Pegasystems Inc (PEGA) 2005 Q1 法說會逐字稿

Good morning, my name is Bonnie and I will be your conference facilitator.

At this time, I would like to welcome everyone to the Pegasystems first quarter results conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer period. [OPERATOR INSTRUCTIONS].

Thank you, Miss Lewis, you may begin your conference.

Thank you.

Before we begin I would like to read our Safe Harbor statement.

Certain statements contained in this conference call may be considered forward-looking as defined in the Private Securities Litigation Reform Act of 1995.

These statements involve various risks and uncertainties that could cause the Company's actual results to differ from those expressed in such forward-looking statements.

These risks and uncertainties include the impact of the volatility of our quarterly operating results, difficulty in predicting the completion of product implementations and consequently the timing of our license revenue recognition, the timing of term software license renewals, customer acceptance as PegaRULES Process Commander Technology, our ability to develop new products and evolve existing products, interest rate market trends, the impact on our business of the ongoing consolidation in the financial services and healthcare markets, our ability to attract and retain key employees, reliance on certain key third-party relationships, management of the Company's growth, and other risks and uncertainties.

Further information regarding these and other factors which could cause the Company's actual results to differ materially from any forward-looking statements contained in this conference call are contained in the Company's most recent filings with the SEC.

Investors are cautioned not to play undue reliance on such forward-looking statements and there are no assurances that the matters contained in these statements will be achieved.

The forward-looking statements we make on today's call are based on our beliefs and expectations as of today, April 29, 2005, only.

We do not undertake any obligation to revise or update publicly any forward-looking statements expressed in today's conference call.

With us today we have Alan Trefler, Chairman and CEO, and Chris Sullivan, Chief Financial Officer.

Alan, would you like to begin?

Thank you, Beth.

Let me talk a little bit about a couple of things, the BPM market as a whole, Pega's strategy and the progress we're making, and how we're trying to make it all come together.

In terms of the BPM market a lot of attention is being paid in the business community to making things work better.

There is an increasing level of interest in Business Process Management and how smart automation can fill an execution gap that exists when management objectives outpace the ability of operations and systems to keep up.

Our technology, which let's organizations build for change, let's organizations act more quickly to achieve their objectives and let's them be far more responsive.

There's a better understanding out there that the rules are central to doing this, that the rules need to be part of the processes.

And as we have had presentations at the Chicago BPM Institute Conference, many of the panels talked about how systems need rules and need to unify business process with business policies.

Recently when I presented it to the Butler Conference in London, there was a tremendous amount of interest in the same thing.

So even though the market I think is evolving and analysts are approaching from different angles, we continue to be very, very comfortable that we've positioned our Company, our vision, and our technology in the right place.

And that we're going to increasingly see mentions of how Business Process Management and Business Rules need to be intricately linked, something that plays to our unique strengths.

So, for us, this means that Pega's strategy to be the BPM leader is on target and we're going to do it by spending the right money on the right things, doing what we said we were going to do.

We're going to put a full bat on BPM powered by RULES in the way that we market, in the way that we sell, and the way that we develop, and in supporting our customers.

Tactically, what this has been meaning, particularly since the beginning of the year, is I think a much-more disciplined approach to targeting accounts.

Really more aggressively addressing areas in which we have been challenged and where we think we need to fill in some of the gaps.

For example, making it so that our customer and user-oriented technology can be far more developer-friendly by; for example, joining the Eclipse Foundation and doing other types of things to really make it so we can remedy any objections that are out there.

And being extremely focussed on doing the things that we think will make the market appreciate us and our customers more successful.

So that means we are continuing our R&D investment and we will continue more significantly to invest in marketing and sales.

We have -- I've undertaken a real step-up here, we're presenting at more conferences.

BPM-focused conferences along with selective financial insurance and health care conferences to highlight what we can do and what we have done in those very important businesses and industries.

And we're continuing to double down on our work with IBM.

