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Executives

Kevin Faulkner -

Paul A. Ricci - Chairman and Chief Executive Officer

Thomas L. Beaudoin - Chief Financial Officer and Executive Vice President

Analysts

Brent Thill - UBS Investment Bank, Research Division

Daniel H. Ives - FBR Capital Markets & Co., Research Division

Shyam Patil - Raymond James & Associates, Inc., Research Division

Nandan Amladi - Deutsche Bank AG, Research Division

Shaul Eyal - Oppenheimer & Co. Inc., Research Division

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division

John F. Bright - Avondale Partners, LLC, Research Division

Daniel T. Cummins - ThinkEquity LLC, Research Division

Matthew J. Coss - Piper Jaffray Companies, Research Division

Steven R. Koenig - Longbow Research LLC

Scott Zeller - Needham & Company, LLC, Research Division

Unknown Analyst

Nuance Communications (NUAN) Q2 2012 Earnings Call May 10, 2012 5:00 PM ET

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Nuance's Second Quarter Fiscal 2012 Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. And with us today are Chairman and Chief Executive Officer for Nuance, Mr. Paul Ricci; Chief Financial Officer, Mr. Tom Beaudoin; and Vice President of Investor Relations, Mr. Kevin Faulkner. At this time then, I'd like to turn the conference over to Mr. Faulkner. Please go ahead.

Kevin Faulkner

Thanks, Doug. Before we begin, I remind everyone that matters we discuss this afternoon include predictions, estimates, expectations and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to our recent SEC filings for a detailed list of risk factors.

As noted in our press release, we also issued a set of prepared remarks in advance of this call, which are available on our website. Those remarks are intended to serve in place of extended formal comments, and we will not repeat them here.

Now let me turn the call over to Paul Ricci.

Paul A. Ricci

Thank you, Kevin. Before taking your questions, I might underscore a few points from today's materials. We were gratified this quarter with the strong fundamentals throughout our business, including accelerated organic revenue growth, very strong bookings performance, significantly improved gross margins and operating margins, strength and competitive posture across our market and heightened customer interest in our solutions, especially in our newest innovations in Natural Language Processing and Clinical Language Understanding [ph].

Indeed, on this last point, in previous quarters, we've indicated that the pace of market activity suggests to us an unprecedented level of interest in our solutions. This remains our perspective, and recent product releases such as Samsung's Smart TV showed tangible results.

Activity around our Mobile & Consumer business in particular remains intense, as we see smartphone manufacturers, consumer electronics firms and automotive companies almost universally racing to implement next-generation, voice-enabled, natural language and virtual assistant interfaces.

In Healthcare, sales for our solutions, led by record sales of our Dragon Medical products, record bookings for our On Demand solutions and increased demand for our radiology systems, continue to grow in double digits. We believe that the strength of our products, channels, customer service reputation and competitive position all point to continued momentum in Healthcare in the coming fiscal year.

In Enterprise, we had robust bookings for professional services, and we see growing interest in our mobile customer care platforms that combine voice, natural language, biometrics and multimodal output to deliver a rich user experience.

Momentum in our imaging business is also quite good, characterized by growing contract sizes. We believe imaging holds a potential for outperformance this year as our MFP solutions enjoy expanding reception from our OEM partners and their corporate customers. Our third quarter and full year guidance reflects sustained optimism about the business.

To help investors interpret our updated Q3 and fiscal year guidance, we also note that the guidance anticipates that Transcend will add about $50 million in revenues in the balance of this year. We've modeled revenues cautiously for the balance of our fiscal year based upon our experience with short-term effects of integration activities and acquisition-related accounting in the first 2 quarters of an acquisition. We do anticipate significant revenue synergies associated with the Transcend acquisition, which will become material in early fiscal 2013.

Concerning Vlingo, which has not yet closed, we've modeled in our guidance no revenue contribution in FY '12 as we wait for the closing to complete the complex accounting analysis of revenue contracts with mobile partners. Transcend should add between $0.01 and $0.02 of EPS, and we've included about $0.01 of dilution of earnings in the second half of fiscal 2012 associated with Vlingo.

We're now prepared to take your questions

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from Brent Thill with UBS.

Brent Thill - UBS Investment Bank, Research Division

A question for Paul and a follow-up for Tom. Paul, just in the Enterprise business, you saw really strong outperformance. Can you just help us understand what caused that outperformance this quarter?

