Open Text Corporation
Q4 2012 Earnings Call Transcript

Published: 10 Aug 2012

[Operator:]

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the OpenText Corporation Fourth Quarter and Fiscal Year 2012 Financial Results Conference Call. [Operator Instructions] I'd like to remind everyone that today's conference is being recorded. I'll now turn the call over to Greg Secord, Vice President of Investor Relations.

[Greg Secord:]

Thank you, and good afternoon, everybody. I would like to start off the call with a reading of our Safe Harbor statement. First, note that during the course of the conference call, we may make statements relating to our future performance of OpenText that contain forward-looking information. While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast or projection in the forward-looking statements made today. Certain material factors or assumptions were applied in drawing any such conclusion or while making any such forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and the material factors or assumptions that were applied in drawing the conclusion while making the forecast or projection as reflected in the forward-looking information, as well as risk factors that may affect the future performance and results of OpenText, are contained in OpenText's Form 10-K and 10-Q, as well as in this press release that was issued earlier today, each of which may be found on our website. We undertake no obligation to update these forward-looking statements unless required by law. In addition, our conference call will include discussion of certain non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to their most directly comparable GAAP measures have been included in today's press release, which may be found on our website. And with that, I'd like to welcome everybody to the call. With me today is OpenText President and CEO, Mark Barrenechea; as well as our CFO, Paul McFeeters. As with our previous calls, we'll read prepared remarks followed by a question-and-answer session. The call will last approximately 1 hour with a replay available shortly thereafter. I'd also like to direct investors to the Investor Relations section of our website where we've posted an updated PowerPoint that will be referred to during this call. We've also posted a summary table highlighting OpenText's historical trend and financial metrics. As a reminder, OpenText will be holding an investor briefing on the morning of September 6 at the New York Palace Hotel in New York. The presentation will feature new members of the management team and will provide a detailed review of our EIM strategy, as well as our new cloud services offerings and global distribution initiatives. This briefing will be webcast for those that can't attend in person, and all presentation materials will be made available on our website in advance of the meeting. Please contact our Investor Relations department for more details. Also, I'm pleased to announce that in the coming weeks, OpenText will be presenting at several investor conferences, including the Canaccord Genuity Annual Growth Conference in Boston on the 14th of August and the Deutsche Bank Access 2012 Technology Conference in Las Vegas on the 11th of September. Details of these and all other investor events are available in the IR section of our website. And with that, I'll hand the call over to Paul McFeeters.

[Paul J. McFeeters:]