We presented it at the IBM Financial Forum in Monaco and we'll be sharing a booth with IBM at an upcoming insurance conference.

So you're going to see us in the market at BPM conferences throughout the year.

On the sales front, we're putting a lot of attention and I am using this as, frankly, a major place where my energy is being put.

We're trying to bring real clarity to how we go to market, trying to bring discipline and equality, and really I think some additional incite to the way we categorize opportunities and the way we pursue them.

We're doing I think an excellent job at teamwork getting the cross-functional units to really galvanize around being a sales-oriented company.

And on the sales front, we're committed to hiring and training a best-in-class sales force.

And are in the process of launching a very important series of training initiatives to make sure that the entire sales force is going to get up to a level of expertise about how our technology can bring tangible value to customers.

So between the training, the support, some of the tools that we're building I think we're filling a lot of the gaps that we need to fill to be able to make this organization a very, very effective, aggressive, and assertive sales machine.

So pleased at the work, though it's still early and still very much in progress.

We're also ramping up the way we deal with customers.

For example, in terms of external training, this quarter we delivered training for our customers and partners far in excess of anything we have done before.

In the first quarter of 2005, we trained approximately 80% more people than the same quarter last year. 365 folks went through our formal instruction.

In addition, in terms of customers, more customers and prospects were trained in March 2005 quarter than any prior quarter.

So it's really quite positive to me to see that we are working to get our message out at a marketing level, at a sales level, and at a training and usage level here.

Also, on our last call, I explained that the Company's commitment to lighter component frameworks is going to be I think a tool to leverage what we do best.

Rules-driven integration, rules-driven process flows, rules-driven components that deliver useful business value in as short as 60 to 90 days, and allow us to leverage the considerable intellectual property we have in the industries in which we're expert.

We have been making a lot of progress at this, and I'm extremely pleased, both at the frameworks that we've been able to bring to the market so far, and the types of things you will see us putting out in the next three to six months.

This is going to give us an increased ability to resonate with customers, prospects, and partners.

You are also going to be seeing very shortly a new release of our core products, something we we're going to call the "smart builder lease" which has extensive facilities, things such as the integration with Adobe PDFs at a very fundamental level.

And also things for developers, they're trying to be more developer-friendly like built-in diagnostics and guardrails to be able to make technologists use and like our product.

It's I think a good way for us to leverage the 20 years of experience working with the most demanding customers, the Fortune 500 customers, the Aetnas, and JPMorgan Chases, and Visas to be able to go and now broaden our footprint by being able to move into areas and industries while leveraging our past.

So, what have we been up to and how are we doing about some of the signposts?

Well, the ultimate signpost is going to be when we can show a really consistent improvement in the way that we book business.

But in terms of how we're doing now, I'm really pleased that in this quarter, we have shown that we've been able to break in to some important new markets and new areas.

I think really showing the power of rules-driven business and rules-driven Business Process Management.

We did some exciting business with three companies I'm going to talk about.

One of them was a company we never would have had entry into in the past, it's a company called VetCentric, which is a provider of veterinarian pharmaceuticals.

And it's actually really quite an interesting Business Process Management coupled with rules-market which has actually given us some real insight into what we might do in the pharma market in general.

In terms of the telecommunication space, we won an important opportunity with one of the world's largest provider of mobile communications.

They bought our system to consolidate internal operations involving [Dysport] systems, that they've gotten through many acquisitions.

And then the third one is in the government sector.

We're part of a federal government contractor's delivery to the Medicare and Medicaid administration.

A central part of supporting the drug Medicare Modernization Act.

And this is a perfect example where stringent rules and process capabilities were a perfect match for our technology.

And it's given us much greater insight to some of what we can do in the large government agencies, which is one of the other areas we're going to be moving into on the back of our newest technology and our vision.

So, we're excited about the developments in the BPM market.

We're focussed on growing Pegasystems and leveraging our technical capabilities and successes.

And I will tell you that the Company, since the beginning of the year, we're making significant changes.

