Pegasystems Inc (PEGA) 2015 Q1 法說會逐字稿

Greetings, ladies and gentlemen and welcome to the Pegasystems' First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Rafe Brown. Thank you sir. You may begin.

Thank you and hello everyone. Before we begin, I'd like to share our Safe Harbor statement. Certain statements contained in this presentation, including but not limited to, statements related to future earnings, bookings, revenue and mix of license revenue, may be construed as forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The words expects, anticipates, intends, plans, believes, could, estimates, may, targets, strategies, intends to, projects, forecasts and guidance, and other similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Because such statements deal with future events, they are subject to various risks and uncertainties. Actual results for fiscal year 2015 and beyond could differ materially from the Company's current expectations.

Factors that could cause the Company's results to differ materially from these expressed and forward-looking statements are contained in the Company's press release announcing its Q1 2015 earnings, and in the Company's filings with the Securities and Exchange Commission, including its quarterly report on Form 10-Q for the year ended December 31, 2015, its annual report on Form 10-K for the year ended December 31, 2014, and other recent filings with the SEC. Although subsequent events may cause the Company's views to change, the Company undertakes no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise, since these statements may no longer be accurate or timely.

And with that, I'll turn the call over to Alan Trefler, Founder and CEO of Pegasystems.

Thank you Rafe. We kicked off 2015 with a very strong Q1 and we're very excited about the year. As we've talked about in the past, first quarters have often required us to consume backlog to achieve our license goals. This quarter sales performance yielded both strong license revenue and increased backlog. Our strategic applications are being well received by an increasing set of clients and our unified platform once again lauded this quarter by leading industry analysts, continues as a powerful competitive differentiator. We're being successful addressing the most daunting challenges enterprises face today, to become more customer centric and to become digital.

Our history in the market gives us the perspective to see the change is a constant and likewise, both our customers and us are continually being driven to change, to evolve, to meet the needs of our respective clients. As we've discussed in the past few quarters, we've embarked on an ambitious effort to bring our solutions to a broader market and we're in the process of raising our name brand recognition with new audiences, instituting more repeatable and scalable sales models, packaging our capabilities as easier to deploy applications and addressing the critical needs our customers have to improve their engagement with their customers. We believe this strategy of increasing our visibility and moving to a broader market will lead to improved sales repeatability and long-term growth. To make this transition, we are continuing to invest in our products, our talent, our marketing and really looking to have PEGA be a tremendous growth business and we're off to a great start in 2015.

Now, this quarter, we've made some significant progress in communicating on new positioning that are focusing on strategic applications and we are seeing enthusiasm from clients and prospects. And we're raising awareness among the broader range of clients, we believe, represent a significantly larger long-term revenue opportunity. I'd say that over the last 12 months, we've made dramatic changes to our marketing organization and our thinking about how to go to market, in that we've rolled out a number of new marketing programs throughout the quarter, starting at the very beginning of the quarter when we rolled out our brand new, completely redesigned website. We've also put in place global regeneration programs. We launched our first paid advertising campaign this first quarter. We call it Pega Can and it challenges clients to consider how to best meet the needs of the most sophisticated, complicated and rich organizations that really are our best customers. And most recently, we have an initiative with Accenture and The Economist to position PEGA as a thought leader in digital transformation.

I've spent a lot of time with existing and potential customers and they're all pretty stressed. We're living in an age of the empowered, consume and constant change. But in building businesses that are successful, our clients understand that software is central to how they run their businesses and they need new approaches to software to help master complexity, achieve scale, quickly evolve and enhance the client experience. On-message continues to resonate, because our solutions deliver compelling results and because they're built on a unique platform that brings a model-driven architecture to our clients, empowering change now and in the future.

In terms of customer successes, this quarter we added a number of important new logos, one significant business and extended relationships with many important existing customers. Good start to the year included real strength in the Americas where Bradesco Seguros, the largest insurer in Brazil shows PEGA to be the basis of an enterprise transformation and new industries for us. In the auto business, where we've continued to expand with companies like Nissan, using us to support the global dealer network; and Toyota, around quality information management. And Sprint, helping them with their challenges in marketing and retention. And return business from long-standing customers like Healthfirst, Bank of America, Anthem and Bank of Nova Scotia.

