Aspen Technology Inc (AZPN) 2006 Q3 法說會逐字稿

Good afternoon. My name is Marie and I will be your conference operator today. At this time, I would like to welcome everyone to the Aspen Technology fiscal 2006 third-quarter earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS).

I would now like to turn the call over to Chuck Kane, Chief Financial Officer, and Mark Fusco, President and CEO. Please go ahead, sir.

Thank you, Marie, and good afternoon, everyone. I'm Chuck Kane, CFO of AspenTech. With me today is Mark Fusco, the President and CEO of the Company. I'd like to welcome you to our fiscal 2006 financial results conference call.

Before we begin, I will make the usual safe Harbor statement that during the course of this conference call, we may make projections or other forward-looking statements regarding future events or the financial performance of the Company that involve risks and uncertainties. The Company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include but are not limited to those discussed today in today's earnings release and in our form 10-Q filed on February 9, 2006. Also, please note that the following information is related to current business conditions and our outlook as of today, May 9, 2006. Consistent with our prior practice, we expressly disclaim any current intention to update this information prior to the release of our fourth-quarter and fiscal 2006 year-end financial results, which is scheduled for some time in September.

During the course of this call today, we will reference non-GAAP information. In compliance with the SEC's Regulation G, we filed an 8-K this afternoon that includes our rationale for why we believe non-GAAP information is important in describing our operating importance, as well as the full reconciliation with the corresponding GAAP numbers. You'll also see the reconciliation to GAAP in our press release.

The structure of today's call will be as follows. I will begin with the financial details of the quarter. Mark will then comment on what is driving our results, and I will then finish by providing an updated guidance before turning it over to the Q&A session.

We were extremely pleased with the Company's performance during the March quarter. Our end markets remain strong, and the combination of our unique aspenONE solutions and improved execution is driving growth. Indeed, this was the second consecutive quarter that strong license revenue led to significant bottom-line overage, providing further evidence of the operating leverage potential our business model holds with renewed topline growth.

Total revenues for the third quarter were 77.1 million, representing a 20% growth on a year-over-year basis. Within total revenue, software licenses came in at 41.7 million, while services revenue came in at 35.4 million. Software license revenues increased 34% year-over-year, while services revenue increased 7% on a year-over-year basis. We are particularly pleased to see the sequential strength in license revenue in what is typically a seasonally down quarter.

In terms of the details, we closed six transactions in excess of $1 million during the quarter, as compared to six in the prior quarter and the prior year's quarter. In addition, we closed 13 transactions between $250,000 and $1 million during the quarter, as compared to 17 transactions of this size in the prior quarter and 26 in the prior year's quarter.

Our average sales price for this quarter was $600,000, compared to $300,000 in the prior year's quarter. As a reminder, we quote our average sales price based on transactions that are above $100,000.

We will providing non-GAAP measures for this quarter's results, which exclude non-cash or nonrecurring items such as stock-based compensation charges, amortization of intangibles associated with historical acquisitions, restructuring charges and preferred stock accretion. As we stated in our press release, we are providing non-GAAP results in order to provide consistency and transparency relative to our previously issued financial guidance. Beginning with the upcoming fiscal fourth quarter 2006, we will be providing guidance only on a GAAP basis, though we will point out the value of non-cash and non-recurring expense items to assist analysts and investors that wish to evaluate the operating performance of the Company consistent with how we have historically presented these numbers.

Gross margins on licenses for the quarter were 89%, an increase from 87% in the prior year's quarter. Services gross margins were 48%, an increase from 42% in the prior year's quarter. The GAAP total expenses were 67.8 million for the fiscal third quarter, leading to a GAAP income from operations of 9.3 million, or an operating margin of 12%. For the March quarter, the GAAP and net income applicable to common shareholders was 3.2 million and the resulting GAAP diluted earnings per share was $0.06, making a dramatic turnaround from a GAAP loss of $0.32 in the prior-year period.

Turning to non-GAAP profitability, which primarily excludes the amortization of intangibles associated with past acquisitions, stock-compensation costs and restructuring costs, our non-GAAP total costs and expenses were 64.1 million in the quarter. The combination of topline overage and a continued focus on expense management enabled the Company to deliver non-GAAP net income of 10.8 million, leading to non-GAAP diluted earnings per share of $0.12, based upon a non-GAAP fully diluted share count of 91.8 million shares. This exceeded our non-GAAP guidance given in February 2006 of a range of $0.06 to $0.08.