Thank you, Greg. Turning to the financial results, I will highlight our fourth quarter and then fiscal year 2012. Total revenue for the quarter was $306 million, up 7% compared to $285 million for the same period last year. License revenue for the quarter was $78 million, down 2% compared to $80 million reported in the same period last year. Maintenance revenue for the quarter was $153 million, up 8% compared to $151 million the previous year. Services and other revenue in the quarter was $65 million, up 17% compared to $55 million in the same period last year. Gross margin for the quarter before amortization of acquired technology remained relatively stable compared to last year at approximately 73%. Pretax adjusted operating margin before interest expense and stock compensation was approximately $85 million this quarter compared to $74 million in Q4 of last fiscal year. Adjusted net income increased to 12% this quarter, up from $61.7 million in Q4 of last year. Adjusted earnings per share was $1.17 on a diluted basis, up 11% from $1.05 per share Q4 of the prior fiscal year. The sequential effect of foreign currency movement on adjusted earnings per share for Q4 was a negative $0.02. The adjusted tax rate for the quarter is 14%, the same as it was last fiscal year. Net income for the fourth quarter in accordance with GAAP was $8 million or $0.14 per share on a diluted basis, compared to $29 million or $0.49 per share on a diluted basis for the same period a year ago. There are approximately 58.8 million shares outstanding on a fully diluted basis for the fourth quarter. Operating cash flow for the quarter was approximately $80 million compared to $52 million in the same period prior year. Turning now to our fiscal 2012 results. Total revenue was $1,207,000,000, up 17% compared to $1,033,000,000 in fiscal 2011. License revenue for the year was $294 million, up 9% compared to $269 million. Maintenance revenue was $657 million, up 17% compared to $561 million at fiscal 2011. And service revenue was $257 million, up 26% compared to $204 million in fiscal 2011. Gross margin for the year before amortization of acquired technology was 72.4% for fiscal 2012, compared to 73.6% for fiscal 2011. The reduction was partially due to revenue mix and some decline in customer support margins. The pretax adjusted operating margin before interest expense and stock compensation was approximately $330 million or 27.3% for fiscal 2012, compared to $285 million or 27.5% in the prior fiscal year. Adjusted net income increased by 14% to $270 million in fiscal 2012, compared to $237 million in the prior fiscal year. Adjusted EPS was $4.60, up 13% compared to $4.07 in the prior fiscal year. The adjusted tax rate remained at 14%, the same as it was last year. Net income for fiscal 2012 in accordance with GAAP was $125 million or $2.13 per share on a diluted basis, compared to $123 million or $2.11 per share on a diluted basis for the same period in the prior fiscal year. There are approximately 58.7 million shares outstanding on a fully diluted bases for fiscal 2012. Operating cash flow was $266 million for fiscal 2012, an increase of $43 million compared to $223 million in fiscal 2011. On the balance sheet, at June 30, 2012, deferred revenue was $227 [ph] million compared to $266 million for the same time last year, and accounts receivable was $154 million compared to $155 million at the end of the last fiscal year. Days sales outstanding was 48 days as of June 30, 2012, compared to 49 days at the same time last year. Our headcount remain relatively flat from last quarter at approximately 4,600 employees, of which 43% are in sales and services, 17% in customer support, 27% in R&D and 13% in G&A. On July 2, we announced the closing of the EasyLink acquisition, adding an additional 540 employees. This was a strategic acquisition for us, and Mark will discuss, gives us cloud strategy instant scale. EasyLink has made significant investments in their cloud infrastructure and gives us a broad data center footprint with over 40 points of presence in 25 countries. In their last full quarter being -- before being acquired by OpenText, EasyLink closed approximately $44 million in total revenue. This was down approximately 5% year-over-year. While we would expect some attrition upon integration, we also expect to add additional revenues with our OpenText products that we will host in the cloud for Cloud Services. At this point on a net basis, we'd expect the Cloud Services revenues to remain fairly flat through fiscal '13. As we move into fiscal 2013 and as a result of adding a new revenue stream to our operations, we will now report Cloud Service as an additional revenue line along with additional cost of sales line in our financial statements. I would also note that the gross margins will be presented differently in our financial reporting, compared to EasyLink disclosure, as OpenText will classify some items in cost of sales, which are reported in their G&A, primarily regarding customer support activities. This reclassification will put the gross margin for this business in the 58% to 60% range versus the 54% to 56% range that they have reported. In our press release, we showed that the percentages of revenues and expenses in each of our major currencies. A major currency mismatch is between U.S. and Canadian dollars, and we hedge up to 80% of that exposure. With the acquisition of EasyLink, our percentage of revenues in euros will reduce by approximately 6% of overall revenue, and this will narrow the gap in the natural hedge of revenue and expenses in euros. Even with the dramatic drop in the euro in Q4, our net earnings were only affected by a negative $0.02. We have updated our pretax adjusted operating model for fiscal 2013 as shown in our investor PowerPoint in the Investor Relations section of our website. As I noted, we have now 4 revenue lines after adding Cloud Services. We've also expanded the gross margin section to break out the gross margin ranges for our 4 revenue categories. Additionally, we've tightened some of the ranges for the operating costs. We expect our annual non-GAAP operating margin to be in the range of 26% to 30%. Our recent acquisitions continue to have an impact on the overall operating margins from FY '12 into FY '13, including recently-acquired EasyLink. We have also recently discussed continue to invest in our distribution network. The combination of these will result in our fiscal '13 adjusted operating margin remaining relatively flat to fiscal 2012. Of course, our operating earnings will grow through organic growth in the business, as well as accretive acquisition of EasyLink. Our projected tax rate of adjusted earnings will remain at 14%. In the past, we made reference to historical seasonality in our license revenues. While recent quarters have had more variability than in the past, we're still of the view that Q1 license revenue should be down 10% to 20% from Q4, and Q2 should be up in the range of 20% to 30% from Q1. We expect Q3 to be down in the 5% to 10% range from Q2, followed by Q4 turning up 20% to 30% above Q3 levels. Our customer support renewals remain in the 92% range, while our new maintenance averages 20%. So in summary, we are investing for growth while maintaining our margin focus. Cloud Service is an exciting new business that is additive to our revenue stream and accretive to our net operating earnings. Now I'll turn the call over to Mark.