Paul A. Ricci

There were a couple of things that contributed to performance in the quarter and a couple of things I want to mention that will, we think, improve performance as we look forward. In the quarter, we had very strong licensing revenues and some significant in-quarter licensing deals. And we had the contributions from Loquendo, which were significantly stronger than we had anticipated in the quarter. As we look forward, I might mention that the demand for our Professional Services and Enterprise is quite strong. I think we referenced in our prepared remarks Professional Services bookings. And we have seen a more robust pipeline for our On Demand solutions, including some deals that have been closed in the last quarter.

Brent Thill - UBS Investment Bank, Research Division

Okay. And real quick for Tom, just on the revenue guidance. You increased your guide. I just wanted to be clear that the majority of the raise is due to Transcend. It doesn't look like you factored in any other organic improvement. Is that correct?

Paul A. Ricci

Oh, we're not breaking out the contribution -- the various contributions beyond what we told you of about $50 million. But it is true, the majority of contributions were from Transcend in the additional guidance.

Operator

Our next question is from the line of Daniel Ives with FBR.

Daniel H. Ives - FBR Capital Markets & Co., Research Division

Yes. Can you just talk -- I mean, obviously, you had a bounce back on mobile, and we know what happened last quarter with the big deals as they were kind of, from a time perspective, pushed off. Just speak generally, I know you can't give out specific deals, but did you start to do the Professional Services on some of those ones that swooped out of last quarter's revenue?

Paul A. Ricci

Yes. We did see -- I think there are several factors that we've talked about before, we'd like to emphasize with respect to the Mobile business. One, that -- as we reiterated this quarter from last quarter in the prepared remarks, the deals are becoming more expansive and more complex, and the accounting around those is equally complex. And because they tend to involve cloud-based services and other factors that are -- that cause revenue to be recognized over time, we will see a prolonging of revenue recognition. Second is I referenced in my comments just now, and as we also stated in the remarks, the demand for a sophisticated natural language solutions in the mobile industry and the consumer electronics industry widely is unprecedented in our experience. And we are continuing to staff and invest in anticipation of that continuing. But those revenues will be recognized with time, and we did enjoy the benefits of some significant design wins this quarter and the completion of some of the milestones on existing contracts this quarter.

Daniel H. Ives - FBR Capital Markets & Co., Research Division

Okay. And then just lastly, on Healthcare, obviously, organic growth, kind of back to where we would hoped it would be. Did you feel like this is kind of a sustainable level going forward? I'm not saying quarter-to-quarter, but just that kind of low to mid-teens sort of growth rate?

Paul A. Ricci

We think it's a reasonable indicative growth rate for the business. We did note in our comments that we anticipate a slower growth rate in the third quarter and a resumption of a higher growth rate in the fourth quarter, just because of the timing of licensing deals in the 2 quarters of last year, second 2 quarters of last year, and our anticipation for licensing deals in the 2 quarters of this year.

Operator

Our next question is from the line of Shyam Patil with Raymond James.

Shyam Patil - Raymond James & Associates, Inc., Research Division

Just got a few questions. Paul, you mentioned in the prepared remarks the material mobile contract. I was just wondering if you could share any additional color around that. I know if you can't talk about pricing [indiscernible] but anything in the way of what kind of devices includes the kind of structure, whether it's fixed-fee or per price, and how you guys are thinking about its point of revenue?

Paul A. Ricci

I can't share much more. I -- the language in the prepared remarks, I think, was meant to indicate that it was a broad spectrum of devices. But it is centered on the smartphone. It is centered around smartphones, but not exclusively smartphones. And as we've indicated even in the comments I made to earlier questions, these contracts involve numerous forms of revenue that include services, fixed payments, royalties, and all of those are at work in this contract as well.

Shyam Patil - Raymond James & Associates, Inc., Research Division

Okay, great. And then switching to Enterprise, very strong growth this quarter. What's the right way to think about kind of the organic growth rates for that business? And should we expect it to be smooth or maybe it's lumpy. Anything else to talk about as we think about the margins for that business overall?

