PTC Inc (PTC) 2009 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to PTC's fourth quarter fiscal year 2009 results conference call. After brief comments by management, we will go directly to the question and answer session. (Operator Instructions). As a reminder, ladies and gentlemen, this conference is being recorded.

I would now like to introduce Kristian Talvitie, PTC's Vice President of Corporate Communications. Please go ahead.

Thanks, everyone. Good morning.

Before we get started, I would like to take a couple minutes and read the Safe Harbor Statement. This conference call and webcast may include forward-looking statements regarding PTC's future operations, prospects, expected financial performance, or products. Any such statements will be based on current assumptions of PTC's management and are subject to risks and uncertainties that could cause actual events and results to differ materially. Information concerning these risks and uncertainties is contained in PTC's Form 8-K filed yesterday and in its most recent Forms 10-Q and Form 10-K on file with the SEC. PTC will use non-GAAP measures to describe its results of operations and expected future financial performance. A reconciliation between the non-GAAP measures and the comparable GAAP measures is located in the Financial and Operating Metrics document on the Investor Relations page of our website at www.PTC.com.

Also, before we get started with some brief comments from Dick and getting into Q&A, a quick housekeeping message, that we are hosting our 2010 Investor Day next week, next Tuesday, November 3 in New York City. Please feel free to contact me with any questions or to RSVP for that event. With that, I'll turn the call over to Dick Harrison.

Okay, thanks, Kristian. Just a couple of points maybe I'll make before we turn it over to Q&A. I really won't dwell on them here in the intro, but we've consistently said and felt like that we have a huge market opportunity here, helping manufacturing companies in a changing world build better products, collaborate with their supply chain, control the engineering bill of materials, and so forth. It's a maturing market. I think it's one that PTC and its competitors have built better solutions for and better service deployments for over the years, and so I think the market is maturing and there's a lot of upside there.

In addition to that, there are some changing dynamics within the market from a competitive standpoint and we think that it's going to result in some good upside for PTC over the next few years. We feel like we have a technology leadership position. We feel like the accounts that we've won in the dominos -- and not only the dominos, but a whole group of other replacement accounts are a manifestation of that technology leadership, and we'll talk more about that. Then finally, we're committed to 20% EPS growth on a sustainable basis over the next five years at least, driven primarily by revenue growth. And I think that revenue growth is going to come from the competitive advantage that we have, particularly in the data management aspect of the whole PLM business.

So with that as an intro, why don't we open it up for Q&A?

(Operator Instructions). Our first question comes from Yun Kim with Broadpoint AmTech. Go ahead and ask your question.

Thank you. Just wanted to ask you guys about the overall state of your channel business. Obviously that's probably one area where there seems to be some weakness. Is it bad enough that we have to start worrying about some vendor viability issue with the channels, if the weakness persists for a while? Then also, if you could just talk about the overall state of your channel business today. And then in terms of your margin guidance for fiscal year 2010, does that assume no meaningful rebound in the channel business? Thanks.

Yun, that was a three-part question. This is Neil. First of all, the channel business was challenging for us in the fourth quarter. It was down about 25% year-over-year. The channel business actually performed better than the direct business for the first half of the year and then worse than the direct business in the second half of the year. Overall, during the course of the year, they performed pretty comparably.

As far as your question about whether we're worried about viability of channel partners, the answer is no. I think that we've got some pretty good relationships there. We haven't seen any bad debt issues arise with channel partners around the world of any significance this year, despite the fact it's been very challenging from a macroeconomic perspective. And I would say that probably the channel is going to recover, as evidenced by our fourth quarter, a little bit more slowly than we're seeing on the direct side. And we would expect that that recovery would be in the second half of our next fiscal year.

Okay, and then -- so second half of fiscal year 2010, right?

That's correct.

Okay, and then quick question on consulting business. Is Barry there?

Yes, he is.