[Mark J. Barrenechea:]

Well, thank you for the overview. Fiscal 2012 was another strong year for OpenText. I'm pleased with our Q4 license performance, which rebounded strongly after a challenging fiscal third quarter, and I'm excited about our fiscal 2013 outlook. Let me spend time today discussing 3 key attributes of our business and our future

[Operator:]

[Operator Instructions] Your first question on the line today comes from Tom Liston with Versant Partners.

[Tom Liston:]

Mark, just, you did allude to it a fair bit, but on one of the slides, you talk about the growth drivers. I think there was 9 or so, and acquisitions was a bottom line. I wondered if that's by design. And the second part of that, if -- it's kind of interactive, but is there 1 or 2 key elements of those 9 or so initiatives that you think will drive the most impact to a new license revenue?

[Mark J. Barrenechea:]

Sure, Tom, thanks for the question. So yes, acquisitions is listed at the bottom of the list by design. As I highlighted, we've put plans in place to where we believe we will grow license organically here in 2013, and of course, we'll continue to be a strategic acquirer. Now in terms of the path to grow license, number one, of course, is our direct sales force. Number two would be focusing our install base, better coverage of our install base. Third is looking at expanding our channel and so on, sort of as I highlighted in the script. So I think we got some really good paths in place for organic license growth as we enter '13. And if we look back on Q4, we had a good execution in Q4 on license. So one, direct sales force; two, coverage model, new markets, channel expansion.

[Operator:]

Your next question on the line comes from Scott Penner with TD Securities.

[Scott Penner:]

First of all, Mark, can you give us a -- an update on the hiring relative to the goal of adding 20%? And how do we think about the people coming over from EasyLink in that context?

[Mark J. Barrenechea:]

Yes. So 2 questions there. Let me start on EasyLink. We're a disciplined acquirer, and we know how to integrate companies. And when we integrate quickly, we have -- we accelerate our successes. We've taken the approach on EasyLink to integrate the business very quickly. We've defined a very clear mission, a very clear focus and have integrated the business from day one with Capture, Connectivity, and FDDG into one team. If we look at their business model, they have sort of their set of top accounts, but the majority of their business is actually indirect and through the channel [ph]. So we moved very, very quickly in integrating the business and doing that on day one. And that just comes from lots of experience and history, that when we integrate quickly, we accelerate our successes. In relation to the hiring, the hiring is going well. We enter fiscal '13 executing, and our hiring, I would say, is going well. We're more focused right now on increasing yield and productivity; and on a certain level, we'll always be hiring, as we continue to grow the direct sales force. But in short, I'd say it's going well. I'm pleased with it, and we enter the year executing.

[Operator:]

Your next question on the line comes Eyal Ofir with Canaccord Genuity.

[Eyal Ofir:]

Just on the BPM, you talked about how you've stabilized it. Can you guys give us any either revenue indications or any form of metrics to help us get to that same conclusion?

[Paul J. McFeeters:]

Eyal, it's Paul. As you know, we're not breaking out the revenue in that business, but put it this way. In our original plan discussions, our Q4 will be back on track. As you know, in the middle of the fiscal year, we were disappointed, but I can tell you that Q4 came back to our original plan. So that's why we're confident with it, and that was with respect to the top line and the margin.

[Operator:]

Your next question comes from Blair Abernethy with Stifel, Nicolaus.

[Blair Abernethy:]

Mark, I wonder if you can give us a little more color on progress with the Oracle relationship and anything to update as well on the SAP side?

[Mark J. Barrenechea:]

Sure thing. So in terms of Oracle, as I've talked about in the past, it's really about our capabilities. That's the starting point of the discussion, how compelling is our offering. I think we've cracked that code, and we will have the next version of our product out in the second half of the year, with more capabilities integrating into their financial suite and their database, extending the ability to have information flows for purchasing, customers' assets, as well as archiving underneath that environment. So I'm very pleased with the progress on the roadmap and what we feel we need to deliver there. I highlight that on SAP, we've been at it for only 3x as long than as we have at Oracle, but I say we have our roadmap together at this point. There's no barriers to entry in working with the OpenText Field. We're winning business, but we'd like to bring our capabilities up to par as we have on SAP. As it relates to our SAP relationship, it continues to be very strong. We see lots of growth opportunity around the world, and I continue to hold the relationship and structure up as one of the best partnerships and structures that I've ever seen. So I'm optimistic about the continued growth with SAP, and I think we have our Oracle roadmap in line for something compelling to deliver at this point.

