Progress Software Corporation
Q2 2015 Earnings Call Transcript
Published:
- Operator:
- Good day and welcome to the Progress Software Corporation Second Quarter Investor Relations Conference Call. At this time, I would like to turn the conference over to Brian Flanagan. Please go ahead, sir.
- Brian Flanagan:
- Thank you, Don. Good afternoon everyone and thanks for joining us for Progress Software's fiscal second quarter 2015 earnings call. With me today is Phil Pead, President and Chief Executive Officer; and Chris Perkins, our Chief Financial Officer. Before we get started, I'd like to remind you that during this call we may discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives, or other information that might be considered forward-looking. This forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties. Please review our Safe Harbor statement regarding this information, which is available both in today's press release as well as in the Investor Relations section of our website at progress.com. Progress Software assumes no obligation to update the forward-looking statements included in this call whether as a result of new developments or otherwise. Additionally, on this call we may refer to certain non-GAAP financial measures such as revenue, operating margin and diluted earnings per share. You can find the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers in our earnings release issued today. Today we published our financial press release on our website and also furnished the information to the SEC in an 8-K filing. These documents contain the full details of our financial results for the fiscal second quarter 2015 and I recommend you reference these documents for specific details. Today's conference call will be recorded in its entirety and will be available via replay on our website in the Investor Relations section. With that, I'll now turn it over to Phil.
- Phil Pead:
- Thank you, Brian. Good afternoon everyone, and thank you for attending our second quarter earnings call. Our momentum continues in fiscal 2015 with a strong second quarter performance. We now have one of the largest developer communities in our industry and a suite of strategic solutions that offer those developers unrivaled choice and flexibility. Our ongoing commitment to become the preferred destination for application developers is helping to drive our financial performance with each of our business units contributing to our strong revenue and earnings this quarter. Let’s take a look at each of our business units starting with OpenEdge, which continues to show growth in line with our expectations. Our EMEA and APJ regions performed particularly well, and license sales to enterprise customers across all our regions were again a highlight. Our partner channel continues to strengthen with the majority of our revenue in the OpenEdge business unit being driven by the 1,400 partners worldwide who have written applications using our OpenEdge platform. We continue to focus on product enhancements and marketing support to enable our ISVs to sell more of their solutions to their customers. In support of this goal, there are several initiatives I’d like to highlight today. One of our partners’ main requests was for an analytic solution tailored to OpenEdge. As a result, we recently announced a partnership with Logi Analytics to launch Progress OpenEdge Analytics360, a new custom analytics platform that will help our customers unlock the value of the operational data from their systems of record. Analytics360 provides dashboards, reports, and over 100 pre-built KPIs as well as the data warehouse that’s already mapped to their underlying OpenEdge database. This pre-built content dramatically reduces costs and time-to-market providing a clear advantage to our partners and their customers versus traditional business intelligence tools. Our recent acquisition of BravePoint really facilitated our entry into analytics due to their extensive consulting experience and expertise in this area enabling us to also offer services to help our partners make analytics a key differentiator in their applications. We also released version 5.5 of Corticon, our business rule solution. The new release offers improved scalability and rule flow making it even easier for business analyst to identify, automate, and deploy business rules and decision systems without the need for expensive custom coding. A key aspect of modernization for our OpenEdge partners involves separating out the business logic and their applications, and this latest release of Corticon will make it much simpler for them to embed automated business rules as part of their solutions. Both analytics and our Corticon rule solution are add-on sales, which will generate incremental revenue for us as these new offerings are adopted within our OpenEdge customer base. Finally, in part through our ongoing partner enablement programs, most of our large partners now offer their application in either an on-premise or a software-as-a-service model, ensuring that they remain competitive in their markets and continue to appeal to new customers. As a result, revenue from our ISVs selling their solutions in a SaaS model continued to grow in the second quarter further increasing the percentage of our revenue that is recurring in nature. We see this as a trend that will continue in the future. Turning to our Application Development & Deployment Business unit, Telerik remains on its anticipated growth trajectory and our Pacific platform and Modulus continued to gain traction benefiting from our improved positioning in the Visionary category of Gartner's Magic Quadrant for enterprise application platform as a service announced in