Absolute Software Corp (ABST) 2013 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Absolute Software Corporation's fiscal 2013 first-quarter conference call. At this time all participants are in a listen only mode. Following the presentation we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions.

Before beginning its formal remarks, Absolute would like to remind listeners that certain portions of today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements.

For more information on the company's risks and uncertainties relating to these forward-looking statements, please refer to the section of the quarterly MD&A. If anyone has any difficulties hearing the conference, (Operator instructions).

I would like to remind everyone that this conference call is being recorded today, Wednesday, May 8, 2013, at 5.00 p.m. Eastern time. I would now like to turn the conference over to Mr. John Livingston, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Thank you for joining us today in our fiscal 2013 second-quarter -- sorry, third-quarter results conference call. With me today is Rob Chase, our Chief Operating Officer, and Errol Olsen, our Chief Financial Officer. I will take you through our business progress for the quarter and Errol will discuss our financial results, after which we will open up the line for your questions.

The third quarter was a pivotal quarter in the history of Absolute Software. Working together, the Absolute team has now accomplished a full transition of our technology platform in management and security business from being PC- and Mac-centric to making a paradigm shift to fully support and embrace fast-growing tablet and smartphone markets.

How did we do it? We leveraged Absolute's 20 years of experience managing remote and mobile computing devices. And, most importantly, we engaged with the two most relevant mobile device companies in the world, Samsung and Apple.

It was only a month ago when we announced our game changing embedded mobile security technology and go-to-market partnership with Samsung, the world's leading smartphone manufacturer. The Samsung/Absolute mobile security initiative crystallizes our tablet smartphone strategy, supports our platform cross-device vision and provides our customers with a level of enterprise-grade security that no other vendor can match.

Today we announced yet another critical milestone, long-awaited customer support for the Apple iPad with the launch of Computrace mobile test management for iPad. Our Computrace mobile test management solution has been embraced by Apple and today is queued up and available for sale at Apple and is already seeing significant interest from customers.

While we are not persistent on the iPad, we are able to leverage many of the aspects of our investigative expertise and proven capability to provide a holistic loss and theft reduction and theft recovery program for our Apple customers. This solution is primarily focused on our valued education customers, who account for an estimated third of the tablet market today.

I'm sure you will agree that these two very important strategic initiatives with Samsung and Apple clearly demonstrate that Absolute has fully transitioned from a legacy PC services company to a uniquely positioned tablet and smartphone security and management services company. We have created a comprehensive endpoint security management and service platform that is essential to cover the full computing device spectrum adopted by our customers. From legacy PC and Mac devices right through to next generation tablet and smartphone devices, all devices need to be covered.

Customers want one vendor with a single integrated solution to provide full security and management capabilities to their entire endpoint device population, regardless of form factor or operating system. This is our many devices, one solution vision. And it is resonating strongly with customers and industry analysts.

Today's mobility trends combined with intensifying regulatory requirements and tight budgets are causing disruption and conversions in the mobile device management and client management tools markets. This is creating an exciting opportunity for next-generation companies like Absolute that are ahead of this consolidation curve.

In fact, we believe that Absolute is the only vendor that provides natively designed cross-platform support for all endpoint device form factors including desktops, notebooks, tablets, fablets and smart phones. This is a key differentiator, and as a result Absolute is winning business against leading competitors in the mobile device management and client management tool markets.

Along with customers, Gartner has also noted Absolute's cross-platform progress, and this reflected in positive movement for Absolute in the Visionary's quadrant of the Gartner Magic Quadrant for client management tools.

It is also important to note that we have successfully migrated Absolute's persistent technology to not just Samsung but also to our good friends at Dell, HP, Lenovo, Panasonic, Acer and Fujitsu, providing persistent support to their Android and Windows x86 tablet platforms. We believe this significant cross-device coverage enables Absolute to participate in providing security to large numbers of tablets being deployed within K-12, high ed, government, healthcare and other commercial market segments going forward.