AspenTech has made substantial progress over the past year, resulting in 20% year-over-year revenue growth while decreasing operating expenses by 8% over that same time frame.

Turning to the balance sheet, we ended Q3 with 70 million in cash, up from 57 million at the end of the prior quarter. The increase in cash was driven primarily by the strong net income we generated during the quarter. Our DSOs for build receivables were 60 days versus 76 in the same period last year. If you include the unbilled receivables, our DSO was 71 days, versus 93 days in the prior year's quarter.

On the liability side of the balance sheet, we remain virtually debt free. In addition, total deferred revenue ended the quarter at 67 million, up from 59 million at the end of the prior quarter and 55 million of a year ago. The increase in deferred revenue was being driven by strong new sales and improvements in our billing and maintenance processes. This is the highest level of deferred revenue in the past two years, and it is also the second consecutive quarter where we have had a significant increase in our deferred revenue while at the same time reporting revenue results that have been well ahead of expectations.

So with that, let me turn it over to Mark so that we can provide a more qualitative perspective on our March quarter performance. Mark?

Thanks, Chuck.

The March quarter was a great start to the new calendar year, and we continue to make progress against our goal of returning AspenTech to a growth company that generates significant profitability and cash flow. During the March quarter, we delivered the highest rate of year-over-year revenue growth in five years. Additionally, for the second consecutive quarter, AspenTech delivered significant operating profitability and we again strengthened our balance sheet and cash flow.

From top to bottom, the March quarter was strong -- license revenue, services revenue and profitability, overall expense management, cash, deferred revenue, and aspenONE sales.

I'd like to take this opportunity to thank the worldwide employee base of AspenTech for their continued dedication and hard work, which are critical factors in the Company's improved financial results.

On that point, I'm very pleased with the overall level of execution AspenTech is now delivering and it positions us well to capitalize on the tremendous opportunity in front of us. We believe that the process manufacturers are still in the early stages of investing in new, state-of-the-art systems to optimize their plants and for many of these manufacturers, now is the right time to either start or increase their level of investment. Put simply, we believe we're at the right place at the right time.

AspenTech is the only company able to bring a broad, integrated suite of applications to solve the plant optimization problems that process manufacturers are facing, and we have the number one market position across the majority of the application suite. It is evident that customers are getting increasingly comfortable resuming the expansion of their commitment to our solutions, as we have improved our execution, delivered strong financial results, and solidified our long-term financial profile.

If we take a look at the details of our March quarter, results were strong overall with particular strength in the energy vertical and in the Asia-Pacific region. In the quarter, we saw a contribution from energy, engineering and construction, chemicals and pharma. This was the third quarter in a row that we delivered strong results from the energy sector. During the March quarter, the energy sector was the largest contributor to our overall results, and it included our top three license deals; each were multi-million dollar engagements. During the March quarter, we closed additional follow-on business with Sinopec, which came on the heels of business with them in the December quarter, and Conoco-Phillips.

The building of new plants abroad is continuing to drive demand for our solutions in the engineering and construction vertical. During the quarter, we saw another strong performance from this sector. Our engineering solutions are the standard for 17 of the top 20 worldwide engineering and construction firms, and during the March quarter, 5 of our top 10 deals came from the EMC sector. For example, we closed a follow-on deal with Technique after they completed a sizable deal with AspenTech just six months ago. We are the clear choice for EMC firms and we believe we will be well positioned to sell aspenONE solutions to the process companies that ultimately operate the plants currently under construction.

Finally, we also saw a continued contribution out of the chemical sector, as it represented the third largest contributor to our license sales during the quarter.

In addition to customers expanding their use of our point products, we also saw strong adoption of our aspenONE solutions. During the March quarter, aspenONE solutions were a part of four of our top six deals, and they represented roughly 20% of our license sales. This is the second consecutive quarter we were at or above our targeted long-term range of 20 to 25% of license sales, which is impressive, given that we are still very early in rolling out these solutions to our broad customer base. I would reiterate, however, that we would expect variability in this metric on a quarter-to-quarter basis, given the impact of large deals on detailed metrics. We're making very good progress in bringing these integrated solutions to the market, but we have just begun to scratch the surface. From a long-term perspective, this is a major opportunity on top of the ability to expand our recurring engineering plant operations and supply chain businesses.

