really two basic points, our solutions are self-service and easy to use. So, we will push out our technology and get people at their desks the ability to self-serve and go after information that they need. They are not going to be reliant on the IT organization to generate the reports for them, and the tools that they use are exactly that, easy to use.

We leverage existing systems and applications, so, we are an enabler within the organization. We are not going to ask organizations to throw out all the investments that they have made, whether it's in the content management or the ERP or CRM systems. We are going to help those systems become far more effective within the organization. And finally, we are easy to implement. We implement in days and weeks, not months or years if ever.

Now let me flip a little bit to the operational side of the business, and give you some insight into the go-to-market model. We've got a full range of product solutions, desktop through the enterprise, and for the desktop we utilize II-Tier distribution, increment tech data are our two primary distributors here in the U.S., and we utilize national resellers to then reach our customers in the marketplace. We have an inside sales group that is really focused on departmental and FMV customer set. And then we've got direct sales and valued-added partners that are working in selling enterprise solutions out in the marketplace. We do have worldwide coverage. We've got operations in North America that is headquartered in Chelmsford. We've got UK operations that are located in London that covers United Kingdom, Ireland, as well as Europe. And then we also have operations out of Australia.

We've got pretty comprehensive solution set from the desktop, as I said up through the enterprise. You can see the list of products there; there is Monarch, which is the flagship desktop product. Monarch Data Pump which is essentially an automated ETL tool that can move data around and it is something that is a source of data to things like share point and other archive systems.

We've got Datawatch ES and RMS which is our report mining service. Datawatch ES is actually a standalone enterprise business intelligence tool. RMS is the tool that would wrap around in existing archive system. BDS which is our own archive solution, Mail Manager which is a brand new product that we just introduced in this past quarter, for Mail Manager, management capabilities, and then finally, we've got solutions for business process and service management.

We do take advantage of it and it worked pretty diligently over the last year to 18 months in terms of developing key strategic partners. And this is going to become very important, in terms of leveraging our sales capabilities. We've got premier partner status with IBM from the content management on-demand group, and they've got about 3,500 active IBM CMOD customers in North-America, about 1,500 that exist in Europe. As I said, we've gotten our first implementation done in the last quarter. We are working on technical large bank on the west coast we are looking to close our business with today. So, we feel that we've got some implementations, IBM is behind us. We have had lots of conversations with their sales management folks all the way up to the highest level, so they understand the value that we bring and offer to their customer sets. It will not only add value in terms of existing implementations but they believe that it will also drive more CMOD license sales and seats for them.

And that’s the same story with Hyland. We again have completed the integration with Hyland this year and we've got several implementations that have been successfully completed. And you can see that we've got 3,000 targeted customers across the US and Latin America.

We recently were announced as a high potential Microsoft ISD partner, and that’s going to be very important to us in terms of our continued integration with the Microsoft products, and they believe that our technology has helped them sell more, for example, SQL Server Databases and it will assist in the implementations from a share point perspective. So, we are planning an increasingly large role there and we've got direct relationships with Microsoft and are beginning to get more-and-more involved with their channel partners. And you can see the list of other partners that exist. ASG, who recently acquired Mobius, Redwood, OpenText, and we've had long-term relationships with both UNISYS and Xerox.

From the development and support perspective, this is where we focused a lot of efforts over the past year and have really started to bring a lot of these operational functions back into Chelmsford, to give them more corporate focus and really corporate control. So, we have our VP of Development and Product Management, and what I would kind of characterize is the big head of the organization. So, that’s where all the thought leadership with regard to products and strategies in market it occurs. And that's where senior management, so we have a conversation of about what we need to have from a market perspective. And then from product development perspective, we've got development sites not only in Chelmsford, so we have developers that exist in Chelmsford, but we see that we also have folks that develop for us in Greensboro, North Carolina in Russia and in India. And we do our QA and documentation from the operation in the Philippines. And we recently really re-organized the support and service function and may that a worldwide organization again focused and headquartered from Chelmsford, so we get consistency in terms of dealing with our customers.

So, when you pick up the phone in the UK you are getting the responses and answers to your issues and questions, and we're dealing with you in the same way that you are customer in the US. And we can also then track you, and we've begun the integration process of getting information available, so that we know on a worldwide basis, what's going on with the customer set.