[Operator:]

Your next question comes from Kris Thompson with National Bank.

[Kris Thompson:]

Mark, you had touched on Microsoft in your prepared statement. SharePoint 2013 is now available in public beta. Can you maybe just give us an overview of what new functionality over SharePoint 2010 is in that release? What new solutions OpenText is launching to complement SharePoint 2013 and maybe just touch on your revenue growth expectations with the 2013 solutions going into the next couple of years? I mean, I know you said it grew, but how much do you think you're going to expect OpenText revenues to grow tied to Microsoft?

[Mark J. Barrenechea:]

Fair enough. So as I said in the script, customers are looking towards us to either replace or surround SharePoint, and SharePoint was primarily designed, and still is designed today, as an extension to Office. And in our review of Microsoft SharePoint 2013, we don't see really big advancements within the product line, so it doesn't change our view and outlook. There are new APIs and some new protocols we have to talk to, but our strategy hasn't changed. We're going to stay focused on governance and compliance, extending it for BPM, extending it for Capture, extending it for CEM. So looking at '13, I would describe it more as being platform current than having to change our approach. So we're taking a view we just need to be -- like any next version of an operating system, you need to become compliant and current. So we need to become compliant and current on SharePoint 2013, but we're not seeing great advancements functionally, and it doesn't change our approach or views on SharePoint. We don't break down -- we don't break out publicly -- We're expecting A, B, and C from SharePoint Microsoft, SAP, but I would expect to see growth from the Microsoft products in 2013.

[Operator:]

Your next question on the line comes from Brian Freed with Wunderlich Securities.

[Brian Freed:]

Can you talk a little bit about how you look to balance your license revenue growth targets with opportunities for Software as a Service and hosting?

[Mark J. Barrenechea:]

Brian, thanks for the question. So in managed hosting, we're still selling a license, and we're selling maintenance, and our hosting fees are additive, right? They're additive to what we're doing. On the Applications as a Service, these are new additions to our revenue stream. And at the end of the day, it's really going to come down to customer choice of how they want to deploy, whether they want to deploy on-premise or whether they want to deploy in our cloud. But our current view is that when we look at Applications as a Service -- we don't use the term SaaS -- Applications as a Service and managed hosting, we see these as additive revenues and not swaps, not swapping like for like. Again, on managed hosting, if the -- if the customer purchases a license, they can either deploy it at their place or deploy it at our place. And if they deploy it at our place, we have an additional revenue stream.

[Operator:]

Your next question comes from Thanos Moschopoulos with BMO Capital Markets.

[Thanos Moschopoulos:]

Mark, can you provide some more color on the partnership front? You've highlighted the channel as playing a key role in your growth. And can you just talk about some of the initiatives you've been undertaking on that front, whether there's been any recent developments worth highlighting with respect to SI Partnerships, for example, or with any other channel partners?

[Mark J. Barrenechea:]

Yes, sure thing. Thanks for the question. Yes, we've done a lot of thinking and as we enter FY '13 as to our distribution model, and of course, we got a lot of attention on our direct sales force, as we should. But we see, really, 6 other layers here. We see a strategic alliance layer, system implementers, bars [ph], distributors, OEM and technology partners. So this is framing our thinking, framing how we engage both with customers and partners, and we're going to execute to this 7-layer model on FY '13 and beyond. What's new in the model? I would say you're seeing a stronger emphasis on companies like Ingram Micro and Software House International. I announced -- I talked about on the -- in the script a growing partnership with Cisco and Xerox. So those are the points I would highlight to progress

[Operator:]

Your next question comes from Michael Nemeroff with Credit Suisse.

[Michael Anderson:]

It's Mike Anderson for Michael. So 2 questions. One is for Mark, just more at a high level. To use a sports metaphor, what inning do you think that OpenText is in, specifically in relation to you and the management, with respect to the changes that you want to make after your initial assessment of the company? And do you think there are many more changes to make? And if so, what are -- what would -- how would you focus those changes? And then one quick one for Paul, could you just comment a little bit on the sequential decline in customer support revenue?

[Mark J. Barrenechea:]

Very good. So I love baseball analogies. So when I look at the functional structure and the individuals leading those functional structures, we're complete. We're done. With the addition of Greg Corgan, I look at Greg as a capstone to the changes that we really started to put in place over 7 months ago, and thus, we're entering fiscal 2013 executing. So I don't know. Maybe it's a seventh inning stretch in terms of having completed those changes.