In summary, we were very pleased with our third-quarter results. Strong topline growth in a traditionally seasonally weak quarter led to significant profitability outperformance. Our core engineering and aspenONE solutions had a very strong quarter, and our business is delivering balanced performance across both licenses and services. There is still a lot of work to be done, but we have the products, market opportunity and leadership position to continue making progress against our goal of creating a long-term profile of attractive, consistent growth and significant profitability.

Before turning it back over to Chuck, I would like to take the opportunity to personally thank Chuck for his many contributions to the Company. As we announced in our press release earlier today, Chuck has decided to take a position with RSA Security, a well-known local company in the security software sector. Chuck's leadership has been instrumental in improving the Company's financial controls and processes and strengthening our balance sheet and overall financial profile. We all wish Chuck the best of like and we're confident we will identify a high-caliber replacement for him.

With that, let me turn it over to Chuck to review our updated guidance and go to Q&A.

Thanks, Mark, and I appreciate the kind words and especially appreciate the opportunity to play a role in the significant improvement of AspenTech's financial performance. I must say that this is a very difficult decision and I am ready for my next professional challenge in my life, and AspenTech has now achieved all the major objectives that I targeted when I joined the Company three years ago. I'm highly confident that the Company has a strong financial profile and is well positioned to deliver continued strong operating performance and results. It has been a pleasure working with Mark, who has provided a strong CEO leadership and commitment to execute on the revised business model. I am also very proud of the excellent finance team we have here at AspenTech and look forward to their continued success.

So now let me finish by providing fiscal 2006 fourth-quarter guidance. From a revenue perspective, we expect to see total revenue in the range of 76 to 78 million in the June quarter. This represents approximately 10% topline growth on a year-over-year comparative. To reiterate from prior calls, large multi-national, multi-million to the deals have impacted quarterly results in the past, and we continue to have large deals in our pipeline. The timing of these large deals can skew quarterly results at times, but we do our best to minimize our downside exposure during our planning process and forecasting.

Turning to the expense side, we currently anticipate total GAAP operating expenses of between 67 and 68 million in the fiscal fourth quarter. We are roughly flat with that compared to the third quarter we just finished. In the fourth quarter of the year-ago period, total GAAP expenses were just under 94 million.

We appreciate that many analysts will still wish to back out non-cash charges and other expenses that are nonrecurring in nature in order to evaluate the performance of AspenTech, so it is worth pointing out that we expect to incur non-cash, stock-based compensation expense of approximately 1.8 million in the fourth quarter and non-cash amortization of intangibles associated with previous acquisitions of approximately 1.8 million, again in the fourth quarter coming up. Inclusive of these expenses, we currently anticipate fiscal fourth-quarter GAAP earnings per share of between $0.05 and $0.07.

So, in summary, we are extremely pleased with our March quarter results, which exceeded all of our targets. We are optimistic about our ability to sustain our return to growth and to continue driving profitability and high cash flow.

So with that, Marie, I will turn it back to you and we can start the Q&A session.

(OPERATOR INSTRUCTIONS). Richard Davis, Needham & Company.

Thanks very much. This is actually John Maietta for Richard. Chuck, congratulations, first.

The first question I had -- Mark, when you're talking to customers, do they sound or are you incrementally more bullish today as compared to six months ago, three months ago? Or is it still -- do you feel that the end markets are pretty robust and there hasn't really been an incremental change in their tone?

Well, I think, clearly, from a company perspective, things have changed. We are operating and executing much better than we were a year ago and probably even nine months ago as well. I think, from a macro perspective, the markets are strong and we are seeing strong demand across really all of the spaces in which we compete. All of the verticals are pretty strong. As we've had for the last three quarters, we've had strong results out of our energy sector but continued strong results in both engineering and construction and chemicals over that period of time. So I'm not sure that, from a macro perspective, that things have changed too much, but I think that we as a company are executing better and you can see that in our results.

I got it. Then just a second question I had and Mark, I realize it was a general comment that you made, but you said there's still a lot of work to be done here at Aspen. What are the kind of the one or two top things that you'd like to accomplish going forward?

Well, you know, in any company, there's always challenges and things that we're working on. We're very pleased with the performance of our company; we're very pleased with the team we have around the world and with the consistency that we're starting to show from a revenue growth and a profitability perspective. We are pleased with the services business that continues to be strong, but we have lots of opportunities in the marketplace for us. We have lots of things to be working on to take our markets much more effectively to the market in all parts of the world. You know, we just need to be aggressive about continuing to press the issues worldwide and continue to work on building a great team and working with our customers. So, it's not meant to I guess mislead people to think we have problems here at the Company. We don't; we are in very nice shape. But we have -- as any company would say, we have lots of things we are interested in and lots of opportunities in the market.