This is a slide that really gives you some sense of the customers that exist from the 20,000 plus customers that we have worldwide. You can see that there are a large variety of markets, very prominent names that you all know. So, we are very proud of the customer set that we have. And it just gives us a tremendous amount of cross sell, up sell opportunities because in very many cases, they will have started with some set of our products but have needs for other products that we sell. So, the cross sell, up sell opportunity is immense.

We have got a solid management team, that has strong expertise in both the BI and Content Management space and I think this is something that I am not sure that the organization would have said a couple of years ago. If you take a look at the list of folks here, with the exception of John Kitchen, who has been with the organization for, I want to say 10 plus years, almost everybody else on that list have come into the organization over the last year to 18 months. So, it begun to recruit and enhance the management team, and feel very comfortable and very bullish on the management team that we've got expertise in both of the areas in the markets that we serve. The management team has chosen to be there, I think that they understand the opportunity and what needs to be done, and how to go execute. They've got long experience in how to do it and track records in doing it. So, we feel very good about the list of post who are managing the business.

And in summary, we've got six points. We like to finish up with the fact that we are undervalued to our market competitors. We think that we have some substantial upsides. We participate in two very strong growing markets, the enterprise content management and business intelligence market which are converging and being called the enterprise information management space.

We've got compelling sales prepositions and a strong revenue generation model. Strong relationships with partners, IBM, Microsoft, Hyland, as well as others, we've got established distribution model both in the US and across the world. And I think probably one of the most important things, while we've got a strong management team, who really believes in the business and is very excited about the opportunity that we've got.

And with that, I will close and let you ask some questions. And thank you very much for listening. Yes sir?

Question-and-Answer Session

Unidentified Audience Member

(Question Inaudible)

Ken Bero

Well, it depends on kind of where we are selling. We will sometimes run into business objects and covenants, quite frankly on the Content Management side there really isn't a competitor and we've got the Content Management folks that are taking us into their sites and being participants with us. Really, quite frankly, there are not many folks in the market space who do what we do, and we have lots of conversations with the organization. We compete with ourselves and so it's a matter of talking to as many people as we can possibly talk to and getting the solutions set out in front of the customers.

Unidentified Audience Member

There's a lot of folks in content management much of what I understand, how you really differ except that you got the integrated business intelligence?

Ken Bero

Well, I think that's our differentiation. We would not -- I won't stand here and say that we are going to go out and displace IBM and a CMOD implementation or Hyland are or Documentum or any of the other folks that exist out there from an archive perspective. We do, on occasion, want to cross new implementations where we have a solution standalone that we can go sale. We are certainly servicing our own customer base around the BDS product which is about a 150 strong across the world.

The key about solutions are that they are enablers. And when you take it from that context, we will make solutions that you got currently install better and that will make them more effective and not ask you to reinvent the wheel. We are not asking you to take the investment that you have made, move it out and displace it. We are an enabler to enhance your current investments and make them better than what they are.

Unidentified Audience Member

Are you selling software that services the pure licensing model?

Ken Bero

Fundamentally, it's perpetual licenses. We do have a subscription service that accounts for something in the neighborhood of 1 plus in 10% of revenue at the enterprise level and that's really kind of the distinction that some folks has opposed to doing the capital acquisition would rather do it from an operating perspective and not of operating budget. So it's more of a financing issue than it is anything else. We have really not seen much of demand from an ASP perspective for example. So, it's really still selling. People want control of their information and their data, especially the financial folks and then the healthcare folks. They want to keep that in-house.

Unidentified Audience Member

And what is the average selling price when you go if you can today, (inaudible) relative Cognos or just about this?

Ken Bero

Our solutions can be implemented anywhere from $50 to quarter of a million dollars, so we are substantially less than a big implementation, for example Business objects for Cognos.

Unidentified Audience Member

Have you worked with any consultants in the behind space just relative to what…

Ken Bero

I think that's one of the areas, as I said, that we really are pushing on the partnering program and that's when something that we have implemented. We got some folks that are focused entirely on partner recruitment, and so we don't have any consultants that I would call out you and say that we have got actually relationships. But I think that that’s certainly is…

Unidentified Audience Member

Just one in your backyard you can probably talk to.

Ken Bero

Okay, then I would like to hook up with you afterwards, and lets see if we get that information hence back, because I really think that part of the ability to expand a business is going to be relying on others, carrying on a message and helping us in terms of position and taking advantage of the relationships they already have with customers and then getting us in through the front door. We think we have got a compelling message once we get there.

Unidentified Audience Member

Are you concerned about the way those acquisitions have gone out in the area?

