Blackbaud Inc (BLKB) 2013 Q1 法說會逐字稿

Greetings, and welcome to the Blackbaud first quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. (Operator Instructions). It is now my pleasure to introduce your host, Tony Boor, Chief Financial Officer. Thank you, sir. You may now begin.

Good morning, everyone. Thank you for joining us today to review our first quarter 2013 results. With me on the call is Marc Chardon, our President and Chief Executive Officer. We both have prepared remarks and then we'll open up the call for your 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 on our investor relations section of our website. With that, let me turn it over to Marc to review our high level financial performance and business highlights. Then I'll come back at the ends to provide a greater details on the first quarter results, as well as guidance for the second quarter. Marc?

Thank you, Tony. And thanks to all of you for joining us today to do review our first quarter results, which represented a solid start for 2013. We're pleased to deliver non-GAAP revenue and profitability that were above the high end of our guidance ranges.

In the first quarter, we began to benefit from the significant actions we've undertaken in recent months to realize cost synergies as we integrated the Convio acquisition. This includes the initial cost synergies that we achieved in 2012 plus an additional $9 million to $10 million of annualized cost savings that we initiated during the first quarter of 2013. With our improving operational efficiency, Blackbaud is now better positioned to deliver both higher profitability and make important investments in our business that will help our much larger company to scale more effectively and efficiently for many years ahead.

We believe that our ability to improve the efficiency of Blackbaud following the integration of Convio will drive increased shareholder value. In addition we're focused on taking the steps necessary to ultimately realize the revenue synergy potential of our combined company as another important lever in shareholder value accretion. We're still in the early stages of implementing our integrated product strategy, and we're encouraged by customer feedback and our differentiated ability to deliver the best of both worlds online fundraising and CRM offering.

Now let me provide a brief overview of our first quarter financial performance. We delivered non-GAAP revenue of $116.2 million, which exceeded the high end of our guidance. We generated non-GAAP operating income of $20.9 million, which was well above the high end of our guidance range, due to a combination of solid revenue performance, greater than expected cost savings from the actions we undertook in January, and the timing of certain investments that we plan to make in our business.

From a macro perspective, the environment in the first quarter resembled what we saw in the fourth quarter, which we would characterize as stable. We're seeing modest growth in the Blackbaud Giving Index which is encouraging, but we also have to keep in perspective that many nonprofit organizations have barely reached the donation levels that they experienced prior to the recession. At the same time, reduced funding levels from government agencies have put pressure on many sectors. While this clearly creates a challenging environment, it also underlies the need to invest in new or updated fundraising software and related solutions to optimize their relationships with constituents and ultimately their donations raised. We believe the unmatched breadth of Blackbaud's product offerings and best of breed fundraising, CRM, and back office solution position us as the vendor of choice for nonprofits looking to improve their operations.

I'd like to take a few minutes to review the performance of each of our business units. The enterprise customer business unit got off to a solid start in the first quarter, including closing nine deals across our CRM offerings. We continued to see a healthy pipeline of opportunities with our CRM offering, and the replacement cycle of 20-year-old outdated legacy systems that we have talked about in the past is beginning to play out. While we still barely have scratched the surface with respect to the large nonprofit organizations in the world, we also believe that there's a significant opportunity to bring our CRM offerings down the market. We are optimistic that we will see a continued strength in our CRM business going forward.

We also continue to make progress in rebuilding the Luminate Online pipeline in the enterprise segment of the market during the quarter. It will be a multiquarter process to get the Luminate Online business back to where we'd like to have it but we continue to receive favorable feedback from customers regarding our commitment to the product and the enhancements that we are making. We remain confident that our acquisition of Convio will generate revenue synergies over time, though the sales of these subscription-based Saas offerings means it will take time for improved sales activity to impact our income statement.

In our general markets business unit, which posted solid results in the first quarter, the mix shift that we have seen in recent years towards subscription deals continued to progress. Recurring revenues now represent the strong majority of our general markets business, which is enhancing the visibility and predictability of our revenue in this meaningful contributor to Blackbaud's overall financial performance. We're pleased with the performance of the Luminate Online offering in the mid-market as well, and similar to the ECBU, we are seeing good progress in the general market business with expanding pipelines for the strategic offering. We expect Luminate Online will not only enable us to increase cross-selling activity into our sizeable installed base, but it will also open up new opportunities for Blackbaud to sell into prospects that don't have a Blackbaud CRM.

