甲骨文 (ORCL) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Responsys third-quarter 2012 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's presentation, Miss Carla Cooper. Ma'am, you may begin.

Thank you. Thank you for joining us today to discuss Responsys' results for the third quarter ended September 30, 2012. Participating in today's call will be Dan Springer, Chairman and Chief Executive Officer; and Chris Paul, Chief Financial Officer. I will cover the Safe Harbor statement, and then turn the call over to Dan.

The primary purpose of today's call is to discuss our third-quarter performance. Some if our discussion will contain forward-looking statements, which may include projected financial results or operating metrics, business strategies, anticipated future products or services, anticipated market demand or opportunities, and other forward-looking topics. These statements are subject to risks, uncertainties, and assumptions. Accordingly, our actual results could differ materially. For a listing of the risks that could cause this, please see our most recent Form 10-Q filed with the SEC as well as the factors identified in today's press release.

During the course of this call, we will also be discussing certain non-GAAP financial results. We direct your attention to our reconciliations between GAAP and non-GAAP measures, which can be found in the Company's earnings release, which is posted on the Investor Relations portion of our website. Dan?

Thanks, Carla, and good afternoon to everyone on the call. I'll make brief remarks about the quarter and our guidance before turning the call over to Chris for a review of the financials, and then we will take your questions.

Revenue in the quarter was $40.5 million, an increase of 20% versus the third quarter of 2011. While we are pleased with our continued new business success that's driving our growth, there were also some challenges. Revenue growth was affected by two factors. First, we saw some pricing pressure in the quarter, which adversely impacted our subscription revenue growth, and I'll talk more about that in a minute. Second, we saw modestly lower demand for our professional services than anticipated. The latter was the result of slower on-boardings for a few new customers, and a little less growth than planned for professional services across several other customers.

In terms of profitability, we saw solid profits and delivered non-GAAP earnings per share of $0.06. Stronger profitability came primarily from somewhat lower headcount additions. As we have discussed on previous calls, we are continuing to invest in certain areas, particularly sales and marketing, to drive growth. We believe that the prudent decision is to continue to invest, and we will cover that when we discuss guidance.

With respect to our Q4 guidance and outlook, Chris will have more details, but I would like to address my earlier comment on pricing. Our markets have always been competitive, as we have told you in the past. We have always been a premium-priced solution, and that continues to be the case. Many of our customers are still willing to pay a 20% to 30% premium for the Responsys Interact platform because of the strong returns on investment that they generate with the solution's superior functionality. But, many don't want to pay a higher premium than that. As a result, in circumstances where competitors aggressively drop their price levels to keep an existing customer or win a new customer, we have to decide whether we should drop that price, too.

The good news is that we do run a profitable business with margins that allow us to make these decisions, while still being profitable for shareholders. The impact, however, is that we have to adjust our expectations for short-term revenue growth and margin performance. We are estimating that the impact will take revenue down by a few percentage points in the first quarter and in 2013, and this is reflected in our fourth-quarter guidance, which we now see at $42 million to $43 million. Based on this revenue, we expect that margins in the fourth quarter will, therefore, be a few percentage points lower than our previous expectation.

Despite this new challenge, the third quarter was robust in terms of operational success in our business on several fronts. We mentioned last quarter that we expected strong adds for Q3 customer count and are quite pleased to deliver an increase of 46, to 399 customers from 353 at the end of Q2. About 0.5 of this increase is organic, where we continue to be encouraged by our win rates, while the other 0.5 came through the completion of the acquisition of our Danish partner.

New business wins continue to drive our customer count. Let me tell you about a few of those from the quarter. First is Nordstrom. No brand epitomizes service and retail more than Nordstrom. With an increased investment in e-commerce in 2012, this leading retailer knew they wanted to align with the industry's best provider in cross-channel digital marketing solutions. Responsys will enable Nordstrom to attain the goal of increasing their revenue by working with their internal teams to improve efficiencies and implement a life-cycle approach to their customer-driven communications.