Okay, great. If I try to reconcile the guidance for Q1 and for the year on the consulting side of the business, it implies there will be a pretty significant acceleration in that business in the second half. Is this something that is already planned and in the pipeline, or is this something that is driven by improving environment and more deal closure than first half of the year?

I think it's built into the plan already. I think what we saw in Q4 is an uptick in our bookings, particularly in North America and China, so we're beginning to get much more confident. What we saw in the second half of 2009 really was the decline in net bookings. And the bookings is the upfront part of the plan, it accelerates the plan, so we're very confident that we'll see that second half uptick.

Okay, great. Thank you so much.

Your next question comes from Ross MacMillan with Jefferies. You may ask your question.

Thanks. Neil, if I look at your cost guidance, you guided for I think $2.10 to $2.15 for Q1 and then you said fiscal year 2010 would be $8.35. So I guess the way I'm looking at this, if I annualize the Q1 guidance, you actually come up with a number which is above that $8.35, which would imply the Q1 run rate cost rate was the highest of all quarters in the year. Can you help me reconcile that? Because normally I guess we would expect Q1 costs to be maybe lower than costs later in the year. Thanks.

Ross, our cost in our plan, our expenses in our plan are relatively comparable by quarter in our fiscal year 2010 plan. So you should see somewhere in the range of $210 million [ish] throughout the year. It's fairly comparable. Maybe a little bit less in certain quarters, but basically it's in that range.

And have the cost implications of the further adjustment to headcount you did in the fiscal fourth quarter -- have we still got to see a little bit more of that flow through? In other words, did we get a full quarter benefit in Q4, or will we see more of that benefit in Q1?

Basically, all that activity was taken place by the end of September. So we should see a full benefit starting out really in Q1 of this year and continuing throughout the year.

Great, and then just on -- you obviously had a better close rate on the larger deals in Q4 than you had proportionately for the prior three quarters, and I know that North America Windchill -- you highlighted that. Was there a tangible difference in terms of I guess customers in North America willingness to sign, and how do you then translate that into how that might flow through into other territories, other regions through fiscal 2010? Clearly you're guiding to 20% license growth, which I guess implies that we're going to see further improvements as we go through the next few quarters.

So Ross, I think that what we said a little bit at the last call as well is that if we look at the pipeline and take the pulse of the salespeople, there's more momentum in the US in terms of the recovery that might be happening. And we do feel like the economy's gotten better than it was in the beginning of the year. And so we definitely see it first in the US where the pipeline's stronger and the sales teams are just more aggressive right now about their deals and their forecasts. I think that will -- historically, that will move around the globe. We feel like actually in China, the pipeline's pretty strong and there's more confidence in it as the sales people do their forecasts. Europe is still a little bit lagging, although it feels better. And so I think in the context of all of that, we feel pretty good about it. If the US generally -- that trend would normally start to flow into some of the other geographies. The question is when? Is it one quarter, two, or three?

Okay.

Just to add to that Ross, I think we're going to see the recovery in waves, both geographically and by line of business. So geographically, as Dick said, North America starting out, China maybe is right behind there, and Europe and rest of Asia will probably follow. By line of business, certainly we're seeing the pickup on a relative basis in license revenue today, primarily in North America. Probably both the service and maintenance businesses recovery is going to lag that by a quarter or two.

Okay, and then one last one for me, if I could. Just any implications from Dassault's announcement yesterday to buy out their PLM salesforce? Any implication for Parametric? Thanks.

That's a good question. I think we're going to learn more about that in the coming quarters. It's -- I think it's something that we've talked about for a few years here on these calls that we saw happening eventually. I think we need to learn more about the detail of it and I think that will come out in the next couple of quarters. But I think at a simple level, Ross, it's going to level the playing field. And so SAP, Siemens, PGC, and Dassault will now complete on an equal playing field. I think Dassault's had the advantage of IBM, which is a great partners, and they're no longer going to have. I think it's going to make our job of talking about our benefits with the customers easier when we don't have to overcome the presence of the IBM company and their footprint in all of these large accounts. So it's -- I think it's positive news for the market.

