Dun & Bradstreet Holdings, Inc.
Q3 2015 Earnings Call Transcript

Published: 3 Nov 2015

[Operator:]

Good morning and welcome to Dun & Bradstreet's 2015 third quarter teleconference. This conference is being recorded at the request of Dun & Bradstreet. If you have any objections, you may disconnect at this time. All participants will be in a listen-only mode until the question-and-answer session of the call. I would now like to turn over the call to Ms. Kathy Guinnessey, Treasurer and Investor Relations Officer. Ms. Guinnessey, you may begin.

[Kathleen M. Guinnessey:]

Thank you. Good morning, everyone, and thank you for joining us today. With me on the call this morning are Bob Carrigan, our Chief Executive Officer; Rich Veldran, our Chief Financial Officer; and Josh Peirez, our President and Chief Operating Officer. Here's what you can expect on our call. Following my brief remarks, Bob will provide an overview of our third quarter results and an update on our strategy. Then, Rich will come on to take you through the highlights of the third quarter. And after that, we'll open the call for your questions. To help our analysts and investors understand how we view the business, our remarks this morning will include forward-looking statements. Our Form 10-K and 10-Q filings as well as the earnings release we issued yesterday highlight a number of important risk factors that could cause our actual results to differ from these forward-looking statements. These documents are available on the Investor Relations section of our website, and we encourage you to review the material. We undertake no obligation to update any forward-looking statements. During our call today, we will be discussing a number of non-GAAP financial measures, which we call as-adjusted results, as that's how we manage the business. For example, when we discuss revenue growth, we'll be referring to the non-GAAP measure revenue growth as adjusted, which is revenue adjusted to eliminate the effect on revenue due to purchase accounting fair-value adjustments to deferred revenue and before the effect of foreign exchange. When we discuss operating income, operating margin, and EPS, these will all be on a non-GAAP basis, which we call as-adjusted. Additionally, our as-adjusted results exclude the results of discontinued operations. When we discuss free cash flow, this will be on a non-GAAP basis excluding the impact of legacy tax matters, potential regulatory fines associated with the ongoing China investigation, and potential payments for legal and other matters. You can find the reconciliation between these and other non-GAAP financial measures and the most directly comparable GAAP measures in the schedules to our earnings release. They can also be found in the supplemental reconciliation schedules that we post on the Investor Relations section of our website. We do not provide guidance on a GAAP basis because we're unable to predict with any reasonable certainty the future movement of foreign exchange rates or the future impact of non-core gains and charges, acquisition and divestiture-related fees, purchase accounting fair-value adjustments to deferred revenue. These items are uncertain and will depend on several factors, including industry conditions, and could be material to Dun & Bradstreet's results computed in accordance with GAAP. Later today, you will also find a transcript of our prepared remarks on our Investor Relations site. So with that, I'll now turn the call over to Bob Carrigan. Bob?

[Robert P. Carrigan:]

Thank you, Kathy, and good morning everyone. On the call this morning I'm going to focus my comments on three areas

[Richard H. Veldran:]