March. Sales of Telerik’s Dev Tools were strong, and bookings for Telerik platform, our full lifecycle platform for building enterprise-grade mobile applications continued to accelerate. We are extremely pleased that Telerik’s large developer community, one of the major benefits of our acquisition has grown from 1.3 million to 1.7 million developers. In May, our developer community came together for TelerikNEXT, our first global user conference for Telerik customers, which was very well attended. We showcased several of our new releases, and while the conference was primarily focused on our Telerik solutions, it was exciting to see many of our OpenEdge partners attending. Our Telerik solutions will prominently feature in our OpenEdge user interface modernization framework, which will be released during Q3. During the second quarter, we also announced exciting advancements in the Telerik Sitefinity platform. We’ve combined Sitefinity CMS, our web content management system with the newly released Sitefinity digital experience cloud to create a powerful Digital Marketing Command Center. IDC estimates that the market for worldwide marketing technology will grow from $20 billion in 2014 to over $32 billion in 2018 as more and more companies look for new ways to engage with their customers. Gartner estimates that by 2020, more than 7 billion people and businesses and at least 35 billion devices will be connected to the Internet, and companies will need to have strong digital competency and delivery capabilities in order to succeed in this increasingly digital world. That means their websites can no longer function as billboards, places where customers can find relatively static data about the company, and perhaps locate a phone number to contact the sales rep if they’re interested in buying something. Instead, they need their websites to be transformed into a digital sales channel helping them to convert leads into customers and close business. Our new Digital Marketing Command Center positions us well to take advantage of this transformation. Sitefinity CMS draws key data from individual customer interactions across channels and devices allowing businesses to personalize and optimize the digital experience for each individual who visits their website. It provides unmatched mobile support, and end users love the elegant intuitive user experience. The addition of Sitefinety’s digital experience cloud enables integration of third-party data sources providing an expanded 360-degree view of customer interactions. This allows enterprises to truly analyze and optimize the customer journey using predictive and prescriptive analytics to recommend changes to marketing programs in real time and increase conversions to drive sales and profitability. Sitefinity bridges the gap between marketing and IT by providing solutions for both. Marketing wants to build beautiful websites with personalized content and user experiences, while IT loves it because it's easy to work with, has a high degree of built-in security, is customizable, supports all devices, and provides data connectivity and accessibility from their existing systems of record all within the Digital Marketing Command Center. We also announced during the quarter that we've extended our modulus platform to support multiple languages by integrating with Docker. Modulus has being growing rapidly over the past year as a platform for deploying applications written in Node.js by utilizing Docker to offer support for multiple languages, organizations that have come to rely on modulus for their Node.js support can now use it to deploy scale and monitor other applications as well. This enables more simplified and efficient deployments and exposes modulus and Progress to an even wider audience of developers. I am pleased with the momentum of our data connectivity and integration business unit as we continue to add new OEMs and direct customers broad data solutions during the quarter. Although revenue was flat the last year it exceeded our expectations and the strength of our pipeline gives us confidence that our data business will exhibit strong growth in the second half of this fiscal year. We continue to add support for new data sources including our recent release of drivers for MongoDB and Spark SQL. MongoDB is one of the fastest growing open source databases and Spark SQL is a framework that enables much faster processing of data from Hadoop over 100 times faster than traditional methods. As enterprises increasingly adopt Hadoop as their data warehouse Spark SQL is the engine that will allow business intelligent vendors to access and process that data quickly and efficiently. With six of the nine vendors in the leaders category of the Gartner Magic Quadrants of business intelligence already using our drivers as their means of data connectivity, we are well positioned as they use Hadoop continues to grow. In summary, I am pleased to say that our future is trending positively. We are seeing strong engagement with our customers and partners as we offer a broader suite of strategic solutions. It’s also exciting to see a greater engagement with prospects that are coming to Progress for the first time. We are grateful for the increased media coverage with recent mentions in the Wall Street Journal Forbes and Fortune. Everyone is working tremendously hard behind-the-scenes to continually evolve our company and we are really starting to see positive outcomes from it. We look forward to sharing much more with you in the quarters ahead. I’d now like to turn it over to Chris to review in more detail our second quarter performance as well as our expectations for the third quarter and for the full-year of 2015. Chris?
