Blackbaud Inc (BLKB) 2011 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Blackbaud first quarter 2011 earnings conference. Today's call is being recorded. At this time all participants are in listen-only mode, and following today's presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for a question. I would now like to turn the conference over to Mr. Tim Williams, Chief Financial Officer of Blackbaud, please go ahead.

Thank you very much, good afternoon everyone. Thank you for joining us today to review our first quarter 2011 results. With me on the call is Marc Chardon, our President and Chief Executive Officer. Marc and I have some prepared remarks, and then we will open up the call later for questions.

Please, note that our remarks today contain forward-looking statements. These statements are based solely on present information, and are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Please refer to our SEC filings including our most recent annual report on Form 10-K and the risk factors contained therein, as well as our periodic reports under the Securities Act of 1934 for more information on these risks and uncertainties, and on the limitations that apply to our forward-looking statements.

Also, please note, that a webcast of today's call will be available in the Investor Relations section of our website. With that, I would like to turn the call over to Marc and I will come back afterwards to give some further details regarding our financials. Marc?

Thank you, Tim, and thanks to all of you on the call today for joining us to review our first quarter 2011 financial results which were above our guidance. The first quarter was a solid start to the new year for Blackbaud with both our general markets and enterprise business units contributing to accelerating revenue growth which moved back into the double digit range. In fact, it reached the highest level of year-over-year growth in over two years.

The Company's momentum continues to be driven by our suite of subscription-based offerings, expanding array of integrated packaged offerings, as well as our Enterprise CRM solution where we completed the largest number of signing compared to any previous quarter since the product's launch. We believe that Blackbaud is well-positioned to be a primary beneficiary as improvements in global economic conditions filtered down to the nonprofit sector. Over the last several years, we have established a leadership position in non-fined fundraising solutions, invested in product and services focused on the high end of the market which we believe we are creating significant competitive advantage, and solidified our undisputed market leadership position in core fundraising, where we see demand for hosted solutions.

All things considered, we believe that Blackbaud is emerging from the economic downturn in an even stronger position, with a compelling financial model characterized by recurring revenue, low to mid teens total revenue growth, and best in class profitability and cash flow. Let's take a look at the financial highlights for the first quarter. Total revenue for the quarter, excluding an unanticipated and positive one time net benefit, was $86.4 million. This was above the high end of our guidance range, and was up 13% year-over-year. On an organic basis, revenue growth was approximately 11%. As I mentioned at the outset, Q1 represented our highest level of annual growth in over two years.

In terms of profit, once again excluding any benefit of the unanticipated net adjustment to revenue I just mentioned, non-GAAP operating income was $15.9 million, and non-GAAP earnings per share were $0.22, above the high end of our guidance range, both of them. Tim will discuss the onetime positive benefit to revenue and profit with some detail in a moment. As in recent quarters, we continued to experience a trend towards our subscription-based offerings, especially within our general markets business unit which is focused on mid size nonprofits and smaller nonprofits in North America.

This trend towards subscriptions is broad-based. We had significant year-over-year unit growth in our subscription-based online fundraising solutions, both Sphere and NetCommunity, and our traditional solutions, The Raiser's Edge, Financial Edge, and Education Edge, saw their percentage mix of subscription adoption increase from approximately 5% of units in Q1 of last year to just under 20% in the first quarter of 2011. The strong growth in our subscription bookings in recent quarters contributed to the acceleration in our subscription revenue. Even without the one-time benefit, subscription revenue in Q1 was five times the size of our perpetual license revenue during the quarter, further demonstrating the continuing evolution of our business to an increasing mix of recurring revenue.

Turning to the market environment, we continue to see the kind of modest improvement I mentioned in our last earnings call. But, the level of no decisions in our opportunity pipelines still remains high when compared to a more robust market environment. Notwithstanding, we are encouraged that we now have several quarters in which market conditions in the nonprofit sector have been stable, and we seem to be a couple quarters into improving overall macro economic conditions.

We have shared in the past our view that the nonprofit sector would lag the general -- economic recovery. Blackbaud has now proven its ability to achieve growth in the double digits in a stable market environment, and we remain confident that we will further accelerate our organic growth to the low to mid- teens range once market conditions in the nonprofit sector catch up with the general economic recovery. This overall view is supported by recent surveys from the nonprofit research collaborative which showed that just over half of nonprofit organizations reported reaching their fundraising goals during 2010.