Second is global athletic leader New Balance. New balance wanted to integrate display retargeting into their ongoing customer communications, so they turned to Responsys. The New Balance marketing team will work closely with the members of the Responsys strategic services group to launch highly personalized and automated programs in two channels -- email and display. New balance recognizes Responsys' approach to data management across multiple channels as a way to gain competitive advantage. We believe the combination of more personalized campaigns, as well as utilizing display for relationship retargeting, will have a significant impact on campaign performance metrics, such as click-through rates and, more importantly, on sales.

Third, and moving to the Asia Pacific market, we're proud to announce Next, the leading real-estate portal in Japan. Next aims to dominate the North Asian property-listing market. The company is switching to Responsys to power life-cycle communications that will improve their engagement ratios, which are critical to driving their business growth. One of the first campaigns Next will deploy on the Responsys Interact platform is a multi-wave campaign providing relevant real estate information when a visitor makes a property inquiry. This deal marks one of our first wins in Japan after establishing operations there earlier this year.

Along with these great retail brands, we're proud to announce wins across our other key verticals as well. We signed financial services companies, like ETrade and Dun & Bradstreet, and technology leaders, like the anti-virus software company, Bitdefender, and the leading online restaurant reservations site in Australia, Dimmi. These wins underscore the value that Responsys is delivering in the market and are the critical proof points that our technology and sales and marketing investments are driving results.

Our technological investments are helping to drive our win rates, and the enhancements we delivered to the Interact platform in fall release, continue to support that differentiation. Let me highlight two of the key points on the enhancements. First, to enhance cross-channel content delivery, we rebuilt our content library so that our customers can have one digital repository for email, social, mobile, and display ad content. This enables them to more efficiently roll out campaigns across multiple channels without having to rely on IT to code content for each channel. Managing our customers' content for marketing programs is a fundamental task, and content library empowers marketers to drive faster turn-around times and increase cross-channel synchronization.

The second enhancement I would like to mention relates to mobile. As part of the fall release, we have expanded the types of mobile campaigns that our customers can deploy. This includes text for location of a store, for a callback, or for sweepstakes. Responsys Interact for mobile can integrate with web preference centers and coordinate email and SMS messaging together. We are proud to announce that we have signed a leading retailer to our first six-figure mobile commitment. And, this is just one part of their multi-million dollar relationship with Responsys.

This emerging channels area if our business, the non-email channels, remain a significant opportunity as we prepare to move into 2013. We are seeing strong interest in the expanded functionality of our mobile offering, and we believe mobile will be an important part of multi-channel campaigns in the coming years. We also continue to see strong interest in our Display offering. With Display, our customers can use such data as purchase history, browse history, and category interests to target customers across the web and show them Display messages targeted especially for them, like customized discounts or special offers.

Before I turn the call over to Chris, I want to close with two thoughts. First, we are seeing great traction in our ability to attract new customers. We added over 20 new customers in the third quarter, not counting the 20-plus customers that we officially added from Denmark. The fantastic wins that I noted were but a few of the name brands we signed and are proof positive of our leadership position.

Second, the emerging channels area of our business remains a key focus and a significant opportunity as we move into 2013. In addition to the sizable mobile deal that we mentioned, we have other customers testing and ramping up Display with us as well. We still have not broadly penetrated our customer base with large-dollar deals in these emerging channels, so the total impact to our revenues is not yet significant. This is an important priority for Responsys going forward, and we believe it will be a meaningful contributor when we exit 2013.

Now, I'll turn the call over to Chris Paul, our Chief Financial Officer, to discuss the financial details of our third quarter. Chris?

Thank you, Dan. Third-quarter revenue was $40.5 million, up 20% year over year. Subscription revenue was $28.5 million, up 19% over the prior year. Overage revenue was $5.1 million, or 18% of total subscription revenue. Professional services revenue was $12.1 million, up 20%. Our subscription dollar retention rate was over 100%, consistent with past quarters.

