Model N Inc (MODN) 2015 Q3 法說會逐字稿

Greetings and welcome to the Model N third quarter FY15 financial results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Sheila Ennis, Investor Relations for Model N. Thank you, Ms. Ennis. You may begin.

Good afternoon and welcome to the earnings call for Model N's third quarter FY15, which ended on June 30, 2015. With me today are Zack Rinat, Chairman and Chief Executive Officer, and Chief Financial Officer Mark Tisdel. Our press release was release was issued after the close of market and is posted on our website, where this call is being simultaneously webcast. The primary purpose of today's call is to provide you with information regarding our third quarter 2015 performance, in addition to our financial outlook for the fourth quarter and the full year of FY15.

Commentary made on this call may include forward-looking statements. These statements are subject to risks, uncertainties and assumptions. Please refer to the press release and the risk factors in documents filed with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q, for information on risks and uncertainties. Should any of these risks or uncertainties materialize or should our assumption prove to be incorrect, actual Company results could differ materially from these forward-looking statements.

In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of Model N's performance, should be considered in addition to, not as a substitute for or in isolation from, GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our press release.

At times, in response to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that this additional detail may be one-time in nature, and we may or may not provide an update in the future on these metrics. I encourage you to visit our Investor Relations website, at investormodeln.com, to access our third quarter FY15 press release, periodic SEC reports, and the webcast replay of this call.

Finally, unless otherwise stated, all our financial comparisons in this call will be to our results for the comparable period of our FY14. With that, let me turn it over to Zack.

Good afternoon and thank you for joining us today. I am pleased to report that Model N delivered strong Q3 results, exceeding our guidance on both the top and bottom lines. Model N is making excellent progress executing on our strategy to concurrently growing our revenues and transforming our business to SaaS. Model N grew 22% versus Q3 of FY14 and reported [65] of our revenues in SaaS and recurring revenues. Furthermore, this is our third consecutive quarter of both sequential and year-to-year growth.

We believe we have reached two important tipping points in the market. First, revenue management is now a mission-critical solution in organizations; and second, cloud-based solutions are commonly being leveraged, even in highly regulated industries, such as pharmaceutical. Let me walk through some of the business highlights of the third quarter that illustrate these two tipping points. In our pharmaceutical vertical, Model N has won significant deals with both new and existing customers to replace disjointed revenue management systems with our end-to-end Revenue Management Cloud.

The North America division of Glenmark Pharmaceuticals selected Model N Revenue Management Cloud to transform the revenue management lifecycle from a series of disjointed operations into strategic end-to-end process to enable profitable growth. Glenmark has close to $1 billion in revenues and 11,000 employees. Since its first product launch in 2005, Glenmark has emerged as one of the leading generic organizations in the country. The business has grown in a consistent way, with a robust portfolio of products that has doubled every year. Glenmark will leverage Model N Revenue Management Cloud to accommodate evolving market strategies, including an expansion into new channels, to scale, to manage data volumes associated with growing product portfolio, and importantly, to minimize compliance risks.

Actavis, previously a Model N customer, completed the acquisition of Allergan to become a $23 billion company, positioned as one of the top 10 global pharmaceutical companies in the world. The combined company is renamed Allergan, and its strong and sustainable brand franchises, a leading global generic business, a premiere pipeline, highly efficient operations, an experienced management team, creating an unrivaled foundation for a long-term growth. Actavis has done a remarkable job in leveraging Model N as the platform to integrate their previous acquisitions. Actavis has once again expanded their commitment to Model N to enable integration with Allergan.

AstraZeneca is the number 8 in the top 15 pharmaceutical companies line up, and one of the only pure play biopharmaceutical companies to span the entire value chain of medicine from discovery, early- and late-stage development, to manufacturing and distribution. AstraZeneca has selected Model N Revenue Management Cloud to replace their legacy revenue management solution, leveraging Revenue Management Cloud as a growth platform to maximize their US revenues, both commercial and regulatory, as well as reducing cost by improving efficiency.

Model N enjoyed further momentum in Q3 with our Revvy product line, which is a SaaS solution based on Force.com. For instance, we had a significant win at Ortho Clinical Diagnostics, or OCD, with Revvy CPQ. OCD serves the transfusion medicine community in labs around the world, with over 4,500 employees. They are the leading provider of total solutions for screening, diagnosing, monitoring and confirming diseases early before they put lives at risk. OCD's single focus is to help hospitals, labs and blood centers worldwide deliver results that help patients experience a better quality of life.