Paul A. Ricci

Well, it is an enterprise software business, although it has a strong cloud component. So it's -- and it's got an attractive Maintenance and Professional Services streams. So it's going to have some of the aspects of an enterprise software business in its lumpiness, and some of that will be mitigated by the more recurring revenues. And I think, in response to your question about the growth, we've said that our expectation for the business was to resume positive organic growth in the high-single digits and perhaps to be able to build on that somewhat over time. And I think that's a realistic expectation. We are seeing the expansion of solutions in that business that incorporates some of the capabilities we've talked about, for example, in the mobile business, as enterprise customers look to have more mobile-enabled, self-service applications, and that's benefiting us as well. And that may provide opportunity for future growth as we look down the road.

Operator

Our next question is from the line of Nandan Amladi with Deutsche Bank.

Nandan Amladi - Deutsche Bank AG, Research Division

I had a question on the Healthcare margin profile. We went from 51% to 46% contribution margin this quarter. This is relatively low compared to the past 3 or 4 quarters. Can you describe the nature of the projects? Or was it pricing or customer segment or just the revenue mix?

Paul A. Ricci

Well, I might start by pointing out that if you go back 6 quarters or so, you'll see that the business operated in the mid-40s and then trended up to low-50s and is now back down. We think of this business as being a business that's going to operate in the mid- to high-40s margins, and that's an awfully good margin contribution for a business that has the kind of growth potential this business has. And we've sought to reinvest in this business to buttress that growth and, in fact, to look for opportunities to enhance that growth. So I -- we're comfortable with the margin and where it is. I think this quarter reflects some elements of -- that will continue, which are increased services content within the revenues, that we expect that to continue, and we also expect to continue to increase our investments in R&D and marketing. So we wouldn't encourage you to model this at significantly higher margins on an ongoing basis.

Nandan Amladi - Deutsche Bank AG, Research Division

Okay. And a quick follow-up if I might, also on Healthcare. The government has pushed back the ICD-10 deployment deadline. What impact is that having on your sales pipeline?

Paul A. Ricci

It -- so far, it hasn't been appreciable. There's still intense interest in the application Clinical Language Understanding to it, integrated clinical documentation solution that unites transcription and coding. And I don't think that a temporary pushback of ICD-10 is going to change that.

Operator

Our next question is from Shaul Eyal with Oppenheimer & Co.

Shaul Eyal - Oppenheimer & Co. Inc., Research Division

Two quick questions on my end. Strong cash flow with this quarter. Can you share with us the contribution that you had seen from Transcend as it relates to the cash flow?

Thomas L. Beaudoin

So there was no effect for this quarter because this -- the transaction just closed. So there was no effect of Transcend in Q2.

Shaul Eyal - Oppenheimer & Co. Inc., Research Division

Okay. Got it. Yes, that's fair. Some of the slippage that you talked about in the prior quarter as it relates to the mobile division, how much of that kind of came back in this kind of strong quarter that you just reported?

Paul A. Ricci

Oh, some of it. It's hard to quantify precisely what was quarter-to-quarter. But I think in -- roughly, you should think of us having recouped the slippage that you all perceived in the first quarter and the second quarter.

Shaul Eyal - Oppenheimer & Co. Inc., Research Division

Got it. And if I might just kind of squeeze one final question, Paul, I want to take you back to the Analyst Day back in December. I think kind of Mike Thompson kind of -- did kind of a great job kind of discussing the relation specifically with Google. Five months roughly after that, can you kind of talk to us about where your relation with Google stands right now?

Paul A. Ricci

I don't recall Mike's comments, and so I couldn't comment. I couldn't say anything about them. And I don't think I would have anything to add to whatever he would say. So I probably should pass on that question.

Operator

Our next question is from Jeff Van Rhee with Craig-Hallum.

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division

Paul, just a couple questions on the Healthcare side first. Two questions. The health lines in terms of line growth, slower over the last few quarters compared to prior year. Can you just touch on the drivers and if you think this level of line growth is where you’d expect it to stay? And also, you just touched a minute ago on more services being one of the impacts in margins. What's driving that? Wouldn't that go the other way to more automation?

Paul A. Ricci

With respect to line growth, I've just got to get those numbers out before I answer that question. With respect to services, services are lower margin than technology licensing. And so that -- there's some diminution of gross margin by that. And that was all that I meant in that particular comment. With respect to the line growth, our line count is becoming very large number, and so the -- some amount of slowing of that trend over time is to be anticipated. But it's -- we're looking at a trend over the last few quarters that's roughly consistent with the kind of revenue growth that we're suggesting as appropriate for this business, which is low- to middle-teens. And I think that's a reasonable place to think about it.