Ken Bero

No. I think, we've had several conversations about that topic, and I think, one of the things that I've kind of said is, that I understand why, for example SAP and the IBMs of the world, the Oracles of the world would want to acquire these companies because they certainly enhance their total stack when they walk in the door, I think one of the challenges from the customer side of things is that it really creates some real uncertainty and confusion as to you know, so what's that mean now, all those investments that I've made in your solutions, am I dealing with SAP, for example, or are we still dealing with Business Objects.

So, I think the bottom line answer for us is that we feel we've got a big opportunity as a vendor that still sits as an independent and can walk in and say, you know something it really doesn't matter who you've got or what you've installed, your problems have not gone away, but all those problems that were there yesterday regardless of what the market looks like today still exist. We've got solutions that can help you out and let's go from there.

Are there questions?

Unidentified Audience Member

Yes sir? Have you provided any forward guidance?

Ken Bero

No.

Unidentified Audience Member

Is there much seasonality that you are seeing in your sales?

Ken Bero

If you look at the history of the business, I think you would say that strongest quarters are quarters two and three, although we displaced that in our strongest quarter in Q4 so, no, I don't think there really is seasonality to our business. I would tell you that our issue right now is and continues to be execution and getting in front of as many customers as we possibly can. Again, we think we've got a strong story to tell and have spent a lot of time over the last year organizing and focusing our folks on a key strategic message and really focusing on the key differentiators that we have and talking to as many folks as we possibly can.

Unidentified Audience Member

Okay. Looking at you fourth quarter release, was there anything unusual going on in that quarter, or is that the type of earnings power we can expect going forward?

Ken Bero

Well, I think again we have reorganized and positioned the business to take advantage of the opportunities that we have. We've got strong desktop product sales with the Monarch product with the refocusing of the management team particularly from the service and support side.

We've enhanced our ability to provide services, not just on a local basis but actually take resources, and if we've got a implementations in Europe where we don't enough folks to fulfill, because they are all out being build, I can take people from the U.S and move them over there. So we've enhanced and improved our delivery capabilities from the services side.

And again, we've put a lot of focus on the enterprise solutions and have restructured the sales team and you are beginning to see I think the fruits in the results of the building of the backlogs and the pipelines with regard to enterprise solutions.

Unidentified Audience Member

Are there any reasons that we should expect first quarter to be less than the $0.14 you just earned?

Ken Bero

I can't give you, I guess, some of the topic going forward Eric that we just do.

Unidentified Audience Member

But I am just saying, what requires if you go down, what will have?

Ken Bero

Well, there is lot of things that can cause to go down, obviously the ways and decisions and just anyone of the number of things. I think the one thing that the Monarch product is, when we introduced their versions which we did this past year, we typically get pretty significant jumps in the adoption, early adoption of the upgrades. So we've had a couple of strong quarters since we've introduced that. So we will start to see that taper off a little bit, but the enterprise business is, we see that is building.

Unidentified Audience Member

Is the business lumpy, we even start talking the $1.25 sales; can you see any lumpiness in there?

Ken Bero

You mean in terms of binary large sales?

Unidentified Audience Member

Yeah.

Ken Bero

Well, I think one part of what they through that in the case of -- I'd love to that problem and that will be kind of a fun one to manage. We are clearly, again as we upgrade the sales organization and bring in better management folks and stronger solution sales persons, we are going to be dealing with larger deals and we've got those in pipelines. Yes, sir.

Unidentified Audience Member

Maybe I missed that. How much of your revenues may currently which is at 10% would you get service rent equipment, how much will be revenues recurring?

Ken Bero

Well, when you recurring, we've got --Murray help me out, it's like $5 million or $6 million in maintenance renewals that would be recurring revenue. And there the customer sets are being retained at the 90% to 95% levels. So those revenues are in place and contractual. The rest of the business is really software license driven and so they are individual transactions.

And when you say recurring, I guess the other and I think I answered this a little bit yesterday. We have to make a distinction between brand new customers versus upgrades and additional seats or more software into existing customers. So much of our businesses in existing customers sets who are buying more, buying upgrades, buying more seats as they expand and start to take advantage of the capabilities. We also have brand new customers who are coming on board as well.

Unidentified Audience Member

Revenue breakdown old versus new customers roughly, what that is?

Ken Bero

It wouldn't be something I can do off the top of my head, I think to do some work for you and come back with an answer for you.

Unidentified Audience Member

Also could you give us a very rough feel for sales by each of the products that you had on the product sheet?