OCD was recently spun off J&J and has leveraged the Model N revenue management application suite for over 14 years. They have selected Model N Configure, Price and Quote, or Revvy CPQ for Med Tech, to maximize revenues by enabling their global sales organization to quickly submit winning proposals, leveraging a global standard platform.

Additionally, we saw a continuing increase in our Revvy CPQ footprint [leaving visit] manufacturing solutions in industry leader in robotic integration solution and [Mito Denko], the largest manufacturing of (Indiscernible) and various other products, with over 30,000 employees. A top 15 pharmaceutical company based in Europe selected our Revvy Global Price Management, or Revvy GPM. Leveraging Revvy GPM, this leading European company will enable worldwide collaboration and transparency for global prices. Revvy GPM will enable them to maximize their revenue by reducing price and revenue erosion via best practices processing, sophisticated analytics, and launch sequence optimization. Revvy GPM is now the de facto gold standard for global price management, having been selected by 8 of the top 20 pharmaceutical companies. But opportunity for Revvy GPM goes well beyond the large companies, as evident by previous wins, including Vertix Pharmaceutical in Q3.

Our momentum has not been exclusive to the life sciences segment of our business. Global Foundries, one of the world's first full service semiconductor foundries, with a global manufacturing and technology footprint and 18,000 employees, chose Model N Revenue Management Cloud for semiconductors. We will be implementing our Global Price Management quoting contracts and deal intelligence products to automate a cohesive end-to-end process for executing price and pricing goods more consistently and to support deal review workflow and compliance tracking for their pricing team worldwide. Model N is clear enabler of this new initiative.

Corpus Technology is a pioneer for disruptic technology in the semiconductor market. Corpus was looking for a CRM solution and chose Model N Revvy Sales for semiconductors, the only CRM solution built for semiconductors companies. Revvy Sales is integrated with our revenue management cloud to coordinate the entire sales and channel revenues. Corpus selected Model N for semiconductors specific functionality built into Revvy Sales.

Our Revvy product line is a key component of both our strategy and our revenue management cloud solution in both life sciences and high tech. Revvy's leverage is both an expansion opportunity into current customers and as a catalyst to penetrate new customers.

OCD, Corning and Abbott, among others, having selected Revvy CPQ for med tech, and a top 15 European pharmaceutical company that has been a customer of Model N in the US selected Revvy GPM, a great testament to the enormous strategic value of our enterprise-grade Revvy product. In fact, Revvy GPM has been selected by 4 of the top 20 pharmaceutical companies as their first Model N application and is evident in the power of Revvy to penetrate new accounts. And finally, the wins this quarter with Revvy Sales and Revvy CPQ also demonstrate Revvy's ability to penetrate this SMB market.

We are pleased with our progress in Q3 and in particularly, pleased to report that our Q3 SaaS and recurring revenue represents 65% of our total revenues. We are executing on our strategy of concurrently growing revenues and converting to SaaS and recurring revenues. We are expanding the organization to ensure we exceeded our customers' expectations.

The third quarter was also a record recruiting quarter for Model N. I continue to encourage by the momentum we are gaining as the market becomes more aware of the strategic importance of revenue management.

Let me turn the call over to Mark to discuss our financial results and guidance for the remainder of the year. Mark?

Thank you, Zack. Total revenues for the third quarter were $23.6 million, above our guidance range of $23.1 million to $23.4 million and representing growth of 22%, compared to $19.3 million in the year-ago period. Within total revenue, license and implementation revenues were $8.3 million, and SaaS and maintenance revenues were $15.3 million for the quarter. The mix of revenue in Q3 was 65% SaaS and maintenance versus 35% license and maintenance, an improvement from 58% SaaS and maintenance versus 42% license and maintenance in Q3 of FY14. We continue to transition to a SaaS and maintenance model, and this quarter's results represents the highest percentage of SaaS and maintenance revenue in Company history. Year-over-year, we recorded a 36% increase in overall SaaS and maintenance revenues.

Before I move on to profit and loss items, I want to remind you that my commentary will be focused on non-GAAP results. A reconciliation of non-GAAP to GAAP results is provided with our earnings press release issued earlier today.