But there is a lot of energy and a lot of excitement about what we're doing, and the types of things we're going to be able to accomplish.

So with that, Chris, let me turn it over to you.

Thank you, Alan.

Total revenue in the first quarter was $24.2 million, down 2% compared to the first quarter of a year ago.

License revenue increased 13%, while services revenue decreased 12 -- excuse me, 11%.

Services revenue is comprised of consulting services which declined 25% from the first quarter of '04 and maintenance services revenue which, grew 38% over the first quarter of the prior year.

License revenue was $10.9 million, compared to 9.7 million for the first quarter of last year.

This $1.2 million increase in license revenue includes a $3.5 million increase in term license renewals and expansions.

As a reminder, term license renewals scheduled for 2005 are modestly higher than actual renewals in 2004.

The increase in term license revenue is partially offset by a $2.3 million decrease in perpetual and subscription license revenue.

It should be noted that the majority of our new customer license sales are sold as perpetual licenses rather than as term licenses.

Services revenue was $13.3 million, compared to $15 million for the first quarter of '04.

This $15.7 million decrease in services revenue includes a $3 million or 25% decrease in consulting services associated with new license implementations, partially offset by a $1.3 million or 38% increase in maintenance services due to a larger installed base of software, and improved pricing for maintenance support.

It's important to note that consulting services revenue in the first quarter of last year benefited significantly from the margin associated with two unusually-large fixed-price contracts, which were completed in the first quarter.

During the first quarter, we refined our estimates of allowance for credit members, resulting in an increased in revenue of approximately $300,000.

In the first quarter, new customers accounted for $2.7 million or 11% of our total revenue.

New license signings in the first quarter decreased sharply from the strong license signings recorded in the fourth quarter of 2004.

As noted on our 10-Q filing, we will need to significantly increase our new license signings during the second and third quarters of 2005 to achieve our projected 2005 financial results.

Our average deal size over the past eight quarters has ranged from 0.5 million to $1.7 million of license revenue.

The small number of license deals each quarter can cause fluctuations in the average deal value in a quarter.

Our average deal size for the first quarter of 2005 was just over $1 million of license revenue.

In general, we have found that the average deal size for our PRPC product is lower than that of our vertical applications.

However, it should be noted that we see a greater tendency for follow-on sales with PRPC customers.

International revenues have historically been in the range of 15 to 25% of total revenue.

In the first quarter of 2005, international revenue represented 28% of total revenue.

This reflects new PegaRULES and Process Commander sales in Europe and an Australian bank that renewed its license with us.

Our international revenue may fluctuate in the future because such revenues is generally dependent upon a small number of license transactions during any given period.

Our recent SEC filings include more information on the composition of revenues.

For the first quarter of 2005, gross profit increased to 16.6 million from -- sorry, decreased from -- to 16.6 million from 17.9 million in the first quarter of 2004.

The decrease was due to a lower professional services gross margin, partially offset by increased license gross margins.

Service gross margin was 5.8 million or 43% in the first quarter of 2005, compared to 8.3 million or 56% in the first quarter of 2004.

As noted earlier, the 2.5 million decrease in service gross margin reflects the fact that the first quarter of 2004 benefited from recognition of margin on two large services engagements.

In addition, cost-of-services was higher in the first quarter of 2005 than in the same quarter last year.

R&D spending was down $0.5 million versus the first quarter of 2004.

R&D spending as a percent of revenue increased to 21% in the first quarter of 2005 versus -- sorry, decreased to 21% in the first quarter of 2005 versus 22% in the first quarter of '04.

The decrease in R&D spending is primarily due to reduced spending on outsourced R&D contractors.

We expect to completively invest in R&D though our spending levels will occasionally increase or decrease depending upon new product development schedules.

Selling and marketing expenses as a percent of revenue increased to 30% -- 37% in the first quarter of 2005 versus 32% in the first quarter of 2004.