We also saw solid performance with our flagship fundraising project at Raiser's Edge, including great enthusiasm related to our mobile functionality for this product that's widely recognized as the industry standard. Our continued innovation for The Raiser's Edge contributed to solid new sales activity in addition to our ability to retain best of class retention rates across large installed base of accounts. We also saw continued traction with our Financial Edge subscription offering, which we introduced last year. And we see that as an additional driver of increased subscription revenues over time.

Our international business also continues to perform well overall. We have an expanding pipeline of opportunities internationally, particularly with our CRM offerings which we're working hard to close during 2013. In addition, Everyday Hero, while still relatively small continues to deliver strong results, and we see the individual fundraiser and multicharity event fundraising markets as an exciting growth opportunity. We currently have five disparate multicharity fundraising platforms in various markets around the globe, and we're making investments to standardize on Everyday Hero as our unified platform in the future and sell it into new markets our core domestic market.

Our improved proving, execution, and momentum internationally is counterbalanced by the fact that the macro environment in Europe continues to be meaningfully more challenging than in the United States. We remain optimistic in the long term opportunity to increase our international revenue contribution from its current 13% level.

From a product perspective, during the first quarter, we unveiled important product releases including a major release of our Infinity platform that will enable improved integration into our data warehouse for all of our Infinity-based products like Blackbaud CRM, Blackbaud Direct Marketing, and Altru, which will drive greater efficiencies in our customers' ongoing operations. An updated version of our Blackbaud CRM that includes a mobile CRM offering, improved international capabilities, and the ability to link a constituent social media accounts directly to their constituent view, updates to Luminate Online, which include website pages -- for example, donation forms and team fundraising pages -- optimized to work across all mobile devices and operating systems and the integration of Blackbaud Merchant Services into Luminate Online. And an updated version of RE Mobile, which brings the power of the industry's most robust fundraising platform directly to tens of thousands of individuals by their smartphones.

We have a robust product road map we're working against in 2013 including integration between Raiser's Edge and Luminate Online, which is expected to be generally available in this second quarter as well as increased mobile, social, and cloud functionality. Our focus from a product development perspective is to expand on the best in class capabilities our solutions provide.

Another area of focus is analytics. And during the quarter, we were delight to do announce the return of Wendy Fox to Blackbaud, where she will be heading up a newly created Information Management and Strategic Services line of business inside the Enterprise Customer Business Unit. Wendy is one of the nonprofit world's -- leading experts on how to leverage the vast amount of donor and constituent data that nonprofit organizations have in order to improve their ability to maximize donations and meet their objectives. We are thinking customers thinking more strategically about the value of the data that resides in their systems and we see a significant opportunity for Blackbaud to be the strategic vendor of choice for nonprofits looking to unlock that value.

Finally, to provide a quick update on our executive transition process, about a month ago our board of directors engaged a leading executive recruiting firm to manage the search from my successor. We're encouraged by the interest that we are seeing from potential candidates, and are in the process of determining who will be interviewed by the board. We're looking to finish the process as quickly as possible of course but the most important thing is that we find the right individual to select them to lead the next stage of Blackbaud's growth strategy. In the meantime, I remain fully committed to the company, our customers and our shareholders.

In summary, Blackbaud delivered solid first quarter results that demonstrated our ability to deliver improving levels of operational efficiency and profitability. We've made significant progress in better equipping the organization to deliver improving revenue and profitability growth over the long term. We continue to believe Blackbaud is well-positioned to successfully scale the company through our longer term goal of $1 billion dollars or greater in annual revenue.

With that, let me turn the call back to Tony to discuss our financials in more detail.

Thanks, Marc. We are pleased to have started 2013 with a solid performance that reflects non-GAAP revenue and profitability that exceeded the high end of our guidance ranges. We are pleased to see the benefits from our focus on positioning Blackbaud for improved profitability while we also remain focused on taking steps to drive improved revenue growth over time.

Let me begin with a review of our first quarter results starting with the P&L. GAAP revenue was $115.6 million, and non-GAAP revenue was $116.2 million, which exceeded the high end of our $113 million to $115 million guidance range and compared to $94.7 million in the first quarter of 2012. Non-GAAP subscription revenue was $47.9 million compared to $28.1 million in the first quarter of 2012 and down from $49.1 million last quarter. Subscription revenue represented 41% of our first quarter revenue, up from 30% a year ago.