Great, thank you.

Thank you. The next question comes from Greg Dunham with Deutsche Bank. You may ask your question.

Thank you. I wanted to actually follow up on the comments of the recovery in waves and first by geography and then by revenue line. Is there any color you could provide on a product line basis in terms of -- I know that Windchill is actually performing better now, but I also want you to give me some color on the MCAD business -- split into large enterprise, small enterprise, and when do you expect that business to really start to improve?

Well, Greg, it's Neil. It's a good question. Certainly we are seeing the recovery first with Windchill. I think that's for two reasons. One is the technology advantage is most clear there, right? I think that's part of it. The second part of it is on the larger transactions that tend to take place, they tend to be Windchill-driven transactions, and we did see a pickup in those transactions in this quarter and hopefully we'll continue to do so.

In terms of the MCAD business, I would say the same thing there, which is a fair amount of the MCAD business is driven by our channel. I think we said we thought the recovery for the channel would probably be in the second half of fiscal 2010. And on the large enterprise MCAD business, I think that will lag Windchill somewhat as well, although I think we'll see a recovery there in the second half of fiscal 2010 as well.

Okay, that helps. And then final question, in terms of investment for channel support, I mean you have the question on vendor viability, but what about investments for marketing support? Do you plan on increasing the investments still in that business?

We do. We have specific funds earmarked for our 2010 plan to invest in support of our channel partners around the world, predominantly around marketing.

That's all I had. Thank you.

Thank you. The next question comes from Sterling Auty with JPMorgan. You may ask your question.

Thanks. Hi, guys.

Good morning.

Neil, a quarter or so ago, you did a nice job in terms of describing in a grid format the revenue by direct sales versus channel and new product versus maintenance. So specifically to the channel, can you talk to us about, all right -- so it was down slightly sequentially. What were the aspects that pressured the results in the channel? Was it new business, was it MCAD versus PLM, et cetera?

Sure. I think -- when you say grid, I think you're talking about what we affectionately refer to as the 4-Box. If we talk about the 4-Box and the bottom two boxes, which is basically our SMB business, either MCAD or PLM, the best performing business for PTC this year in that 4-Box was the lower right-hand quadrant, which is SMB PLM. That was better than the two top boxes as well, and it was significantly better than the bottom left box.

So we've seen in the channel what some of our competitors are seeing there. Maybe Autodesk would be a good example, which is the low end MCAD business, has been impacted relatively significantly by the macroeconomic environment. And so that business, which has been very, very strong for PTC over the last five years, a 15% CAGR annually from a revenue perspective before this year, certainly had a difficult year this year. But as I said, as the economy begins to recover, we think that business will begin to recover as well.

Okay, and then on the expense side, can you talk to us in terms of -- we've got the expense guidance for next year, but what's the plan for headcount within that? Should we think the headcount will be held mainly flat for the year, or is there going to be a mix to more lower cost geographies, so headcount could actually increase? How should we think about headcount in context of the expense plan?

Headcount will increase slightly, not a lot. Probably 2% to 3% over the course of the year. Most of that increase, if not all of it, will be driven by continued shift to low cost geographies. PTC's headcount today, 36% of the headcount is in low cost geographies compared to about 20% two years ago. So we're moving towards that 40% number. We're almost there. And there will be a continued shift in that direction over the course of the next 12 months.

All right, thank you.

You're welcome.

Thank you. Next question comes from Richard Davis with Needham. You may ask your question.

Hey, thanks. So we picked up some positive commentary on ArborText. I mean I know it's small relative to the other parts of your business, but has there been any change either in product, or has it just been time that your customers have finally said, hey, we need technical documentation, but it was just -- we weren't expecting that and people were positive about that. So could you help me out, thoughts on that?