Gross profit for the third quarter was $13.1 million, compared to $10.6 million in the third quarter of FY14. Similar to recent quarters, gross profit in this quarter included an impact of roughly $600,000 from the amortization of capitalized software that began upon the launch of our Revvy CPQ product. Overall gross margin in the quarter was 56%, compared to 55% in Q3 of last year. I want to reiterate that we do expect some quarter to quarter variability in gross margin, depending on the mix of revenue and other factors.

Research and development expense was $4.1 million, compared to $4.5 million in Q3 of 2014. We are investing to further expand the breadth and depth of our products, and the results this quarter do include the capitalization of expenditures related to the expansion of our Revvy product offering in the order of $600,000. Sales and marketing expense was $6.8 million, compared to $5.9 million in the year-ago period. This increase was driven by continued investment in sales and marketing, as we look to expand our sales coverage and continue to increase our sales pipeline. G&A expense was $4.3 million, compared to $4.1 million in Q3 of FY14. Operating loss for the period was $2.1 million, compared to a loss of $3.9 million in the third quarter of last year and above our guidance of an operating loss of $2.3 million to $2.5 million. Net loss in the third quarter was $2.1 million, compared to a net loss of $4 million in the third quarter of FY14. This produced a net loss per share of $0.08 based on a share count of 26.3 million shares, an improvement from a net loss per share of $0.16 Q3 of last year, which was based on a share count of 24.8 million shares. This was above our guidance of a net loss of $0.09 to $0.10 per share. Adjusted EBITDA for the third quarter was negative $1 million, compared to a negative $3.1 million in the year-ago period.

We ended the third quarter with $93.8 million of cash and cash equivalents, up slightly from $93.2 million at the end of the second quarter. We expect to exit FY15 with approximately $90 million to $91 million in cash on the balance sheet. At the end of the third quarter, our accounts receivable balance was $20.9 million and our total deferred revenue was $28.3 million. As mentioned earlier, we believe our accounts receivable and deferred revenue balances are not a meaningful indicator of the business activity during any particular quarter, as the timing of invoicing under our contracts impacts these items because we do not bill our customers up front for the total contract fee.

For the third quarter, cash flow provided by operations was $1.4 million which, after adding CapEx of $0.7 million and $0.6 million of capitalized software, produced a free cash flow of $0.1 million. This compares to cash flow provided by operations of $2.3 million in the third quarter of last year, which after adding $1 of CapEx, produced a free cash flow of $1.3 million. Similar to prior commentary in regards to our receivable and deferred revenue balances, there can be some quarter to quarter variability in our cash flow, as it is impacted by the timing of invoicing under our contracts.

Moving on, let me now outline our guidance for the fourth quarter of FY15, as well as our expectations for the full FY15. For our fourth quarter ending September 30, we expect total revenues to range from $24.6 million to $24.9 million, non-GAAP loss from operations in the range of $2.3 million to $2.1 million. This would lead to a non-GAAP net loss per share in the range of $0.09 to $0.08, based on a weighted average count of 26.5 million shares.

For the full FY15, we expect total revenues to range from $92.9 million to $93.2 million, or a growth of 14% for the year as a whole, non-GAAP loss from operations in the range of $7.3 million to $7.6 million, non-GAAP net loss per share in the range of $0.28 to $0.29, based on a weighted average count of 25.9 million shares. In Q4 of FY15, SaaS and maintenance revenues are expected to be 67% to 68% of total revenue, raising overall FY15 SaaS and maintenance revenues to be 61% to 62% of total revenue, up from the 60% SaaS and maintenance revenues we discussed on our last call.

As we enter Q4 of FY15, I would like to provide some visibility into FY16. Through the first three quarters of our fiscal year, we have seen tremendous progress in our goals of concurrently growing overall revenue and increasing SaaS and maintenance as a percentage of total overall revenue. We expect to continue overall revenue growth in our transition to SaaS and maintenance revenue in FY16, as we expect our customers to continue to purchase our subscription product offerings. As demonstrated through the first three quarters of FY15, our customers are migrating to subscription-based offerings at a faster pace than we originally anticipated. We continue to invest in these product offerings to ensure we meet our customer requirements. We have seen growth across our life science, technology and Revvy subscription-based product offerings, and expect that consumption pattern to continue in FY16. We will provide detailed guidance for FY16 on our Q4 FY15 earnings call.