Ken Bero

It could be $14 million.

Unidentified Audience Member

Yeah.

Ken Bero

It pretty much breaks down; I hope it is exactly right, but it is pretty much a 50-50 split between the enterprise and the desktop products.

Unidentified Audience Member

You've pieced up your organization's expense, what's the cash flow story here? Did you have any free cash flow?

Ken Bero

Well, I mean the cash actually has increased $2 million from last year, and so I think, when in terms of beating up the organization, that’s really been trading out folks who really didn’t fit the profile that we used to have from a sales perspective, particularly from an enterprise perspective. So the incremental ads in terms of expenses, I'm not going to say that they aren’t different, but they certainly have not been. This is not like creating a brand new sales organization, it is really more getting a profile of a solution sales person that makes sense and really can go sell things that I don’t think we had in the past.

Unidentified Audience Member

How much is your revenues in foreign currency. Or do you hold dollar based?

Ken Bero

About 25%, I think of the business comes from international markets; about 75% of the business is being driven out of North America.

Unidentified Audience Member

Okay. So, you're selling in local currency base?

Ken Bero

Yes.

Unidentified Audience Member

And did management change, have you -- you've done a lot of restructuring, and that you have changed a lot of people, and so, why have you changed them?

Ken Bero

Well, Bob Hagger, who is the current CEO has decided to retire. So he announced that -- the Board announced that as of the end of the year, end of September. Although that has been a transition that’s kind of been in place, and we have been working toward over the last year. And over the last 12 to 18 months there was really I think a strategic decision on his and the Board’s part to really start to make some investments, different kinds of investments, change the strategy a little bit and, so we've had the opportunity to really take that and run with it, and the Board -- and Bob has been incredibly supportive of that activity and so I think, I don’t know if you saw the slide, but the entire top management team has been built and brought in over the last 12 to 18 months. So we've got folks that really understand the markets have got success and track records, and really know what they are they doing.

Unidentified Audience Member

Four to six people, I thought they were all in sales or anything…

Ken Bero

No. There is product development, there is the service and support. So, we've strengthened I think every piece of the business.

Unidentified Audience Member

When you lose an account, what are the major objectives that you are running into, I am talking in terms of a new sale?

Ken Bero

It often comes down to we are just not ready to go ahead and we understand that you can add value. It's just not quite one or two of the top things that is on our list to go ahead and do. Again, we will occasionally lose to the likes of Business Objects, Cognos, with Mail Manager for example, there are issues and the fact we have got a brand new products and there are established vendors out there. Some man-tech, other folks that have probably better mail management solutions overall than we do, not to mention a breadth of other products are on stores, that give them some capabilities to sell that we don't have. So, we are still kind of feeling away with regard to that. I think more than anything else it has been timing and budgets, as much as anything else.

Unidentified Audience Member

Typically, let's say somebody is spending a $100,000 with you for the software. By the time they are finished, what is their actual implementation cost in terms of what they have got to put in and whole other auxiliary cost as they may be…

Ken Bero

No, really it’s, as I said, we get it up and running in days and weeks, so it's the service implementation cost we can get an enterprise system up and running with 3 or 4 days of implementation now, you can tack on some training to that and maybe it's a couple of weeks worth of additional services, training, and our support work that we have to do to work with the customer, but we get them up, get them trained and so that they are understanding how to create models and they can get the solution in place and they are utilizing it and taking advantage of it almost right away. That’s one of the beauties of it.

Unidentified Audience Member

If you look at where you're selling in terms installed database, other installed VI types of solutions, can you give us some sort of a feel what that customer base looks like? What you're selling into?

Ken Bero

Well, a good proportion of our business, I think I'd say about 40% or so is between financial and health care, a lot of transaction, a lot of data, a lot of analytics, manufacturing, retail, in U.K. a lot of health care and government kind of business, manufacturing is very large. I can talk to you as much about the industry space, but I'd also talk to you in terms of where SAP for example exist, the CRM Systems, ORACLE Financials. We are as much trying to understand the key components that exist within an organization that are really driving the systems.

Unidentified Audience Member

But I'm trying to understand, is that typically a SAP user or an ORACLE user who is buying you or are you sprinkled all over?

Ken Bero

We're sprinkled all over, yes.

Moderator

In order to move things along, if anyone has any further questions you are welcome to move to the break out room, which is just around the corner.

Ken Bero

Okay. Great.

Moderator

Thank you very much.

Ken Bero

Thank you.

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