Now our European results have been slower than we'd like. We are pleased to see a number of new logos such as Virgin Media in the decisioning space, Next-Best-Action Marketing, and [WW], an important insurer in Germany choosing PEGA for its sales and onboarding capabilities that they need to support their agents with a flexible selling and onboarding solution, and return business from customers like Vodafone, ING Capital, Siemens. And I was in Europe just last week, and it has been a frustrating time in Europe, but I'll tell you, I'm seeing an increase in energy levels and an increase in interest and I think it would be fair to say it was more promising than my sentiment on previous visits.

Now Asia, where I am heading next week, was also very successful in the quarter. We had an important new business with the Australian government, it's probably in the Department of Defense. And one existing business from clients such as AIG, Mitsubishi and Siam Commercial Bank.

So, I'll say that International is going to continue to be a very important engine for growth, though I'm thrilled with the way the Americas are holding up. Around the world we saw lots of great go-lives, which are very important to us as a company. Many of these will be talked about at the upcoming PegaWORLD Conference. [Isbank], which is one of the most innovative banks I've ever seen in Turkey, is putting in place a remarkable enterprise-wide business and IT joint transformation. AffordaBlue put a quoting system in for their agent, mobile enabled to enable them to, well, basically do things whatever they need to, up and live and running in less than four months.

Roche, an event management system, helping them track payments to healthcare professionals. GE Healthcare around the complaint and customer service management solution. WellCare for appeals and grievances. And [Connad] put a CRM tracking app in that they say has raised customer satisfaction by 20 points.

So, the market is increasingly recognizing and seeking out the unique capabilities we bring to customers, a unified platform that can deliver end-to-end solutions and strong capabilities built on top of that, making it possible to go from point of contact with the customer, all the way through fulfillment and across all channels, In fact, we have the only product set to be recognized by industry analysts in five separate ranking reports issued in 2015, covering software categories, including everything from back-office platforms to customer-facing apps. Remember that this is all the single unified PEGA platform. This isn't a bunch of stuff brought from other companies that have been stitched together in a way that makes it hard to use and impossible to maintain. This is with a really well-architected, model-driven architecture that enables customers to get started fast and keep going.

For further evidence, you can check this out on our website, the pictures are beautiful. We were really recognized by Gartner as the Most Improved Leader in their Magic Quadrant for Intelligent Business Process Management suites. We're once again recognized as a leader in Forrester's Wave for CRM suites for large organizations, and our software was noted in its ability to empower organizations across marketing, sales and service to predictably engage in real-time with their customers. We are ranked as a leader in Gartner's annual MQ for CRM customer engagements, that is, which cited our predictive intelligence as a strength. And Gartner also placed PEGA as a leader in its application-focused Magic Quadrant for BPM based case management frameworks. And for the first time we were recognized by Gartner in multichannel campaign management.

Now, we're really pleased, as I said, to be able to have all of these wonderful positionings, if you check out the pictures, and to have it on a single product, because that is what we understand is going to drive our customers to be more successful and make us more successful as we go forward.

One might assume that it's necessary to compromise when choosing a comprehensive solution like PEGA's, but these reports indicate the exact opposite. And they demonstrate the strength of the capabilities of our unified architecture and our customers demonstrate how these strengths build upon each other.

Now, I also think an important differentiator is our ability to deliver our software in the cloud, as well as on premise. Many large global organizations are looking for options when it comes to their strategic applications and the ability to start on one place and go back and forth, we think and we're seeing is very compelling. Our leadership in real time marketing analytics is also being recognized as a strength. And having these all work together provides that end-to-end customer experience that, well, we think is so key.

Now in terms of the verticals that -- our traditional verticals in banking and insurance continue to have been strong, but we're also seeing other development verticals, including manufacturing, as I mentioned with Toyota and Nissan. And a lot of interesting things going on in the healthcare space this year on the back of many of the changes across North America. The telephony and media space also continues to be very strong. So we're really happy with how the businesses are performing pretty much across the board.