Furthermore, the NRC surveys also showed that organizations were generally optimistic about increased contributions in 2011. The study concluded that strong fundraising results were more likely when organizations invest in resources and fundraising staff and infrastructure, including technology from vendors such as Blackbaud. While the number of no decisions remains higher than normal, the acceleration in our revenue exiting 2010 and continuing into 2011 is evidence that there are a growing number of nonprofit organizations moving ahead with investments in technology.

During the first quarter, our Enterprise CRM offering delivered another strong performance. We closed five new Enterprise CRM deals in that quarter which is in line with our stated objective to ramp quarterly Enterprise CRM signings beyond our previous target of two to three -- deals per quarter on average. To be clear, there will continue to be quarter to quarter fluctuations in the number of Enterprise CRM contracts, but we're encouraged by our first-quarter performance as well as the health of our Enterprise pipeline.

During the first quarter, we signed Enterprise CRM deals with the Boy Scouts of America, World Health International, Southern Poverty Law Center, another region of The Salvation Army, as well as with a significant International nonprofit organization. In addition, following on from the recent PIDI acquisition, Public Interest Data, we are moving forward with our first deal to migrate a PIDI customer from their existing direct marketing platform to Blackbaud's Enterprise CRM pipeline. Over time, we believe we there will be further opportunities for such migrations in the PIDI customer base.

From an overall perspective, we closed our first Enterprise CRM, Early Adopter, less than five years ago, and we now have over 40 customers spanning all key nonprofit vertical market segments. We believe we are close to reaching the level of product maturity, momentum with customers and implementation experience that will create a significant gap between Blackbaud and our competition. And we continue to press forward with further innovation and enhancements that we believe will expand our sustainable competitive differentiation at the high-end of the market, and move Blackbaud to a greater mass adoption of the solution.

We also continue to strengthen our leadership position and online fundraising solutions. We are uniquely positioned with a set of offers that are tightly integrated with our suite of core applications, most importantly The Raiser's Edge, and we have a best of breed online fundraising platform for those customers interested in a standalone application. The success and growth of our online fundraising solutions is an important driver of our subscription revenue growth which, as I mentioned a moment ago, accelerated to over 20% year-over-year in the quarter.

We highlighted over -- 300 wins with our Sphere solution in each of the past two years, and that momentum continued in the first quarter with over 20% growth in Sphere unit sales. The 2010 online giving report showed that while online giving accounted for less than 10% of total fundraising, it is the fastest growing segment of overall giving. Blackbaud is well positioned to capitalize on this fast growing market opportunity. Also, our prepackaged next generation solution, targeted at the arts and cultural sector, called Altru, had its best quarter since we introduced the solution three quarters ago. While it's still early, the pipeline of opportunities for Altru has increased threefold since the end of Q4. We believe that this strong response to increased focus and resources is a good evidence that Altru is a unique solution that meets an under served need in an improving market segment that was amongst the hardest market hit during the economic downturn.

Finally, another key long-term growth initiative that we highlighted last quarter was growing our international business. We appointed Brad Holman as President of our International Business unit last November, and he has already made changes to get the right team in place to execute our strategies with country leadership transitions in both the UK and the Netherlands. During the first quarter, we also announced the launch of our global accounts program which is an initiative that aligns marketing, sales, service, and support to major international non governmental organizations such as Save the Children, UNICEF, World Wildlife Fund, and Amnesty International, to name a few. We are working closely with top global customers to help them align their operations worldwide, implement best practices, adopt efficient, money-saving strategies, and boost fundraising performance.

This program began in 2010 as a pilot, and based on the success achieved with the initial group of customers, we have decided to roll the program out more broadly. From an overall perspective, our International operations delivered a solid first-quarter performance. But we expect there'll be quarter to quarter variability based on the level of change we're driving, combined with the fact that the economic environment facing nonprofits in Europe is still behind the recovery in the US market. Nonetheless, we believe the steps we're taking now will help Blackbaud's International business accelerate as European markets stabilize and return to growth just as we've done in the US.

