ANSYS Inc (ANSS) 2013 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the ANSYS first quarter 2013 earnings conference call. All participants will be in listen only mode.

(Operator Instructions)

After today's presentation, there will be an opportunity to ask questions.

(Operator Instructions)

Please note, we would like to limit your questions to one with one brief follow-up. This presentation is being recorded. I would now like to turn the conference over to Mr. Jim Cashman, President and CEO. Please go ahead, sir.

Good morning and, again, thanks everyone for joining us to discuss ANSYS's 2013 first-quarter financial results. Again, from housekeeping, consistent with our standard protocol, all the information of the key topics relative to Q1's business performance and our updated 2013 outlook are included within this mornings earnings release and in the prepared documents that we posted on the homepage of our investor relations Web site this morning. So with that in place I'm going to ask, first of all, introduce Maria Shields, our CFO, and ask her to go through our typical Safe Harbor statement.

Thanks, Jim. Good morning, everyone. I'd like to remind you that in addition to any risks and uncertainties that we highlight during the course of this call, important factors that may effect our future results are discussed at length in our public filings with the SEC, all of which are also available via our Web site. Additionally, the company's reported results should not be considered an indication of future performance, as there are risks and uncertainties that could impact our business in the future. These statements are based upon our view of the business as of today and ANSYS undertakes no obligation to update any such information unless we do so in a public forum. During the course of this call and in the prepared remarks, we will be making reference to non-GAAP financial measures. A discussion of the various items that are excluded and a full reconciliation of GAAP to not comparable non-GAAP financial measures are included in this morning's earnings release materials and the related Form 8-K.

So Jim, I'll now turn the call back over to you.

Okay. Thanks, Maria. Before we get started with the Q&A, I would like to briefly underscore a few important highlights regarding our Q1 results and our updated fiscal year 2013 outlook. Let me begin by saying that Q1 was a solid quarter on many fronts, but it also finished a bit softer than it started or than we had planned. From my perspective, the most important aspect of our performance for Q1 is that despite a variety of issues, including macro economic challenges and currency rates that were towards the lower end. And in case of the yen outside of the range that we provided, we continued an important multi-year trend for us as a company and as a management team, we delivered on our earnings commitment. We managed the business in a disciplined fashion and finished with earnings above the range that we had guided coming into the quarter.

In addition, we achieved revenue growth in all three major geographies, as well as double-digit constant currency growth in both Europe and GIA, Asia-Pacific, our occurring revenue is very strong and 74%. Our operating margins remain slightly above guidance and 48%. Deferred revenue and backlog grew to an all-time high of $399 million. We generated $95 million in operating cash flows, which is a 14% increase over Q1 2012. We welcomed EVEN, the company name EVEN, to the ANSYS family on April 2. This is a company that actually gives us a very good positioning into the advancing world of composite materials in our simulation space and on the hiring front, we netted about 50 employees.

There were many positive aspects of the quarter including a relatively strong constant currency revenue performance in the United Kingdom and in GIA most notably, but we also acknowledge that there were some pockets of sales ramp up issues for all of those new hires that we talked about in previous quarters and that impacted the quarter Q1 and they are top priorities for us in Q2 and the remainder of 2013 to continue to expedite that ramp up. Our industry competition continues to be diverse while exhibiting strength in automotive, industrial equipment, electronics and the bio med sectors in particular. We added really a host of new logos and continue to see new sales and strong renewals in our existing account base.

Now, as we look forward to the remainder of 2013, we are revising our full year outlook based on two primary assumptions. First of all, we are expecting a continuation of the business climate similar to that which we experienced in the first-quarter and secondly, we are adjusting our currency rates, most notably for the significant weakening of the Japanese yen. With this in mind, we've updated our full-year outlook for 2013 non-GAAP revenue in the range of $855 million to $875 million and EPS in the $2.96 and $3.04 range. For Q2, we are targeting non-GAAP revenues of $206 million to $212 million and EPS of $0.69 to $0.72. Now, I would also like to -- one thing I would like to note is that our Q2 EPS guidance includes additional costs related to user group meetings that historically occurred in the second half of the year, but due to some chronic timing things, we've actually moved that forward into Q2 things. It will be non-comparable but nothing surprising there.