Got it. Thanks very much.

Robert Schwartz, Jefferies.

Thank you very much. Best of luck, Chuck, on your new position. I've just a couple of questions. First, you had really great deferred revenue. Is there a lot of licenses -- (technical difficulty) -- maintenance?

We couldn't hear you totally there. You said are there a lot of license -- (multiple speakers)

I'm wondering, of the deferred revenue, how much of it is licenses as opposed to maintenance renewals?

We don't break that out, Robert, as a matter of course historically, but there is a combination of both licenses and maintenance services and consultant fees for that matter, in those numbers.

And the licenses that -- what would be the gating factor that would keep licenses in there?

It could be a number of factors. It could be tied to a consultancy assignment; it could be some kind of contingency in the future that has to be delivered on in order for the license to be recognized, etc.

Aspen has a history of having very strong seasonality and Q4, of course, is a strong quarter for you. You just posted really great numbers but the guidance is relatively flat. I'm wondering what's going into the thinking, given that we've seen good traction with aspenONE and good performance on the cost side as well.

Well, our Q4 guidance -- we think, as we've always said, we have large deals that can swing our guidance or our quarters one way or the other. We just put up a very strong Q2 and a very strong Q3. We've got a very strong pipeline as we enter this quarter and start our next fiscal year. You know, if you look at the guidance and wrap it all together, you're looking at double-digit revenue growth for the entire fiscal year, if you do the math. We think that's a very nice performance for our company and actually a little ahead of what we've modeled for you in the past where we said we thought this year would be a single digit growth year for the Company and we would transition to low double-digit growth in the future. So, while it may appear that, in the past, there's been more seasonality, I think the results are a bit skewed with a very large quarter in Q3 that we just did, which I think reflects very good operating performance of the Company. I think our fourth-quarter guidance -- (technical difficulty) -- being up nearly -- (technical difficulty) -- 80 million is very strong guidance, given that it is 10% above last year's number, which was a pretty good quarter for us and we are comfortable with how the Company is executing.

Which products were particularly strong this quarter? You talked about the sector. I would be interested to know the products themselves that really showed -- you know, contributed.

Yes. The part of the business that was the strongest this quarter was our legacy part of our business, which is our engineering products. It was strong on both a point product sale in the respects that it showed incredible growth in a number of different, large deals for renewed and expanded usage, and it also showed growth on the aspenONE side of things, in the modules that we're selling in the engineering space. So, engineering was primarily the growth and the driver of our performance, but we are pleased with -- that it was new revenues as opposed to renewals and it was expanded use of our products as opposed to just renewing old deals.

I don't know if I caught it. Did you say how much of your revenue was from new deals?

We didn't say and we don't usually break it out.

Okay. I guess if I could just get one more question in -- I know your target margin in services is around 50%; 48% is great compared to where it has been in the past. do you think there's a possibility to get it higher?

I think we can get our services margins higher. You've got to remember that, in the first calendar quarter, we hit additional social costs for FICA and -- (multiple speakers) -- of items which can skew the margins downward. If you look in sequential quarters, it's about flat from Q2 to Q3, so we actually did very well in our services business on the margin line. I would expect that, during the calendar year, as you saw last year, it got better. If we continue to operate well, it will continue to get better.

Thank you very much for taking my call. Congratulations.

Philip Rueppel, Wachovia Securities.

Great, thanks very much. Mark, you've often said that stability in energy prices is really what can drive customers to you. You know, given the recent volatility or continued volatility, have you seen that affect any of the sales cycles, particularly with new customers or some of the larger deals? Have they been extended as companies still aren't as interested in efficiency versus production?

No, I think there's a lot of interest still in the energy sector in the exploration side and also in the refining side to get better use of all of the assets. You know, in this case, I think we have stable oil prices that are just high. Historically, now that they are in the high 60s/low 70s and they have been for quite some time, we are seeing consistent demand in the energy space, in all parts of the business. I think it reflects strong cash flows on their part over the last several years in high oil prices, and we think it will continue as such and have seen no drop-off in demand or skewing of deal sizes or whether they are going to close in the near term or not.

Okay. If you look out in your pipeline, would you expect that energy will remain your number one industry vertical, at least for the near-term?

I would say, going forward, yes; energy is going to be a very strong contributor to our license revenues. I would expect it to be at the top in the coming couple of quarters but --.