In addition, we continue to believe that our international business can represent 20% to 25% of our revenue overtime, up from the mid teens level today. To summarize briefly, Blackbaud's first-quarter performance was a solid start to 2011. Our subscription revenue, service revenue, and total revenue growth all accelerated to multi-year highs. And, we had a record-tying quarter for our new ECRM offering, and our suite of subscription-based solutions, and integrated multi-product offerings continue to perform very well. We believe we are on track to meet our full-year objectives, and that we are well-positioned to continue to gain market share in each of our key target markets. With that, let me turn it over to Tim.

Thanks, Marc. Over the next few minutes I'm going to provide some further details on our first quarter operating results, review our guidance for the second quarter, and give some directional commentary for the full-year 2011, and then provide a quick review of our capital management program. Before I begin, a few words on the one-time adjustment that Marc referred to.

As we were completing our first quarter close process, we identified certain one-time adjustments to revenue associated with certain subscription-based transactions. Overall, the net effect of these adjustments was that revenue in prior years, principally 2010, was understated. As a result, our $87.3 million of reported revenue included a one-time, net positive adjustment of approximately $900,000 in order to correct for the prior period understatements.

The adjustments principally resulted in an increase in subscriptions revenue partially offset by a decrease in services revenue. From a profitability perspective, this one-time adjustment had a positive net impact of approximately $500,000 on our GAAP and non-GAAP operating income, and our reported GAAP and non-GAAP EPS of $0.23 benefited by $0.01. For purposes of evaluating our performance, however, and, in my following comments, I'm going to be excluding the positive contribution from these one-time adjustments. When talking about both our revenue and profitability, as it is one time in nature, and to provide better comparability regarding our performance relative to the guidance we provided.

So, with that, let me start with the income statement. Revenue was $86.4 million which was above the high end of our guidance range of $83.5 million to $85.5 million, and up 13% on a year-over-year basis. This represents the highest year-over-year quarterly revenue growth for Blackbaud in over two years. As Marc noted, our gross was still in the double-digit range without the contribution from Public Interest Data during its first quarter as part of Blackbaud. I should note here that the PIDI numbers were consistent with our expectation.

Looking at the details of total revenue, subscription revenue was $23.8 million after backing out the one-time benefit. This represented an increase of 24% on a year-over-year basis, and 10% sequentially with the growth being driven by a combination of increased subscription bookings, as well as the contribution from PIDI. Without the PIDI contribution, year over year growth would have been approximately 19%.

License revenue was $4.6 million in the first quarter, representing a 12% decrease compared to the year ago quarter. This decrease is a reflection of our ongoing shift to a higher mix of subscription-based offerings. In addition, license revenue may continue to vary quarter to quarter since it is now the smallest contributor to our revenue, and the timing of license revenue recognition from our Enterprise CRM transactions that can skew numbers on a quarter to quarter basis.

While services revenue has declined sequentially in the first quarter in each of the last three years, the declining Q1 this year was only 2% sequentially to $24 million, as the increased services headcount added in recent months started to become productive. Year over year growth was 20%, the highest level of services growth in the last three years. Our quarterly maintenance revenue once again represented the largest source of revenue during the quarter at $31.8 million, and increased 4% on a year-over-year basis, our maintenance renewal rates have remained in the mid-90% range.

Turning now to profitability and beginning with our non-GAAP results, starting with gross profit, we generated $52.5 million in non-GAAP gross profit in the quarter, representing a gross margin of 61% which is below the 63% in the year ago quarter, and roughly flat with Q4. The biggest contributor to our reduced gross margin is from investments we are making in our data center infrastructure to support the strong growth in subscription offerings. The services gross margin is improved over the prior year, but down sequentially which is consistent with historical trends.

Operating expenses were up approximately 10% on a year-over-year basis, and up 7% compared to Q4. While our overall management of expenses has been solid, expenses do traditionally go up in the first quarter on a sequential basis due to increases in employee-related costs, and we are also making selected strategic investments in our growth initiatives as we have shared with you previously. For the quarter, non-GAAP operating income came in at $15.9 million, above the high end of our guidance range of $14 million to $15.5 million, and represented a non-GAAP operating margin of 18.4%. The effective rate for non-GAAP results in the quarter was again 39%, leading to non-GAAP diluted earnings per share of $0.22 excluding the one-time adjustment, which was above the high end of our guidance range of $0.19 to $0.21.