Thanks, Bob, and good morning, everyone. So as Bob described, a year and a half into executing on our strategy, some things are happening faster than expected, like the growth of DaaS. And some are taking longer than we'd like, particularly our sales execution in certain parts of the business. Both trends impacted our third quarter results. During the quarter, total revenue was $414.2 million, up 8%. All of our growth came from acquisitions, and organic revenue was flat. As Bob said, organic revenue is not growing as fast as we want it to, and there are two primary reasons. First, sales execution issues, primarily in our government and mid-sized customer channels, as well as in Europe. And second, more of our revenue is being deferred out as we shift more of our sales to newer embedded products where revenue is recognized over time. Much of the revenue from these newer solutions is either subscription-based, where we recognize the revenue evenly over the course of the contract year, or what we call usage-based, like D&B Direct, where we recognize revenue when the customer actually uses the data that they bought. For these products, we typically sell annual contracts to our customers that include a set amount of data that they can use. We don't know the rate at which they will use that data, so it is difficult to predict revenue from quarter to quarter. What we do know is that they will have to use it by the end of the contract term, and we will recognize that revenue. Now it is often the case that usage is more back-loaded because it generally takes some time for customers to begin using the data that they purchased. Since we don't recognize revenue at the time of the sale, this results in an increasing deferred revenue balance. Now let me give you some additional color on the third quarter results. The Americas market segment represented 81% of our revenue at $336.4 million in the quarter and was up 10%, and organic revenue was down slightly. Non-Americas represented 19% of total revenue at $77.8 million, up 3%. Let me go through each segment in more detail, beginning with the Americas. Risk Management, which makes up 60% of Americas revenue, was up 12%. Within Risk Management, Trade Credit was about two-thirds of RMS and was up 1%. DNBi was 73% of Trade Credit and was down 2% during the quarter. Price increases continued to be in the low single digits and retention was in the low 90%. The rest of the Trade Credit was up 8% due to the inorganic revenue from the Emerging Businesses division. Other Enterprise Risk Management, which is the other third of RMS, was up 45% in the quarter. The growth was due to the addition of Credibility Credit-on-Self revenue to this category. In terms of our newer products, the growth of our DaaS solution, D&B Direct, remained strong in the quarter. However, compliance was down as one of our large government customers had lower data requirements in this quarter. Sales and Marketing, representing 40% of Americas revenue, increased 6% in the quarter. Traditional Prospecting at 29% of S&MS revenue was up 10%. The primary driver of this growth was inorganic revenue from Emerging Businesses, which offset declines in Hoover's. Advanced Marketing Solutions, which was 71% of S&MS, was up 5%. The growth was due to the continued strength of our DaaS solutions as well as the impact of the NetProspex acquisition. At the beginning of the year when we announced the acquisition, we said that our customers were looking for more accurate and actionable contact information, and I'm happy to say that we're really building momentum with NetProspex customers as well as with existing D&B customers. Now as Bob discussed, deferred revenue in the Americas was up over 4% for the quarter before the effect of foreign exchange and acquisitions. This does not reflect committed sales through alliances, which would have added another two points to the total balance. The growth in deferred means that our underlying sales are actually growing at a faster rate than revenue, which will pay benefits in the future. Non-Americas revenue was up 3% in the quarter, with all of the growth coming from alliances. Our direct channels were flat for the quarter. As I said, we continue to have execution issues in Europe, particularly in Benelux. On a positive note, we've recently signed a few very large deals in the compliance space, where revenue will be recognized in the future. We continue to expect full-year revenue growth for non-Americas to be in the low single digits. Profit improved in the quarter with operating income up 1%, which is consistent with the expectations that we shared at the beginning of the year. As we said then, we expected operating income to decline in the first half of the year and grow in the second half, primarily in the fourth quarter when we see our revenue growth accelerate. EPS was up 3% in the third quarter, outpacing growth in operating income. Higher interest expense as a result of increased debt for the acquisitions is more than offset by a lower tax rate due to the release of audit reserves related to our 2011 tax year, which was in our plan and contemplated when we gave our guidance at the beginning of the year. Later this month, we'll be refinancing our maturing senior notes by drawing on a term loan facility that we put in place earlier in the year. As a result of using the term loan rather than issuing new bonds, our interest expense for the year will be lower than we anticipated when we set expectations at the beginning of the year. So all in all, we expect to deliver within our guidance ranges for the year, specifically

[Operator:]

Your first question comes from Jeff Meuler with Baird. Your line is open.

[Jeffrey P. Meuler:]

As you've taken a closer look at sales and more closely integrated yourself into it, what are the main issues that you've identified? Is it mostly a management issue? Is it the broader talent throughout the sales organization? Is it something about the product, anything that you can say about what the issues are and your new view in terms of how long it will take to meaningfully address them? Thank you.