This is Jim, by the way, dialed in from Europe. I'll take a shot at that. I think there's a couple of different factors that are occurring simultaneous. Let me first say for everybody's benefit, ArborText is probably our, what, third largest product line behind Pro/Engineer and Windchill. It is important and it can move the needle.

But I think that there's two things that happen. One is a time factor. It takes a while to get this technology into the PTC ecosystem and begin the campaigns and move through the process. And I think we're now in a good spot where there's quite a healthy pipeline of ArborText's business out there to go close and develop in the coming quarters and years here. Second thing is we have upped the ante on the strategy a bit, and we've begun to paint a picture of the next generation of what we would call a service information system, so that ArborText isn't the way just to create documentation efficiently. There's actually a vision where the documentation goes away and this is a realtime business system for an aftermarket service department.

And I think that's pretty compelling, and that's caused a few new customers, major ones to sit up and take notice and in fact I think we closed probably the largest order that PTC's closed, as [we technically] acquired the company. Really from a customer who liked the current product but was sold on where we're going with the vision of a service information system. So I think it's really both the time factor and some extra juice added by us continuing to push the concept and push the vision of what's possible.

Got it, thank you very much.

Thank you. (Operator Instructions). The next question comes from Mike Olson with Piper Jaffray. You may ask your question.

All right, thanks. Good morning. In the script, you mentioned success in ProductPoint, and we can see ProductPoint wins are improving sequentially every quarter. Just from a high level, why is ProductPoint working? What do you think is resonating with customers that's causing ProductPoint wins to exceed expectations?

This is Jim again. There's one simple answer for that. It's SharePoint. So ProductPoint is a SharePoint native product. It's part of the Windchill suite, but it's a way for small customers, and in some cases large customers, to get onto the Windchill road map by deploying a piece of technology on top of SharePoint that helps them get a lot more value out of SharePoint and becomes an onramp to ultimately a bigger relationship with PTC in a broader PLM solution. But Microsoft is putting incredible energy into SharePoint. They are having incredible success with SharePoint, and I think we did a very wise thing by being first to market with the solution that harnesses some of that energy to PTC's benefit.

Okay. Then when you talk about the 20% EPS growth goal based on revenue growth, I realize it's hard to predict what the acquisition pipeline is going to look like, but how much of that do you envision being organic and how much do you think could be from acquisition?

Yes, this is Jim. Let me step in and head Neil off here. We have an organic growth strategy. My view, and I'm joshing a bit with Neil here, that we don't have an acquisition strategy per se. We have a strategy to grow organically. We have the means to grow organically. We may make acquisitions, particularly the technology tuck-ins we've been doing, which fundamentally show up down the road as organic growth. But we don't have a predetermined goal to acquire half of that growth or something like that. I would say our pre-determined goal, if there is one, is to acquire none of it, to grow it all organically. We'll keep that acquisition option open when we find a special piece of technology, or if some situation presents itself that's too good to pass up for one reason or another. Neil, anything you want to add to that?

I couldn't have said it better myself, Jim.

Good.

Thank you.

Where are you, Jim?

I'm in Europe.

Thank you. Next question comes from Steve Koenig with KeyBanc. You may ask your question.

Hi, guys. Thanks for having me back on the call. Just one question and one follow-up here. First question is about the sales organization starting in fiscal 2010. Any reorganization to be expected? How is the organization looking with respect to the transition to named account reps versus territory, or is that all done, et cetera?

I think the sales organization, there's no major change in the sales organization. We did expand the person who heads up Europe. We expanded his responsibility and gave him Asia-Pac as well, so there's one Vice President for International Sales reporting up to the Corporate Sales VP. And -- but fundamentally, there's no change in the organization for sales. I think that transition to the named accounts and so forth is done. It has been done for a good year or more, and I think it's working pretty well for us.