As a reminder, we fully tax non-GAAP EPS amounts, even though the Company's cash tax rate is much lower due to our deferred tax assets and other tax benefits associated with recent business acquisitions. As such, our cash EPS is materially higher than the non-GAAP and non-GAAP EPS that we report. In our earnings release, there's a full tabular reconciliation between our non-GAAP and GAAP results.

As most of you know, our differences between non-GAAP and GAAP numbers typically only include -- two adjustments, one for amortization associated with intangibles arising from business acquisitions. And then a second, non-cash stock-based compensation charges. In Q1, we also added back to GAAP earnings $500,000 which represented two items. A one-time charge of $1 million associated with part of the cost of acquiring and closing the deal with PIDI which must be treated as an expense under the new M&A accounting rules, partially offset by a gain of $500,000 related to the sale of our donor advised fund business.

In summary then, first-quarter GAAP results were GAAP operating income was $10.3 million, GAAP net income was $7.6 million, and GAAP diluted earnings per share was $0.17. This compared to GAAP results of $9.7 million, $6 million, and $0.13, respectively, in the same period last year. And, of course, our GAAP results, as presented, also included the positive one-time benefit that I referred to earlier.

Let me now turn to cash flow and the balance sheet. We ended the quarter with $24.1 million in cash, compared to $28 million at the end of last quarter. For the quarter, we generated cash from operations of $17.5 million, which was a strong performance and more than double the amount in the same period last year. We used $16.5 million of this cash flow in order to purchase PIDI, and we also returned $5.3 million to stockholders in the form of quarterly dividends. Total deferred revenue came in at a proximally $141.6 million, which was up approximately 7% compared to the end of the first quarter in 2010. And, finally at the end of the quarter, the Company's deferred tax asset had a balance of approximately $46 million, this asset adds roughly $8 million annually to our cash flow, and, additionally, remember, we have an annual cash flow benefit of approximately $3 million associated with the structure of several of our acquisitions.

Turning now to guidance, for the second quarter, we are now targeting revenue of $90 million to $92 million, which would represent year over year growth of 13% at the midpoint of that range, with non-GAAP operating income of $17.5 million to $18.5 million leading to non-GAAP earnings per share of $0.24 to $0.25. Based on our first-quarter results and guidance for the second quarter, we continue to feel optimistic about the Company's ability to deliver full year 2011 organic growth of 10%, which would be an improvement from the mid single-digit growth we experienced in 2010. We also believe there is potential to expand our non-GAAP operating margin for the full year assuming that the economic and related growth environment remains stable or continues to improve slightly.

As we discussed last quarter, there could be room for up to 75 basis points of margin expansion, though the specific level will be determined based on revenue performance and level of growth investments in the second half of the year. Longer-term, we remain confident in our ability to re-expand on our non-GAAP operating margin to the 26% to 28% range, though the top near-term priority is to get our total revenue growth rate back to the low to mid teens level.

Finally, very few, very quick comments on our two part capital management program. The Board has declared a second quarter dividend of $0.12 per share that will be payable on June 15, 2011, to stockholders of record on May 27, 2011. Second, we did not repurchase any shares in the open market during the first quarter, and, therefore, we continue to have $50 million in capacity remaining under our authorization that was adopted in August of 2010. We continue to balance the best ways to use our cash flow to enhance long-term shareholder value.

In summary then, we are optimistic about Blackbaud's future. The Company's momentum is solid. We are optimistic about the continued stabilization in our marketplace, with the potential for improvement when the nonprofit sector eventually catches up with the overall economic recovery. We feel even better about the fact that Blackbaud's market position, long-term financial profile, have improved considerably exiting the economic recession versus how it was when we entered it.

With that, let me turn it over to the operator and we will begin the Q&A session. Operator?

(Operator Instructions) We will hear first from Philip Rueppel with Wells Fargo Securities.

--very much. Given the broad strength that you mention in your prepared comments, are you starting to see some rebound in some of the segments of the nonprofit arena that you hadn't seen strength in the past? You mentioned Altrue, do you think that is an example of just a good product, or is it also an example where some of the segments are starting to spend more aggressively?

