MobileIron, Inc.
Q4 2017 Earnings Call Transcript

Published: 9 Feb 2018

[Operator:]

Welcome to the MobileIron Fourth Quarter and Fiscal Year 2017 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]. I'd now like to turn the conference over to Erik Bylin. Please go ahead.

[Erik Bylin:]

Thank you, Operator. Good afternoon and welcome to MobileIron's fourth quarter and fiscal year 2017 financial results conference call. Joining us from the company are Simon Biddiscombe, CEO; and Shawn Ayers, Interim CFO. The format of the call will be remarks by Simon. Then Shawn will provide details on the financials. We will then have time for questions. If you have not received a copy of today's press release, please go to MobileIron's Investor Relations website at investors.mobileiron.com. Today's conference call contains forward-looking statements that involve risks and uncertainties, including statements regarding MobileIron's revenue, operating expenses, GAAP, and non-GAAP financial metrics, projections, and trends. All of these forward-looking statements, but subject to a number of significant risks, uncertainties, and assumptions. Actual results could differ materially from the statements made on this call. Please see the Risk Factors section of our SEC filings. All statements made on this call are made as of today. We assume no obligation and do not currently intend to update any such forward-looking statements. If this call is reviewed after today, the information presented during this call may not be current or accurate. With regard to non-GAAP financial metrics, while we believe them to be helpful in understanding MobileIron's financial performance, they are not meant to be considered in isolation or as a substitute for comparable GAAP metrics. They should be read only in conjunction with MobileIron's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the non-GAAP financial metrics to the GAAP metrics can be found in our press release and on the Investor Relations page of our website. Unless otherwise stated, results shared today will be non-GAAP. At this time, I'd now like to turn the call over to Simon. Please go ahead, sir.

[Simon Biddiscombe:]