- Chris Perkins:
- Thank you, Phil, and good afternoon everyone. We are very pleased that we exceeded our revenue and EPS guidance for our second quarter
- Phil Pead:
- Thank you, Chris. I have some exciting organizational news to share today. I am very pleased to announce that Jerry Rulli has been appointed as Progress’s Chief Operating Officer. In his new role he will have responsibility for driving the operations of our three business units OpenEdge, Application Development and Deployment and Data Connectivity and Integration. As you know Jerry joined Progress last August as the President of the OpenEdge business unit with over 30 years of experience in the software and technology industry and extensive operational expertise. Since his arrival he has done an excellent job in engaging with our OpenEdge partners and customers and has driven consistent quarterly growth. He is also been instrumental in the acquisition and integration of BravePoint and in our recently announced partnership with Logi Analytics both of which will make our ISVs more competitive and help them sell more of their solutions to new and existing customers. Appointing Jerry to this role builds on the success we've enjoyed since we implemented our business unit structure last year. We’ve benefited from the increased focus and accountability from having dedicated sales, product management and product marketing teams for each unit, resulting in go-to-market strategies tailored for each of our markets. We believe however that there are opportunities to accelerate our growth by maintaining our acute focus on our respective business segments, but also ensuring that we are leveraging common sales resources and exploiting product roadmap and marketing synergies. I'm confident that Jerry’s strong leadership will ensure our business units inter-operate seamlessly and I look forward to working with him in his new role to drive our future growth and profitability. With that, I'll hand it off to Brian for the Q&A.
- Brian Flanagan:
- Thank you, Phil. That concludes our formal remarks for today. I'd now like to open up the call to your questions. I ask that you keep your remarks to your primary question and one follow-up. I will now hand over to the operator to conduct the Q&A session
- Operator:
- Thank you. [Operator Instructions] And we'll take our first question from Steve Koenig with Wedbush Financial.
- Steve Koenig:
- Great, thanks a lot guys. I just have one question here; it’s like kind of a broad one, so let's see here. Well, I’d like to get some color on really kind of the – you’re thinking on the full-year guidance relative to the results we’ve seen in the first half. And in particular, I guess the contrast between the core business performance, which looks like in the first half constant currency we’re probably talking license is down double-digit, the overall business, pretty much flattish maybe slightly down just a smidgeon,but then for the full-year with the 5 to 6 or 6 to 7 with that constant currency guidance if you could maybe tease out some of the factors here such as OEM renewals later this year or maybe visibility to OpenEdge deals, any headwind from the SaaS revenue recognition in OpenEdge, how much the factor has that been in the first half. So maybe just some color on the magnitude of the various puts and takes that get you that acceleration that you're expecting in the second half?
- Chris Perkins:
- Yes, first Steve this is Chris. I just want to chime in on the comment that our license revenue is down versus last year. Again, I think well certainly it wouldn't be the case. It would be up from last year again excluding the acquisitions, and excluding the impact of the currency translation, so that’s certainly a major negative factor there, but we're transitioning - our base business grew in the second quarter excluding acquisitions 2% on a constant currency basis, and we grew our base business in Q1 on a constant currency basis. So I just want to make sure we level that we are not coming from a period of being declined to an increase. We have an increased level and our base business is expected to grow 10% to 11% in the third quarter compared to the prior year. So we do have a higher-level of growth in the second half, but we’re not coming from a period of decline.
- Steve Koenig:
- Yes, I was just talking about the license line, Chris specifically, but that’s fine, really I’m looking for a big…
- Chris Perkins:
- License is not down year-over-year.
- Steve Koenig:
- Okay. So can you comment though on your – still your expectations for acceleration in the second half looks pretty substantial. So I’d be interested in commentary there as well as any sort of color you can give us on the SaaS revenue recognition, how that impacts you?