In wrapping up, I'm going to spend a moment talking about PegaWORLD, which would be wonderful event for those of you who are interested in learning more to attend. We're expecting about 3,500 attendees. It's in June, Just 7 to June 9 and we have a very, very focused agenda that enables people to hear from clients about their successes, about their visions, about what they're going to be doing and what they have done. Royal Bank of Scotland will talk about [how they] transform the way (inaudible) international clients to deliver more personalized customer experience. At RBS, PEGA makes more than 1 billion real time recommendations every quarter. AIG Japan will talk about its state of the art omnichannel portal, which is now being used by 180,000 agents. The application has helped reinvent how it interacts with its customers, using data-driven insights to guide agents to [comp] to optimal customer interactions. And Cigna will share how it's addressing the challenges and opportunities associated with today's healthcare consumer through a core health platform that will enable new models of payer and provider collaboration. And Vodafone will discuss how it's created a differentiated customer experience, reducing onboarding times, increasing sales and operational efficiency through a transformative initiative that won the 2014 Gartner BPM Excellence Award.

So in summary, strong start to 2015. We're very excited about the transitions we began last year, where we are today and that we are making progress. We continue to be excited about how our software is being adopted and how this new push to strategic applications is really complementing our traditional strength and bringing the power of our platform to an increased suite of clients. And our 2015 plan anticipates its continued investments in the initiatives I've discussed today and on recent calls, and we will continue to reallocate our resources to repeat -- to create a model that we believe is increasingly repeatable and definitely increasingly scalable.

With that let me turn the conversation over to Rafe.

Thank you, Alan. For the first quarter of 2015, we are reporting both GAAP and non-GAAP results. A full reconciliation of all GAAP to non-GAAP measures is provided in the financial tables of the press release issued earlier today and is available on the Investors section of our website.

First quarter 2015 non-GAAP total revenue was $154 million, up 8% year-over-year and that's net of approximately 3% of FX headwind. First quarter 2015 non-GAAP total license and cloud revenue totaled $64 million, an increase of 12% over the prior year. As a percentage of first quarter non-GAAP revenue, total software related revenue, which is to say license, cloud and maintenance revenue, stood at 73% of total revenue compared to 72% for that same period in 2014. This is a result of our higher margin software-related revenue continuing to grow faster than professional services and training revenue.

On a geographic basis, the Americas continued to be the growth driver for the Company with non-GAAP revenue growing 17% to $103 million for the quarter and standing at 67% of total revenue. Revenue from EMEA was approximately $39 million on a non-GAAP basis, which is down 14% year-over-year. And for the quarter, Asia-Pacific revenue was up 32% to a total of $12 million.

As we've discussed in the past, we offer our customers a number of options when purchasing our software, including perpetual and term license arrangements, as well as the choice of installing the software on-premises or using our cloud offering. With this in mind, we track the blend of software bookings closely. For the first quarter of 2015, the contribution to non-GAAP license revenue recognized from term and license subscription arrangements was [52%] of total license revenue compared to 56% in the first quarter of 2014. This change in relative contribution reflects an increased proportion of our license revenue coming from perpetual licenses, and as a reminder that many of our customers have established buying patterns and/or strong preferences as to deal structure. Thus despite our internal preferences, the portion of our license revenue derived from either perpetual or ratable arrangements remains variable. For the first quarter 2015, non-GAAP professional service revenues were $40 million, an increase of approximately 2%.

Turning to the rest of the income statement, the Company's non-GAAP gross margins for the first quarter of 2015 stood at 69.6%, in line with the 69.7% recorded in the first quarter of 2014. And while we are pleased to maintain our overall gross margin, professional service margins remained stubbornly below our expectations. The Company has taken a number of steps to improve margins, though acknowledge it will likely take a few quarters to work through the current challenges.

With respect to operating margins, our first quarter non-GAAP [operating] margin was 11.3%, down from 16.6% for the first quarter of 2014. The reduction in operating margin can be attributed to the following. First, as the backlog number reveals, we had a very strong quarter. These additional bookings drove commissions and other variable compensation expenses higher in the quarter. It is important to recall the PEGA does not defer commission expense, even if the related booking drives deferred revenue recognition.

Secondly, as we discussed in detail during our fourth quarter call, we are making every effort to position the Company to accelerate growth and achieve our longer-term objectives. Already in 2015, we've been shifting resources and making new investments to support each of our stated core corporate initiatives. As Alan mentioned, we're launching our first paid advertising campaign in Q1 of this year. This is part of the overall increase in marketing investment discussed in our Q4 earnings call. And in addition, our efforts to accelerate development of our strategic applications are well underway.