As we noted last quarter, our transaction revenue is seasonally weakest in the first quarter. We anticipate delivering sequential growth in subscription revenue throughout the rest of 2013.

Maintenance revenue was $34.1 million for the first quarter and up 2% on a year over year basis, as we continue to benefit from our best in class renewal rates. When combined with our subscription revenue, our total recurring revenue was $82.1 million for the first quarter, an annualized run rate of over $328 million. Licensed revenue in the first quarter was $3 million compared to $7.2 million a year ago. As a reminder, our first quarter of 2012 license revenue benefited from timing of revenue recognition related to certain Blackbaud CRM transactions. While license revenue can be volatile on a quarter it quarter basis, our license revenue continues to become a smaller part of our overall revenue mix due to the growth in our subscription business.

Services revenue was $29.3 million, compared to $24 million in Q1 of 2012 and slightly down sequentially. We've made progress improving efficiency of our services organization and instituting best practices, and we expect to make additional improvements in the coming quarters. We are increasingly confident that this process improvement will lead to improved services revenue growth and profitability over time, but it will take several quarters until these changes are fully implemented.

Turning to profitability, non-GAAP gross margin was 59.9%, compared to 59.3% in the first quarter of 2012. The gross margin improvement was driven primarily by improved subscription gross margins which reflect the increased scale in that business following the acquisition of Convio. Non-GAAP operating income was $20.9 million, which was meaningfully above our guidance of $16 million to $17 million. Non-GAAP operating margin was 18%, representing a 400 basis points improvement for the first quarter of 2012.

Our better than expected profitability in the first quarter was a result of several key items. First we realized greater than expected benefit during the quarter from the cost synergy actions we implemented in January. Second, the operational improvements that we've been making occurred faster than we anticipated, and as a result there were areas of our business that did not require as many additional resources to meet the current business needs. Lastly, the timing of certain investments and hiring we plan on making in the business moved out of the quarter versus our initial plans.

Our non-GAAP diluted earnings per share were $0.26 for the quarter which was $0.05 better than the high end of our guidance range of $0.19 to $0.21.

Turning to the balance sheet and cash flow, we ended the first quarter with $8.4 million in cash and equivalents, a decrease from $13.5 million at the end of last quarter. We generated $12.9 million in cash flow from operations, used $5.5 million to pay our quarterly dividend, invested $7.1 million in capital expenditures and capitalized software, and used $4.5 million to pay down our debt. Our unlevered free cash flow, which takes into consideration capital expenditures and excludes the impact of interest expense, was $7.6 million. This metric provides insight into what our cash flow for equity holders would be post paying down our debt. We ended the quarter with $211 million in debt, which is down from $215.5 million at the end of the fourth quarter. Our total deferred revenue balance was $177 million, an increase of 9% from a year ago.

Before I turn to guidance, I'm happy to announce that Chad Anderson recently joined Blackbaud as our controller. Chad comes to us from BrightPoint, where he served in a variety of finance roles over the past 15 years, most recently e serving as CFO of BrightPoint Europe, Middle East, and Africa. I worked closely with Chad for a number of years at BrightPoint, and his extensive experience should help us become even more efficient in the way we manage our business. Properly aligning our back office functions to ensure we are positioned to scale the business in coming years has been a top priority for me since I joined as the company's CFO. With Chad's hiring, we now have the right team in place to drive back office transformation that Marc and I have talked about in prior quarters, and his arrival will also free up more of my time to focus on long-term planning and implementing strategic initiatives.

I'd like to finish by turning to guidance for the second quarter and updating our financial outlook for the full year 2013. For the second quarter, we are forecasting non-GAAP revenue at a range of $121 million to $123 million, which represents a year over year growth of approximately 7%. From a profitability perspective, we are forecasting non-GAAP operating income of $21 million to $23 million, resulting in non-GAAP earnings per share of $0.26 to $0.29.

Turning to the full year, we are maintaining our forecast for total revenue in a range of $495 million to $505 million. We are also maintaining our profitability targets of a non-GAAP operating margin of 19% to 19.5% for the full year 2013, which represents approximately 250 basis points of year over year expansion at the midpoint, and non-GAAP EPS of $1.19 to $1.25 per share.