So, netting this all out, we continue to focus on driving increased productivity from those recent sales investments that we talked about, while also balancing our investments for future growth against basically the realities of what continues to be a challenging macro environment, which in turn leads to some fairly cautious customer sentiments. So basically, that is the scope and with all that, I will open up the phone lines to take any questions you might have.

(Operator Instructions)

Richard Davis, Canaccord.

Thanks. Two quick questions. I saw you hired, I think, a chief product officer, a fellow named Walid. Is there going to be any change in product direction under his stewardship and thoughts there? And just a more broad question on the competitive front, have you seen any changes in dynamics?

The first part is, obviously, any time we get new talent we want to continue to add those new perspectives to that, however, the basic mainline product direction and vision of that really is not changing. Now you have to look at some of the benefits. First of all, we've gotten to the point where obviously the strength of the individual projects continues to be important and that's been a major emphasis for us for many years but also there is increasing emphasis on that portfolio and having basically full-time pension to drive toward unifying those in a rational manner over a number of years and pick that right aspect is particularly good.

But also, bringing in some additional perspectives into the changing world of computing and delivery, and interaction when you get from everything from mobile to cloud, we talked about cloud many times over the last few calls and there are certain shortcomings to the kind of computing we do with what cloud delivers, but that is not a long-term kind of thing. And so we're making sure that we are fully prepared for that. As well as, over the years we have grown from, as everybody knows, we've grown from having a couple of seats per customer to, in some cases, having thousands of seats and that gets us in a different form of enterprise computing delivery, and obviously adding that background of computing delivery is an important aspect. And I didn't know if you are pre-signaling your discussion on competition or if that's the competitive environment or if that's your follow-up question, so I'm going to turn it back and if you want to repose the question, I don't want to let that one by.

Just have you seen any changes in the competitive environment? Those are two questions.

Actually, absolutely not. Over the last few years as we have gained success and helped develop the market, that obviously will always bring in new classes of competitors and they ebb and flow during various aspects of that. The one thing that probably is the most telling and I want to really kind of couch this so it does not come off as any form of hubris because it is anything but that, but obviously in any quarter, particularly in this environment, you have sales that slip out, sales that slip in and things like that. So we actually did, since we were on the softer side of the range we had provided, we actually wanted to look at all the things that got in there and we can't talk about the multitude of all the major and minor sales but of the large ones, the interesting things was the ones that slipped, there were a couple of projects that just got cancelled by the customer. But there were none that turned to competitive standpoint, at least when we looked at that top 100 classification which is one thing obviously we would've been turning an eye toward.

I can't tell you below the 100 if there are some spot tactical ones but really the competitive environment really has not changed. The main story here right now is twofold. One of which is the macro economics and I'll throw the currency volatility in with that. The second part is we talked about the investments that we're going to be making and ramping up the sales team. We actually did that but as we've also talked about in the first three or four months, we don't get a ton of productivity even out of the quickest learners and that is something you tend to cultivate in the 6 to 12 months and then it kind of grows from that standpoint. If there's anything else, that is kind of like the broad brush look.

Got it. Thank you.

Sterling Auty, JPMorgan

Thanks. It looks like you did -- it looks like you had an increase in deals over $1 million. It didn't look like big deals were an issue. If I piece things together, it looks like North America, teed up licenses, deals under $1 million, so kind of the meat and potatoes business was the issue in the quarter. If that's correct, just kind of curious what we can read into that and read into how that might come back as the year progresses.

First of all, we will give a little bit of qualitative aspect here but again, the first thing I'd say is everything I tell you right now do not read a long-term trend, at least not yet. There is not enough to indicate that would happen. But yes, the fact is that first of all, with regard to the number of large sale, large-sale aspects, keep in mind those are additive with our major accounts but they also reflect the building up, accumulation of continually ramping up business with those. It's not like a bunch of million dollars instantaneously appeared. Some of that was renewal business, some of that was new business.