[Robert P. Carrigan:]

Look, as I said, I've been digging in with our sales team, spending a lot of time over the last couple of months. And look, we actually have a lot of talented folks. The structure that we have announced, the new organizational structure, will help remove some of the impediments, really leveraging the multi-channel go-to-market that we have in serving the customers, allowing us to minimize some of the conflicts that I saw that existed. We also had a few too many layers, and I have made some changes there to create a bit more agility. And like I said, we have lots of great talent, but we still need to upgrade sales talent throughout the company, and that's a continuing process. So the good news, these are all execution issues that we've identified and that we're all over. And I feel like the changes that we've announced will really help us to accelerate our growth going forward.

[Jeffrey P. Meuler:]

Okay. And then any comments on how Optimizer is performing and what the Q4 pipeline for Optimizer looks like? And then is there any plan to move Optimizer to the cloud, like you have Optimizer for Contacts in the cloud?

[Richard H. Veldran:]

Hi, this is Rich. So Optimizer was slightly down in the quarter. It can bounce around, as you know. The fourth quarter looks robust. We do have a very good read on our pipeline, as you would imagine, so we feel confident in our fourth quarter. In terms of your other question around the cloud, certainly we're looking at the best delivery mechanism for all of our products, right, so it's certainly something we could potentially contemplate. I don't know if Bob wanted to add...

[Robert P. Carrigan:]

Yes, Rich, I'll take it. As I mentioned in my remarks, we acquired some modern technology platforms through Credibility and also through NetProspex. And so we've been pretty aggressively moving products to those cloud-based platforms. And Optimizer is absolutely on the list there for us to move, particularly to the NetProspex platform. So that is in our plans, and that will really help us to modernize that solution and be an answer to our customers. So many of our customers are moving their technology budgets and their strategies to the cloud. An\d so the more that we can make our products available in that format, the better and more responsive we can be to those customers, and the more opportunity we can capture over time.

[Jeffrey P. Meuler:]

Okay. And then just finally for me, I didn't hear any comment on 2016 expectations. I just want to make sure that people's expectations are appropriate. Given that revenue growth is tracking towards the low end of your plan on an organic basis, are you now thinking low to mid-single-digit growth in 2016, or how are you thinking about 2016 organic constant currency revenue growth?

[Robert P. Carrigan:]

Look, I'm not going to provide 2016 guidance at this time. A couple things, we're very focused on execution in this very significant fourth quarter. It's all about delivering on our results this quarter and setting us up for 2016. This is the quarter to do that, and we're also deep in our budget planning. And then we've got this accelerating mix change that we talked about, where we've got this increasing deferred balance, which also plays into this. So for all those reasons, I'll look forward to giving you specific 2016 guidance in February.

[Jeffrey P. Meuler:]

Okay, thank you.

[Operator:]

Your next question comes from Andrew Steinerman with JPMorgan. Your line is open.

[Andrew Charles Steinerman:]

Hi. Over the last few quarters, we've increasingly spoken about the deferred revenues that just inflected. I think I understand deferred revenues well. They refer to both ratable and usage-based products, which I think is about three-quarters of your revenues. And so when I look at the deferred revenue growth, organic in the third quarter, how should I think about the timing of when that becomes revenue growth?

[Richard H. Veldran:]

Hi, Andrew, this is Rich. It obviously depends on the particular product, right? But as you think about a subscription product or a usage product, they tend to be really over the next 12 months – obviously, a subscription is pretty equally over 12 months. Usage can bounce around a little bit. But for the most part, those products you will see over the course of the next 12-month period.

[Andrew Charles Steinerman:]

All right. And so you do think that deferred revenue growth with a lag basis will influence the organic revenue growth for about three-quarters of your business right?

[Richard H. Veldran:]

It is a significant factor as I think about – it's more like – so about 60% of the business tends to really be things that have a pretty significant deferred impact. So yes, you will see that. The question that we'll be looking at very hard as we do our product planning is obviously does that trend continue or not, right, that we continue to shift more and more product towards more deferred things. Ultimately, we love that trend. Although it can be difficult in the short term in terms of reported results, the beauty of it is predictability over time, but also you're selling newer things that are more embedded into companies' workflows. So any day of the week, I'll make that trade-off.