Thank you, Erik, and good afternoon. In my remarks today, I will provide comments on our fourth quarter financial performance, share some detail on our view of the markets we serve, and then discuss how we are poised to win in 2018. I'm very pleased with our financial performance in the fourth quarter. Our gross billings and revenue were each quarterly records for MobileIron. Gross billings were $60.3 million above the top end of guidance and up 9% over the fourth quarter of last year. Our cloud solution continues its strong growth trajectory and represented $11.4 million of billings in the quarter, up more than 110% year-over-year. Revenues were 48.8% also above the high-end of guidance and up 7% over last year. Recurring revenue grew 15% for the fourth quarter and this improvement is significant, because as I previously discussed, our recurring revenue is the best proxy for our true rate of growth, as we continue our transition to a cloud and subscription business. Recurring revenue now stands at 75% total revenue and is on an annualized run rate of $140 million. Our gross margin came in above guidance and OpEx was below the mid-point of our guidance. This led to positive operating margins for the first time in the company's history and more than $10 million in cash flow from operations for the quarter and $3 million for the year. I'm very proud that we were able to deliver on these longstanding commitments to our investors. Shawn, will provide further details on our financials in his prepared remarks. Turning now to our view of the markets we serve. We are very well-positioned in a growing market and MobileIron products provide the greatest protection against the most critical threats. IDC projects that over 1 billion new smartphones will be shipped for business use in the next three years. We believe each of these devices will require a security solution to protect business data. The amount of business data on these devices will also grow, driven by the explosion of cloud services, and the corresponding mobile apps that employees use to access those services. The threat landscape is also evolving. Employees readily connect to unsecured Wi-Fi, download business data to unsecured endpoints or take actions that expose their data to malware. This is a real and growing threat, with a number of reported cyber attacks targeting mobile devices, doubling every six months for the last three years. This means business data has been downloaded every day to hundreds of millions of devices that may not be protected by a security solution. Lots of devices, lots of data, lots of threats, security is not optional. The mission for the CIO is to give employees the ability to use the cloud services, apps, and endpoints they want with a fantastic user experience, and at the same time, to ensure that business data never falls outside of IT's control. You can't pass a security audit or BGDPR compliant, if you don't know where your data is. IT must be able to delete data if an endpoint is lost, stop data from being shared with consumer apps, and stop data from being compromised. The MobileIron Cloud and endpoint security platform now provides an integrated end-to-end solution to secure data from the endpoint to the cloud. MobileIron EMM technology established a trusted workspace on the endpoint to protect business data and preserve the privacy of personal data on Android, iOS, Mac OS, and Windows 10. MobileIron Access adds seamless single sign-on across mobile apps and blocks untrusted devices and apps from accessing cloud services like Office 365, Salesforce, Slack, Workday, and so on. MobileIron's threat defense have zero day threat detection and remediation. Together the platform now ensures that enterprises can deliver all the apps the businesses needs without compromising data security. No other vendor has this end-to-end modern security solution to protect data from the endpoint to the cloud. We win when security matters. Our competitive advantage is the depth of our cross-pack security architecture, combined with the native experience we provide end-users, across the different apps and cloud services they want. I can't think of a single enterprise that uses only Windows PCs and Microsoft apps. Most large organizations support Android, iOS and Mac OS and Windows endpoints which then access cloud services from dozens, if not hundreds of application providers. Securing this multi-cloud, multi-OS world is our strength and that is reflected across our customer wins from the last quarter. A new customer is the National Institutes of Health, a U.S. government agency. MobileIron is helping secure the NIH mobile infrastructure, as they create and share scientific and business knowledge. We're excited to announce their participation as a new cloud and access customer. Another customer example is BS Energy, a German company involved in electricity, gas, water, and infrastructure. We're helping BS Energy become GDPR compliant, using our mobile threat solution to detect and remediate known and unknown mobile threats. MobileIron fits perfectly with their needs, as we will become essential tool for their mobile processors to secure and manage large amounts data in their mobile applications. Tucson Electric Power is a new mobile and Access customer. They deliver safe, reliable power, to more than 414,000 customers in the Tucson Metropolitan area. MobileIron Access is helping to ensure customer data security and provide a seamless and productive user experience for the Tucson Electric Powers employee base. Further demonstrating our reach in the European market, MobileIron recently expanded its relationship with SNCF one of our largest customers. SNCF is the French state owned railway company with more than 180,000 employees. The company decided to broaden its coverage from basic email security to more advanced security for apps and cloud services. Now let's turn our attention to the coming year. As we enter 2018, we have a huge installed base of blue chip customers who are accelerating their digital transformation to mobile and cloud services. For us, this drives multiple growth factors. First, we are very well-positioned with an outstanding product in the EMM market. With improving sales execution, we believe we can grow faster than the market. Second, our Access solution continues to gain traction with customers who recognize the imperative of keeping business data secure, while enabling a seamless and productive user experience on any device or app. Third, our MobileIron mobile threat detection which continuously detects advanced network device and application mobile threats in real time has met with swift acceptance and closed multiple deals in Q4. We believe we can significantly increase our revenue from our installed base devices by adding Access and MobileIron threat detection. To capitalize on our market opportunity, we need strong go-to-market execution. I'm thrilled to see the early successes of our new sales leader Greg Randolph. I believe as Greg continues to drive executional excellence, we will see better performance and greater efficiency. Last week, we announced a very important next step in our relationship with Google. Together, we're collaborating on a new end-to-end platform to enterprise cloud services that will bring together Google Cloud's Orbitera commerce platform and MobileIron's app distribution security and analytics capabilities. A planned solution is designed for operators and enterprises, with a focus on making it easier and more secure for enterprises to buy and use cloud services. The initial customer response has been very encouraging and we look forward to providing more color in future quarters. In closing, I'm very pleased with the progress we made in 2017, and as we enter 2018, I believe we are well set for success. I would like to thank our customers, employees, partners, and shareholders for their continued support. I will now turn the call over to Shawn for his remarks. Shawn?

[Shawn Ayers:]