Great. Also, you know, in the past, you have talked about potential plans to rationalize or at least streamline the product line. Have you made any progress there, and sort of what do you think could be some goals as we enter next year?

We haven't actually broken out any specific information about the product line, per say, but we are in the process of coming out with a new release of all of the Aspen software, which will be out in October. So, the rationalization and the skinnying down of the product line is all part of that, and we will be giving more information as the year goes along.

Okay. Then chuck, just a quick one for you -- sort of the tax rate that you are assuming, sort of on the non-GAAP pro forma this quarter, and is that the kind of tax rate you would assume going forward?

Yes, it would be, Phil. It's about 25% is what you should use to factor in for the fourth quarter. This quarter, this past quarter, it was a little higher, but on average for the year, it's still coming in around 25%.

Okay. Then I'm sorry, I didn't -- you mentioned ASPs this quarter but I just couldn't catch it. What were they again?

600,000.

Okay, great. Thanks very much.

Dennis Wassung, Canaccord Adams.

Thank you. A few questions -- first, on the aspenONE side, you mentioned that four of your top six deals in the quarter included aspenONE. I am just curious if these bigger deals are a majority of aspenONE or are these just sort of people testing the waters with aspenONE? You know, how big of a contributor is some of these big deals you are putting up?

Overall, Dennis, it was about 20% of our license revenue, so it's becoming a material amount. As we told everyone in the past, we are breaking out the aspenONE portions and separating them from the point product sales so we can try to give you an apples-to-apples comparison from the past. So, it is becoming a material amount. As we've said and as you've seen over the last couple of quarters, the deal sizes have gotten larger, the ASPs have gone up. These are large deals and very important to our customers, and they can clearly drive revenue growth, but they can be lumpy and skew the results over time. So we're doing our best to make sure that we factor them into the guidance appropriately so that we can deliver consistently on what we tell you.

Okay, great. Another question -- when you look at the guidance, you discuss it a little bit here -- roughly flat to where you just were this best quarter, but obviously you guys have put out very strong number in the last couple of quarters. I'm just curious if you had any deals or significant deals that did pull into Q3 that maybe were in the Q4 pipeline. I'm wondering if that has any effect on your -- (technical difficulty) -- Q4.

No, we run our business consistently as we have always in the past. Revenue comes when it comes, and as we told you several quarters ago, we had a very good pipeline. We didn't know when some of these deals were going to close. They closed in their own due time. Our pipeline today continues to be strong, and I think it's reflected in strong guidance on a year-over-year basis for the fourth quarter and very good operating results that we're modeling for you for the entire fiscal year. So you know, we are in good shape and I wouldn't read into -- that we're pulling deals forward. We don't do that. Revenue comes when it comes.

Absolutely. I guess to that point pipeline comment you made, would you describe the pipeline as growing on a quarter-to-quarter basis here as your numbers have been stronger and stronger?

Well, I think, overall, in pipeline management, as we've made changes and improved how we execute and operate in the sales channel, we have much better visibility into deals earlier in the process and understanding where they are. As we've talked in the past, we've done lots of training and focused on the sales channel, so it's unclear, based on the data that we have from the past, that it's better, but what we have in our pipeline now is very good data; we understand where it is. I would say that it's continuing to be strong and something that we are proud of going forward.

Okay and last one for me -- you've mentioned, on the engineering and construction side, that basically half of your top ten deals were in that area. Just any comments here on how that business relates to the rest of your energy and chemicals in other areas business? Would you consider these as sort of a prelude to increasing activity in these other areas, like energy and chemicals (multiple speakers) -- building these plants -- (multiple speakers) -- down the line?

Yes, it's clearly a leading indicator, we believe, of activity in the software space downstream. When you look at the macro contracts -- that we have very strong end markets, we have expansion in multiple geographies across the world. We have demand for our core products; we've demand for our aspenONE solutions. We believe that some of the demand we're starting to see for our software is as a result of plant expansions and new plants, which started to be built several years ago. If you go back and look through our operating results in the past, engineering and construction has been a very consistent and strong performer for us over time. It continues to be so, and we think it is a leading indicator going forward.

Great, congrats and best wishes (indiscernible).

Richard Williams, Icap.

Thank you, guys. Congratulations on the quarter. I wonder if you could give a little more color on the guidance, focusing particularly on the differences between the last two quarters as you moved into them and what you are seeing now and help us understand what is changing that would make you be more conservative than perhaps might be expected at this point in the cycle.