As Dan mentioned, two factors affected revenue in the quarter. First, in the professional services business, we had a few customers that ramped up more slowly than anticipated and also had modestly lower usage across some other customers. Second, lower pricing negatively impacted our subscription revenue, primarily affecting overage revenue in the quarter. Let me explain that in more detail. Third quarter overage revenue was 18% of total subscription revenue, in range with historical third quarters, but it fell 9% in absolute dollars versus the second quarter. This is coming from the impact of some lower pricing and higher volume commitments we are experiencing on some contract renewals that Dan described earlier. What we saw historically is that upon renewal, customers will typically increase their volume commitment, and along with that, get an additional discount.

We are now seeing cases where the discounts are larger, and we're also seeing discounting where the customer is not making a significantly higher commitment. In many cases, these are multi-year renewals. So, while we are seeing near-term negative impact, we believe that this is offset by higher and longer visibility. As Dan said, we believe we continue to generally maintain premium pricing versus competitors, supported by the superior returns the Interact platform allows our customers to achieve. We added 46 customers in the quarter, about 0.5 from Denmark and about 0.5 from organic growth. We are pleased with our customer additions in the quarter, a reflection of the success of our investments, and believe we are laying a solid groundwork for expanding a customer base that will drive future growth.

Let me talk, briefly, about expenses and profitability before I discuss guidance. Please note that the following commentary refers to non-GAAP expenses and income measures that exclude amortization of stock compensation and amortization of intangibles. Subscription gross margin was 72%, 2 percentage points above year-ago levels. Professional services gross margin was 10% -- 10% flat compared to one year ago, but down from the second-quarter level of 14%, due to continued hiring and lower-than-expected revenue. We are keeping a close eye on professional services headcount additions in order to manage margins in that business.

Operating expenses were 42% of revenue in the quarter versus 39% one year ago, reflecting a 4 percentage point increase in sales and marketing expense from 20% to 24% of revenue. R&D and G&A expenses were both 9% of revenue. Operating margin was 11%, up from 5% in the second quarter, which carried the expense from our major user events in the period. Operating margin decreased 3 percentage points versus one year ago, reflecting our commitment to invest in our business, primarily in sales and marketing to drive higher customer acquisition. Our cash flow from operations in the quarter was approximately $5 million. Free cash flow was approximately $1 million. Cash and equivalents were approximately $101 million at September 30, 2012.

Turning to guidance, our Q4 revenue guidance is a range of $42 million to $43 million. This reflects the impact of pricing adjustments on renewals and puts our annual guidance at $160 million to $161 million. Our non-GAAP earnings-per-share guidance for Q4 is approximately $0.05 per share. This reflects the net impact of lower-than-anticipated revenue, offset partially by slightly slower expense growth. Our fourth-quarter guidance reflects a projected 40% non-GAAP tax rate and 53.6 million shares outstanding. We expect our CapEx in the fourth quarter to be close to $3.5 million, bringing our total for the year to about $12 million, in line with guidance.

While we will give formal 2013 guidance on the fourth-quarter call if February, we want to share our initial thinking about growth in 2013. We previously forecasted that our growth in the second half of 2012 would increase from the first half as a result of our increased sales investments. We believe we are seeing success with new ones to support this increase, but it is being offset by a few percentage points from the pricing impact we are seeing in renewals. As we think about 2013, we now see revenue growth in the high teens, rather than low 20s, where we had anticipated our investments would take us as we began the year.

We are working hard to drive reacceleration and continue to put in place the building blocks for future growth. We continue to benefit from the build-out of our sales organizations, and we are winning customers in competitive situations, based on the targeting, automation, and cross-channel functionality that allows our customers to drive higher returns. We are pleased with our name-branded customer wins and also with the wins we see in general business. Responsys will continue to invest in the significant market opportunity we see in digital marketing.

We are now ready for questions. Operator?

(Operator Instructions)

Jennifer Scully, Morgan Stanley.