[Paul J. McFeeters:]

Mike, Paul on your second question, yes, our deferred revenue balance actually peaked through the end of Q3, and they declined each quarter subsequently thereafter. And if you look at the history, that's our pattern, and that's because we have a large percentage of contracts that renew in December, including the highest deferred balance, technically January 1 of accordance, but when it shows up in our balance sheet at the end of Q3. Then, declines Q4, 1 and 2 and then picks up again in Q3. So that's been our pattern. There's nothing underpinning that that's directionally of concern on balance of the deferred revenue, et cetera. That is just the seasonality pattern of our contract renewal and deferred revenue correspondingly.

[Operator:]

Your next question comes from Richard Tse with Cormark Securities.

[Richard Tse:]

Yes, Mark, sounds like the functional changes are all done, but you've got a lot of products that you're going out with, so can you explain to us how you have or how will you organize the sales force around these multiple product areas and whether that's done now or what you have left to do here?

[Mark J. Barrenechea:]

Yes. Fair enough. Thanks for the question. The model that Greg and I both believe in strongly is that our AEs need to know the strategy of the company. They need to know the broad strokes of the portfolio and have intimate knowledge of the customer and their needs. And then behind that, they need to have specialized teams who can help them advance an opportunity in more specialized areas. I believe an AE should know our core offerings of ECM and BPM, but also have specialized teams behind them who can get into maybe more of the nuanced areas of our core offerings or more of the specialties within our portfolio. That concept of AE direct engagement with accounts and specialty teams have put in place as we enter FY '13. So we've gone through our account segmentation work, our coverage maps and our specialty teams as part of the completed work as we enter fiscal '13. I'll also note that in terms of our sales force structure, we had less than 5% of relationships changing between an AE and a customer. So of all of our completed work, we kept a very mindful eye that we are not going to change relationships between the company and a customer.

[Operator:]

Your next question comes from Tom Liston with Versant Partners.

[Tom Liston:]

Just a follow-up. You, obviously, break down total revenue by geography, but within the EMEA, it was flat. Can you talk about the license revenue environment and kind of close rates and then what you're seeing post-quarter and just a general kind of view of the pipeline there?

[Mark J. Barrenechea:]

EMEA specifically?

[Tom Liston:]

Well, yes, and is there pockets of strength within -- whether it's Germany or U.K. Obviously, you're hearing a lot of different things. Some vendors are having a really tough time in Europe. Some are actually doing pretty well considering the backdrop of the macro. So could you give us your view on how you fit and what -- where -- there are some maybe perhaps some strength or concerns?

[Mark J. Barrenechea:]

Fair enough. So in Q4, EMEA was roughly 38% of our book of business. As I look at the pipeline coming into Q1 in the first half of the year, feels relatively strong actually for us in EMEA or we seem to be executing well in France, Germany, U.K. And I would note that our -- many of our offerings helped customers in this time around governance and compliance, so I'm actually cautiously optimistic on our EMEA outlook as we look into fiscal 2013. We're also looking at emerging Europe with opportunities in places such as the Czech Republic, Poland, Russia, Turkey, to name a few. So I think on that balance overall, I'm cautiously optimistic about our ability to execute in fiscal 2013.

[Operator:]

Your next question comes from Scott Penner with TD Securities.

[Scott Penner:]

Paul, can you just lay out any expected charges related to the -- to EasyLink acquisition and whether the CapEx profile of the company changes post-acquisition?

[Paul J. McFeeters:]

I'll deal with CapEx first. Last year, we spent about $28 million in CapEx, and this year, that will only increase slightly, maybe $2 million or $3 million. So that -- and combined, it really hasn't gone up. I appreciate the question. It's really not going up materially that we're going to be able to continue to invest in the infrastructure in the cloud. So that will be our expectation there. I know it's a little early on the restructuring charges, although obviously, there will be some. So my best range estimate right now will be between $12 million and $15 million. Maybe 1 to 2 in this quarter and then probably flat, equally in the following 3 quarters for this fiscal year.

[Operator:]

Your next question comes from Paul Treiber with RBC Capital Markets.