Thanks, Simon, and good afternoon. Our discussion today refers to non-GAAP financial measures unless otherwise noted. Our press release, Form 8-K, and website provide a reconciliation of GAAP to non-GAAP financial results. In the fourth quarter, billings and revenue were above the high-end of our guidance, with strong revenue that came in slightly above our gross margin guidance, while our operating expenses came in below mid-point. For the fourth quarter ended December 31, 2017, gross billings were $60.3 million, up 9% year-over-year. Our recurring billings in the fourth quarter were $45.6 million, up 15% year-over-year and made up 75% of total billings in the quarter. Revenues were $48.8 million, up 7% year-over-year. Perpetual license sales were $12.6 million, down 12% year-over-year, as new customers continue to show a strong preference for subscription solutions. Revenue from subscriptions consisting of both term subscriptions and monthly recurring charges or MRC was $19 million, up 16% year-over-year. Term subscription revenue was $14.6 million, up 39% from a year ago. MRC revenue was $4.4 million, down 24% from a year ago. Revenue from software support and services was $17.2 million, up 16% year-over-year and we continued to enjoy renewal rates of about 90%. Revenue from recurring sources for the fourth quarter was $34.8 million, up 15% year-over-year. We believe that recurring revenue reflects combined performance data on seats, contract length, billings mix, and renewal ASPs. Since ASPs have generally been flat, the rate of growth for recurring revenues has been highly correlated to the rate of growth of cumulative seats. We believe recurring revenue is the best proxy for organic growth. On an annualized basis, our recurring revenue was running at slightly under $140 million per year. Non-GAAP gross margin in the four quarter was 87.3% slightly above the high-end of guidance. This was stronger than expected because of higher revenues and continued operating efficiency of our customer success organization. Total non-GAAP operating expenses were $42.4 million below the mid-point of our guidance due to strong cost controls. Turning to the bottom line for the fourth quarter we reported a GAAP net loss of $7.9 million and non-GAAP net income of $274,000. GAAP EPS was a loss of $0.08 per share and non-GAAP EPS was breakeven. Looking at 2017, MobileIron surpassed the $200 million threshold in total billings for the year, coming in at $200.9 million, an increase of 10% over the prior year. Revenues were $176.5 million, up 8% year-over-year. More importantly, we grew recurring revenue by 15% in 2017. Gross margin came in at 85.3% for the year, up 1.6 percentage points. Even with billings growing 10%, we were able to hold our cost structure relatively flat during the year. And in fact over the last two years, we've improved our operating margin by 24 percentage points. Moving to the balance sheet, we ended the quarter with $92.6 million in cash and short-term investment, up from $82.2 million in the prior quarter. In the fourth quarter, cash from operations was $10.4 million and capital expenditures were $1.4 million. For the full-year, cash and short-term investments increased $2.4 million from $90.2 million at December 31, 2016. DSOs for the fourth quarter of 2017 were 72 days. In general, we expect our DSOs to remain in the 70 to 80 day range. Deferred revenue was $112.5 million at the end of December versus $88.1 million the prior year, up 28% year-over-year. The strong growth is a reflection of the ongoing transition of our business to subscription. I'd like to share a preliminary view regarding our 2018 financial outlook. Note that this outlook reflects our current accounting methodologies, and as such, does not include any potential impact to either revenue or net income associated with the pending adoption of ASC 606. We're adopting ASC 606 in Q1 2018 using the full retrospective method in order to provide investors with the greatest level of clarity about the trends in our business. Our first quarter of 2018 guidance is as follows

[Operator:]

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from James Faucette of Morgan Stanley.

[Simon Biddiscombe:]

Hi, James. We can't hear you.

[Meta Marshall:]

Sorry. This is Meta for James. A quick question if you could just kind of refer to what you're seeing as far as the competitive environment for like what you're seeing out there clearly you guys kind of have a leading product if you're doing security, but just what you’re seeing as far as kind of other competitors in the space who may be bundling portions?

[Simon Biddiscombe:]

Yes, this is Simon. So there is really three of us that are relevant to the marketplace, ourselves, Microsoft, and VMware, and each of us are taking slightly different approaches to how we attack the market at this point in time. When it comes to Microsoft, I mean we beat Microsoft when people are looking for a comprehensive government grade best-of-breed security platform to enable that business transformation, right. So that's when we beat Microsoft frankly, we continue to view their product as being somewhat immature inconsistently adopted would be the right way to look at it and not scalable they certainly don't have anywhere near the multi-OS, multi-cloud types of capabilities that we have. So we beat them time and time again when security matters, we beat them time and time again, when multi-OS, multi-cloud environment is something that our customers demanding. When it comes to Airwatch, different value propositions that they're offering, they’re trying to persuade you to Workspace ONE is the way to move in the world and ultimately they would like you to be using one view, the VMware view of the world across all devices and that's not the native experience that we as end-users have become so comfortable with over the course of the 10 years that we've been using Mac OS, Android, and iOS devices. So we continue to believe heavily in the native experience and we beat VMware where that is the user preference. So that's how I see the current dynamics in the market. I think we’re doing very well against the competition for each of those reasons.

[Meta Marshall:]

Got it. And then just there -- clearly there used to be a lot of smaller players and so there's a lot of installed base that people who have solutions that may not have been invested in to stay current. I guess just wondering in customers and opportunities that you guys have are they traditionally Greenfield or are they traditionally people who might have had kind of a first-generation MDM solution?