The $1.1 million increase in spending is primarily due to marketing related severance costs, increased sales commissions, and increased marketing programs associated with our shift and strategic focus on Business Process Management.

G&A expenses were up 0.4 million versus the first quarter of 2004 primarily due to $300,000 of severance compensation associated with the departure of our former President and Chief Operating Officer, as well as increased spending on audit and compliance activities associated with the requirements of the Sarbanes-Oxley Act of 2002 and related regulations.

G&A expenses as a percentage of revenue was 14% of revenue for the first quarter of 2005, versus 12% in the first quarter of 2004.

Profit before tax was $200,000 -- or roughly $200,000 in the first quarter of 2005.

A $2.5 million decrease from the first quarter of 2004.

This decrease was driven by a $2.5 million decrease in service gross profit, a $1.1 million increase in selling and marketing expenses, and a $0.4 million increase in G&A expenses, partially offset by a $1.2 million improvement and license gross profit, and $0.5 million decrease in research and development expenses.

Accounts receivable days billed outstanding as of March 31, 2005, was 60 days.

This is up from December 31, 2004 due to some outstanding amounts owed for annual license and maintenance billings.

A significant portion of the outstanding annual billings have been collected since the end of the first quarter.

Deferred revenue at March 31, 2005 primarily entered under maintenance fees and the billed fees from arrangements so which acceptance of the software licenses or service milestones had not occurred, increased to $15.9 million from 9.1 million as of December 31, 2004.

The increase is due in large part to the advance payment of annual maintenance fees.

We generated $12 million in positive cash flow from operations during the first quarter of 2005 and ended the quarter with $107.4 million in cash and marketable securities, as well as 64.6 million in combined short- and long-term license installment receivables.

As a reminder, these receivables are related to unbilled term licenses and are indicative of future payments.

We are reiterating our earlier revenue and earnings guidance for the full year 2005.

We anticipate full-year revenue between 97 and $105 million with revenue and earnings weighted to the latter part of 2005.

We expect license revenue growth to be driven primarily through the sale of perpetual licenses.

Any license revenue growth from term license renewals is likely to be modest for the full year.

We are committed to be coming the leader in BPM software and are, therefore, planning to invest more heavily in sales and marketing in 2005 than we did in 2004.

We believe this investment will better position Pegasystems to achieve accelerated growth in future years.

But we also anticipate it will result in lower profit before tax in 2005 compared to 2004.

We expect earnings per diluted share to be between $0.05 and $0.15.

Cash flow from operations is expected to be in the range of 12 to $20 million, depending primarily on the revenue achieved.

That concludes our financial summary.

And Operator we'll open the call to questions.

Bonnie, we're ready for questions now.

Thank you. (OPERATOR INSTRUCTIONS).

Your first question comes from Joseph Halpern of Halpern Research.

Hi, guys.

I just wanted to get an idea of -- it seems like you're still in the same area where it's, the contracts are a little tough coming.

Maybe give an idea of what you're seeing for the next couple of quarters in terms of who you're talking to?

And also whether this partnership program you have can ever possibly generate -- I know you've been training some people for quite a while now.

Will this ever generate contracts, revenues, et cetera, especially the IBM partnership you have?

Well, a couple of things.

In terms of who we're selling to, first.

I think the profile of who we're selling to, which tend to be large companies that have the issues and complications around what we call the "execution gap."

That, I think is unchanged.

What is, I think, good and positive is we are now able and have demonstrated we're able to sell beyond our traditional verticals and have successes there.

So, that's -- I think really broadens our ability to capture what I believe is going to eventually be an extremely large BPM and RULES market here in the world's largest companies.

I think in terms of where we're selling in those organizations, we're making some changes about how we're going after them.

And I think we're already beginning to see some better results in terms of being able to get to the business owners, get better to [audio difficulty] -- put a better point on the sphere that we used to try to penetrate new accounts or radiate existing ones.

But that's a process where we believe we needed to make some pretty significant changes as I took the helm at the beginning of the year and that's still very much in progress.