Hi, Phil, thanks. We don't really have a separate sector index for the arts and cultural sector, so the information I have is anecdotal. I would say that they have stabilized in terms of their fundraising ability, and are starting to see some opportunity to do a little bit better. So I'd attribute most of the interest in Altru to it being a product that covers customers who wouldn't of otherwise customers, so it's greenfield for us. And the attractiveness of the integrated suite offering, I would say much less of that is due to any change in the underlying fundamentals for the arts and cultural sectors.

Great. Thanks. And then the strength in the ECRM continues, about as you had outlined. Given your outlook in the pipeline, do you expect -- do you need to hire more sales teams? I know you have done a lot in the services arena last year, but do you feel like you are still in an investment mode with that particular product area?

Well, they're such big deals that the number of reps involved in actually chasing them down and closing doesn't materially change our sales posture. So I don't think that you will see a significant -- you won't see a visible from the outside shift in resources necessary to meet the goals that we are talking about now. Looking forward, you might see some improvement -- increase when we would go down market a little bit more strongly. But that would be sort of a packaged version of the product that's not in market yet.

Great.

The only thing I would add, Phil, is that as you know from following us here, typically we do add salespeople at the beginning of the year. I don't recall exactly what the breakdown was; how many Enterprise CRM salespeople would have been added versus general markets. But we did add a few salespeople, but in general probably, not significant growth in ECRM.

Great. Finally, just in terms of acquisitions, your recent ones, especially PIDI, how is the integration going there? Is a pretty complete? And sort of what happens on a road map going forward from a product perspective. Thanks.

So PIDI, we actually were very expeditious in terms of back office type integration. I mean, I believe they closed their first quarter, first month they were on our system. So we have gotten quicker at that, and good about that. I think both organizations, about 50 customers, the customers from merged are gaining serviced today, that is rolled right into the analytics part of our business relatively seamlessly, and we're starting to point merge, purge opportunities, and point them out inside of our traditional analytics customers. But that is still momentum to be gained.

In the 30 or so customers who are using their direct marketing services, they are managed with our own DMS team. One of them is, as I mentioned in my remarks, has decided to move to ECRM. We are finalizing the details of that at this point. So I would expect that the larger organizations would be looking to decide when ECRM would be an attractive opportunity, offering for them. The smaller ones I think will probably sort of hang around on the existing offer for somewhat longer. I cannot predict exactly when that will happen, but like our other acquisitions in the past, we will support the application and the platform for the period of time needed to keep the customer satisfied and productive and help them serve their missions.

Great. Thanks.

Thanks, Phil.

Our next question comes from Ross Macmillan with Jefferies & Company.

Thanks a lot, and congratulations on the good first quarter. I have three questions if I could. Tim, the subscription growth, I think you said, organically and ex the one time item grew 19%, which is obviously an acceleration from where we have been. I was curious though that I think deferred revenue growth was only sort of upper single digits. Is there any reason why the latter is kind of lagging the former? I guess I am curious to get a sense for kind of, if you will, billings or bookings around the subscription business.

I don't think there is anything that is particularly meaningful that you can connect here between the movement in deferred revenue quarter to quarter or year over year, and what is actually showing up in subscription revenue. Part of the reason for that, Ross, remember that the biggest component in deferred revenue is the maintenance component. That still is the largest element.

And so if you take a look at deferred and deferred revenue, and kind of take out the piece that relates to maintenance, I think what you'd find is that deferred revenue probably grew something more in the midteens range, maybe around 15% or so.

Okay. That is helpful. And then on maintenance itself, obviously it's still growing despite the transition of your model away from perpetual licenses. Is it fair to say that you aren't really selling to the base with the subscription products around the kind of, general markets group? And I guess what I am really driving at here is, is it possible that the maintenance revenue would actually move into decline at some point in the future as you convert those customers in the base to subscription?

Yes, two things, I think, the first is that for the moment, there's very little replacement of -- of licensed products by subscription. So if you see a customer with a Raiser's Edge license, they could potentially add a subscription, they could add hosting, or they could add an Internet product on a subscription basis like Sphere Event for example. But for the moment there is very little replacement.