Overall, the business continues to show improvement in both overall revenue growth and growth in SaaS and maintenance revenue as a percentage of total revenue. We expect to show further progress on both aspects as we enter FY16. We believe that our leadership in this large and growing market positions us for further success going forward. We will now open the floor for your questions.

(Operator Instructions)

Nandan Amladi, Deutsche Bank.

Hello. Good afternoon. Thanks for taking my question. So Mark, first question is on the deferred revenue trends. I know you said in the script that billings are probably not the best way to judge the business. But now with the two-thirds of your revenue being recurring in nature, when does it become appropriate to start to look at deferred revenues and billings as a meaningful indicator?

Sure, Nandan. I think if you look at deferred revenue pattern over time, we are at the very high end of the range we've been for the last six to eight quarters. So you are right in the fact that as we continue to move in that direction, you would expect deferred revenue to increase. I think as we do emphasize, there will be certain times when customers will want to be billed in the first week of the following quarter which, therefore, would not impact our deferred revenue in the reported quarter. So that's why we don't feel it's an important metric. But you're right in the fact that we would expect to see deferred revenue move to the right over time, as it continued to execute on our goal of selling SaaS and maintenance revenues.

Okay. And a question for Zack, sort of a big picture industry question. There's been a lot of M&A in life sciences, in general. How does that trend impact your business? Can you give us some examples of where you've gained new customers versus perhaps lost a customer, if the target company was a customer and the parent company then made the change to a different product?

Yes. Nandan, thank you for the question. In general, M&A has been extremely positive driver for Model N business. As a company merged, they see an opportunity to develop a platform for integration of the combined company. And it really pushes them to make some of the strategic decisions related to revenue management. When you look at the M&A activity in the life sciences industry in general, in pharmaceutical in particular, that [quote] to Model N significant bookings and revenues over the years.

An example for this will be the merger a couple of years ago between Merck and Schering-Plough; and neither companies were a customer of Model N. And as they have come together, they decided to expand their standardized with Model N as their basically platform from the combined company.

Another example is what we announced this quarter on the list, with Actavis and now Allergan. And Actavis used basically the Model N platform as a way to integrate their previous acquisitions. So they acquired the companies like Forest and other pharmaceutical companies; and as they grew their business, they used Model N as the integration platform for this solution. They most recently acquired Allergan, and what we announced is they utilized now Model N as the platform to integrate with Allergan.

It's not certain that Model N is always going to be on the winning side. There were very few deals where we were not on the winning side, where they decided to use their legacy systems. But when you look at these over a very long period of time, they yielded us basically losses of a couple of hundreds or say thousands of dollars in revenues, where on the other hand, it was definitely more than $100 million of revenue that we got actually from acquisitions over time. So it's two orders of magnitude better for Model N, in terms of history.

Thank you.

Tom Roderick, Stifel.

Hello, guys. Good afternoon. So I wanted to just get a better handle on this model. I think Nandan was doing a good job breaking through to the heart of the deferred revenue there. And it looks like you put up a nice jump in deferred. So as it relates to some of the booking trends you saw on the quarter and how we think about the puts and takes on license and implementation versus the SaaS and subscription line, what's the broader trend line on those two? In other words, should we model L&I to continue to be down over time? Would you suggest that 2016 will likely be equivalent or less on the L&I side than what we're going to see in 2015? And what are some of your goals as you look out to the mid-term or 12-, 18-, 24-month time frame goals on the SaaS and subscription line for how you think you can grow that?

Sure, I'll take the first part of that question, Tom. Thank you for the question. In reference to what we're seeing as far as a trend from a bookings perspective, I think it correlates highly with what we're seeing for a revenue perspective. As we talked about earlier in the call, this quarter we were at 65% SaaS and maintenance revenues and we guided to 67% to 68%. So we are seeing bookings in that direction. Customers are consuming [approx] from a SaaS perspective. And as we enter 2016, although we, obviously, are not guiding at this time, from a color perspective, we do expect that trend to continue.

So we are seeing customers migrating, as we've talked about in the past, on all three areas of delivery, the life sciences, high tech and from a Revvy perspective. Customers are consuming the SaaS products, and we do expect that trend to continue as we move forward. We would expect to see that trend continue to 2017 and beyond. I think a lot of customers that we see today come into us and are looking for a SaaS product. They're not looking for on-premise products anymore. And that process has accelerated very quickly through our customer segment. We've been very pleased with our delivery through 2015.