[Simon Biddiscombe:]

It's a combination. If you want to think about it that way, so first and foremost when we talk about companies that have -- may have already chosen our solution that we aren't in a position that we're able to replace at this point in time a lot of that's actually Blackberry device. So we do replace tremendous amount of Blackberry in the field. I'm happy doing that for an extended period of time, we've touched on that in previous earnings calls obviously. So as it relates to both VMware and EMM Solutions maybe we're going to deploy Blackberry is the greatest opportunity for us and continues to be that way especially where people care about security which is where we've done very well in that highly regulated financial services and frankly governments right so that exists. The other part not to forget is even where we have one customer over time in many instances the EMM footprint is not as broadly penetrated as you may think it is. So we still think that the crossover existing customer base is probably around 30% deployed. And as I said in my prepared remarks, if we take the combination of the numbers of devices, and the increased security needs associated with the business data that's going to be on those devices as we move forward, we think you're going to see an increased penetration of our technology across the customer base that we already have and then you layer on top of that what we can do at Access, you layer on top of it what we can do with the MobileIron threat, defense capability and we're able to extract more dollars from every one of those devices as well as being on the footprint of the device itself.

[Meta Marshall:]

Got it. And then just a quick financial question, there is a pretty big spike in the deferred revenue for support. I guess I just wondered is that all new contracts, is that people lengthening the terms of their support, just any contacts there would be helpful. Thanks.

[Simon Biddiscombe:]

Yes, Meta, I'll answer that one as well. So you will actually see the perp was fairly strong in the fourth quarter there and that's fairly common for us perpetual license business actually performed fairly well and then you get a natural bump to the deferred revenue associated with the maintenance agreement as a result of that. So that’s the principal reason.

[Operator:]

Our next question comes from Robert Breza of Northland Capital Markets.

[Robert Breza:]

Hi, congratulations on the good quarter specifically the operating cash flow. Nice to see, looking at the full-year guidance, Simon I was just wondering is there anything that would change kind of the historical shape of the year or how should we think about the shape of the 2018 outlook?

[Simon Biddiscombe:]

Yes. I think so, it's a good question. So let’s first of all if I may talk about what we're seeing and how we built the model right. So first of all, we provided the billings and revenue guidance that we provided which at the mid-point is roughly 7.5% on billings and roughly 10.5% on revenues right. And that's the underlying performance of the business is obviously much stronger than that as we continue to see a mix shift towards subscription transactions and away from perpetual transaction. So 2017, we said that rate of growth was closer to 15%. I actually think that's going to accelerate this year by the way. So I think you'll see north of 15% from a recurring streams of billings and revenues in 2018. So the businesses is accelerating, just can’t see it in the headline numbers at this point. And then if you double-click on okay, so what's happening in the EMM component to it Access and then mobile threat. We've got great confidence in what we're going to be able to deliver around EMM but you can absolutely believe we got the best solution in the market at this point in time. And then, I think Access and MTT are going to continue to improve the financial performance throughout the course of the year. So to specifically answer your question, if you look at what I expected of Access and mobile threat capability, I certainly think that's going to ramp throughout the course of the year and that might result in you seeing a little bit more of a backend loaded year than you might otherwise have seen it will be just the EMM market that we were serving. So those new products as they continue to ramp in the market will continue to benefit us on a quarter-by-quarter basis as we move forward.

[Robert Breza:]

Got it. And then maybe this is a follow-up as Greg has come onboard, how has he kind of reshaped the salesforce, made changes or any kind of high level thoughts you could provide that would be great? Thanks.

[Simon Biddiscombe:]

So he will be onboard 90 days right, so we're going to be careful not to get too far ahead of ourselves. As I said in my prepared remarks I'm absolutely thrilled with what I've seen from him so far. He is very execution focused, he did fantastic job in delivering Q4 numbers, so been able to deliver billings number and our revenue number that were in excess of the guidance that we provided was partly attributable to what Greg brought to the table in the fourth quarter and if I look at what he is doing at the moment as it relates to making sure that there is a discipline and a rigor as to how the sales organization engages with customers, generates pipeline, manages its forecast, process, he is held accountable for efficiency metrics and so on. It's different then had previously existed at this company and I'm thrilled with what I've seen so far. And frankly, the team has brought in, I'm really happy with how the sales organization has bought into what Greg is driving at this point in time. And I know that that our investors often get nervous by the fact that are you going to see significant churn when you change out sales leaders but we've seen none of that so far, the courses made any consternation whatsoever. So very happy with what I’m seeing and expect good things as we move forward through 2018.