Looking at our Q3 performance, these developments are starting to gain traction in the market. And as a result we were able to grow our commercial business 4% over Q3 last year despite a 14% decline in traditional PC shipments. This is also due to customer acceptance of our governance, risk management and compliance solutions in corporate and healthcare verticals. We are continuing to generate double-digit growth in these verticals for our Computrace offerings as customers look to implement best practices in data security.

Our commercial growth in these verticals has been offset by declines in our education market this fiscal year to date, as up until today we did not have a concentrated solution for iPad. As we head into Q4 we have persistence in Windows 86 and Android tablets, which are now being adopted by education. And now we have launched our Computrace solution for the iPad. We expect this to enable us to deliver education sales growth in addition to corporate and healthcare growth for the year ahead.

During the quarter, we launched Absolute Manage 6.1.5, which expands our unique mobile content management capability currently supported on iOS devices and now on Android tablets as well, enabling users to securely access and deliver content without compromising Company data. Along with many technology advancements, Absolute continues to build a strong intellectual property portfolio and now has 32 issued patents and 120 patents pending in areas covering mobile device tracking, persistence, theft management, remote device management, remote forensics, remote data protection and a number of other important mobile security and management functionalities.

During the quarter, Absolute was awarded a new patent called Persistent Servicing Agent. That covers, among many things, the method and apparatus conducting remote data wipes across all mobile device types, all leveraging a persistent agent embedded in firmware.

Finally, we are encouraged by the early success we've had with our recent LiveTime acquisition. Absolute's service is now officially launched and it has been very well received by our customer base. As a result, our sales pipeline is building nicely and sales are on track to more than double pre-acquisition sales levels.

In summary, mobile device adoption is accelerating. Data privacy regulations are intensifying, and, consequently, data breaches are on the rise. And of course, the stakes have never been higher. Absolute is in a perfect position to continue to lead and dominate the mobile security marketplace. Absolute has been in the business of managing remote, mobile and off-network devices for 20 years. Mobility is our DNA. We have a strong, defensible, competitive advantage with our technology, our patents, our people, our customers, our partners and our go-to-market platform.

Today is a milestone day for the team at Absolute. With our Apple and Samsung announcements, we now have the opportunity to sell and provide our management securities services into the majority of the shipping tablet population.

At this point I would like to turn the call over to Errol to discuss our financial results for the quarter and our outlook. Errol?

Thanks, John. Good afternoon, everyone. Overall we are pleased with our results for the quarter, particularly against the backdrop of a substantial year-over-year decline in global PC shipments. In spite of these headwinds we are continuing to see growth in key commercial verticals in product lines, a clear sign that we are breaking the direct ties to the PC market with our expanded product portfolio.

We delivered modest topline growth for the quarter, reporting total sales contracts of CAD19.0 million, up 1% from CAD18.9 million in Q3 of last fiscal year. Commercial sales contracts were CAD17.8 million, up 4% from CAD17.2 million last year. Growth was fueled by our continued success in the targeted expansion areas of the business, specifically the corporate and healthcare verticals, the device management and data security product group and our international business, together which offset the headwinds that we encountered in the North American education and consumer markets. In fact, sales contracts for the corporate and healthcare verticals continued to grow double digits year-over-year.

Additionally, with the combination of tablet persistence for Windows and Android devices, including a recent partnership announcement with Samsung as well as our mobile [best] management offering, we believe that we now have the right offerings in place to maintain the position of Computrace as the standard for device security in the North American education market.