Great. Okay.

Tom, just to Mark, from a strategic point of view, if you think about what we have done over the last 18 months, and so we offer a series of cloud and SaaS solutions to the market. And as [a trend to consume] this software becomes to be evident, and new customers are buying almost solely from these products. But our strategy with revenue management as a service also provide a unique feature to our installed base to move on-prem installations to software as a service. And that's enabled us to use these two vectors, both the new market, as well as the conversion of our installed base to recurring revenues. And that leaves basically, when you think about the SaaS line of license and implementation for only current customers that continue to keep the solution on prem. And lots of them are actually strategically moving to SaaS.

Zack, that brings up an interesting second question around the existing installed base. When you do move a customer from an on-premise installation to a software as a service arrangement, what are the economic puts and takes in that model? Do they effectively trade a maintenance payment for a subscription like-for-like? Is that just another opportunity to upsell them on some of the newer SaaS-based products, like Revvy CPQ? Maybe talk about what the sales cycle and the economic puts and takes look like there.

Yes, so our SaaS solution is definitely a transformation outside [the coin] solution, and that's not a replacement of support and maintenance. It's obviously, it's an add-on solution that they provide that they package with a lot bigger values to our customers, including the one that you mentioned, which is the ability really to consume a new software that the Company has, and it's all integrated with the Revvy product line that we have. So we see it as a significant opportunity for our (inaudible) customers, as they transform their business to SaaS.

Very good. Last question for me. For this one, either of you, whoever wants to take it. The revenue line continues to grow. It's being driven more by subscription. What's the right revenue level or the time frame for a return to profitability we ought to think about as we build out our models for 2016 and 2017?

Sure, I'll tackle that one, Tom. As we look at our profitability and we've discussed our focus, our overall focus for the business has been on three different areas. Number one focus for us is overall revenue growth. Number two has been recurring revenue as a percentage of revenue, and then three has been in profitability. You can see we feel we've been very successful delivering with year-over-year 22% growth, but also called we out earlier 36% year-over-year growth from a SaaS and maintenance perspective. So we've done very good in those two areas.

As Zack discussed earlier, we've also added a number of new customers to which we have upsell abilities from a SaaS products and services perspective. We will continue to invest in sales and marketing and R&D, as we've discussed earlier in the call. And we've had a great recruiting quarter, as we talked about earlier.

So again, we're not guiding on 2016. We are remembering the fact that we talked about EBITDA earlier in the year; and as we enter in 2016, we will continue to focus on that area. But our primary metrics that we're driving the business by right now, our overall revenue growth, which I think we've done a strong job, and SaaS and maintenance revenues, as well.

Okay. Very good. Thank you, guys.

Brian Peterson, Raymond James.

Good afternoon, guys, and thanks for taking the question. Just wanted to clarify an answer to Tom's question on SaaS and how your customers are looking at potentially on-premise versus SaaS. Mark, I know you said that's going a little bit faster than expected and that most customers are actually looking for SaaS. Are we really at the point now where, let's call it, 9 or maybe even 10 of 10 customers are coming, looking specifically for SaaS solutions? Or do you still have instances where there are holdouts looking for on-premise implementations?

Sure. Brian, that's a good question. I think the answer to that is a majority of the customers that come to us today, from their infrastructure perspective, are consuming products from a SaaS perspective. And so when they come to us, it's foremost that they have that discussion. When they look at overall cost of ownership, they come in and talk about other products that they've consumed this way and how we would fit into that portfolio of their internal products.

That's not to say there isn't some customers that come to us, because some customers will come to us looking at a perpetual versus a SaaS model, maybe because they budgeted that way a couple of years ago and they're trying to get into the norm of budgeting from a consumption versus a perpetual license. But a majority of the customers that come to us look to SaaS first, and we don't have that many discussions on the perpetual side. So it's really driven by the customers versus Model N trying to push them towards a SaaS platform.

Got it. All right. Thanks for the clarification there. And obviously, you guys have a lot of new products in different markets, so maybe this is an unfair question. But I'm looking to get a high-level clarification or perspective from you guys, how do you look at organic growth in your business? Obviously, we've had some puts and takes. I'm just curious how you look at that potentially longer term?