As we discussed in the Q4 call, R&D is thus also an area of increased 2015 investments, but one we believe is key to our ability to meet our clients' needs. It should be noted that operating margins were essentially unchanged by FX during the quarter, as the revenue headwind discussed above was largely offset by expense-related FX savings.

Turning now to earnings, for the first quarter of 2015, we posted non-GAAP earnings totaling $10 million. On a non-GAAP fully diluted EPS basis, this provided $0.13 per share. This is net of an FX charge appearing in the OI&E section of the income statement. This charge relates to balance sheet exposures and totaled approximately $3 million or $0.03 of diluted EPS.

Now to discuss license and cloud backlog. As a reminder, we compute license and cloud backlog by totaling two elements; deferred license and cloud revenue as posted on our balance sheet and off-balance sheet license and cloud commitments that are signed, but as yet unbilled. As a reminder, you can find detail of both elements in our 10-Q and the summary table in our press release, both of which were filed earlier today.

We finished the quarter with $374 million of total license and cloud backlog. For year-over-year comparison purposes, total backlog as of March 31, 2014 was $333 million. Thus at the end of the quarter, backlog had increased $41 million or 12% over the prior year.

Turning to cash, for the quarter, the Company produced $28 million of operating cash flow. Free cash flow, which we define as operating cash flow, less CapEx, was $24 million for the quarter and we finished the quarter with total cash and marketable securities of $225 million. While our 2015 cash flow results are down from the prior year, our sales team's strong start to the year helped to significantly increase accounts receivable as of the end of Q1, compared to the end of Q1, 2014, which will favorably impact cash flow going forward.

For the quarter, the Company repurchased approximately 107,000 shares for approximately $2 million and as of quarter-end, we had a balance of $11 million available for repurchase for the coming year. On headcount, we finished the quarter with approximately 3,000 employees, up 13% from March 31 of 2014.

Now before I conclude, I would like to remind you that consistent with last year, PegaWORLD falls into the second quarter, which will thus increase second quarter marketing expenses. Of course, I would also like to reiterate our invitation and remind you that we have an investor session on June 8 that will include presentations from a number of our executives, as well as a Q&A session with Alan himself. You can find out more by contacting us [to] the link on our Investor Relations website.

And with that operator, we will open the call to questions.

(Operator Instructions) Steve Koenig, Wedbush Securities.

So, maybe one or two quick follow-ups, if that's okay. Alan, source of the outperformance in particular as it relates to whales, tunas or lots of minnows kind of any color there?

Well, we did have one whale in the quarter, but I think it didn't actually contribute to revenue. And we're seeing a couple of what I would describe ass in the tuna, but we're seeing a pretty good mix of deals. The deal size is consistent with what it's been historically and I'm feeling pretty good about the sort of rhythm of the business. I feel very good about it everywhere, but Europe.

Well, very good performance in the smaller deal category, it sounds like, with some contribution from larger deals. If you had the kind of -- maybe think about how that -- attributing that to sustainable improvements from your marketing and application template initiatives that are beginning to take hold versus kind of -- seasonally like Q1 that can have some variance, how would you attribute maybe the outperformance to those sources, maybe any color there?

One, I think the business, particularly in the Americas and Asia, has a nice rhythm to it. (inaudible) we will have big deals when we deal with big customers, because if a large customer makes a commitment to a transformation or something significant it's appropriate for them to pay a meaningful price. But I feel like the business is less dependent on the whales and big deals than it has been historically in terms of the way, frankly, we are managing. I'm happy that we're managing to concepts like overall rhythm of pipeline to a greater level, as opposed to going and cherry-picking deals. So, like the feel of the pipeline and the feel of the sort of selling process.

And Alan, we haven't asked you about this in a while, but maybe can you give us an update on who are you competing with now most often, besides Java, which is probably their custom development still probably number one. But, who else are you seeing and any changes there?