[Andrew Charles Steinerman:]

Thank you.

[Operator:]

Your next question comes from Bill Warmington with Wells Fargo. Your line is open.

[William A. Warmington:]

Good morning, everyone.

[Robert P. Carrigan:]

Hey, Bill.

[William A. Warmington:]

So a question initially on DNBi growth, and I just wanted to ask on your thoughts there, when you start to see an improvement in that growth, meaning renewal rates and the price increases start to exceed 100%.

[Joshua L. Peirez:]

Hey, Bill. It's Josh. So first of all, I think as we've talked about on the last couple calls, we are seeing an improved rate this year. So year to date, while DNBi is still down 1% for the year, that's versus the 4% down we were last year. So we actually have seen that improvement based on some of the new functionality and packaging that we've done. We also expect, as Bob mentioned, our rollout of our cloud version late this year or very early next. And so we do expect that to actually help us initially as well, particularly with new business in the Americas, and with then upgrading customers. So we are seeing that trajectory shift already. And I should note that in this quarter, the trends were pretty consistent with what we've seen all year. However, with some rounding it's 2% versus the 1% down, but it's really consistent with what we've seen throughout the year.

[William A. Warmington:]

So I had a question for you also on organic growth coming into Q4. So looking at the comps, this quarter looks like on an organic basic basically zero versus zero in Q3 of 2014. As we go into the fourth quarter, you're going up against what was a 3% comp last year, although I realize that we don't have Australia in there now, so that may be one of the factors there. But I just wanted to understand what type of organic growth you are thinking of for Q4 or what's implied there.

[Richard H. Veldran:]

Obviously, we expect – this is Rich. We obviously expect an acceleration. I won't give you an exact number. You can imagine that it will allow us to deliver within our guidance range for the year. If you go back the last couple of years, we were obviously 3% last year. We were 4% the year before that in the fourth quarter. It is the seasonality of our business. It is that biggest quarter four, the fastest, the Optimizer product which is up front, and it does typically grow pretty fast in the fourth quarter. Lots of momentum into that and into pipeline visibility.

[William A. Warmington:]

And then you mentioned a large deal in the compliance space. I was just hoping you could give us a little bit more color on that.

[Richard H. Veldran:]

That was with one of our government agencies. That business tends to bounce around a little bit depending on government needs in any given year. So we do expect a little bit of choppiness, and you've seen that historically with us.

[Robert P. Carrigan:]

I think also one of the things we did talk about was that we had a couple of deals that have already been signed in Europe in the compliance space in fourth quarter. So that's not reflected in the results we released yesterday.

[Richard H. Veldran:]

Correct.

[Robert P. Carrigan:]

But you will see those come through.

[William A. Warmington:]

Got it, thank you very much.

[Robert P. Carrigan:]

Thank you.

[Richard H. Veldran:]

Thanks.

[Operator:]

Your next question comes from Shlomo Rosenbaum of Stifel. Your line is open.

[Shlomo Rosenbaum:]

Hi, good morning.

[Richard H. Veldran:]

Good morning.

[Shlomo Rosenbaum:]

Hey, Bob, I just wanted to ask a little bit of follow-up on a question. You seem more reticent to talk about the potential to get to 4% growth next year versus where you were really three quarters ago. Is this more of a deferred revenue-related question, or is it more of a sales issue-related question?

[Robert P. Carrigan:]

Hi, Shlomo. So look, as I said, this mix issue has been an accelerating change. And so as we look out to next year and especially as we get through the fourth quarter, I want to see how it plays out. We like it; we like the trend in general. It accelerated beyond what we thought this year, obviously. But I did say we also have some sales execution issues, which we're all over and have been all over it, and I think we're very much addressing those issues. So I feel really great about where we're headed with our strategy. It just feels like, given that I'm right in the point of budgeting right now, I haven't even presented a budget to my board yet. Hence, we're very much heads-down closing Q4. I just want to talk about 2016 when we next chat in February.