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division

Okay. Then last one. On the Enterprise side, have you seen a mix shift, and in particular, in terms of the way customers want to buy it? There was a stretch there where we heard a lot about customers having a very, very strong preference for the On Demand. Now that -- sort of the reading between the lines, it sounds like licenses have been -- become the predominant. Do you expect that to continue? And am I reading that right?

Paul A. Ricci

We've spoken about this in past quarters and in past years. My view is that with time, we're going to see more and more of the customer self-service infrastructure migrate to the cloud, and that is our expectation for long-term trends in our -- reflect trends in our revenue composition as well. Having said that, that migration has certainly not been as fast as I might have anticipated. So there will continue, I think, to be a mixture of on-premise and cloud-based revenues for some time. But I think I wouldn't read too much into any quarterly trend on that.

Operator

Our next question is from John Bright with Avondale Partners.

John F. Bright - Avondale Partners, LLC, Research Division

In Enterprise, very strong growth in the quarter. Could you characterize where it came from geographically?

Paul A. Ricci

North America and Europe.

John F. Bright - Avondale Partners, LLC, Research Division

Was it stronger in one or the other?

Paul A. Ricci

I don't have that break out in front of me. So I can't say -- I actually can't answer the question.

John F. Bright - Avondale Partners, LLC, Research Division

Okay. From the prepared text regarding the guidance, in the Mobile and Consumer segment, you mentioned that a materially greater portion will come from mobile services. How might that impact the margins in the second half?

Paul A. Ricci

It would tend to suppress margins somewhat, but I wouldn't look for a radically discontinuous trend in that -- over the next couple of quarters. The -- so I don't think there's a significant effect to be had there. And there are some offsetting licenses -- license. We have -- we anticipate some license opportunities in the third and fourth quarter, which will -- which may offset that. So I wouldn't look for a big margin change.

John F. Bright - Avondale Partners, LLC, Research Division

Also in the Mobile and Consumer segment, you talked about a Dragon consumer product launch, and you're preparing for a future launch as the, I think, that the channel is clearing. When is that launch scheduled?

Paul A. Ricci

We haven't announced it, and I'm not in a position to announce it today. But I think we did reference that as we look into fiscal '13, we expect the channel suppression to abate and to see a resumption of the kind of historical growth we've seen over the last several years in Dragon, which has been terrific incidentally, well above the corporate average growth.

John F. Bright - Avondale Partners, LLC, Research Division

Final question. Paul, I asked this on the last call and I'll ask it again. Given that organic growth is a consistent key discussion point on these calls and it's of interest to investors, what's your thought on not providing that as a part of guidance?

Paul A. Ricci

Well, we've provided an awful lot of data about our growth and organic growth. And we provide enough information that certainly investors and analysts can model their own organic growth. I just don't think we're going to be providing specific organic growth guidance in the near future.

Operator

Our next question is from Dan Cummins with ThinkEquity.

Daniel T. Cummins - ThinkEquity LLC, Research Division

That was my first question. I was going to ask what the midpoint of the revenue guidance reflects in terms of organic assumption, but I'll move on to the next one. The Transcend guidance for $50 million for the remaining part of the fiscal year, does that assume that you leave behind any elements of their business? Or are you just being conservative? Looks like you're excluding perhaps about 15% of what was projected on first calls by analysts who are covering Transcend.

Paul A. Ricci

Well, I can't make reference to the first call numbers, so I'll just leave that aside. But I think I did say in my comments that we are being cautious in the first 150 days because we have experience that says that there's some disruption of revenues that can occur in the integration effects in the first few months, and it takes a few months before the real synergy, revenue synergies begin to engage. And certainly, there is some revenue potential loss of revenue to accounting, in acquisition accounting as you know. So it may be a bit cautious. We'll see. But that was the approach we thought was prudent. With respect to leaving -- I don't think we're leaving behind many material revenues, no. Meaning, we're not closing down any aspects of the business or -- if that's what you're asking.