Q3 fiscal 2013 commercial sales contracts for our theft management products were CAD11.5 million, down 10% compared to Q3 of fiscal 2012, largely due to the previously mentioned weakness in the North American education sector. We believe that long-term potential for this product category remains robust as the benefits of our products for governance, risk management and compliance are increasingly resonating with potential and existing customers, especially in the corporate and healthcare markets. Commercial sales contracts for our device management and data security products, which include Absolute Service, were robust at CAD6.3 million, an increase of 45% over Q3 of last year. This product category has accounted for 37% of our year-to-date commercial sales. Our performance in the quarter particularly reflects strong sales of Computrace Data Protect as well as Absolute Service.

On the consumer front sales contracts were CAD1.2 million, down from CAD1.7 million in Q3 of last year, reflecting the continuing macro trend of slower PC sales in the consumer market.

Turning now to our international business for the quarter, sales contracts were CAD2.9 million. This was up 38% from CAD2.1 million in international sales for Q3 of last year. We are seeing particularly strong growth out of Asia Pacific, where we opened an office earlier in the fiscal year and are working closely with our OEM partners in the region. We are also continuing to see new business out of Latin America including new opportunities in the education space. We are very excited about the opportunities in all of our international geographies.

We remain committed to taking a balanced approach to spending. We did increase our investment in the business toward the end of last fiscal year, primarily adding to our sales and development teams, which is reflected in our year-over-year expense comparison. Our adjusted operating expenses, which include cost of sales and operating expenses but exclude non-cash charges for amortization of acquired intangibles in stock-based compensation, were CAD18.2 million for the quarter. This was up 20% year over year and up 7% sequentially. The sequential increase was largely the result of the fact that the prior quarter included the benefit of the reversal of the doubtful debt provision as well as the fact that Q3 included a full quarter of costs associated with the acquired Absolute Service business. Additionally, third-party fees in Q3 were higher than average.

Looking ahead, we believe there is still a lot of available leverage with the investments we have already made. Our plan as of now is to demonstrate a return to healthy growth and then make measured investments if necessary to support continued growth.

With our SaaS-based model we continue to deliver solid cash from operations. Q3 cash from operations was CAD4.8 million, up 83% from CAD2.6 million in Q3 of last year. Collections during the quarter were particularly strong, which is reflected in lower than average DSO at March 31. We have continued to maintain a solid cash position. Even with us making our first quarterly dividend payment of CAD0.05 in the quarter, totaling CAD2.1 million, we exited the quarter with CAD61.3 million in cash, cash equivalents and investments. We essentially have seven years of dividend payments already on the balance sheet, which continues to enable us to return surplus cash to our investors while still investing in the business to drive growth.

With this, we have declared our second CAD0.05 per-share quarterly dividend which will be paid on May 28 to shareholders of record on May 7.

Now on to the outlook for the fiscal year. After our Q1 decline we have now had two quarters of sales contract growth and are expecting to close the year with growth in the fourth quarter, in line with our guidance that our sales contracts for the year will be slightly below the prior year. With three consecutive quarters of growth and with our recent Persistence wins on Android and Windows 8 mobile devices, and the launch of Computrace mobile step management for iPads, we expect to head into the next fiscal year with strong momentum, setting the stage for growth in fiscal 2014.

Our expectations for a modest year-over-year decline in cash from operations remains unchanged. This concludes our prepared remarks for today. Operator, please open up the call for questions.

(Operator instructions) Tom Liston with Cantor Fitzgerald.

John, a pretty long question, but just all surrounding the Samsung relationship, it's multipart but it all kind of works together. So in the notes you talked about certain flagship devices, can you talk about what the criteria in terms of what devices you are persistent on, and more importantly just talk about the go-to-market things, whether it's commercial and maybe separate out from consumer (inaudible) the potential mass -- massive market as well, and just all in with pricing and go to market and, with that, talk about the latest DoD approval and what that might mean on the government side and even give a confidence to enterprise. So just overall go to market on each of those two sides and as much help as you can with what devices that will be on.

Sure. So let's tackle devices first. So Samsung has committed to putting us on all of the Galaxy S-4 smart phones, so we are obviously very excited about that on the flagship smartphones and also the flagship Galaxy tablets as well. So that is the commitment. We feel good that we will be on additional implementations of Samsung devices but I will just leave it at that for device types.