[Shlomo Rosenbaum:]

Okay. And just a comment on the usage-based revenue that's been booked that has to get recognized in fourth quarter, whether it's use it or lose it. Is that a significant amount for this year? Basically, in order to get to say 2% growth for this year, you really need a 4% growth quarter. And I'm just looking at it based on your pipeline. Is that really in the bag, or is it not really in the bag? And even 4%, would it just round you up to 2%?

[Richard H. Veldran:]

Look, this is Rich. Obviously, just if you go on our history, go back, again, 3% last year, 4% the year before in the fourth quarter. So we typically do see a strong fourth quarter. I won't get into more specifics beyond that. In terms of your specific question on the usage products, we do tend to see the usage a little more skewed towards the end of contracts, and we did have a fair number of new contracts that happened in the fourth quarter last year. So as you can expect, there will be some usage that does takes place in the fourth quarter, which also helps the growth.

[Shlomo Rosenbaum:]

So is that a yes, you have comfort in that, or no, you don't have comfort in that? I'm just trying to get the answer.

[Richard H. Veldran:]

We've reiterated our guidance. So certainly, we have confidence in our fourth quarter.

[Shlomo Rosenbaum:]

Okay. And given where we are, wouldn't it make sense to narrow that organic guidance down? Does the range still makes sense vis-à-vis where it was in the beginning of the year, given where you've come out in the first three quarters of the year?

[Richard H. Veldran:]

Look, Shlomo, as you know, because we have this conversation probably every year, that's fine. I tend not to like to guide within the range, personal preference. Our fourth quarter is such a significant part of our year. That to me, there's just not a lot of value in it. You can make your judgment on where you see us year to date. But I don't see a lot of value in guiding within the range given the fourth quarter dynamics.

[Shlomo Rosenbaum:]

Okay. And just alliances, is alliances accelerating its growth? And is there some kind of view that the growth in alliances could overshadow the increase in deferred revenue so we could get some actual recognized revenue growth trajectory that would look healthy?

[Joshua L. Peirez:]

Shlomo, it's Josh. I'm sorry, I think we are seeing really nice growth from the alliances area, and we did see a very strong third quarter across a number of different parts of the alliances business. Again, we're in planning, so for next year I can't predict sitting here today whether we would see that overshadow the deferred balance. But I do think that – I want to emphasize. We do plan to grow alliances consistent with we shared on Investor Day, consistent with the portfolio, which we're really pleased with, and the number of blue-chip companies that we've signed deals with over the last year where we're just starting to see them really come to market. And so that is an exciting part of the business that we do plan to continue to push on and to accelerate over time. I would also say that I wouldn't look at it as overcoming the deferred. I look at the deferred as a positive trend that will show up. So any of the deferred you're seeing ramp this year flows into next year, as we've shared. We see most of that usage or ratability occur over a 12-month period. So we are feeling that that is a trend we like.

[Shlomo Rosenbaum:]

Hey, Josh, the point I want to make on that though is that for a few years, we were hearing that the alliances business does not go into deferred, and therefore we're not really seeing the deferred revenue is not as good an indicator as what we're going to – the underlying health of the business. What we're saying now is that the deferred revenue is growing, and therefore we're not seeing as good revenue growth, and it seems like we're playing both sides of fence there.

[Joshua L. Peirez:]

Sorry, Shlomo. So just to be clear, we're actually saying the alliances growth consistent with the trend we've been sharing and consistent with what we've said would have contributed another two points in deferred that you're not seeing in the deferred based on committed deals that are not shown in the deferred balance.

[Shlomo Rosenbaum:]

Right.

[Joshua L. Peirez:]

So that is still there. We are also saying that the growing deferred is not a trend against the alliances. That is actually a trend against what you would have normally seen in direct revenue where sales that could have been on a product with upfront recognition in prior years have now come through in sales that are actually in a deferred product, either usage or ratable-based. And so you can look at that more against those direct sales revenues than versus alliance sales revenue.