- Chris Perkins:
- Sure, we see just kind of going across all of our business units. We see a good momentum in OpenEdge, we see a very significant pipeline in growth opportunity that we have very good visibility. So we expect that we’ll build a high degree of confidence that we’ll see that growth rate continue to step up based on the pipeline we have and the strength that we have - what we’re doing from the positive impact we are seeing - all of our partners actually selling more software to their customers. We do have an increasing level of SaaS revenue that we get from our OpenEdge customers is not truly SaaS revenue to us, but as they are selling more and more of their business on a SaaS model, we share in a portion of that revenue, so included in our license revenue is an element that is more SaaS related from our OpenEdge partners and we are seeing that continuing to grow steadily quarter-on-quarter as we go forward. So OpenEdge, we feel very strong about the strength and the motivation of our ISV partners and the success we’re seeing with our direct end-user customers as well are all contributing. On the DataDirect side - the data side, we’ve seen DataDirect to reach a point where they were flat in the second quarter over prior quarters. They continue to be below the prior year, so showing a negative growth. We have done several things, one that team has done a great job of building pipeline and executing on multi-year business agreements that we will be recognizing revenue on in the future quarters as well as again building a strong pipeline of net new OEMs and end-user customers. So we’re seeing – we have a very strong and high expectation that we’ll see very good growth year-over-year in the second half of the year. [Bigger] driver, but we’re seeing a positive growth in our other products which are a smaller element of our app dev division, but we are seeing them gain momentum.
- Steve Koenig:
- Great. Thanks very much for all the color and congrats.
- Chris Perkins:
- Thanks, Steve.
- Operator:
- Thank you. Next call from Mark Schappel with Benchmark.
- Mark Schappel:
- Hi, good evening. Phil, I was wondering if you could just give us an update on the Telerik business with respect to the plans of rolling Telerik into the broader Progress organization, specifically in terms of the sales force and maybe the product branding, it’s my understanding that to date, you’ve essentially left the organization somewhat separate from the broader Progress organization.
- Phil Pead:
- Yes, we've actually as I think I mentioned, when we did the acquisition, we were looking very much into Telerik rolling our assets into theirs and which is exactly what we did by utilizing their high velocity sales capabilities with the digital platform they have, we’re leveraging their capabilities for marketing qualified leads, and translating that into the capabilities that we have on closing more business. So the actual level of integration that we have at the people level has been specifically in those areas, on the sales and marketing area. With regards to the products sets, we are very excited about the release that we’re going to have in the third quarter, which enables our OpenEdge customers to take advantage of the Telerik UI tools to essentially transform and make more intuitive their front end applications to the systems record predominantly that are being built on the OpenEdge platform. And Jerry Rulli and his team have done a fantastic job at creating a framework that we are offering to OpenEdge customers really to enable them to take more of an advantage of their cloud infrastructure because as Chris mentioned more, more of our OpenEdge ISVs are now beginning to host their products in the cloud and offering SaaS pricing to their customers. So without that modernization framework that is in large part due to the Telerik tools it would be difficult for us to be able to offer that to our OpenEdge customers, so we’re thrilled with that. For the Sitefinity platform that I mentioned in my prepared remarks, our data connectivity software is actually included in the Sitefinity platform so that it enables especially in the digital experience cloud enables you to start getting access to multiple data sources much more easily and seamlessly to the developers then just with the Telerik data connectivity tools that we’re inherent in that software. So the Telerik folks are thrilled that they now have such a wide source of data connectivity solutions as a result of bringing everything together. I am really pleased with the way in which the acquisition is gone, the integration of the people and we are excited about the momentum that we got in our Telerik business.
- Mark Schappel:
- Great, thanks and one more strategic question, with respect to the emerging NoSQL database market for building web and mobile applications, the check Progress it appears now you know pretty close relationship with MongoDB to modules and that's good, but I’m just wondering Phil if you could just give us an idea are you working with any of the other NoSQL database platforms like Cassandra or Riak?
- Phil Pead:
- We are absolutely and most of the work that's being done there is obviously on our data side being able to connect to Hadoop and non-SQL databases because obviously that's becoming a large component of the analytics community. So but again those partnerships are important they may begin on the data side that we may see some other opportunities as a result of those relationships that we are building.
- Mark Schappel:
- Great, thank you.
- Operator:
- We will take our next question from Stan Berenshteyn with Sidoti & Company.