Now, if you look at -- I'd say the one thing about this economy is that; A, nothing happened in monolith so even though we talked about all the major geographies grew and we had the double digit constant currency growth in Europe and Asia-Pacific, but in each of those regions it wasn't like they monolithically moved in one direction. There were segments in each one of those that specifically performed very well and others that performed fairly softly. So southern Europe, not a major part of the business but that was soft. Other parts were particularly strong. We could go through each of the geographies. Same thing from a -- you segmented the business as we also look at it, in major accounts and maybe the small, medium enterprise. But neither of those moved monolithically. We had certain major customers that actually held back and are very judicious in their spending and others that went ahead, and likewise at the small, medium ad. Again, I would not look at that as being a trend. I view that as being more of a -- speaking to the individual excellence or foresight or whatever is going on individually at each company.

Now, there was also a slight -- and this is one I don't want people to over react to -- but there was a slight tweaking up towards lease versus paid-up but again, these are not these wholesale repeat of 2009 type of things but as you mentioned paid-up versus -- yes, that was an element. We did see those particular things but we also see a growth. Why do we look -- what do we look for in the second part of the business? First of all is basically the maturation of the recently hired salespeople. Second of all, we've got our baseline recurring business to build off. Third of all, we've got our major known customer engagements. And finally, if you look at some other statistics that we've looked at, we look at the things like what's happening and just as a specific statistic over the last six weeks the gross pipeline in North America, for instance, has actually grown 10% so it is starting to accumulate a little bit. These are not major and we're not expecting -- we're certainly not expecting a major turnaround in the economy or major bumps there. We are assuming a little bit more of that going in.

But you put those factors, combined with the fact that the overall velocity through the pipeline, people are continuing the judicious spending patterns, they are continuing to be very guarded on that. As I mentioned, there are a couple of projects that we were just actually put on the table until 2014. Now those are -- with the size of our customer base, we looked to other places to actually overcome those things and they are relatively minor in the grand scheme of things. But those are the changes that we see moving forward and really the motivating force behind the guidance after we sift through quite a bit of volatility in the currency and things like that.

And then my one quick follow-up for Maria, can you give us a sense the change in yen FX assumption, how much did that contribute to the full-year revenue cut?

About $10 million.

Perfect. Thank you.

[Perry Wang], Goldman Sachs.

Hi, good morning and thank you for taking the question. I wanted to ask a question about deferred revenue. Compared to last year, it looks like there may have been a mix shift between deferred revenue and backlog for both current and long-term. Could you provide any more color here, especially for the current backlog piece, perhaps whether the increase here may have impacted license revenue for the quarter?

Yes. Perry, essentially what we did is, we commented on this last quarter, but we continue to work with our independent advisors relative to wanting to be in the mainstream from a GAAP perspective. So what they suggested we do to kind of get in line with other of our software peers is to leave on the balance sheet basically the current billing cycle and everything else has moved off and is now reflected as backlog. So if you take a look in the prepared remarks, you can see that the total of deferred revenue plus the backlog for the year -- at the end of the quarter is about $399 million and that compares with a year ago, the same comparable number would be about $333.5 million.

Got you. That makes sense. There weren't any changes to contact terms?

No. The contract terms have not changed. It's just the application of depth and wanting to be more in line with other peers who have billings of our nature that are a combination of annual from the legacy business, but a growing amount of these multi-year leases that come as a result of Apache. But also as we have started to see, as we are cross-selling other products into that Apache base, they tend to like to keep that monologue of time based licenses and we are happy to work with them in any way that makes sense for them, whether it's having it as part of their operating budget or in other cases as a CapEx.