In terms of -- there's two go-to-market strategies. One obviously is we are working closely with Samsung in their commercial markets, particularly as it pertains to tablets. So we are working with the global organization to make sure that the mobile step protection products and services and our mobile device management products and services are well understood by Samsung customers and are adopted by Samsung customers. And so we do a lot of co-selling with Samsung into those global markets.

On the consumer side, there's a tremendous opportunity and Samsung is very supportive, taking us into their telco infrastructures, partner infrastructure, to get us skewed up within the telco market in the consumer space. So we are also supporting that initiative, obviously, and are very excited about the opportunity.

In the consumer market, it does take -- the telcos do take some time, so we are looking at both approaching telcos jointly with Samsung and also looking at the possibility of other partners in that space and whether or not we might be able to partner up with a very strong, additional very strong partner in that space that's already in the services distribution security business and protection, handset protection business.

So I think, Tom, that's all we can really comment on at the moment. I don't know if you guys want to add anything to that?

No.

Okay, that's helpful. And within the education vertical, a couple of things -- obviously, the Samsung tablet and you are on Lenovo and others, that seems like a very strong entry into that market. Can you talk about the potential take-up or pipeline within that vertical? And with that, we've seen at least one big RFP on the notebook side for education. Does education feel like it's really coming back this fall? And just talk about the pipeline there.

Yes, education does feel like it's coming back, Tom. And now we are very fortunate to have this association with Apple and a product that makes a lot of sense for education customers buying iPads. Of course, Samsung coming in, in August, with their Galaxy tablets, where we are persistent -- that is a very exciting story for education as well. And our traditional partner set -- HP, Lenovo, Dell and others -- marketing strongly with us into education and obviously into customers that have been buying our solutions for many years. So they have been asking for persistence in those tablets. They have that now. They are being adopted now. We are seeing more traditional tablets coming into the school systems than we did last year.

Obviously, there was really nothing available last year. So this year HP, Dell and Lenovo are working very hard with their education customers to get back into education with regards to a tablet device.

So it all speaks very positively for Absolute. So I think just the opportunity for us to be relevant in the education market is growing again. Right? Whereas we really saw a little bit of a decline as people moved away from -- we were always in all of the Wintel platform devices that our customers were buying. Then they moved to iPads and we lost some of that momentum.

Well now, we have some -- now, obviously, we are gaining that back as we have an iPad solution and we also have an x86 tablets solution and an Android tablet solution. So there's no reason why customers need to deploy large numbers of these devices without proper security from Absolute on them.

Tom, just to add to that just as evidence, some of the stuff that we are starting to see in US school districts that you might have seen an announcement that came out from Dell yesterday about a significant deployment of their latitude 10 Windows 8 tablets in the San Antonio school district, and we were involved with that sale.

Very good. And just finally, to cycle that off because you hinted at it, so with the announcement today on Iowa being first to market in enterprise, can you really just talk about the differentiators there? There's a few different solutions on at least -- calling themselves best management, but just talk about what is differentiated with you at this announcement.

Sure. There's really nobody out there that's talking about theft management, apart from Absolute. And as you know, any -- I would call them -- I don't know what to call them exactly, but any smaller players that have consumer solutions -- they really don't have the history of device protection and device recovery that Absolute has. We have recovered over 29,000 devices, Tom. We've got a great history and relationship with law enforcement. We've had so many wins together with law enforcement in terms of not only getting devices back but breaking internal theft rings up, solving for people stealing identities, solving for all kinds of things going missing besides devices.

So we have really become a part of the education fabric with our safe schools, safe communities messaging. And this entire program wraps around the school. So it's not just about protecting devices; it's about protecting the kids, it's about getting the iPads back that are being stolen from the organizations that we protect. And we wind it all together and come up with a very good program for the school community, which includes our famous industry guarantee as well.