And one of the things that's hard to describe and quantify is the level of confidence that the salesforce has right now. These domino wins and behind them, a much, much larger list of displacement deals has the sales force particularly confident, and that's first in the US, and I think as these opportunities and these deals come out and they spread inside our sales force, that level of confidence gets inspired and spreads as well.

So the salesforce -- I think turnover last year in the salesforce, I would actually say it was too low. I think it was 2%. 2% or 3%. We're not that good as hiring actually, but the sales people really feel like they are winning and they can make some money and build a career here. So sales is running really well and I think it's linked nicely to the fact that the products have come out, particularly in the Windchill side, with a distinct competitive advantage and the service deployments are increasingly good and so forth. So there's pretty good -- in the salesforce right now.

Okay, thanks, Dick. And then one follow-up would be, let's see, you haven't talked a lot about new product initiatives in this release other than the Windchill SharePoint work, which has been in progress for a while. Can you address any potential upside from new product initiatives that we may hear about shortly, or do we have to wait for all of that until next week at the Investor Day?

This is Jim. I mean we will certainly give you a lot of color next week at the Investor Day. But I think just to preview at least at a headline level what you might hear, in addition to some interesting new developments around Pro/Engineer, just want to throw that out there, there's an interesting development to bring some of the explicit modeling technology of CoCreate into the Pro/Engineer product, which you'll get some Pro/Engineer customers and prospects pretty excited. That will be unique and compelling.

I think what you're really going to hear is pushing forward aggressively with Windchill. We have -- you could call these Windchill or you could call them adjacent to Windchill, but we're building a solution for embedded software development. Our customers are developing mechanical products that increasingly contain circuit boards that increasingly contain software. And we need to treat the mechanical, the electronics, and the software equal. We're coming to market with what we would call an ALM inside PLM strategy -- application lifecycle management, which is what you hear the standalone software vendors talking about. But we're doing that inside PLM. So an ALM solution that dovetails into a PLM solution and helps you manage the software in the context of managing the product that the software's embedded in.

You're going to hear a lot more about the SharePoint story. When we've been talking about SharePoint, we've been talking a lot about ProductPoint. It turns out that that's one of four projects we have going right now in SharePoint and a couple of the other ones are even bigger. So maybe you could say on balance ProductPoint is 25% of our SharePoint strategy. So you're going to hear us articulate some new products. A PPM product, product portfolio management, as it's called. And then we're going to articulate a better story around what we mean by social product development, how to use social networking in product development, thanks to the technologies in SharePoint, particularly SharePoint 2010.

And then you're going to hear us tell a broader story around this concept we call product analytics, which is a new product suite we're building around some of the acquired technology of the Synapsis acquisition of about a year ago and the Relex acquisition of earlier this summer. So you're going to hear us basically talk about advancing ProE and Windchill and launching three significant adjacent products -- again, embedded software, a SharePoint suite, and a product analytics suite next to them, things that we can just attach on to the footprint in existing accounts and use as a way to get in the door in brand-new accounts.

Thanks for whetting our appetite, Jim.

You're welcome.

Thank you. Our next question comes from Rob [Crystal] with Goldman Sachs. You may ask your question.

Yes. I was hoping you could help us understand a little bit more about how the domino accounts are hitting revenues or if there's sort of a six-month lag before -- from win to revenue recognition or something? Maybe you could help us understand that better, Neil? Thanks.

Neil, it's Jim. Can I take a stab at that one?

You can.

Okay. Let me say that's going to be a major subject next week at our Analyst Day, too. We know it's a question of how and when does PTC monetize these dominos? Let me first say -- you see us, Dick and all the rest of us get very excited about these domino wins, and I think sometimes you're scratching your head saying I don't get it, why are you so excited?