In terms of the partnerships, we did a real, I think, deep evaluation of where we were and how we were going to actually get some results from them.

And I'm actually pleased to say that even in this quarter, we've started to see some real improvement, up partially because I think we're being more assertive about how we go after those partners.

We did some management changes in terms of the leadership of that group in that area -- and I actually like what I'm seeing right now.

And things like the government contractor, the partner that actually brought us into Medicare and Medicaid is just a wonderful example of how partners can, in fact, make us successful.

IBM, which you asked about specifically is one of those ones where we've invested a tremendous amount.

And I'd actually say that in the last couple of months we're really seeing much, much more energy.

I think partially because we're doing things a little bit differently and also partially because it takes awhile for these partnerships to develop some traction.

We know that IBM has been willing to, both introduce us and speak up on our behalf at a number of customers more recently.

And we've got a superb integration with the IBM technical staff, which they're actually now beginning to educate their teams about, and that I think really shows how we can actually have a future with them.

So we've decided to double down on that relationship.

Though I'll confess to you I think we had hoped that we would see a little more sooner.

We do continue to believe it makes a tremendous amount of sense.

We're also having a number of organizations sponsor a user group meeting that we're having in London in June.

And so some of them are willing to step-up and actually contribute to this sort of thing and IBM is a very key sponsor of that.

So we're excited and looking forward to that.

Thank you.

Your next question comes from Richard Davis of Needham & Co.

Hi, thanks very much.

It's actually Jon Maietta for Richard.

Alan, in your prepared remarks you had mentioned changing the way you categorize sales opportunities.

I was just wondering if you could add a little granularity to that.

Yes, I think -- we took a look at what we were actually doing and we really stepped back and did a very, very detailed, sort of, scrub of the approach.

I think we determined that we really were missing some steps in the target account process, and that those steps were, had a lot to do with how an organization does push-selling.

We think that BPM is going to be an exciting market and will be eventually be a pull-market where you can respond to leads and you can really be in a situation where some of the [prosetlyzing] doesn't have to happen.

But frankly, where we are today and the customers that we're dealing with, we need to make sure we go out there and work with them and explain to them how BPM can help them solve problems they know they have, but may not realize that BPM and RULES are the way to solve them.

And frankly, the sales process that we had up until earlier this month, just didn't have places in it to actually go out and proactively correct the right vision, get the right sponsor, get the right hunting license, and then really effectively, I think, go through an [IG] generation step.

The steps just weren't in the way we managed the business.

So we've rolled this out.

It requires some important and new tools to give the sales force some new training.

And I'm actually really quite excited.

It's a pretty big change for a lot of the folks.

But we've got a lot of really talented people and most of them seem to be picking it up really well.

Okay.

Thanks very much.

Your next question comes from Jeff Home of Porter.

Hello.

I have a multipart question, so I appreciate your patience.

Chris, I was wondering if you could just help us out in trying to tie the income statement together with the balance sheet.

On the term license it seems like you had 5.7 million in term sales in the quarter; is that correct?

Yes, the Q does a breakdown of the term versus the perpetual license number.

I will just confirm that number in a second.

And your question is what --?

I'm trying to reconcile that with the 11 million off -- it seems like 11 million came out off the balance sheet in terms of term decreases --?

Yes.

-- in short-term and long-term?

Right.

There is a -- the relationship of the balance sheet there is that we do a significant amount of billings each year and many of them are front-end loaded in terms of the annual versus quarterly or monthly billings.

And so you will typically see in the beginning of the year a larger drop than you will see in other quarters for that perpetual -- for the combined short- and long-term license of the value and installed receivables.

So what you will see is that that -- the billings are done at the beginning of the year for many of those, including subscriptions which aren't necessarily revenue in the quarter.

So is it correct to think about it in that -- you send those bills, but you also sell -- you also sell new term?

Right, the revenue events, remember, are typically only associated in our existing term license customers.

The revenue events will occur around the renewal period.