So schools really have the ability of benefiting from this new Computrace Mobile Theft Protection service, and we are very excited about it. And so is Apple. Apple is very excited. We have already sold -- we have already had some significant sales in the market, so we know that it's something that really meets the customer demand.

Blair Abernethy with Stifel Nicolaus.

This is just following on Tom's question. Maybe you could just clarify what is Apple's involvement in the sale. Is this a resell or co-selling? Is it similar to what you have done in the past with HP and Dell? And also maybe you can talk a little bit about pricing.

Sure. So I can't really comment too much on the Apple relationship other than to say that Apple has embraced this service. I think there's a genuine excitement about this service inside of Apple and certainly at Apple customers. And it is [skewed] up at Apple, and there will be numerous trainings taking place at Apple where we train their sales organization and their systems engineers on the service and the technology and how it works exactly and how they can explain it to their customers to make sure that everyone knows that it's available. So we will be doing that.

On the pricing, anyone want --

The same as our Computrace mobile pricing we have today, so we have been selling that in the market already on other Windows-based tablets and on netbooks historically, as you know. So we've got good experience on that price point.

So the pricing is a little bit less than what typical -- a typical Computrace pricing SKU would be, about 20% less, Rob?

Yes.

Approximately 20% less than traditional Computrace pricing. That's a good way to think about it.

Okay, and how are you, given you are not in the firmware on an iPad, are we to think it's basically an app on the device? Is that how to doing it?

That's right. There will be an app on the device. There's a full process, an education process that we take our customers through. The program has numerous modules, if you will, and it's a combination of world-class asset tracking and asset management, theft deterrence and theft prevention, and being able to track the specific devices that are lost and stolen, and actually recover them with law enforcement. So it's a full spectrum of loss and theft management that we provide.

You might think of it, Blair, just like our pretty persistent solutions for -- that we had prior to getting embedded in the first place. So we -- and Mac, as well, today is a nonpersistent solution that we work on. So --

But we recover an awful lot of Mac devices. And we've had this system, the IOS Computrace Mobile Theft Management System has been in beta for about six months. And we've had numerous recoveries of iPads and had a chance to go through the full law enforcement cycle numerous times. And we are very pleased with the results. So are our customers.

That's great. And just one other question, just keying in on the education market. Can you just give us a sense of -- I noticed your deferred revenues are up about 4.5% year-over-year. How are the renewals going in the education market?

Well, the renewals have always been strong in education, as you know. Our issue is not renewals. Our issue was the fact that we didn't support a popular platform that had merged into the marketplace. So, now that we do support it, I think you are going to see education, as we talked about, being a significant contributor to growth going forward. But it has never been a case of education customers not wanting to buy from us. It has been the case of buying iPads and us not having a service available. So, now that we do, I think you are going to see good things in education.

Thanos Moschopoulos with BMO Capital Markets.

John, has the Samsung announcement had a discernible impact on the pipeline at this point? What I mean by that is, do you find you are getting invited to the table a little bit more often for MDM deals, or is it still a little bit early on that front, given that that was a fairly recent development?

Samsung has a real global approach to sales, as you know, enterprise sales. There's a number of very large deals on a global basis that we are involved with through Samsung and within working with Samsung on those deals. So it hasn't impacted our everyday business, say, in North America yet that much because persistence on a tablet hasn't hit the market yet.

But where we are seeing the leading interest from customers are these very large projects where there are hundreds of thousands of tablets or millions of tablets in certain countries or certain states, different jurisdictions, that are going to buy very significant volumes of tablets. And because those projects have such a long lead time, we are involved in ensuring that we are in those discussions at an early nature with Samsung and that we are pulling through Persistent's as a key part of the requirement that will end up in the RFP. So that's where we are seeing some really significant and meaningful traction with Samsung.