Daniel T. Cummins - ThinkEquity LLC, Research Division

Okay. And then, with respect to your pipeline and the growth that you've seen since Apple's 4S phone was released, could you give us some sense of whether that halo effect, and obviously very substantive development work you did, has led to better incremental opportunities directly in mobile or also mobile-enabling enterprise features or health IT features? If -- I'm really curious to hear about what kind of lead gen has come off of the 4S success.

Paul A. Ricci

Well, if I'm interpreting your question correctly, I believe the appearance in the last year or so of virtual assistance in the mobile space, including the products that Nuance brought to market at the early part of last year in calendar '11, and most notably, of course, including Siri, I believe those products have had a material effect on the interest in natural language interfaces across a broad spectrum of health -- of IT solutions and communication systems. And that is true, certainly in the mobile space. I referenced in my comments that we're seeing, almost universally, a demand for solutions like that in the next generation devices that people are bringing out in the home, in cars, in the mobile communication space. And your question is correct in its -- I think a suggestion that, that's spreading in the other segments as well, certainly into health care and notably, as I mentioned, earlier, into customer care, customer self-service as well.

Daniel T. Cummins - ThinkEquity LLC, Research Division

That's great color. And then I just -- last thing. Anything new to report on the Voice Biometric security solutions? Any partnering? Anything interesting there?

Paul A. Ricci

No. We referenced, I think, in our prepared remarks that, as we did last quarter, that it's been an area of considerable interest, and it's a relatively newer business for us. It's doing quite well. The technologies that Nuance had along with the Voice Biometric technologies that we've acquired over the last year have all generated some real interest in growing revenues. We're very bullish about that as we look out over the next couple of years.

Operator

Our next question is from Mark Murphy with Piper Jaffray.

Matthew J. Coss - Piper Jaffray Companies, Research Division

This is Matt Coss on for Mark Murphy. I just had a question about -- in your prepared remarks, you mentioned under Mobile and Consumer that you had design wins in China, both through global partners and with Chinese automotive OEMs. Can you talk a little bit about -- a little bit more about those wins, what they might do to margins and what you're kind of outlook for growth is in the Chinese market for Mobile?

Paul A. Ricci

Well, I apologize. I can't talk in particular about those deals. I don't have a lot of details about them. I think they're not going to significantly influence our margins as we look out over the next few quarters. Obviously, the Chinese market is a very important part of the mobile and consumer electronics industry. And so, Chinese language solutions are -- have been, for some time, important in our existing business with our partners, most of whom, of course, are not -- are importing products into China, not Chinese-based. I think this reference was to some companies that, in fact, were Chinese-based.

Matthew J. Coss - Piper Jaffray Companies, Research Division

Okay. Very good. And then just maybe a large question on margins. And I hopped on late, so sorry if someone has mentioned this already. But margins were both very good during the quarter and -- over the long-term, how do you think about margins? And then, am I correct to assume that you'll invest for growth first and then worry about margins secondarily?

Paul A. Ricci

Well, I think I'll start with the last point, and the answer is yes. That is the right way to think about it, that we are -- actually, our focus is on investing for growth. Our margins ended up being higher this quarter than we anticipated. That, in part, reflects challenges in hiring against our investment agenda. It -- we have a significant appetite for hiring in research and engineering in particular and investing in select areas of sales and distribution. But we've not been able to hire against that agenda as quickly as we had expected. We'll continue to try and do so. Oh, sorry. I didn't complete the first part of your question. We have encouraged people in the -- we've encouraged shareholders and analysts in the past to think about our margin growth of increasing -- our margins increasing slightly year-to-year, but not at the historical rate they have. And having said that, we've continued to enjoy margin expansion beyond what we -- the expectations we've set. But I do want to remind -- reemphasize my point of a moment ago, that really, for us, right now, reinvesting in growth is our highest priority because we think that will ultimately have the most important mid-term effect upon expanding our margins.

Operator

Our next question is from Steve Koenig with Longbow Research.

Steven R. Koenig - Longbow Research LLC

Paul, can you just repeat for me, I didn't quite catch what you said at the very end of your verbal commentary before the Q&A, about -- you're making no assumptions about revenue and guidance from new mobile partners, did you say? Sorry if I got that wrong. But do you remember what that was?