We plan to reinvest the bottom line upside that we generated in the first quarter over the course of the year. With a meaningful amount of change already introduced during the first quarter following the reduction in force we announced in January, we made the decision to hold launching a few investments in our business until we had further confirmation that our operational execution was solid, and we were seeing continued stable market demand. Our goal was to ensure that we put the company in the best possible position to deliver against our full-year profitability and non-GAAP operating margin expansion targets.

We are satisfied with our first quarter performance and as such, we are moving forward several initiatives that are designed to put in place the back office systems for Blackbaud to scale efficiently and effectively for many years ahead. Following the acquisition of Convio, we naturally have disparate systems for managing our sales, marketing, and services organizations. Our plan it is to consolidate these systems and move the best in class integrated platforms that will make our organization more efficient and provide our mid-level management and senior executives with better, faster access to important information required for making business decisions. We also believe our upgraded IT infrastructure will help to make Blackbaud more flexible and profitable over time.

We are also moving forward with certain R&D investments that are part of our integrated product road map and our stronger first quarter profitability provides us with opportunity to accelerate some of those plans. As an example, Marc shared our intention to bring Everyday Hero into additional markets around the world, and to do so we need to make some investments. We are pleased the company is now benefiting from our ability to exceed the initial annualized cost synergies we targeted at the close of the Convio acquisition as well as the additional $9 million to $10 million of annualized cost savings we took action on in the first quarter. Delivering improved profitability to our shareholders is a strategic priority for Blackbaud and we are focused on continuing to build upon our recent success.

To summarize, we're off to a solid start in 2013. We have started to see benefits from our efforts to realize cost synergies following the acquisition of Convio, and customer feedback continues to be positive related to our integrated product road map and messaging. We believe we are well position to do deliver on our full year financial targets, and that we are well positioned to deliver improved revenue growth over the long term.

With that, we're happy to take your questions.

(Operator Instructions). Our first question comes from the line of Tom Roderick with Stifel. Please proceed with your question.

Hey, gentlemen, good morning. So, Marc, you talked briefly about some new product developments that sound pretty interesting here as you get into the first half, first half of the year. In particular, you highlighted an integrated Luminate Online Raiser's Edge offering. I was wondering if you could provide some more detail as to what that might look like, how you plan to migrate existing customers on both sides of the table and how you go forward there? And the second part of the product development question is the analytics offering and the move to bring Wendy Fox back in to run that division sounds pretty intriguing. How much work needs to be done to get sort of an evolved product out the door, how much have you done? Just kind of curious as to additive investments needed to be made there. Thanks.

Yeah. Hi, Tom. So I think saying that it's an integrated Luminate/Raiser's Edge offering is probably one step to -- too much like one product. The current road map is to provide an integration interface between the Luminate Online offering and the Raiser's Edge. There are, obviously thousands of Raiser's Edge customers who could benefit from the industry-leading e-mail and online marketing tools.

And so that's what we'll be delivering in Q2. We have early adopters testing the Luminate/RE interface at the point. So don't think of it today as an integrated single product. Think of it as two products that work together in a way that's much better, very similar, if you will, reminiscent to the level of integration with the BBNC product. That said, the Luminate in that product continues to have its own independent database so if can run independently to Raiser's Edge. And one of the key attributes of Luminate is it's a door opener, it's a wedge product and it can get us into quite a few midmarket and upper end market customers who would be leading with the marketing product as oppose to do leading with a CRM purchase.

On the product development front for Wendy's business, there's a lot of intellectual property that we have both in our internal and analytics organization and in the acquisition of StrategicOne that we came with the Convio acquisition. And so the first step here it to put better data warehouse. I mentioned some of that in the Infinity platform release that we just had.

So the first steps are reporting data warehouse and then the strategic partnership with customers to get the most out of your data that are in those. We'll see later where there are sort of more self-service products that need to be done, but those aren't on the road map yet.

Okay. That's good detail. Thank you.

So Tony, on the cost side -- admirable job of cost containment. When I look at the sales and marketing line, you're down a couple million per quarter from where we were at in the third quarter here. So that's good cost containment. I'm curious as to how you feel about the sales coverage on a -- call it on a global basis, how do you feel your sales coverage is? Do you have enough firepower in the sales organization? Or do you need to expand that more meaningfully as you go on throughout the year?