And of course, as the actual tablets to start to come out that are Persistent, we will see -- and Samsung is shipping them in America -- we will see a lot of traction around that time frame.

I think I might add one thing to that, to, is think of it in mobile theft management or Computrace mobile bids as being part of the device acquisition. And later, they will do their mobile device management RFP separately. So we get to participate twice and leverage our position in mobile theft management to hopefully give us a leg up on the MDM business as well.

Yes, and in some customers not only do we get to go for MDM and mobile theft management but also those customers have requirements for their legacy devices as well. Right? Because most of the world is still running laptops and desktops and will for many, many years to come. So a lot of these jurisdictions, again, are scratching their head in terms of what are we going to do with our legacy PCs and the desktops we are still buying and the notebooks we are still buying and the ultra books we are still buying and the Windows x86 tablets we are by that other MDM vendors don't cover.

So again, it all comes back to that there's many devices coming into the organization and the organization is potentially buying, and there's one solution in Absolute and Absolute Manage and Absolute Manage MDM and Computrace combined that really deliver a very unique security and management solution to this customers. And that's the key vision and the message, and that's what customers are gravitating toward -- one solution to manage everything.

Great. And then could you provide some color around the strong international growth we saw this quarter? So you said in your prepared remarks it was Latin America and APAC. Any specific countries that drove that, any specific partners or any verticals? Or is it more a question of just having more people out in the sales force in those territories driving that?

Sure. I would say that it's improved execution by the people that we've had in there. They have been in there for some time now and we are really starting to see the results. In terms of which geographies, it's actually quite well spread out. We've got a nice business going in Japan, where Absolute Manage does particularly well. We are starting to sell into China alongside some of our major partners. And then in Latin America, as I mentioned, we are seeing some nice nationwide education deals in a couple of different Latin American countries.

(Operator Instructions) Tom Liston with Cantor Fitzgerald.

Just another follow-up -- one of the data points I came across the wire a few weeks ago was that 40% of corporate PCs is still use Windows XP, which, at least in theory, Microsoft is going to stop supporting next year around this time. Are you seeing any early indications where corporate is starting to look at that? And while Windows 8 might not be a gang buster, certainly start to need to refresh that install base?

I think everybody has been speculating about that obviously, as when is that refresh cycle going to begin. It certainly has been delayed. We don't see any particular specific trend in the market right now that indicates that that refresh cycle has an identifiable timeline. But obviously, again, it gets back to the user patterns. I think that, to my way of thinking, notebooks and desktops are very complementary and companion devices to tablets and smartphones. So most business users, I believe, will have either a desktop for a notebook to do their day-to-day data creation and document processing and then, obviously, will have a tablet for consuming information and a smart phone for consuming information on the fly.

And so I think those devices will certainly be replaced. There will be a refresh cycle on those, on those Wintel platform devices. But when it is -- it's happening all the time. Obviously, there's still a lot of desktop and laptops being sold in the marketplace, I think somewhere around 30 million a year in America. So there's a lot of that for notebooks. There's a lot of notebooks still shipping. So that will just continue on, I think.

But I don't think it's going to be a dramatic piece to it. Possibly next year, as you say, with XP being phased out then people obviously have to move to Windows 7 or Windows 8 or Windows 9 at that point or whatever it's going to be.

And just finally, I don't think it was maybe specifically asked -- but central sales and marketing ramp as the Samsung relationship takes hold and the rest -- could you give us high level comments on that?

Well, certainly, we are doubling down on our investments around Samsung and specifically the business development activities required at large telcos, global telcos and, obviously, marketing efforts and sales efforts that surround that effort and the enterprise effort as well. So we have a team that supports Samsung. We are continuing to expand that team and invest in that team, and they are a very important OEM to us.

Scott Penner with TD Securities.