Paul A. Ricci

Yes, I think what I said was with respect to Vlingo, a small acquisition that we announced some months ago and which we anticipate will close soon. We've not modeled any revenue contribution in the balance of this fiscal year because their revenue derives almost exclusively from contracts with partners in the mobile communications market. And those partners are complex in the respective complexity I've been talking about in the answer to other questions. And until we've completed our accounting on those contracts, it would be imprudent to conclude that we'll see many meaningful revenue recognition. So we simply didn't model any in our guidance. We did, however, model expenses. Those are more certain. And it rounds to about $0.01 of dilution in the second half of the year.

Steven R. Koenig - Longbow Research LLC

Okay. And can you help me with understanding the services outperformance that you had this quarter? Did it outperform -- did they outperform against your initial expectations? And what were the primary kind of sources of that, would you say?

Thomas L. Beaudoin

It's a combination of a lot of the things that Paul has been talking about around the increased services in our mobile space. We also had a very strong quarter in our Enterprise POS, and we also continued to have very strong bookings this quarter. So it's the combination of a number of factors across our entire On Demand Solutions and Healthcare and Mobile services, with some strengthening in Enterprise.

Steven R. Koenig - Longbow Research LLC

Okay. And then just 2 last housekeeping questions. One is the -- can you shed some color on the sequential increase in G&A? And then lastly, with that $50 million that you're modeling in from Transcend, is that GAAP or non-GAAP?

Thomas L. Beaudoin

On the Transcend's revenue, it's both, GAAP and non-GAAP. And I think there was a slight increase in G&A quarter-to-quarter. But I don't think it was significant. Yes, I think it's down from a percentage standpoint. So we continue to get leverage out of G&A costs.

Steven R. Koenig - Longbow Research LLC

Okay. And so just clarification, the $50 million for Transcend is both GAAP and non-GAAP so you're not taking any write-down on that?

Thomas L. Beaudoin

Correct.

Operator

Our next question is from Scott Zeller with Needham & Company.

Scott Zeller - Needham & Company, LLC, Research Division

There have been several questions on Mobile and Consumer. The commentary was that the interest is, I think, Paul, you said unprecedented and intense. Perhaps you could talk to us about bookings growth because the as-reported revenue growth is -- it's up a bit, it's 17% organically. But perhaps you could talk about what that $115 million would look like if you include bookings growth as well.

Paul A. Ricci

Well, I don't know if we can give a quantitative answer to that question, but I'll let Tom speak about the bookings growth.

Thomas L. Beaudoin

We had strong bookings growth, again, across almost all of the businesses. Again, predominantly in the services areas, in Healthcare, Mobile. Again, strong bookings in Enterprise. I might have missed the first part of your question. Was...

Scott Zeller - Needham & Company, LLC, Research Division

It was more about trying to get a sense of acceleration in Mobile and Consumer by looking at total bookings rather than just as-reported revenues. That's really the question.

Paul A. Ricci

I might mention that the Mobile services bookings in the quarter, just looking at our history for the last 12 quarters or so, were stronger than any quarter in the last 12 quarters by 50% above this next best quarter, for example.

Operator

And our final question comes from Mike Latimore with Northland capital.

Unknown Analyst

Ryan McDonald [ph] on for Mike Latimore. I was just curious quickly in the Enterprise business, which products were like the big drivers for that business?

Paul A. Ricci

Well, it's not one product. We have a family of products, and those include our core self-service platforms, our On Demand offerings, our Professional Services, some of our new offerings such as Call Steering and Voice Biometrics. So I don't think I could point to a single product which has been -- which is unique in that demand.

Unknown Analyst

And in the Mobile -- in Mobile and Consumer, the big deal that you signed in this, was this the biggest mobile deal that you ever had? Or how does that compare to other ones that you’ve signed?

Paul A. Ricci

It's a big deal, but no, it's not the biggest deal we've ever signed by some distance.

Operator

I turn [ph] to speakers for any closing remarks, please.

Paul A. Ricci

Okay. Well, I thank you all then for joining us, and we look forward to speaking to you again next quarter.

Operator

And ladies and gentlemen, today's conference call is being made available for replay, starting today at 7 p.m. on the Eastern time zone. It will run through the month until Thursday, May 31, 2012. You can access our service by dialing 1 (800) 475-6701 within the United States; outside the U.S. at 1 (320) 365-3844. In both cases, enter the access code of 245812. And that does conclude our conference call for today. Thank you for your participation and for using AT&T Executive TeleConference. You may now disconnect.

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