So, over time, I am not sure if you'd say maintenance is decreasing, or whether you'd say people are moving from maintenance to subscription. That will, at some point in the future, happen, and then the question will be how do you just like with licenses, how do you make the sum total of the two grow at the rate that we expect them to grow, and we are very confident we can do that.

Yes. But it doesn't sound like it is imminent in the sense that you're--.

I don't think it's imminent, I think also, the way that the upper end of the market's going, you'll find that -- sometimes the way the upper end of the market is going, sometimes what happens is the license revenue isn't necessarily very large for revenue recognition reasons, but still the maintenance is being charged. So the maintenance actually, sometimes will start before we'll even recognize any license revenue for something where there's going to be a contract again. So some of that doesn't actually show up in license revenue because it just turns into part of the contract, and some of that does not show up until later.

That is helpful. And then one other question, your service gross margins I think you talked about, they should improve as we move into the second half of the year. Could you help us understand the magnitude we should be thinking about as we start to get that service gross margin improvement?

Well, Ross, as you know, we don't really guide to specific line item performance here. While we have been very clear, I think, that we would expect services gross margins to improve, there will be puts and takes as we move through the second half of the year. I think the key point is we would be looking overall for margin improvement if we were able to achieve the kind of growth we talked about, or that I talked about in my overall directional commentary for the full year. How much of that will come from services versus movements in other lines, we are just not prepared to get into some detail. I think it is fair to say we would look for some improvement in that services gross margin.

And then one last one if I could, your comments around long-term, I think you made it explicit that you believe your non-GAAP property margin can get to 26% to 28% range, but the near-term priority is to reaccelerate organic growth to the low to mid teens. So I guess whilst we're in this acceleration mode, we should probably think about op margin expansion being maybe around the ballpark of what we are going to do this year, 75 basis points, and then as we are at that higher growth rate, that is when we could actually start to see more leverage in the model, is that fair?

I think that's a fair way to think about it, yes, sir.

Perfect. Thanks a lot.

Thank you, Ross.

(Operator Instructions) We will hear our next question from Tom Roderick with Stifel Nicolaus.

Hello, guys, it is Chris for Tom today, good quarter. Just to piggyback on Ross' question real quick. Just to clarify, Tim, when you say up to 75 BPs margin expansion, can you get there if you hit your target of the 10% organic, or is that more of a low to mid teens type deal that you are looking for for this year?

Well, what we said was that we felt confident that we could achieve the 10% organic growth. And I think at that level, we would be comfortable up to 75 basis points of margin expansion.

Great, thanks for that clarification. And then as far as, in terms of the license line going forward, I know you don't guide to particular lines, but that, if you look at it year over year, was off about 12% or so. So as we go forward, given the shift toward the subscription model, is it fair to say that that is going to continue seeing some pressure or could we still see some volatility in that number from quarter to quarter, and could it be potentially significant?

Well, I think the challenge with license revenue now is that it, just to reemphasize, it is our smallest contributor to the overall revenue line. And I think that, in particular, as we close more Enterprise CRM deals you could see little bit more volatility in it, but I don't think, I would not think that 12% decline year over year would be a consistent picture.

Okay.

But I do think it is going to move around, as I said in my comments, I think it can be skewed by the nature of the deals that we close, particularly relative to Enterprise CRM.

Okay, fair enough. And then just to double check in terms of that one-time charge, or one-time gain. I think you mentioned there was a boost to subscription revenue, and if I did the calculation right, if you're at 24% excluding the PIDI and then I think 33% in terms of what you actually reported, was that like a $1.7 million adjustment benefit from 2010 that got shifted into this quarter? And I think you said there was an offsetting services contribution and I would assume that would make up for delta between the $1.7 million and $900,000, is that right?

Yes, you're pretty close, I believe it is $1.6 million, one way and $700,000 going the other way.

$1.6 million and $700,000. Great, thanks. And then just a little bit on the competitive environment, if I can. In terms of one of your main competitors, they've got an Enterprise version of an integrated solution, I was just wondering, I'll just come out and say it, so common ground on top of online marketing, if you compare that to maybe an Enterprise CRM within that community, how do you feel that stacks up in a competitive situation? And have you encountered that yet, and where do you think you are in terms of just being able to provide a fully integrated solution compared to Convio?