[Shlomo Rosenbaum:]

Okay, that's fair. Thank you.

[Operator:]

Your next question comes from Andre Benjamin with Goldman Sachs. Your line is open.

[Andre Benjamin:]

Thanks, good morning.

[Robert P. Carrigan:]

Hi, Andre.

[Andre Benjamin:]

I was wondering how we should think about the SG&A line and the range of outcomes there as you focus on revamping the sales organization. I know you're really focused on motivating people and putting the right people in the right roles. So is there anything that we should be thinking about as you look to budget as to why trends there may change from what they've been?

[Joshua L. Peirez:]

Hey, Andre, it's Josh. Sitting here today, again, we're in planning, but I wouldn't expect major changes there. I think that we have the opportunity to actually better incentivize the things that we'd like to see. And so I wouldn't expect to see major changes in the overall number that we report relative to performance.

[Andre Benjamin:]

And then I guess on the back of Shlomo's question about the range, I know you're not going to tighten it per se. But I guess similar to an exercise we've done in prior fourth quarters, is there anything that you can do to just help us paint what would happen to push you to the top of that range in your head versus the likely outcomes that would push you to the bottom?

[Richard H. Veldran:]

I really don't want to get into hypotheticals on it. Otherwise it's just a theoretical math exercise, so that to me wouldn't necessarily be useful.

[Andre Benjamin:]

Okay, thanks.

[Operator:]

Your next question comes from Manav Patnaik with Barclays. Your line is open.

[Manav Shiv Patnaik:]

Hi, thanks. Good morning, guys.

[Robert P. Carrigan:]

Hi, Manav.

[Manav Shiv Patnaik:]

Hey, Rich, one question for you is just, another way to ask about the fourth quarter, we've seen a lot of companies obviously come out and – I don't want to say blame, but talk about the tough macro and some headwinds there. Is there anything on the macro side that we should be worried about that could sway your results there in terms of – or I guess in another way, what sort of visibility do you have in terms of that revenue booking?

[Richard H. Veldran:]

Look, for us it's really about our own execution. I think macro in the moment has less of an impact on our ability, so it's all about our own execution. Again, because many of the deals in the fourth quarter are pretty big deals, we have pretty strong visibility into our pipeline. So we have a pretty good sense of what's going to happen.

[Manav Shiv Patnaik:]

Okay. And then, Bob, I guess just a bigger picture question. I think this is probably like the fourth or fifth time since I've been covering D&B that we've heard of the sales issues and I think pretty much everything you said in terms of layering and blocks and bureaucracy and all that kind of stuff. So I guess outside of what you mentioned with upgrading the talent, how comfortable do you feel that you've now de-layered enough, or could we have in another year or so another wave of realigning the leadership teams here?

[Robert P. Carrigan:]

Look, I've really benefited from being heads-down in this in the last couple of months. And the changes that we announced, and look, a lot of the things that we've done here in the rank-and-file over the last two months I think will address a lot of the issues. Our strategy overall, I talked a lot about the five pillars of our strategy, which go beyond sales execution. And so we're dealing with a whole lot of things in this multi-faceted strategy, and I'm pretty pleased overall with how things are going. Certainly, the sales execution issues are there to some extent, and it's not an overnight fix. It's something that we have been working on. I do think that with the appointment of Josh in this role, overseeing all of our channels and the customer focus that he brings and his knowledge of the products and what really works for our customers, I think that in combination with the de-layering that we have done in the last couple of months and the alignment that we've created, I think these are all things that are very positive. But again, it's all about execution. It's all about making it happen. And you can be rest assured that I and Josh and the team here are very, very focused on upping our sales execution.

[Manav Shiv Patnaik:]

Got it, fair enough. Thanks a lot, guys.

[Operator:]

Your next question comes from Brett Huff with Stephens, Inc. Your line is open.