It's actually John Parker calling in for Jennifer.

Obviously, it's been a tough last two months from a demand perspective in the macro, as we've seen, and now you're talking about a little pricing pressure. I'm wondering, is the pressure you're seeing in any way reflective of the macro overall, or more so it's competitors around you getting more aggressive? And, along that line on the macro, have you seen any impacts on the timing for deals to get closed, any push back in sales cycles? Are those two related in any way, shape, or form?

We don't see any change in the macro environment having an impact on our business at this point. In terms of the phenomenon you described, we definitely see the focus being the pricing around renewals in a situation where our pricing for some of those longer-term customers became more significantly above what competitors were willing to do with more aggressive pricing to try to drive share. That's how we see that phenomenon, and I don't think, on a going-forward basis, we've seen anything happening with the new deals, where they're being pushed longer than traditionally because of a macro fear.

Okay. Then, diving a little bit further into the pricing -- the pricing pressure that you have spoken about. Is there any common thread or characterization that you would say of those deals in where you're seeing them? Are they tied to a specific geography or vertical market or customer need? Is there any commonality between them, or is it something else that's going on?

I don't think there's a particular segment that's differential, other than the concept we said for customers that have been with us a long period of time that have seen the very high ROI that Responsys drives for them and have been quite comfortable that they get great value from our service. And, now as they come through, and maybe their purchasing team takes a look around as they go through their next renewal cycle, and say -- wow, the differential has gotten bigger because other people have been continuing to lower price, while Responsys has done a better job of maintaining that. So, that's the biggest factor.

I would tell you that in customer situations where people have a very strong ability to measure and drive ROI, there tends to be less pressure because that's where we really differentiate ourselves from folks; and they see that incremental ROI, it makes them comfortable that even a higher premium makes sense for Responsys.

Okay. And, maybe actually going a little bit further there. Obviously, you made a little bit more of an aggressive move into the upper end of the mid-market over the last two quarters of your general business segment. Is the pricing impacts you're seeing more related to that area? Or, are you starting to see it more as well in your larger-enterprise segment as well?

We're not seeing a differential change on the general business side. In fact, we feel really strongly about that being an important growth lever for us going forward. Keep in mind, that's a newer entity, so we wouldn't have that phenomena in terms of customers that have been with us for multiple years. Because, it's really only the last 1.5 years that we've been aggressively selling into that segment. So, it wouldn't be as prevalent for that segment.

Okay. Great, thanks.

[Matt Fohl], William Blair.

(technical difficulties) What is your ability to renegotiate prices down the line while they're still under contract?

Matt, we missed the first part of your question. It didn't come through. Could you repeat that?

Sure. So, when customers sign the multi-year contracts where you said you've been seeing the pricing pressure, what is their ability, after that contract's signed to renegotiate prices further down the line if they feel that those prices are too high as well?

From a contractual standpoint, when we make those longer-term agreements, they obviously don't have a legal opportunity to modify that in a unilateral way.

From time to time, a customer will come to us and say, my needs have changed -- usually it is because their volumes have grown substantially. And, as we've talked about in the past, in those scenarios, they might say, I'd like to modify my contract. Usually at that point, they extend and add additional time to the contract, and we will oftentimes then give them a lower rate for the much higher volume. As we've talked about in the past, traditionally when that occurs, it's a net significant positive to Responsys, because we lock in longer-term customer relationship, and the revenue is usually substantially higher.

As you heard Chris mention in his comments, we have had some situations over the last few quarters where we've seen customers come back and say, I get it. We want to have a longer-term agreement -- and, we want to have a long-term agreement, and I get that I'm getting a great value from Responsys, but I feel that the price differential is bigger than I'm comfortable with. In some of those situations, that leads to either a much smaller revenue growth, or in some much more isolated cases, where the actual total revenue might not go up or even slightly down, even though they're adding multiple years onto the contract.

Okay. Then, looking at the international business, excluding US, where do you see the biggest opportunity the rest of this year and next year?