[Robert Breza:]

Well it's good, the Honeymoon period continues, I guess so congratulations on the hire with Greg. Maybe one last question you mentioned briefly with the Google relationship and somewhat of a backend loaded year, I would assume we should expect probably some influence towards the back half from that partnership, as it's still generally new is that the right way to think of it?

[Simon Biddiscombe:]

Yes, absolutely, that’s absolutely the right way to think about it. So the relationship is new but obviously we keep working on this for an extended period of time right and we've directly the back half of last year, we were previewing the technology to mobile operators and enterprise customers. And as I said in my prepared remarks the feedback has been resoundingly positive and the solution that we're going to bring today is actually without a true competitor in the market at this point in time. And for whole series of reasons, we are excited about what we and the Google Cloud team going to be able to deliver as we move forward through 2018. But yes you’re absolutely right, the benefit from an economic perspective is certainly going to be back half and then it's 2019.

[Operator:]

Our next question comes from Raimo Lenschow of Barclays.

[Mohit Gogia:]

Thanks guys. This is Mohit Gogia dialing in for Raimo. Thanks for taking my question. So just a couple of questions, so just to reference what you said, so you guys are trying to monetize your installed base better and could you sort of give more color on is that do you think that the focus there is more around as a user fee growth is sort of like evolves that's where the penetration will improve or is that more around the new products like Access and Threat Detection the tax rates there will improve going forward. So just give more color on how do you intend to monetize the installed base better? And then also looking into fiscal 2018 and beyond as to how do you feel about just the new logo of growth and sort of what are some of the levers you can pull not just to monetize the installed base better but also to increase customer comps? Thanks guys.

[Simon Biddiscombe:]

So I think I touched on the first part of the question but let me try and answer it again. So if you look at our customers that exist today, we think our penetration across our existing customer base with the base EMM technology is about 30% at this point in time, okay and that number has been fairly consistent for some period. So opportunity number one expand the footprint across the existing customer base by putting the base EMM capable jump to more devices. Opportunity number two, is then to sell higher level solutions on to every one of those devices that we have under management that's where Access and mobile threat come to bear, so that's how we think about the opportunity as we move into 2018. Number one, expand the footprint; number two, monetize that footprint by selling higher value solutions across it. Ask me the second part of the question again if you would please?

[Mohit Gogia:]

Just wondering what are some of the levers like how do you feel about adding new logos and not just monetizing the installed base right now?

[Simon Biddiscombe:]

Adding new logos continues to be important. I don't want to give you the impression that's not the case. In many instances, those new logos are coming from Greenfield opportunities and in many instances they're coming from the replacement of our competitor's technologies as I referenced in the first answer to the first question earlier in the call, okay. So securing new logos continues to be important to us, monetizing the installed base is also important as we move forward. Next question?

[Operator:]

Certainly. Our next question comes from Michael Turits at Raymond James.

[Michael Turits:]

Hi guys Michael Turits. Great quarter, congratulations.

[Simon Biddiscombe:]

Thank you.

[Michael Turits:]

Two quick questions. First Access and mobile threat can you talk about what the uplift, revenue uplift is there and what you think attached could -- or penetration can ultimately be?

[Simon Biddiscombe:]

Yes, it’s a good question. So we'll talk about the uplift. The penetration we haven't talked about broadly, Michael. The technology is very nascent; certainly the Mobile Threat technology is very nascent in terms of its adoption at this point in time. But if you look at Access, Access has a list price of about $48 per year. So you can apply a normal software discount to that and you can start to understand that if you think about, the millions of millions devices we have under management, if we can start to penetrate some of that, continue to penetrate that existing installed base that we can extract. The $48 of list price and apply a discount into that. Mobile Threat continuing to work its way in the market that's for sure. The pricing is somewhat is not all over the map that will be an unfair characterization but pricing has continue to find its natural level in the market would be the right way to say it. And we need to make sure that as we bring those solutions to market that we don't put ourselves in a position where we are causing dilution to the margin and so on. So we're watching that market at this point time in terms of the pricing. The actual, the ASP to be fair is actually higher for that solution than it is for the Access Solution and I'm going to tell you what it is but the ASP for the Mobile Threat capability is higher than the pricing for Access as at this point in time.

[Michael Turits:]

And then as a follow-up there was a strong beat on perpetual as you pointed out, does that -- and anything to attribute that to you and does that in any way change seems to be the mix shift away from perpetual.