We believe that we are in the large market for revenue management, and we believe that we have a [great] market opportunity, both the verticals that we are at right now. We are a leader in [both] and they seem to go very strong, as indicated by the results of this quarter and the trend that we see over the last couple of quarters. And we believe that we have a very strong product line that enables us actually to serve the broader market. So we feel good about the continuous organic growth of the Company.

Okay. Great. Thanks, guys.

Sterling Auty, JPMorgan.

Thank you. It's actually Darren Jue on for Sterling. Just a question around the guidance. I'm just wondering, given that you outperformed on the high end of your guidance for the second -- for the June quarter, you appear to be having a lot of momentum, just wondering why the top end of the revenue guidance for the year is actually coming down a little bit?

Sure, Darren. If you look at where we talked about for the year, we basically have tightened up where we believe that we're going to land from a Q4 perspective. And you know, we're very conservative around our approach in revenue. And when you take the first three quarters of actual plus the Q4 guidance, we are slightly below the top end of the guidance that we announced for the year, but we're certainly in the mid- to higher end of the range that we've talked about for the entire year.

And also, we're much higher than we talked about earlier in the year as a percentage of our SaaS and maintenance revenues, as well. If you remember earlier in the year, we didn't disclose that as a metric, then we talked about being at 60% for the year, and now we're little bit above that, about 61% to 62% for the year. So that plays slightly into that number set. But again, we feel very strongly about what we're delivering for the year, 14% year-over-year growth, and the fact that we are at the mid- to high end of the range that we talked about for the whole year.

Okay, fair enough. Just wanted to ask a question around gross margins, specifically on line 2. I know you mentioned that there's some quarter to quarter variability, but I'm just wondering why the line 2 gross margin has declined over the last four quarters?

Sure. From a line 2 perspective, Darren, you remember the way that we would recognize that revenue is obviously ratably over the term of the arrangement. So sometimes we will be required to make investments upfront and then deliver the revenue with those investments over time. So we've had very strong sales activity for line 2, and we've talked about that. So we've had to make increased investments in cloud delivery and then the resources which are related to those deals. So that will give us slight downward impact in the current quarters. But obviously, our goal is to continue to improve gross margin as we enter 2016 from a line 2 perspective and from an overall perspective.

Okay. Thank you.

(Operator Instructions)

Peter Lowry, JMP Securities.

Great. Can we get an update on traction for Model N Express and your outlook for penetrating the mid market?

Yes, we continue to cast a focus on the mid market with Express. We can't announce all the deals -- not that we won, but we are making some good progress there, as well. And one of the things that is very important for us as related to Express is also increase the bandwidth of the sales organization. So we did a good job in recruiting more sales organization to cover our territories. If you think about what we announced this quarter and before that, we keep doing some very large deals, and we need to continue to scale the service organization. And we believe that continue with Express and with the new products is going to be a very good way for us to diversify.

In saying this, a vast majority of our business will continue to come from the large companies, as we are key ingredients of their revenue management solution, as they grow, as they acquire, and as we further penetrate into the market. We spoke in the past about recent win that we had with, for example, Hill Pharmaceutical. It's a European company based on Denmark, where initially they acquired our Global Price Management solution. And actually, they went live most recently with Express implementation in less than four months. So there's so much we can talk about in this announcement, but it's still progressing nicely with Express.

Update on the competitive environment, does the demand for SaaS change that or is it fairly stable?

We feel that the market for a competitive point of view is positive for Model N. We believe, actually, that our SaaS-based solution is highly differentiated in the market. And we have a very complete and very robust product that we continue to improve, with user interface, with new features, with the new applications. And it's clearly the leading product in that space. Obviously, with the newer set of products, like Revvy CPQ, we tend to see sometimes a new competition. But it's also a very robust market. So I would say in general, I feel extremely good about the competitive positioning of the Company and the products that we provide.

Okay. Great. Thank you.

There are no further questions in the queue. I'd like to hand the call back over to Zack Rinat for closing comments.

Thank you all very much for attending the call today. We are excited about where we are as a company. We are encouraged by the progress that we made in both growing the company and converting the company to a SaaS and recurring revenues. We believe that we have a very exciting market opportunity for revenue management, and we are working hard to take advantage of that. Thank you very much again for attending the call.

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