We continue to see the strength areas that we've had, in thinking about the UK and thinking about Australia as being areas where we'll probably do the most business internationally, and in terms of the exciting growth areas, we've been quite pleased with the Scandinavia progress we've had. And, we're moving to broaden from a Denmark focus to a broader Scandinavian focus, and we feel good about that. I'd also say in Japan, I mentioned one of the additional exciting wins this quarter, and we see a lot of momentum and opportunity. We'll be investing in those areas aggressively to go after that increased opportunity.

Okay. And last one for me, on the new business sign in the quarter, can you give us some idea what the split is between enterprise and general business on that?

Yes. In terms of number of customers?

Or, I guess dollar value, because I would expect you to sign more general business customers since they're not as large. Is that true?

Yes, that is true. From a standpoint -- to give you a feel, think about the fact that we're starting to approach a similar number of customers from general business versus enterprise, and we don't break out the numbers there, but put in that kind of construct with the good success we're having there. From a revenue standpoint, we don't -- or booking standpoint, we don't really break that out at this point. But, your assumption is absolutely right. If you think about the average deal size being two times larger on an enterprise deal than you would see on a GB deal, then that can give you a good feeling for that. We're quite pleased with the success in our general business selling effort, and we will be aggressively expanding that as part of our overall expansion in sales and marketing.

Great. Thanks a lot, guys.

Brendan Barnicle, Pacific Crest Securities.

With the move to longer-term deals, in terms of the pricing, any metrics you can give us around this heightened visibility that you have now into the revenue and into your outlook going forward?

Yes. This is Dan, first commenting, and Chris may add on to that.

We're not breaking out an exact number. Although, one of the things that we're going to be talking about going into 2013 is what's the right way to be able to express that opportunity and how that's scaling over time? I think the way I would look at it is, we feel very good about each tradeoff with a customer that says -- I want to have a two-year or a three-year extension with Responsys, even if the short-term impact is slightly lower revenue. So, that's how we're looking at that strategically.

I don't know if, Chris, you have any further comment.

Yes. Obviously, the average contract terms have extended. The overall length of our contracts from averages used to be about 12 months, or 15 months, and even over that right now. New deals coming are largely multi-year deals. I don't have any more break out than that at this point for you, though.

Would you consider sharing the off-balance-sheet pieces that would becoming more substantial, looking at that as a true bookings metrics rather than a billings metric might now be helpful, where historically because you did one-year deals it wasn't all that meaningful a metric.

Yes. Brendan, that's something we're looking at as we are going into our planning for 2013. Our objective, obviously, is to give good indicators on overall strength and momentum of the business, and we'll look at what the right ones are as we go into 2013.

I think, directionally, we're looking at it the same way, Brendan.We believe -- you're right, that when it was a one-year deal as our average, it was a less-interesting number. And, as that's lengthening, it starts to become much more of a good indicator for that opportunity that's already, quote-unquote, in the bag.

Then, in turning to '13 a little bit, given the lower outlook in terms of growth, should we be assuming that margins would be flat to down next year? Where we previously on the growth and modeling an improvement, or could we still get improvement even at this growth rate?

Split those into two different areas. One is the gross margins and operating margins. I think we're seeing good traction on the subscription side in gross margins as we're growing that business. Professional services margins had a bit of a hiccup in Q3, in Q4 when we didn't see the revenue growing as quickly as we would have liked. Some very specific timing issues there that aren't really long-term trending type indicators, some short-term execution issues. So I think, on the professional services side, we'll still see expanded gross margins over time, and we don't think that will be any slower than we said before.

On the operating side, we will continue to make those investments. Remember, we already took sales and marketing up to about 25% of revenue. We think that's the base that we would have going forward. So, we certainly don't expect to reduce either the sales and marketing or engineering. Because of that, you're not going to see as much expansion as you would normally see -- would like to see in 2013. But, it doesn't change that long-term model. That is still the model that we think is appropriate for us. And, the encouraging thing is to see the expansion on the gross margin side now and we see it going forward

Chris, given the gross margin expansion, though, it's proper to assume that we should see some level of operating margin expansion next year?