[Simon Biddiscombe:]

I think look I've always thought that the perpetual is going to bottom out at roughly 20% and if you look at the model that we gave you this afternoon it's roughly that number. And a couple of transactions here and here throughout the course the year can cause that to swing and we had a couple of good transactions in the fourth quarter. Typically we do see a couple of strong transactions in the fourth quarter that resulted in it being a little better than we had expected to. But nothing that causes me to believe that the base isn't right around that roughly 20% number that I've been talking about for a couple of years frankly.

[Operator:]

Our next question comes from Scott Searle of ROTH Capital.

[Scott Searle:]

Hey, good afternoon, nice quarter. Hey Simon I think you covered a lot of it today as it relates to some of the new opportunities in monetizing the base with Access and Mobile Threat but wondering if there is some additional opportunities and partnerships that you're exploring in the pipeline that we should be paying attention to might be further opportunities for monetization. And I don’t know if I missed anything on the call related to an update on desktop and IoT and then how that factors into the guidance for 2018? Thanks.

[Simon Biddiscombe:]

Sure. So, yes, we're always looking ahead of broaden the footprint from a technology perspective, Scott. Some of that is obviously organic investment but we’re going to extract new product from the R&D organization front. And then part of it will be a continued review of who are the right partners to help us monetize the installed base as move forward and obviously what we’re doing with Mobile Threat is a good example of at that at this point in time. There is nothing more talk about at this point in time but it is something that we’re continuing to -- we continue to look at on a day-to-day basis. In terms of IoT, so might IoT is unchanged over the course of the last 90 days what we said was that we weren’t going to do kind of three layer architectures which would be senseless, talking to gateways, talking to backend services. I continue to believe that was absolutely the right decision we have made. But we will continue to do EMM manageable IoT as Gartner and then characterizes it and things like kiosks at airports, kiosks when you check into hotels and things like that. So we’ll continue to invest in anything that is IoT but EMM manageable IoT as we move forward. So that’s certainly important to us. Now we didn’t talk about desktop neither from a Windows 10 perspective nor from Mac OS perspective during the call. You shouldn’t take anything away from that by the way other than the fact that we had three very specific points that we wanted to drive home associated with the growth trajectory of EMM, Access, and Mobile Threat as well. So please don’t read anything into it that is negative, Windows 10 and Mac OS continue to be very important to us as we talked about in previous quarters the Windows 10 is little slower than we expected it to be from an end user point of view and then Mac OS is very much from our perspective and our ability to manage those devices in its infancy at this point in time. So we will give you updates on that in future quarters just wasn’t something specifically I felt I needed to call out within the context of the current call.

[Scott Searle:]

Hey Simon just to follow-up and clarify those. So when we’re looking at 2018 guidance and what you're looking for billings and sales that that is largely then continues to be driven with the existing EMM platform and penetration and monetization expansion within that existing base of things like CA and Mobile Threat; is that correct?

[Simon Biddiscombe:]

You got it.

[Operator:]

[Operator Instructions]. Our next question comes from Michael Kim of Imperial Capital.

[Michael Kim:]

Hey good afternoon guys. Just going back to the Google partnership with Orbitera, can you maybe talk a little about the go-to-market strategy by channel and whether it's through ROIC? And then, secondarily I think you’re white labeling this solution, so is there anything that would preclude you from maybe replicating this strategy with some of the other cloud platforms beyond GCT?

[Simon Biddiscombe:]

Yes. So I’m going to be really careful how I answer this Michael because I don’t want to get ahead of ourselves in terms of what we’re communicating versus what Google is communicating okay. So a couple of things I can say. Number one is the opportunity to realize revenue streams in different ways than we've historically realized revenue streams is something that’s important to us, okay. So whether that’s us selling our capability through the platform itself or whether that's us receiving a revenue stream from the platform for other technologies is certainly something that we’ve got structured in how we think about the relationship at this point in time. So there are different ways that we can sell our technology, there are different ways we can realize revenue streams as a result of the relationship. And there is essentially a way that both we and Google have agreed across different routes to market, be they operator or be the enterprise and across different ways of thinking about who created the opportunity that we will be able to monetize the relationship as we move forward. So I’m going to leave it at that and not say too much more but it does bring a different framework to how we can think about our business moving forward.

[Michael Kim:]

Got it. And then I think I don't know if I missed this last quarter you talked about some gross billing numbers from Access, do you have sort of updated number for Q4?

[Simon Biddiscombe:]

I actually said last quarter I wasn’t going to do it every quarter. So no idea, we actually did provide that number, we’re actually pleased with the performance of the Access business in the most recent quarter but we’re not going to give that number every quarter.

[Operator:]

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.