Yes. Thanks, Tom. So we're certainly down, we were very successful in the integration efforts and the synergy efforts post-Convio, so we saw some significant reductions as a result. We had, obviously, some additional reductions with the actions we took in January. That being said, we still have 60-plus open positions that we're recruiting for in sales, marketing, and products, all of which will be focused, obviously, on driving top line growth. So I'll tell you we're in good shape, but are hiring to add some additional resources in those free spots.

Great. I'll jump back in the queue but nice job. Thank you guys.

Thanks Tom.

Thanks Tom.

The next question comes from the line of Ross MacMillan with Jefferies. Please proceed with your question.

Thanks a lot. Tony, can you just start on the cost side? I noticed, I think, I'm right in saying your restructuring charges in the quarter, I think were quite -- they were quite a lot lower than I think you had planned for. Can you just touch on that? I think you made some comments around resource requirement as you were making some of these changes. Thanks.

Yes, Ross, I don't know on any specific guidance we gave perspective to the anticipated restructuring charges. But would I tell you they were largely in line with our expectations. Now, we had a couple different pieces and parts there with the work we did in January and still some carryover, I think, from some of the efforts related to our San Diego facility and move to Austin for our NOC. But outside of that I think we are largely in line.

And then I think from a resource perspective, I think maybe what you heard in my script, we did benefit in the quarter just from a lot of actions we've taken in 2012 regarding the back office and the automation and simplification and standardization of process. We had benefit in Q1 where we just didn't need as many resources to meet the demands of the business in the quarter. So we did see positive benefits in those things than we did in 2012.

Great. And maybe as a follow on to, that the cost savings that you've outlined for 2013 above and beyond the actions taken last year and the sort of trade-off, if you will, from an investment standpoint, is there a particular point in the year where you think that we'll have basically worked through these investments such that we could start to see line of sight to sort of improving margins, not on a year over year basis, but I guess sequentially, understand the shape of the cost structure this year?

I think with all I can give you is the guidance that we've provided, which we've got, obviously, Q1 actuals and Q2. The investments we're making are going to be spread throughout the year. So some were investments, obviously, we had planned on making in Q1 and just with all the actions and disruption that we put into the system in Q1, we wanted to make sure the business is stabilized and that we felt comfortable with where we were as an overall business before we took further actions. And so we did have some delayed investments and spending from Q1 that will push out.

But we're also as Marc alluded to going to accelerate some investments and products like Everyday Hero to bring it to some other markets more quickly than we anticipated. We're making some fairly significant investments and are looking to accelerate a few of those on getting offer the disparate systems for our sales and marketing team as well as professional services. And then we are also making some investments in best practices and solutions for the back office still with travel and entertainment and commission systems and some other things.

So I would say that that incremental investment in the business is going to be spread largely through 2013. Some of those investments will carry into 2014 because some of them are rather large back office systems that will take more than the year to fully I implement.

And then just on that gross margin specifically, I think, the subscription gross margin I think is self-explanatory. You did see a nice improvement in services gross margins and we're starting this year, obviously, at a pretty high level. Did you make any comments around -- I think you said something around gradual improvement in profitability. I'm just curious as to how you would have to think about the gross margin structure and services this year.

I think gross margin and services have two countervailing factors at work when you look at Q1, and then throughout the year. The one is that as you may recall from the past, Ross, Q1 has sequentially had 600, 700 basis points lower margins sequentially than Q4. So that was sort of masked by the opposite effect of the fact that the Convio services margins were very, very low. So you sort of had the drop, you have a year over year improvement in a couple dimensions, counteracting things that historically sort of downticks in the past that sort of camouflages some of the services improvement.

So what you've seen basically going forward is you'll see slow improvement in the services margins sequentially. You'll see it based on the implementation of quality assurance processes, but those take time to play out because they sort of get -- they're more impactful on new deals as you sign them than they are on old deals as you're partway through. And you continue to see reductions in nonbillable work throughout the year. I mean we've made huge progress compared it last year, and we don't talk about problem CRM deals anymore. In fact, a couple of those CRM customers were added additional branches to their -- to the CRM offering this last quarter so it showed improved satisfaction level's gone up.

So that's sort of an overall picture, slow improvements throughout the year. But I think the level of improvement that we see is better than you might estimate just based on the combination of those two factors for Q1.