Well, we've been providing the fully integrated solution for a long time, and we provide it on one platform, and I will let the Convio people make their own comments about their products. What I will tell you is that we sell it worldwide. We support it worldwide, we have in on a common platform in the Enterprise CRM product, and we've got 40 of them sold, and 19 in market fully integrated.

So the question there is when you take a look at a product like that, you say how many of the common ground ones are actually in these very large organizations, multiple nations and so on, I don't worry about that too very much because our job is to give people the best solution, which is what I believe we have. I would also say that our win rates are very, very good, and are continuing to improve on average. So I feel good in both dimensions. It's not really the competitor that I worry the most about.

Okay, good to know. And so, just out of curiosity, is there a competitive that you worry the most about, if it's not that?

Depends on the vertical. I do worry about sales force for example, say in a broad, because sales force actually has worldwide presence, they do a pretty good job worldwide. At being present, actually, they are more present in some other countries than they are in the United States at the high end of the market. But I also worry about an organization, like vertical organization like BSR.

You always worry about, they are probably the most important competitor for us in opportunities based for ECRM, there are hundreds of universities that use Advanced. And those are places where we have an advantage because we can actually sell a license, which our on demand competitors can't and may of those customers want to actually buy a license. Actually the number one competitor that I worry about in the sense I want to continue to have this kind of win rate that we have against them, the biggest opportunity for ECRM is actually that higher education segment.

Fair enough, and then just one last one for Tim if I may. So I think in the past you have provided some qualitative directional guidance in terms of the general market bookings versus the enterprise business unit bookings, and I was just wondering if you could give us a sense of what was stronger this quarter.

Well, I would say this. I would say with respect to this quarter, if you look at the growth year-over-year on a quarterly basis, growth rates were comparable. They both had both enterprise and general markets both had very nice growth rates sort of in line with what we saw at the end of the last year as well.

Excellent, great. Thanks, guys. Good luck.

Thank you.

Our next question comes from Sterling Auty with JPMorgan.

Hello guys, it is Saket here for Sterling. Just couple of quick ones. First, it sounds like the online fundraising is really what's driving that growth in subscription. How do you size that opportunity, and what inning of that would you say we are in right now?

I think it is somewhat early days. One of the big drivers is the REI offering, and then the package versions of BBNC. So there's a significant portion of the installed base of the -- it is not -- that is not covered with the Internet solution at all, and that are really sort of moving in that direction. Plus the REI offer is really the sort of leader in terms of the units and volumes relative to what I would call online. It is not just online what people are looking for, is they're looking for online integrated to their overall supporter relationship management platform, you'll see that at all levels of the market.

So I would say that it's very underpenetrated in terms of back to base, and I would say that it is allowing us to go down market, either in vertical solutions and otherwise. And it's giving us market opportunities because people are definitely moving towards an integrated solution where, I mean online it is typically less than 10% of the fundraising in this world, and people can't, they are not divorcing it, they're just so over time Internet just becomes part of the solution.

Right. And on the ECRM, if I heard you correctly, Marc, I think you said there are about 40 ECRM deals total that you signed life to date, and I think about 19 or 20 of them are fully up and running. I guess for the other half that aren't up and running yet, could you kind of size the revenue opportunity, just kind of from those that have not been done yet? And how long do you think it takes to get those remaining 20 fully implemented?

Well, we are not going to give specific details of the revenue opportunities account by account, or by the sector. We said that they are in the sort of mid-six figures to low seven figures. The ones that are out there probably a little bit on average smaller than the ones that are, have been sold earlier because we are going down market a little bit. It will be pretty much half of them.

There are actually 43 that have been done, sold today. As I said, 19 are live. There are about a handful of them are quite large size, much of the revenue for those have actually been recognized over the years. There's still work to be done. So I would say the cost impact of the very large EAPs is larger right now than the revenue impact at this point.

Great. Thanks.

Thanks.

And we have no further questions at this time. I would like to turn the conference back over to today's speakers for any additional or closing remarks.

I would just like to thank everybody for their time, and look forward to seeing you, or talking to you all again in the quarter or out on the road. Thank you.

Once again this does conclude today's conference call. We thank you all for your participation.