Well, the first thing I would point out, Richard, is that the guidance that we've given is consistent with what was out on the street prior to the end of this quarter.

The second point I would make is that, as you can see in our balance sheet, we continue to get better visibility with our revenue stream as the deferred revenue line continues to grow.

Lastly, I would say that, on a year-over-year basis, we look at the way our business is run, how we project our operating model, and feel very comfortable with the guidance that we give. Now, that being said, our business is one that has some significant, large deals that can come in, that can impact that line item. What we told you is that we would build an operating model on the basis of being able to deliver on that model and build an expense structure based on that top line. So that's what we shake through and come to a conclusion on when we provide the guidance that we do from one quarter to the next.

Okay, thanks. Also, if you can give us a little color on the competitive environment, and that will do it for me.

The competitive environment remains largely unchanged. AspenTech is still the leading supplier to the process manufacturers for software in and around the plant on a worldwide basis. We have a very strong competitive position. From my perspective, we're getting better in our execution. As we mentioned on the call, you know, we think our improved financial results have clearly pleased our customers, and they are happier in making investments and large investments with AspenTech, based on our improved results. So, from my perspective, I think we're getting stronger in our business, but overall, the competitive environment hasn't changed.

(OPERATOR INSTRUCTIONS). Philip Alling, Bear Stearns.

Thanks much. Just with the better execution that you've had in the last two quarters, any change in views with respect to what you had said previously in terms of your long-term topline growth? You had talked about sort of a 10% figure before in terms of the long-term. What could you comment on that?

Well, we're having, as I mentioned, a very nice fiscal year. We are a bit ahead from a growth perspective of what we've modeled out in the past. We think, given the guidance that we've given you for the fourth quarter, a nice double-digit growth in our first -- really a transition year for us is a very nice result and we are happy with it. You know, we will give guidance for the next -- for FY07 on the upcoming conference call at the end of Q4. It's a little early now to start talking about additional growth. As you know, the comparables get harder as the Company grows, so we think next year what we said was we would like to be a nice double-digit growth company and we're sticking with that as I guess an overall guidance going forward, but we're not going to update it at the moment.

With respect to sort of the demand environment out there -- I mean you made some comments you thought some customers were getting increasingly comfortable with sort of increasing their investments in your software. Do you think that has to do with -- is it really just strength in the end markets that you're serving, or does it have to do with company-specific execution issues? And so some comments there would be helpful.

You know, it's hard to say overall why people (indiscernible) why they buy now. But I do think this company has been through an interesting transition over the past year or two, and you know, it's clear from our operating results on a year-over-year basis we're at a much different place today than we were a year ago, you know, where we have nice GAAP profitability versus a substantial GAAP loss of a year ago. I think, at this point last year, we were talking about reorganizing the business and it was a new management team and all of these other things. So I think, clearly, the business is in a different place; customers are more comfortable with AspenTech as a long-term supplier. It's our job to earn their trust and business every day, and we are working real hard to do that.

With respect to your CFO search, could you let us know sort when you initiated and what your initial expectations are about how long it will take to fill that position and finally whether -- is Chuck going to be around to sign the 10-Q for the quarter?

Yes. I mean this is a new event, otherwise we would have disclosed it in the past. So, it's a new search that's just begun and we're starting on it as quickly as we possibly can. I expect that we will be attracting many high-quality candidates to the Company, and we will work as fast as possible to bring the right person into the Company for the long-term betterment of the business and the shareholders. (multiple speakers)

Given the fact that the Q is going to be signed tomorrow, Phil, I think I will be around for that, yes.

Okay, Chuck, thanks. How about a couple of quick ones then, Chuck? Just cash flow from operations in the quarter and if you could just let us know also what the sale of installment receivables was in the quarter?

Yes, the cash flow from operations was just under 10 million for the quarter. As far as the sale of receivables go, it was a typical quarter where we sold roughly, I don't know, in the 17 million range. That's typical of what we do in a normal quarter of this revenue level.

I got you. All right, Chuck, good luck in your new venture.

At this time, there are no further questions. Are there any closing remarks?

Thank you, operator, and thanks to all who have dialed in for their interest on the call, and thanks again to all of our employees who may be listening for a very nice quarter, well done, and we will talk to you tomorrow. Thanks.

This concludes today's Aspen Technology fiscal 2006 third-quarter earnings conference call. You may now disconnect.