Great. And maybe one last one for you, Marc, if I could. As you think about CRM and bringing that market, can you just help us understand how you balance that between the general market's opportunity and the traditional Raiser's Edge business -- how do you balance, if you will, the bringing of down market of CRM with the traditional general markets business? Thanks.

Any time you take a RE opportunity at the high end of the mid-market or at the low end of the enterprise and you turn a RE customer or RE prospect to a CRM prospect you're increasing the average revenue stream because what the customer is buy something so much more. So that's part of the RE next strategy is take the top end of the RE market and convert it to one of the two CRM products.

In fact, one of the Luminate CRM product sales in the past quarter was a RE conversion that might not have happened under the old regime had we not been one company. But it certainly is an improvement in both customer -- the customer's ability to spread the product and the benefit of the product across a lot of users in the organization. And it produces an ongoing recurring revenue stream that's higher than the maintenance would have been.

That's helpful. Thank you.

Bottom line I'll take as many RE to CRM conversions as I can get.

Thank you. The next question comes from the line of Matthew Kempler with Sidoti & Company. Please continue with your question.

Thank you. So in 2012 on the CRM side one of the challenges we talked about was we had a pipeline of larger and lumpy deals and you were hoping to balance it out with smaller deals but the product wasn't quite there yet. So I'm wondering if you could update us on your thoughts on as you're about being more readily available for the midmarket or the lower end of the enterprise and how that pipeline is starting to fill up.

Yes. Thank you for the question. So we're beginning to see some good progress there. I'd say there are a couple proof points and then a couple sort of updates on the progress itself. We just went line with a non-English language under $500,000 CRM implementation that was very prescriptive and very packaged. What that depends on is your ability to be able to do the data conversion in a very prescriptive, very automated way, and to be able to have tools for configuration management that allow you to deploy the application with much less professional services intervention.

And tools for both of those things have made quite a bit of progress in the last two to three quarters. So right now the prescriptive packaging, the data conversion, and the ability to have deployment tools are the areas of progress.

I'd also say that some sales discipline is critical. If you sell -- if you tell the customer this is what you need, and we often know better than the customer in some ways what the right best practice is to apply, and they're looking for that expertise. If you're selling a solution that is bounded and prescriptive, that helps us also go down market. The final point is that the Luminate CRM product was designed to go to the bottom end of the Blackbaud CRM product space so it has effectively been going down market. There are in addition to the CRM sales that you've seen in the enterprise space, there's opportunity in the upper end of the general market space already.

Okay. Thank you. And then you have talked about in the past the ratio of license to subscription deals. I'm wondering if you can give us an update on that.

I don't know the number off the top of my head. You know, it's a huge majority of units are -- huge majority of units are subscription, but Tony?

I don't know this we've given that and I don't have that available.

Okay. One last thing for me on the service revenue side, can you just give us the thoughts as the year progresses, do you expect service revenue to continue to climb sequentially as we reallocate resources from low-billable work or will the shift to subscriptions keep the services kind of in this type of a range we saw in the first quarter?

So we expect our license revenue to grow throughout the rest of the year so we think we were certainly at a low point as far as license revenue in the large Blackbaud CRM deals closed in the quarter. And with that, as you know, Matt, comes a fairly good size amount of services business. So I would expect as we continue to grow on those CRM deals throughout the year and licensed revenue growth, we will also have services revenue growth.

Thank you.

Thank you. It appears there are no further questions at this time. I would like to turn the floor back over to management for any concluding remarks.

Well, thanks, everybody for joining us in the call today. We had a good start, good solid start to 2013 in Q1 with revenue and profitability exceeding the high end of our guidance we've really begun to benefit from the significant cost savings that we generated both from the integration of Convio, and also what we undertook in the first quarter that's helping to drive profitability and efficiency but also gives you say opportunity to invest in areas that will have impact over time in terms of revenue generation.

We've seen continued improvement in the Luminate pipeline. I have to say, we probably did a little better than I expected and I had some reasonable good expectations there, so we're optimistic this business will continue to improve throughout 2013. And finally, we remain optimistic about the overall opportunity for the company. Our enhanced market position after the acquisition of Convio and our more efficient cost structure really position us very well for 2013 and beyond. So I look forward to updating you again on the progress at our next earnings call in August.

Thank you very much, good-bye.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.