Likewise, it's not just the Apache accounts, historical -- historically we always provided annual leases and it wasn't like this was any master plan, many, many years ago but it was just one that we flowed in and we found that there are a class of customers that actually like that longer term perspective, but on a time based or a lease type of basis. That is just one more way. We have talked for years that we just want to provide the maximum number of avenues or remove the number of financial hurdles for customers to acquire the technology because it all works for us over the long term with our returning base and the growth elements.

Got it. That's helpful. And for the follow-up question, again also on large deals, I think, Jim, you just mentioned that some deals were canceled. Is there any more color you can provide here, for example were these due to budget constraints, were these new engagements or were they relatively well seasoned before they got canceled?

First of all, when you talk about the big deals, none of those got cancelled. Okay. Just to be really clear. And like I say, of that bump up there, we have a number where we continue with the higher renewal rates and with additional businesses companies tend to graduate up into that level. When I talked about the engagements, none of these were really major ones, some of them are actually related to service engagements and in fact, if you look at the service revenue, a little bit down but particularly in Europe where the stronger part of our service business is, the economic realities of what were going on there tended to affect that disproportionately. I know we are talking about a small portion of a small number but it all speaks to the macro economic hypothesis under which we are using partially to reap the sales on this business.

Okay. Got it. Thank you.

Steve Koenig, Wedbush Securities.

I would like to take a look at your guidance reduction of about $25 million to $30 million or so and so we know how much is from currency and how much organic you talked about. If we take the non-currency part of it, call it $20 million or whatever, I would like to correlate that with kind of two things. First of all, how much of that would you attribute to the macro environment versus the challenges with North American execution and ramping that staff?

First of all, I would say that roughly -- if you want to look at the Q1 shortfall, you want to finger in the wind, it was probably mid-single digits. It might been around that $5 million, $6 million, $7 million and that's the ramp-up thing related to the new rate. We talked about $10 million from a little bit north of that may be from the Japanese yen currency, we also talked about some of the other ones might soften a little bit and then from that you probably have close to $10 million-ish that we think particularly in the four signs that we see in the environment that we are getting the business toward, if you look at the remainder of the year.

That is just kind of the way it breaks down and, of course, one of those things I say is like we've always said, we run the business based around those things but in the short term, if the economy would pick up and the demand picks up we have no problem e-mailing new keys to customers with existing software. There's about 50,000 plus of them out there so we can definitely harvest that one, but we want to make sure we don't lean too far out over the edge if the factor is something over the horizon on that. That is one of the reasons why we are a little bit soft on the Q1. We still had the decent earnings performance, actually above and the like. So that's really the way we dissect it, the issue. Long-term, no real concerns apart from you don't want to see this kind of macro environment continue. It's been several years and to have it continue on for several more wouldn't be to our liking but we will adjust accordingly.

Okay. It makes sense. I don't think anyone would ever describe your planning as not being prudent. I do want to ask though then of the stuff that is non-currency related that you broke down for us, when you correlate that with your quantitative analysis, how does it fit with your quantitative analysis about assumptions concerning close rates or pipeline? What are the quantitative factors that link to that reduction in guidance?

Keep in mind, as I mentioned before, the pipelines are actually growing. Part of that is because they are actually growing and part of it is because if it doesn't come out the spigot in the current quarter, it accumulates. There is an accumulation but there is an actual growth involved in that also, but the overriding factor is the overall velocity of that pipe. If you look at close rates, the close rates over a longer period of time are about as good as they have been, however, they are slower. So if you take rate as the proportion that closes, no problem. If you look at the rate at which they close, that is the part that slowed down, that's the part that's totally related to customer sentiment. Does that cover you?

Thank you very much.

Ross MacMillan, Jefferies.

I just wanted to go back to something you said earlier and it is in relation to hiring the chief product officer. You said certain shortcomings applied to the delivery model exist but that's not a long-term thing. Maybe I'm reading too much into it but this year was a dot release on the ANSYS product, 14.5 rather than a 15.0 release. I don't want to get ahead of ourselves but I'm just curious as you think forward, do you think that there's a chance that we could start to see ANSYS introduce products that are delivered in a different way, perhaps more cloud centric offerings and if that's possible what would you have us think about in terms of timeframe? Thanks.