Actually, John, I wanted to ask about the expenses as well. And I guess, just given the breadth of Samsung and what they can provide to you on the top line, how do you go about judging the correct sales and marketing to support that in your existing team across the world. I guess the question is, do you need to do a lot of investment before the revenue really starts to come in?

Yes. I think we've got -- the team we've got is capable of most of the marketing and sales promotions required. But there may be -- if I can wrestle Errol for a couple of dollars from the budget and maybe we might be able to pick up a couple of -- we want to put some more money into some -- we are putting some more money into some additional business development people.

So think about it like that. It's not going to be a huge spend here at all. We have ample budget to -- it's just a reallocation of funds we already have. But we will certainly be expanding our effort and are expanding our effort towards these global telcos. And those are long sales cycles and we need to be in there and are in there to make sure that we can get our important security services skewed up at large telcos and start to provide meaningful services to Samsung customers, particularly on the S-4 platform.

Thanks for that. Just one other one is on the iOS offering, just a couple of points to make sure I'm clear. What is the expected timeline for -- when you say training of iOS salespeople in some of the education type accounts, is that going on right now? Do you expect to be, I guess, at total effectiveness for this education buying season?

Well, we are supporting the requirement that we have been given. And that will be an ongoing requirement; it typically is. So you are doing -- obviously, you are doing a launch training and then you are doing some subsequent trainings throughout the year. And we do that as part of our overall OEM support. So we will be doing that.

And I think that we are already seeing the Company's Mobile Theft Management Service being sold into education. There's a tremendous amount of interest amongst our current customer base in this service, folks we have long, existing relationships with that understand the value of Absolute's security and management services for mobile devices. So we will be supporting their requirements. And of course, we will be making these services available this education cycle.

Blair Abernethy, Stifel Nicolaus.

Just to follow up, you haven't talked too much in terms of the government vertical performance, in particular. How is that spending trending in the US federal market?

Well, we are still seeing a good, robust opportunity in the federal market. We closed a pretty large deal -- when was it, last quarter?

Third quarter, yes.

In Q3, with the feds, which was great. We've got some very key, influential customers in that market. And we will continue to be relevant there and continue to expand the business. We have grown federal quite significantly over the last couple of years. So it's a growing market for us, Blair, and we will keep supporting it. We are not seeing any issues with funding right now.

Okay, great. And then, John, I wonder if you could just touch on the product side of things, your product integration. How is that coming along, and any sort of new product areas you think we should be watching for, this year?

Well, our mobile device management team continues to upgrade our mobile device management offering. And as you know, we've got full mobile application management now. We've got full mobile content management now. I believe, in this latest release, 6.2 is coming out here shortly or it came out -- there you go, it came out. We had one, 6.1.5, which has a lot of functionality in the 6.2 release, and now they are working on the 6.3 release. I can't keep up with the numbers, there are so many releases.

But there's a lot of very good functionality coming out around the MDM space, and we will continue. We've got an incredible team of developers that continues to crank out a lot of features and functionality at a pretty rapid pace. So that will keep coming.

We are starting to verticalize some of that capability, specifically for markets like K-12 and for teachers that are deploying information, PDFs and Word documents and videos in the classroom and things like that. So that's where we are headed on the mobile device management side of things.

And on that integration piece, so we have the last release of MDM, as you know, included in our Web API, which allows for a web interface and starts the -- is one of our major building blocks of our integration of Computrace and Manage. But the same time, our acquisition of service is also accelerating that integration effort, as that solution is able to integrate both products and enable our technical folks at our customers to be able to manage all of those solutions all from the service platform. So we are making good progress on that integration front.

There are no additional questions at this time. (Operator Instructions) We have no more questions at this time. I turn the call back over to the presenters.

Great. Thank you, operator. And thanks, everyone, for joining us on today's call. We look forward to updating you on our continued progress when we release our fiscal 2013 fourth-quarter results and year-end results in mid-August. Have a good rest of the day.

This concludes today's conference call. You may now disconnect.