Let me first say the number one reason fundamentally is because today's domino becomes tomorrow's annuity. I'm going to come back -- we'll give you a high level view of how that happens over time, and we'll give you some examples next week, but you should think that today's domino is tomorrow's annuity. But beyond that, every domino win by our definition is basically a big strategic win at an away game. This is a big strategic win where PTC had no first right of refusal. That was not our customer, or not our -- we weren't the dominant provider, if we were there at all. So we're excited because it says that there's a big technology gap, that the gap is big enough that it's worth switching vendors and in most cases switching products. And it takes a big gap because nobody likes to switch unless the gap is big enough that the system you thought was supposed to be helping you is hurting you. So that's exciting.

The second thing is, each domino win in turn influences so many other sales campaigns. So I can't tell you how many deals entered our pipeline on the back of the EADS win. Everybody said if PTC can win in that fairly hostile environment, European company, co-ownership with the Dassault family, all that stuff -- then PTC must have something special. I'd better take a look at it.

The final thing I would say is to me it begins to open the discussion of a replacement market. The growth opportunity for Windchill is so much larger, if in addition to winning greenfield new business, we can displace vendors in brownfield old business, it really makes the market probably three times larger. So anyway, we're excited because it's annuity, it makes the market so much larger, it influences so many other deals, and it really reinforces the point that the gap is real and it's big.

You did a much better job than Neil would have done. Thanks, Jim.

That's true, but I feel compelled to add something to that. We did actually monetize the domino accounts this year. The average domino win for PTC brought us between $3 million and $4 million of revenue for those seven accounts that we've talked about. But the opportunity to Jim's point is at least triple that opportunity we believe, A, in a better economy, and B, with a customer not not just making an initial investment, but rolling out the technology on a broad basis across the enterprise. That's what we're looking forward to, that type of annuity that can be significantly more than the initial win opportunity was in 2009.

Yes, Neil, it's Jim. Thanks for bringing that up, because I had actually meant to talk a little bit about a monetization model over time. But you should think that when we look at a domino account, there's a business case development phase, then a competition phase, then a pilot phase, then a seat rollout phase, and then finally a long-term footprint expansion phase. And so I think when we declare we've added a new domino, it generally means the competition phase is over and we've won and we're at the pilot phase. Now, the pilot phase is not a huge revenue contributor, and I think that's the basis for the disconnect sometimes. You get these domino wins in PTC and we don't see a big spike in revenue.

But the spike in revenue actually comes in year two, and then year three, and again in year four and again in year five and so forth. And one thing that Kristian -- we should talk about this at the day next week. But we want to start breaking down big deals for you guys, so you understand the difference between a big deal and a big annuity. Because I think sometimes you see big deals as risky and I suppose the new wins are in terms of being able to predict exactly when they will happen and so forth, but a lot of those big deals are the same customers quarter after quarter just buying into the next round. In fact, that's a fairly low risk proposition, fairly predictable proposition, and it's really this annuity.

So I'm just saying, let's not confuse a big win with a big customer with a big relationship. And a lot of our deals that we call big deals are in fact big customer relationships, not big wins. So we'll try to break it down and give you visibility to what's what.

Thank you.

Thank you. Our final question comes from Sterling Auty with JPMorgan. You may ask your question.

Thanks. I want to follow up on Rob's domino question and, Jim, some of the comments that are around the visibility into it, given the time of year we're in and customers are going through their budgetary process. Has it given you any indication in terms of how they are budgeting for that next phase of investment at these domino deals?

I would say -- Dick, feel free to jump in here -- with each of these domino wins, we're generally talking about a three to five year program with an ongoing service engagement quarter after quarter, a license buy at this point, and another license buy at that point. And then after that, we're going to have to sell them on the footprint expansion. But, yes, I would say when we're talking to these guys, we're not talking about a pilot project order, because that's not really that exciting. That's just a phase we have to get through to get to the excitement. But definitely they're budgeting typically a three to five year program, and we're forecasting a three to five year program.

Okay, and last question from my side is, can you talk to us a bit by vertical industry? You talked about the PLM versus the MCAD, but if you take a step up and look at the vertical industry, which industry did you see particular improvement in in the quarter? And where are the ones that still might be lagging?