First of all, I want to clarify one thing. On the cloud thing, it's really the concept between a typical cloud applications or scatter gather and with ours you have tightly linked co-processing with thousands of processes. You have issues of bandwidth, you have issues of latency and things like that. That's why the model works perfectly well in an internal cloud environment behind a firewall with our customers. Many are using that model right now. For us to take it out to the broader range, which would make it much more accessible to a broader range of users, those are ones where there is going to be some technological advances in the general industry that is going to facilitate it.

What we want to do is we want to take basically about a 12-year running software as a service offering that we still have right now but now bring that up to the new realities of modern computing and we want to be prepared for that. Now, what that all translates into is more of an overall growth model where it won't signal a fundamental shift in the way that we deliver software, but it will signal a significant augmentation or flexibility of the way we do it. And that flexibility maybe as an entry-level point for people who might just have never entered. It's a relatively low-cost way of try or buy which they can use our software as a service offering for right now. It also can be a way for companies to build up a certain level but also very easily switch to, if I can call it this, surge capacity for either unforeseen or temporary major increases in the usage patterns. So, it's really one more kind of aspect of it to you it, sometimes you buy it, sometimes do you short term rent it, sometimes you long-term lease it. It provides a broader span of being able to provide that.

The other thing that we've also seen that I think is going to be interesting adjunct is, obviously while we have a good leadership position in each of our individual product lines, one thing that is very appealing long-term is basically the co-utilization of that by customers and we talked about that being a longer-term trend but it's one that takes a long time for companies to absorb, reorganize, adjust processes to. And this is one model that makes it very easy for us, for companies that may have centered on a subset of our technology to either experiment, expand, or globally weight into some of those other forms of simulation that they have had an interest in but they just haven't gotten over that threshold point of view there.

That's helpful. Thank you. Maybe one follow-up. Maria, can you just remind me Esterel roughly speaking the mix of revenue between Europe and other regions? And then just on the EVEN acquisition, anything to think about there in terms of revenue contribution? Thanks.

On Esterel, they are still largely -- the majority of theirs is European in nature.

Keep in mind, it was also a very small number which is why it's kind of like pretty inconsequential. Small companies start near where they can build, so being a European based company that was their major outreach. Sorry, go ahead, Maria.

Yes. And on the EVEN side, there's not going to be much change. If you risk some of the language describing EVEN, they actually were a partner of ours and we have been basically their channel for revenues. So neither material nor is it going to have a significant change on the reported results. You're basically going to have the same volume of revenue and you'll have instead of royalties, we will have an increase in R&D expense.

Thank you.

Jay Vleeschhouwer, Griffin Securities.

Clarification on what is going into your guidance for the quarter and for the rest of the year. When we look at your direct and indirect revenue splits for the first quarter, it looks like your indirect revenues were, in absolute terms, about flat year over year. So what is your thinking in terms of the progression of indirect for Q2 and the rest of the year? And as well, last year in the second quarter you had quite strong growth in your perpetual revenues, up 16% year over year in Q2 of '12. Does your guidance for the current quarter encompass the possibility that perpetual revenues might be flat to down in the second quarter?

Well, first of all, I will tackle the first part. First of all, again in this environment with the turbulence and in particular areas where the currency was most volatile, yes, the indirect channel did feel it a little bit more in Q1. It was probably not flat but it was in that lower to mid single digits, lower single digits kind of range. So that part is absolutely correct.

Now on the issue on the perpetual thing, perpetual likewise should be -- we are projecting it will be up in Q2, but still probably subdued and still in the below double digits range so in the single-digit kind of range, also. So that means that is already incorporated in. Some of that relates to macro, some of it related to the slew of continual upgrade or up ramp of the maturation of some of the new sales structures that we put in place. And if there's another aspect of that question, sorry I lost it. So you can repose it. I tried to cover everything.