At this stage -- we, obviously, haven't gone through our full 2013 planning. When you look at, for example, if we put a new data center in next year, that may have bit of a higher investment than you would normally see. So, we are still looking at that; and at this stage, I'm not looking at much margin expansion next year. I really think it is an investment year. We need to look at the impact these competitive pricing situations have. We think we have very good visibility on that. But I, at this point, don't see much margin expansion in 2013. But that path, certainly, is there beyond that.

Great. Thanks, guys

Carter Malloy, Stephens.

On the theme of the 2013 outlook, and given what you said about margins, where is the confidence in the reaccelerated growth come from? Is that just the traction in the pipeline you're seeing today? Or, the incremental investments you're making in sales and marketing? Help us understand a little more around that?

Yes, absolutely.

The core of it is we're very happy with the new business momentum that we're having, and we're seeing the net adds coming in quite strong. We believe we are going to be continue to be adding customers at a significant rate. And, the way we look at it, Carter, there's a phenomenon of we have to work through this one-time adjustment from the revenue from the base, and there's no real change to the other growth that's being driven by the net new business. So, once that's worked through mid next year, the acceleration will come right back because it's the same momentum that we have.

To Chris' earlier point to the last question from Brendan, is that's why we want to maintain the aggressive spending on both, sales and marketing and technology, to make sure we continue to differentiate and continue to drive a higher growth rate.

In terms of that one-time blip you're referring to, and specifically around pricing, are there more renewals coming, or even potentially larger renewals over the next few quarters that we should we be worried about or -- aside from this quarter, how should we think about pricing and rationality, or lack there of in the market, going forward?

If you look at the install base of customers, there's no one particularly large customer that we think would be anything unusual. I think it's pretty much -- very much what we've seen. If you look at the number of contracts -- we really started seeing this in Q2, so Q2, Q3 renewals have already factored in this pricing change. And, typically we're about 15-month contracts, so we've seen probably (inaudible) of that coming through already. The impact is bigger in Q4 because of the overage scenario, so I think we've swallowed a significant piece of that nut. So, you'll see the growth impact on Q4. 2013, previously we had said the growth rate in the second half 2012 would be in the low-20s, so that going forward to 2013, with the pricing adjustments now, we're saying it's going to be in the high teens, and that's the extent of the adjustment we see coming through. So, we've gone through a significant chunk of it, and I think we've got fairly good visibility on the rest.

In terms of the number of customers that you've resigned or worked through, you're saying you've already seen a large part of the majority this year already -- first, is that a correct assumption on my part? And then, again, why do those customers not come back and try again, at least, going forward?

So, it's not a majority. We've seen a large part of it come through.

Okay.

Let me hand off to Dan on the pricing.

I think there's a phenomenon where we've always seen that we do a lot more work with our customers, which drives significantly more volume on our platform. And, as they move to the higher tiers, we've always seen some price drop, and that's been a phenomenon for the last seven, eight years in our business, in our industry, and for Responsys. The change we're describing right now is it was more of a pent-up demand around some customers that were very excited about the value they were getting and the ROI they were getting from Responsys and hadn't realized that, that price differential became much larger than the typical 20%, 30% that people were quite comfortable paying. So, we feel that adjustment is halfway worked through, approximately, to Chris' point, or 40% worked through. And, we see the rest of that working through the first part of 2013.

In terms of going forward, we expect our customers will continue to come back, increase their volumes with us, and then have much smaller price reductions as been the norm over the last several years. That's our view going forward.

Okay. Thank you very much.

Michael Nemeroff, Credit Suisse.

This is Kyle Chen in for Michael Nemeroff.