[Paul Treiber:]

Large deals rebounded nicely from Q3, but it looks like midsized deals are only up 1 over Q3. Can you provide some detail on some of the dynamics at play between large deals and the midsized ones? And then also, how many of the large deals closed in the quarter were ones that slipped from Q3 and subsequently closed in Q4?

[Mark J. Barrenechea:]

Paul, thanks for the question. I'm not seeing any dynamics per se on the midsized deals. It's how the mix worked out, if you will, in the quarter. So I don't see any dynamics there per se. There's no doubt that some of the deals from Q3 that were pushed did close within the quarter, which certainly helped -- I think it was 8 or 9 deals that we had over $1 million in Q4.

[Operator:]

Your next question comes from Eyal Ofir with Canaccord Genuity.

[Eyal Ofir:]

I just have a quick follow-up question. On the commentary you made on the cloud offerings, Mark, can you just talk about what your plan is from a go-to-market strategy once you launch all the applications in the cloud? And if you do target potentially some SMB accounts as well, do you go through a different channel as well?

[Mark J. Barrenechea:]

Yes, thanks for the question. Our initial focus is our install base. We have a good-sized install base. We know the customers, know how to engage them. I would classify us as a traditional enterprise company going after Fortune 10,000 firms. So we're not looking to really change our go-to-market model to increase adoption of our cloud. I'd say we're going to go after our install base and remain focused on the large enterprise firms around the world.

[Operator:]

Your next question comes from Kris Thompson with National Bank.

[Kris Thompson:]

Mark, Tom Jenkins, a couple of years ago, used to talk about the growth opportunity in China, and I couldn't help but notice recently Huawei announced a global technology partnership agreement with SAP. And I haven't heard you talk about China since you've been at the helm at OpenText. Can you maybe just walk us through your view on the growth opportunity in China?

[Mark J. Barrenechea:]

Sure. Good question. APJ was roughly 9% of our revenues in fiscal '12, and I -- and it's certainly one of the -- albeit on a smaller base, one of the exciting -- more exciting geographies for us in terms of a growth number. We have beachheads in Australia. With EasyLink, our Japan business could near double year-over-year. We have a strong hub in Southeast Asia out of Singapore, going after Malaysia, Indonesia. And part of our market expansion for fiscal 2013 is both India and China. And within China specifically, it's a close alliance with SAP within China, and both India and China have upsides for us. But if I look into -- at fiscal '13, with the addition of the EasyLink business, we're going to near double our business in Japan. We're strong in ANZ, we've got a strong hub in Southeast Asia out of Singapore. And 2 of the greater growth opportunities for us is India and China. Our China strategy is very tightly aligned to SAP, and within India, it's a little more aligned with the large system implementors, such as Wipro, Infosys and Tata Consulting Services. More to come on that through the fiscal year.

[Operator:]

Your next question comes from Gabriel Leung with Paradigm Capital.

[Gabriel Leung:]

I've got a question for Paul. I just want to go back to an earlier question around the maintenance revenues. I think the question was why -- if you had any color as to why the maintenance revenue itself declined quarter-for-quarter. And I think your explanation talked about deferred revenues. But just looking specifically at maintenance revenues, should we read anything to the fact that maintenance revenues was down $3 million or so on a quarter-over-quarter basis?

[Paul J. McFeeters:]

Good question. Thank you. That is all due to FX. There's absolutely no trending, again, there's no trending concerns there underlying deferred maintenance. But of course, in Q4, by itself, is where we had the dramatic drop in the euro, and certainly, our maintenance line has the typical representation of our percentage of revenues, I think around 25% in euro and that had that impact on it. So that, again, was a, strictly an FX effect.

[Operator:]

And that concludes our question-and-answer session. I'll turn the call back over to Mr. Barrenechea for closing comments.

[Mark J. Barrenechea:]

Well, I'd like to thank everyone for joining us today. I'm really pleased with our Q4 and fiscal '12 results. I hope you can see from today's call that fiscal 2013 is an important year for the company, with our focus on organic license growth, in addition to our continued focus on solid financial metrics. We enter fiscal 2013 executing. If you have not had a chance, please see our investor deck and current financials under our Investor section on opentext.com, and we appreciate your feedback on how we present company information. Paul and I look forward to seeing you at our Investor Day on September 6 in New York City at the Palace Hotel. Please see Greg for the details. This concludes our call today.

[Operator:]

Ladies and gentlemen, that does conclude our conference call for today. Thank you for your participation. You may now disconnect your lines.