[James Rutherford:]

Thanks for taking...

[Robert P. Carrigan:]

Hi, Brett.

[James Rutherford:]

Hey, good morning. Thanks for taking the questions. This is James Rutherford in for Brett actually, a couple questions. First on the Emerging Business, I was just wondering if the Credibility sales force has begun to sell Hoover's and DNBi yet, if there's any indication of a better trend in the SMB portion of your traditional business.

[Robert P. Carrigan:]

I'll start and, Josh, you could – you know. So what we did was we moved the entirety of our small business operations under the Credibility team to form Emerging Businesses. So we moved Hoover's. And look, DNBi skews disproportionately to our small-to-medium business customers. So yes, they're already involved in selling those solutions. And over time, our goal is to be able to offer to our Emerging Business customers a suite of services and applications that will help them improve their own Credit-on-Self and their own Credibility to be able to get visibility in giving credit to others, and also with the sales and marketing solutions to find new customers. Leveraging the model that the Credibility team has been so successful with across Hoover's, and DNBi is critical with that. I will say also, we've seen some innovation – early innovation on Hoover's. One of the things that the Credibility team has done so well is they built these concierge level of services, which are essentially paid-for service plans that are value-added services to the existing products. And so they've added a concierge element to Hoover's, which is something we had never done, and their team is out there selling it and having some good success with that. So it's just an example of how they're leveraging some of their best practices in the things that have worked for them in the Credit-on-Self business historically how they're already leveraging that with products like Hoover's. So over time, we hope to see more and more innovation and more and more of these products moving directly to their platform. And that really is the strategy behind the Emerging Businesses concept.

[James Rutherford:]

Okay, great. And just to follow up to that, are the positive changes Jeff [Stibel] is making and going to make are primarily around the product or around the way it's sold and the incentives that happen in the sales force?

[Joshua L. Peirez:]

Hey, it's Josh. Actually, it's really across the business in how we operate to serve our SMB clients. So it's in the value prop. It's enhancing the products, as Bob mentioned. But it's also in the systems that we're having the reps use, the way they go to market, the offerings that they have in their bag, and their ability to close deals quickly through more streamlined processes. So it's really an across-the-board set of changes. And consistent with some of the earlier comments, we're actually taking a lot of the learnings on how Jeff and his team have made those changes quickly with the team that they've taken on here post-integration. And we're applying those across the broader sales force as we move forward to figure out how we can streamline those processes and make those value props easier for them to get into the hands of the customers quickly.

[James Rutherford:]

All right. Then just on Europe, I wanted to shift over there for a moment. I think last quarter you talked about a large pipeline of European deals. Did those just get pushed out, or are those still in the pipeline? And then just in general, why is Europe weak? Is it a competitive issue, or what's going there?

[Robert P. Carrigan:]

So we had – this is an area of compliance which we've identified as one of the use cases that we're excited about. We've had some particularly good traction in Europe. And we should say that we're on different fiscal years, and so the quarter ended in Europe in August. And so we had some deals that closed in September that are not yet visible in our results, particularly in the compliance space. We had a couple of really big sales, frankly, some of the biggest sales we've had, and we're really excited about that, and we are looking forward to reporting on those results as we go forward. But, we see some real momentum in this compliance space, particularly from the European team, and I think that's going to help them. There is more competition, particularly in the Benelux region, in the compliance space. So for us to have solutions and a greater focus around this particular area will help us to be more competitive and to win more business. And we're starting to see some early indications of that. Actually, you're not seeing that yet, but stay tuned.

[James Rutherford:]

Okay, thank you very much.

[Operator:]

Your next question comes from Jeff Meuler with Baird. Your line is open.

[Robert P. Carrigan:]

Jeff?

[Operator:]

There are no further questions at this time.

[Kathleen M. Guinnessey:]

Okay, great, thank you, everyone, for joining us, and we look forward to coming back to you in February.

[Robert P. Carrigan:]

Thank you.

[Operator:]

This concludes today's conference call. You may now disconnect.