The revenue does not necessarily correlate to the timing of the billings because those are -- that's more representative of the cash flow.

So, the billings for renewals, for instance, we had in this quarter, renewals including but one large one in an excess of $3 million, that would be associated with a renewal event in the quarter and the revenue taking on a net present value for that event.

Okay.

And so how much of the 5.2 million of perpetual was PRPC?

Interestingly enough PRPC for the most part is of the renewals and terms.

It's more difficult than you would think.

There are -- many of the renewals are on pre-existing platforms.

But many of those pre-existing platforms have imported to our PRPC technology or have PRPC technology sold along with the renewal license.

So it's harder to say exactly.

Virtually all of our perpetual license revenue is PRPC-related and much of our renewal revenue, particularly extensions and add-on components are PRPC-related.

So some PRPC can wind-up in the term?

Yes.

If they renewed on a PRPC platform?

Yes, particularly if they add on or extend technology, which has underlying PRPC technology, which happens not infrequently.

But just to be clear, almost all of the technology that is actively sell -- being actively sold and deployed by our customers these days, it's overwhelming PRPC or PRPC-based technology at this point.

Okay, so but most of -- most of the perpetual was PRPC?

Yes.

Okay and final question, were any shares repurchased in the quarter?

Yes, in the quarter we purchased about 163,000 shares.

You should be aware that in the first quarter, we did not have the 10b-5 plan active, that was, we did an 8-K indicating we have have a 10b-5-1 plan allowing us to sell outside of the closed window -- I mean to purchase outside of the closed window.

That will not be effective until June 15th.

So all of the acquisitions in the first quarter while the window was open -- about $1 million essentially we acquired in the first quarter.

Okay, and so you, after that plan becomes effective, you would anticipate entering the market.

Yes.

We will in all likelihood be in the market when the window's open and then the plan allows us, as of June 15th, to remain in the market when the window is closed.

Okay.

And just to confirm, the Annual Meeting is June 2nd.

Yes.

Okay.

Thank you.

(OPERATOR INSTRUCTIONS).

Your next question comes from Kelly Pan of Pantheon Capital.

Yes.

I'm sorry, I didn't hear the breakdown between perpetual and term this quarter.

In the first quarter it was $10.9 million of license revenue and it's broken down as $5.2 million as perpetual license and subscription, and 5.7, which was the term license and extensions.

Thank you.

And that's in the Q, as well, if you want to -- which we filed late after the press release last night.

Your next question comes from John Para of Mac Capital.

Hi.

Good morning.

Chris, this may be for you.

Just a question on the new license.

You mentioned it was 2.6 or 2.7 for this quarter.

Yes.

What was it last year?

For the first quarter of last year -- I'm not sure if I have the exact number.

We had a larger number last year in the first quarter.

New customer license revenue was about 2.7, about the same, and then there was new -- additional new customer services license around $7 million.

Okay.

And a question on in affirming your guidance for this year, what do you see -- you mentioned that you need to see a big pick up in the new licenses in order to achieve your guidance.

What are you seeing to give you confidence to actually affirm your guidance at this point?

We do a pretty in-depth analysis.

As a reminder, we had a fairly strong Q4, in fact, one of our strongest.

And we had hoped to sustain that momentum and as we said, it fluctuates quarter-to-quarter and then unfortunately in the first quarter it was down and, quite frankly, less than we had hoped for.

So what we would like to see, obviously, is to return to the levels or close to the levels we saw in the fourth quarter.

That would be very helpful but even some things less than that but stronger than Q1 would be helpful.

What we look at is we have actually a number of deals in the pipeline that are at different stages and we look at all of those deals that are potential deals in the quarter.

We don't use, sort of large number macroanalysis.

We look at the deals in their likelihood of closing.

So in the list of opportunities we have between now and, particularly, the third quarter, there is some bookings you can close in the fourth quarter that will convert to revenue, but you have to presume that that is a lower percentage.