I was wondering if you can comment a little bit about the competitive landscape -- recently one of your customers made some acquisitions in the web-analytics and marketing-automation space. Just wondering what you're seeing from a competitive perspective, and whether you feel like these applications would be necessary for you to remain competitive in the space? Thanks.

Sure. So, if you're referring to ExactTarget, I assume, in terms of those acquisitions. Pardot -- start with the B-to-B space, so that's a space we have spent a lot of time looking at. And as you know, a small percentage of our customers are in the business-to-business space, but we're very focused on the B-to-C space. We have looked at a lot of companies in that space. We actually got to know Pardot several years ago quite well, and actually considered at one point, would that be an area we wanted to move into. We made the choice we are going to be a B-to-C-centric company. Much of the functionality that the B-to-B providers have, we think we can deliver for our customers, and do for our B-to-B customers through our Interact program capability. So, we made the decision that we don't think that's an important differential piece. Our assumption is it was more their decision to move into a different market and looking for additional areas, as opposed to that functionality would play against our core customers.

On the web-analytic space, we made the decision to have a partner strategy there. There's a strong set of partners there, Omniture, Coremetrics, Webtrends, Google, that we integrate very seamlessly with for our customers, and that's an important part of our broader ecosystem. So, rather than competing with them and entering into that space to go against them, we're choosing to say -- we think they're expert at that, and our customers do very well by us integrating with those leading players.

Okay, thank you.

Laura Leaderman, William Blair.

Sorry to ask a question that's already been asked, but I had multiple calls going on, so jumping back and forth. Can you talk a little bit about what you think the long-term growth rate is in email marketing, taking into account pressures in pricing? And, is that different than what you had thought before? And, I realize you're not giving guidance for the next three years, but just high-level view of the market and what growth rates you think are achievable long term and why?

Yes, absolutely. At the core, if you look at the traditional email marketing business nature of your question, Laura, we've been consistent in saying that's a low-teens growth rate for the last two years and for the coming years as well. And, we believe that we are a very, still small market share of that. If you look at the $3 billion-ish global market that we think we're competing in the email only component, we still see ourself as a 5%-ish market-share company. So, we think there's an opportunity for us to grow much faster because we have the leading solution, both our opinion as well as folks like Forrester and the analysts, in the marketplace and that will allow us to continue to take share over time.

When we get the part that we're most excited about, it's really realizing the vision we have talked about, about a true cross-channel platform. And as I mentioned earlier, where we have been very successful on the other channels is we figured out a way to create this orchestration capability that we think is exactly what the market wants, both the important where the market is moving to in the future and where the leading marketers are today, is to be able to do that orchestration across channel. Where we haven't been as successful, and what we need to do in order to achieve a much higher growth rate than just the core email growth rate and our stealing share in that market, is we need to really turn to those significant volume plays, so in the mobile and Display and social, where we're actually driving a significant portion of our revenue. So, that's how we think about the overall opportunity.

Another question for me, if you look at your suite -- and you and I have talked about this at [shop.org] -- it looks like suites are getting broader. You see with ExactTarget making acquisitions so that they can compete with Prodot, and lead nurturing, and that sort of thing, so what's your thought on having to be a broader marketing suite than just social and mobile? Once again, I apologize if somebody else asked this question.

No, not at all. I think it's a great question.

We think that we do need to constantly drive the innovation to provide more functionality. First, we are focused on the mobile and Display channels, as the areas we think we are going to have the biggest impact in the near term. From a standpoint of, are there additional channels or additional capabilities beyond email, mobile, social, and the web, I think the answer is yes. But, we feel like we really haven't come close to tapping the potential of those segments. So, I don't think you'll see us, from an innovation standpoint, moving dramatically into different areas until we feel like we're really doing a great job on those areas of focus. So, that's how we're looking at the opportunity, right now.

Okay. Thank you so much.

(Operator Instructions)

I'm showing no additional audio questions at this time. I'll turn the conference back over to you

Thank you all very much for joining. We will talk to you next quarter when we report our fourth quarter. Thanks much, have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.