Sure, I'll take a crack at that. Aerospace and defense has continued to hold up pretty well for us. Obviously our other two major verticals are industrial, which -- where we have seen signs of improvement. And I would say the high tech and electronics business is a business that is probably still the most challenging of our three major verticals. Beyond that, we certainly would say that the automotive vertical, which for us is between 10% and 15% of revenue, so not as significant, is still challenging, as is consumer products. The last vertical we compete in, medical devices, has done quite well.

But, Neil, wouldn't you say from a domino perspective, and it's shown actually in that table we provided you -- that Kristian provided in the commentary -- from a domino perspective, it's quite well diversified across the different verticals.

Yes, it absolutely is. I didn't realize the question was domino related. It is diversified across all verticals. I think we had two in industrial and one in every other vertical.

And again, I think it speaks to our excitement. It's not that we can only win in automotive, or aerospace and defense. We're able to nail these accounts in pretty much each and every vertical right now. And again, not to belabor it, but behind the dominos, the 15 or 20 targeted dominos, there are right now close to 300 active displacement campaigns in other accounts, many of which are large or could be larger than what we've characterized as a domino. So there's a big pipeline of deal activity under there that does compel our excitement.

We had a really major -- one we haven't talked about. I don't know if you want to do it now or next week at the meeting, but we had a major win in a domino account this last quarter that resulted in a nice order -- not a huge order. It was a good order in terms of an initial one around a heavily debated and benchmarked campaign. We were not the incumbent at all in this account. It's one of the largest industrial accounts in the world. It's a major -- a $25 billion division of this major industrial account. Siemens, which is a good, strong competitor, was the incumbent in the CAD area, was the incumbent in the data management area for the engineering department for managing the CAD files, as well as the team center was installed in the engineering department, as well as the enterprise.

And then Dassault had a deployment in the account of Matrix in the enterprise as well. That was the incumbent environment. We had a very small footprint because the company had acquired a company that had Pro/Engineer two years ago. I think we had 20 seats or something, and somehow we were -- we wedged our way into the evaluation of the benchmark that took place over the last year. And in September, the company did place an initial order to replace all of the CAD seats and standardize the entire thing around Pro/Engineer. All of those seats will be managed by Windchill and we have an opportunity to expand that out of the enterprise as we go forward as part of the pilot. But that's a major, major company which we'll talk more about.

How did we win that deal? How do we win those deals today? That's why the sales force is excited. Those deals spill over to other salespeople and give them more and more confidence to go out and attack, not only in our install base, where we have an opportunity, but to go out after these new retail accounts where we're doing displacements. But this was a very sophisticated, highly innovative, prestigious account where we had no incumbency. You would have thought that Siemens would have come and won with their incumbent position with Team Center Unified and NX, which they didn't win. You would have thought that Dassault would have just bolted on their V6 CATIA modeler onto the Matrix deployment, which they couldn't demonstrate.

So it's a major win for a lot of reasons and it gives us a lot of confidence as we go forward around the commitment that we have to you around earnings growth really for the foreseeable future that's predicated on revenue growth. And I think there were aspects of this win that led to the change in the dynamics with IBM and Dassault as well.

We'll talk more about these. There are more deals like that that we'll describe next week as well.

Okay, thank you.

Thank you. At this time, I'll turn the call back over to the speakers.

Doing a wrapup?

Yes.

Okay. So thanks, again, for the time today and we'll look forward again with getting together in the January timeframe. There's a lot -- hope to see you next week, and then talking about the Q1 results. Q1's going to be an interesting quarter. We don't know yet what's really happening in the economy and I don't think anybody does. It's actually a very nice pipeline and it's hard for us to predict how fast those wins might come, but we'll talk more about it next week. Thanks again.

Thank you. This does conclude today's conference. We thank you for your participation. At this time, you may disconnect your lines.