So we look at the second- and third-quarter opportunities and we believe we have the opportunities out there to support the current guidance and we'll continue to monitor that and update as we see changes.

But that's what we do.

We look at it on a deal-by-deal basis.

Okay.

And then just to finish up.

Last year after Q1, you affirmed the guidance as well, and I think it was 105 plus or minus 10%.

You ended up at the low-end of the range.

What happened last year to kind of -- you were in the range, of course, but what pushed it to the low-end of the range?

I think we executed poorly.

I think we did not pick the right targets and follow through on the way that we could.

And I don't think we had really stepped back and understood that we were in a push-market instead of a pull-market.

That coupled with the strategy change about really putting our weight of our marketing and our selling effort around the BPM message where, I think last year, we were pretty -- just kind of muddled in how we came to market.

I think there were a lot of things that were not I think at their core representative of a company that shouldn't have difficulty executing.

But I think in terms of how we came to market gave us the opportunity to not take control of certain deals and to not drive certain things across the goal line.

You're seeing us put energy in different places.

You're seeing us place some different bets.

And the management team here believes at this point that we'll deliver.

But it's a tough [indiscernible] business out there.

I don't want anyone to believe that there is not a lot of work that we need to do to make this happen.

Do you think the market is in terms of demand from customers and customers is better at this point compared to last year year-over-year or worse?

I actually think that for BPM and RULES, it's better.

There's a greater awareness for BPM and RULES that, boy, for me to transform my Legacy environment, I'm not going to be able to rip them all out and replace them with something.

I need to find some way to be able to do things in a more [entrative] way then in a way that really caters more to the business user.

I'm seeing -- the sign I like the most is that people are understanding that the business user is going to be central to the way that businesses take control of their need to change.

So, that is, from my perspective, a very, very positive sign.

Having said that in terms of where and how we're selling, the transition is significant.

We're making changes and making progress.

But at this point, you know, we are still investing in advance of all the results I would like to see, and that's something that has never made me feel happy.

Okay.

All right.

Thanks very much.

Your next question comes from Hal Berry of Graham Partners.

Thanks for the call.

It looks like you had two customers at 18 and 10% of revenue for the quarter.

Just curious were those customers on sort of the lighter-weight PRPC platform or was that more Heritage Custom Maps from the Legacy business?

I think in terms of those two customers, one of them is a mix of both the Heritage and also the purchases of some new.

And the other was all the new stuff.

So, I think that they represent, frankly, the right sort of trend as we think about our business.

Okay.

On the share buyback, was all of the stock purchased before the 8-K that you put out on March the 14th?

I would have to say the majority, because our window closed right around that time, I think the 15th and 16th.

But, yes, the majority for sure was bought before that.

Okay, and nothing done in January or February, then?

The window is closed until we release.

Our window generally opens 48 hours after we do our release, and I think we did our release around February 28th.

Okay.

So it's a very narrow window in the first quarter.

Okay.

Thanks a lot.

Okay.

At this time, there are no further questions.

Are there any closing remarks?

Yes, thank you to everybody's listening.

I would also like to thank our Finance Department once again who have done I think a marvelous job of getting through the 404 certifications.

And actually as I think about the things that go right about this Company, I'm really, really pleased about the team's ability to have this be a company that I think can really be relied on in that regard.

I know a lot of our competitors and a lot of other organizations, frankly, have struggled with things that this team has pulled off.

And I would like to congratulate them.

And I know the investors are pleased to see that as well.

We're holding our user group conference for our international community in London on June 9.

And anybody on the call, please let us know if you would like to attend.

We're going to have both European and also some folks from America coming over and we're going to have some interesting customers talk about the work that they're doing with Pegasystems.

I would like to thank everybody for their interest and their attention.

And we're all working extremely hard here and I am really pleased that though the challenges are significant, we really have a lot of energy, a lot of enthusiasm, and I think we're making the right progress.

So with that, thank you very much.

This concludes today's conference call.

You may now disconnect.