No, that was it for the first question. As follow-up but staying on the subject of license mix, when you look at your business by either vertical market to mention or by your three business units, MBU and so forth, are there any appreciable mix differences in terms of perpetual as a percentage of revenue either by business unit or by vertical?

Okay. Well by vertical, by vertical really no substantial change. And really from product line, no real change, particularly if you segment the electronics business where the contour or the Apache business stayed about where it was and the contour of the slightly different business model mix of the rest of the electronics stimulation products stayed about where they were. And when I talk about the dimensions of the fact that geographies were not monolithic, the Company size was not monolithic and for the large part really industries were not monolithic, even the industry variations were not that supreme. Really, there weren't those kind of tie-ins either with our major product lines. I think there was some confluence of the natural concentration of industries within different regions of the world and, therefore, we see different physics lines that might have a greater predominance in different areas. All of the physics lines were pretty much on par but they were different levels of strengths across geographies and across industries and that.

Okay. If I could just cheat a little and ask one more just to clarify your comments on employment. You mentioned you hired about 50 people in the quarter or added 50 people in the quarter and you are now focusing on the sales productivity. When we look at your Web site, as of today, you are looking to hire about half as many sales related positions as you had opened three months ago when you reported Q4. Is that reduction in the open positions for sales mostly a function of your having filled many of the prior positions and you're now focusing on productivity or you're just taking your foot off the gas anyway?

I'm sorry, your original hypothesis is correct. It was through the filling of those and as you recall, we even signaled that we were going to actually be doing it before the start of the year and of course that did not mean that we billed everyone before the start of the year but in fact the reduction there is largely related to that. And then the other thing is -- what it's saying is we're not putting on the brakes but we are not pedal to the metal either on the acceleration based on things we are seeing.

Got it. Thanks, Jim.

Matt Williams, Evercore Partners.

Good morning and thanks for taking the questions. Just real quickly, you touched on it in your remarks but any more commentary around linearity in the quarter and if there was anything specific to what you're seeing in North America relative to the other geos, just around linearity.

Around different regions had different performances but linearity slightly skewed a little bit. Because, like we said in the remarks and I'm just trying to be totally open on this, that it wasn't as high, like I said, it wasn't as high in our initial range or what we saw so it did tend to soft but softening manifested itself more in the latter half, even the latter third of the quarter. Okay? So those are things that continue. We definitely did see that at it was really just a stretching out of the cycles that have been there.

Okay. Thanks. And just quickly, we've touched on it a little bit, maybe more so on the Esterel side, just talk a little bit about the Apache performance and Esterel in the quarter and any change to your outlook relative to those two acquisitions over the rest of the year. Thanks.

The first thing I would say is that if I just put a binary statement out there, the performance of those two were kind of right on target as to what we said. Now, the one that I always talked about for over a decade on this is the manner in which we go about the integration tends to now blur the lines of what was specifically one and what was specifically the other. Some of the things we did in terms of -- you heard us talking to you about combining our other offerings with Apache to do a comprehensive ship package system kind of simulation. There are some blurs as to how things get -- how they get scored vis-a-vis the old methodology. But in aggregate, they were pretty much on target, pretty much on expectation.

Great. Thanks.

Jason Rogers, Great Lakes Review.

Looking at your guidance for the quarter or the year, does that include any future share repurchases and what are your thoughts on the share repurchase given your large cash balance and the current level of the stock price?

Jason, we have always said and will continue to say that, to the extent there is a pull back in the stock price and it's attractive, we are absolutely going to use the cash to return shareholder via share buyback. I don't think we have assumed it but I think if you look at our behavior and historically that we will see how things shake out today and to the extent that there is a pull back, we are definitely going to go in and use some of that cash.

Yes. But it was not built into, it is not predicated on doing X million shares.

All right. And as a follow-up, the 50 new salespeople that you added --

50 total people. Not just new sales people, some were added in Q4 just to clarify but go ahead.