I think the positioning that we've undertaken in the market here enables us to compete and frankly compete successfully with companies such as Salesforce and companies such as a Microsoft Dynamics, and of course the traditional folks who are doing the Java builds and the other types of things. We both can cooperate with those companies, our systems are very, very good at complementing the technologies with other front. But we also, as is often the case, compete with them as well. So the players we're dealing with are large important, established players as IBM, who is always in the mix. There's a lot of the software being given away for free these days from some of these large companies. But obviously we're getting growth numbers that are vastly better than the IBMs and the Oracles in terms of the natural organic growth of the business.

So, actually either one of you can answer this, but any updates in terms of your thinking on the longer-term margin trajectory, certainly not guidance for next year, but when should we expect to see leverage kick in from the investments you're making?

A lot of it -- So, I think it's really understand the margins in the business. When I think about the business, I typically think about changes to both revenue and backlog in concert to the extent that it can make an enormous difference in the current margin environment, to whether a particular deal goes into a ratable recognition or whether it goes into the current quarter. And in reality from the strength of the business and from a commission expense and all the other expenses, it's really not much of a difference from my perspective. I think if you considered the changes to backlog in concert with our revenue, you'd actually get what I would think is a much rosier picture in terms of what the margins are. As we grow, we have tremendous power to change the margin equation, but we see that it's more important at this instant I think to invest in the things like the marketing etcetera, than to necessarily try to squeeze out a couple of additional points. As Rafe says, we've got some ideas about how we need to fix. We got some things that we do need some repair work in the professional services side and there is work underway to bolster that. But, relatively, we will, I expect long-term have industry-standard margins that was [at] 20%. I mean that's really where a successful business of our type should be.

Mark Schappel, Benchmark.

Rafe, starting with you, I was wondering if you could just review the factors that influenced cash flow from operations in the quarter. I know you touched on that during your prepared remarks, I was wondering if you could just go through that again.

One of the keys was really in Q4 of 2013, there were some big transactions that all had really good payment terms and so that helped Q1 of 2014 have a really great start to the year. So I think long story short, we had a very tough compare for Q1 of this year and I think that really is largely the bottom line on things. We're obviously watching our cash numbers closely. Getting such a strong start to the year really helps us with our cash flow planning for the year, but it's really a matter of a tough compare, I think, more than anything else.

I think it was interesting, because if you go take a look at the term license revenue from 2014, you'll see a real spike in the first quarter of like $6 million or $7 million more than it was the quarter before, the quarter after. The reason for that is sometimes we'll get a prepayment on these things or something unusual will happen and term license tends to be a little bit more than probably you'd expect, fluid and smooth. So we had some things like. It was a really, I would say, sort of brutal compare. But you take a look at the accounts receivable, they were up about $50 million and --

[$42 million].

We're expecting to collect that all.

Okay, great. Thank you. And then, unfortunately, I had to jump on the call a little bit late, just wonder if you could just review one more time the impact that foreign currency had on the topline.

Sure. At the topline, it was about 3% of headwinds. So our total revenue growth was 8%, but that's net of about 3% in FX headwind.

Okay, great. And then, Alan, over the past couple of quarters, the Company has been making some traction in, for lack of a better term, non-traditional verticals like manufacturing for the Company and I was wondering if that trend played out in the quarter or maybe you could talk a little bit about that.

Yes, we had a couple of really pretty exciting wins with a couple of new firms like Nissan and Toyota, which (inaudible). And of course, the whole automotive business has a variety of ways in which we can help and we found that this is applicable to other manufacturing businesses with customers of ours like Cisco, for example. And the types of places that we tend to help them are of course in customer service and also in warranty, which you should think about as a perfect case management sort of application and we do a lot of that work, both for manufacturers and for other types of firms, but also in elements of this supply chain. And therefore, sort of order to cash, a lot of companies have found that as they go into more markets or as they're actually trying to expand that they need to be more sophisticated about how they deal with the various channels they have. And our rules in process-based technology is extremely well suited, so let them do what they need to do to be competitive, which ultimately is what a strategic system is all about. So, I think that's going to be a very exciting vertical.

I think the emergence of things like the Internet of Things, for example, also promises to be very positive for us. We already did some fascinating things in that area. If you have a GM car, an OnStar service and your car (inaudible) when it crashed into a tree and the air bag deflates, it calls a Pegasystem. So, we're connected to cars, we're connected in some situations to tractors for diagnostics at Philips Lifeline, we're connected to the pendants that people wear that if they fall, it calls a Pegasystem to make sure that the help is dispatched. So, I think manufacturing will be useful in a variety of ways, particularly as manufacturers increasingly think of what they're doing is being related to a service as opposed to just selling a product out there, but tying it into the sort of longer-term relationships. That's exactly what our technology is perfect for.