Were they mostly towards the quarter end or spread out throughout the quarter?

They were spread. They were spread.

Okay. Thank you.

Matt Lemenager, Robert W. Baird.

It's Steve Ashley, I'm not sure what's going on with that. If it's a technical glitch I'm sure it's my fault. I was just going to ask in terms of -- you mentioned the linearity towards the last half or third of the period things started to slow, in what geos did you see that slowing as the period came to an end?

All of them. Most notably Asia-Pacific and then Europe, North America a little bit. It was everywhere, so I'm talking about really shades of distinction here. So it was pretty much across the board but if you had to kind of put a photo finish on it, I would probably say the overseas locations were slightly more tilted.

Perfect. And then you talked about the new sales recruits and maybe some disruption around that. Is that due to accounts being reassigned and people getting new account coverages, just trying to get a little color on that.

First of all, whenever you add new salespeople you have to put them in certain areas and yes, there were -- and those accounts were covered before so obviously anything they get addressed to, there will be some new sharing on there. But the lion share of it is just how quickly somebody can build that personal relationship, make the first contact, actually effectively communicate things and on top of it, the same thing we had salespeople that had actually proven themselves and they have grown into sales management positions. And so you actually have a little bit of newness there. People who are very good at doing and now they have to help others do and if those others are a mix of new and veteran people, and again, not being non-standard here. This is just a normal maturation of a growing standpoint. But it was something that we could measurably and demonstrably see.

Terrific. And just lastly, can you comment on the renewal rates you saw in your maintenance and license business?

Basically, no fundamental change.

Great. Thank you.

Barbara Coffey, Standard & Poor's.

I have a quick question I'm trying to get my arms around the slowdown at the end of the quarter. Was it industry specific, were there sort of bigger projects getting pushed off or stalled? You kind of spoke to a little bit of that but could you give us some more color?

Well no, there was not any geographic specificity. You can look at some things, for instance in India, there's a lot of turmoil around the government versus legal versus industrial and all the things that are going on there. But those are all spot kind of occurrences. So there really was not anything to track along those levels. Like I said, none of these things were monolithic and we saw evidences, different threads if you will, in each aspect, whether we were looking at industry or geography.

Okay. Were there any sort of hold out industries that just continued to execute through everything?

Electronics in certain geographies.

Yes, but that wasn't monolithic either. In general, the industries that we talked about, it wasn't like they monolithically moved and in fact, the separation between them and the lesser performing industries wasn't as great as previous times. Automotive continued to push, electronics continued to push and we mentioned bio med even though it's a relatively smaller but growing aspect of what we are moving on. But, we also saw, and this might have been counterintuitive, but in the industrial equipment side we saw a number of decent things. That was also more tightly tied to, if you will, the Pareto 20% of companies as opposed to everybody in the industry. I don't think we saw any industry where it was just by virtue of being in that industry, it automatically implied that they were going gang busters.

Okay, thank you.

Ladies and gentlemen, this will conclude our question and answer session. I would like to turn the conference back over to Mr. Jim Cashman for his closing remarks.

Okay. Thanks, Denise. And thanks everybody for -- I know we went a long time on the Q&A, but we also wanted to make that time available to you guys. Basically, I'll just say in closing, I'll say the emphasis for Q2 and the remainder of 2013, like we've said throughout this call, is it is going to be continued growth, customer development and really improved execution across all aspects of the business, including that ramped up maturation of the sales engine. No doubt there is still a tremendous amount of long term optimism here. It is driven by continued positive customer receptivity to our vision, but we also -- keep in mind, even with all the stuff we talked about, I think we've demonstrated yet one more chapter of a resilient business model and, of course, a major hallmark of that is we've got great, loyal customers, good partners, obviously superior technology and, as we've mentioned, a growing base of exceptional employees. So however in the environment we are balancing this with the short term kind of caution that we've talked about. So thanks to all those people that have participated in getting us to where we are and where we are going. And thanks to you for this call and we'll see you all next quarter.

Thank you. Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.