Great. Thank you. That's all from me.

Thank you. (Operator Instructions) Steve Koenig, Wedbush.

Hi, gentlemen. I'll lob in another one here.

Just made it under the wire, Steve.

Yes.

It was pretty close.

Yes. Could you guys give us an update on kind of what you're seeing in cloud? You're used for production deployments, as well as any color on revenue contribution, significant yet, or when might it be significant? So anything there you can give us would be great.

So, it's interesting because if you go back a couple of years, our primary use of cloud and the primary sort of revenue everything else from it would have been in the development and test space. And that's completely reversed in the last, I'd say 12 months, where we're seeing a real push from clients. Some clients used to suggest test and some clients who are coming in through the gate are using us for production cloud; it's an enormous area of growth for us and we're investing heavily to be able to make sure that, I think we can ramp this up tremendously.

In terms of its contribution, it's still relatively small, if you take a look at it, it's order of magnitude 10% of the license revenue, the sort of line that we get. But, it's growing at a very fast pace. What was the growth rate on that, Rafe?

60% on a GAAP basis, 45% on a non-GAAP basis.

Yes. So it's growing and I think that the rate of growth is actually going to increase as we go into this year and next year.

Okay. And maybe one more, since it appears we have some time. Wanted to ask about the repeatable sales motion that you all are building, both through your go-to-market changes, your marketing and your R&D. What kinds of metrics would you look at internally to measure that? And can you give us any color in terms of how that's trending or how we should expect that to go in the near term or longer term?

So a couple of interesting things there. The traditional way that we would have sold, if you think about what we were doing when we were really talking about ourselves as a case in Business Process Management Company is our sales force would engage with the customers and talk about what their project list was.

They basically go try to discern, what were the top things of the client was trying to do? And typically, we find that, good 25%, 35% of the stuff on their project list was perfectly fit to Pega software and then we would basically do -- work with them to be able to close a piece of business around their particular need. We can still do that of course, and we have clients for whom we still do that, both existing clients and new clients, but this move around repeatability, for example, is very much going in and saying, hey, we have absolute leadership in world-class capability in customer engagement centers, customer service, in multi-channel selling, and being able to do this next best action marketing capability, which can help you both retain customers and upsell them. And the metric if you want to understand the practical metrics, in that first set of instances, inevitably, we'd have to put together a very sort of sophisticated custom demo or do some form of proof of concept [will decline].

So, when you walk in around a strategic application, the demos in the product, the ability to engage with the customer around something that is tangible, that they can just buy and really start using sooner, is much, much more visible. So, when we talk about repeatability, that's really central to it that it's awesome, for example, that we've chosen and we currently automate ground operations at Heathrow Airport. But that was something that truly was built from the ground-up.

When we go into a client and offer them a next-best-action solution to be able to help them make recommendations for telephones, for example, or banking products or helping them to make credit recommendations, that's something where we've got a lot of IP now, out of the box, that can both make it easier to sell and frankly make it more effective to implement.

So, we've added this whole new wing of capability around the strategic application and we are now managing the organization to make sure they are going and pitching those and have that actually be the majority of the work they're doing. And so that's going to -- we're tracking, for example, how the pipeline is moving, from what I would describe as the platform-oriented sales of yesteryears to the now more application-oriented sales where you can ask different questions of the sales force and frankly give them better tools. Does that make sense?

Yes, absolutely. That's great color. (multiple speakers) Yes, no, go ahead.

One number that was just popped in front of me, apparently, acquired business has now moved, so that it's 80% production cloud. Just to give you a sense of how that's really completely flipped in the most recent quarter.

Great. Okay. Well, I'll leave it at that. And congratulations on a very good start to your year.

Thank you very much.

Thank you. Ladies and gentlemen, at this time, there are no further questions. I'd like to turn the call back to Alan Trefler for closing comments.

Thank you very much. We've been working hard and we're excited about where we are. Well, we have a lot hard work to do. I hope to see many of you at PegaWORLD. Thank you.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.