- Stan Berenshteyn:
- Good evening, thanks for taking my question. I was hoping to get some color as to what percentage of your OpenEdge clients or also clients of Telerik to being acquired and then I guess the second part would be you have seen any meaningful changes in that figure since the acquisition?
- Phil Pead:
- Yes, we actually I could just anecdotally tell you Stan that the number of OpenEdge customers that are using the Telerik is usually the Dev Tools solutions that our OpenEdge customers were using prior to the acquisition was much larger than we expected because we would really not done that analysis. I cannot give you the exact number right now, but I will tell you that it’s not insubstantial as far as the Telerik tools go. I’ll also tell you that the Telerik platform, the mobile platform is now integrated with our OpenEdge database. So OpenEdge customers can stop building mobile applications using the Telerik platform through the OpenEdge platform. So that level of integration is done and we are now able to offer that to our OpenEdge customers. So a lot of OpenEdge customers are beginning to use additional solutions from Telerik, but I’ll tell you I was pleasantly surprised by the number of Dev Tools customers that existed in the OE base. And I think we have something like 80 partners that attended the Telerik next conference, the first user conference that we had. So there's a significant interest in a lot of the Telerik solutions for our OpenEdge customer base and the reason for that is every one of them is looking to take advantage of the cloud opportunities that they have which requires them to modernize their application and take advantage of the digital transformation that’s going on in the marketplace right now and a lot of the Telerik solutions enable them to do that.
- Stan Berenshteyn:
- So just to make sure I understand on when an OpenEdge client uses other Telerik platform app dev platform is the revenue, the incremental revenue being recorded as Telerik revenue or is that OpenEdge revenue?
- Phil Pead:
- I'll let Chris…
- Chris Perkins:
- Yes, it would be included as Telerik revenue and again they would be consuming again prior to the acquisition and post acquisition through the channels of delivery that we have through our Telerik business today. So they would go again primarily it’s related to Dev Tools so again they would consume it, utilize it and whether they do it through a direct sales effort or a digital sales effort that would be recorded as part of the Telerik or app dev revenue.
- Stan Berenshteyn:
- Great, thank you.
- Operator:
- We will take our next question from Scott Zeller with Needham & Company.
- Phil Pead:
- Hi Scott.
- Scott Zeller:
- So I thought if you could explain to us the revenue benefits it seem thus far to the core business of Progress specifically OpenEdge because I think I heard plenty of strategic rationale and you mentioned about recording over some of the technology to make it available to the Telerik users as well as OpenEdge users to borrow. For example you just mentioned about database being available to those who were doing Telerik app development. Are you able to point to revenue benefits to the core business of OpenEdge thus far?
- Phil Pead:
- Well the way that we are looking at this, Scott is and we’re being very clear about this from the beginning. Obviously the more our ISV sell to their customers the more we in turn benefit because that’s the pricing model and the revenue model that we created a long time ago with the ISVs. And by making their products more competitive in the marketplace we believe that we’re enabling them to sell more. And the enablement is coming in multiple ways we’re either offering it on a technology basis some of which I just described and/or we’re offering it through marketing development funds, hosting the user conferences that they're holding. So there’s being an enormous amount of activity over the last two years really helping our ISVs become much more competitive with the solutions that they built. In addition there are lot of direct end users that we’re working with who also want to do the same thing modernizing their applications that haven’t been modernized in a long time, taking advantage of the technologies that we've added to the OpenEdge platform, but in addition to that taking advantage of some of the Telerik solutions that we didn't have obviously prior to the acquisition. And then finally another piece of the business that we weren’t able to offer and has actually been a barrier to us being able to grow our business is being able to offer services. So the acquisition of BravePoint is being very strategic to us to enable our ISVs to modernize their application and for our direct end users to take advantage of that same modernization, so that they can offer better systems of engagement with their customers using the backend systems of record that have been built on OpenEdge. So I can't give you again specific revenue examples on this call, but I will tell you that it has enabled our OpenEdge ISVs to begin to become much more competitive with their products as they roll out more and more the technologies that we’re offering them.
- Scott Zeller:
- And just to follow-up and maybe Chris you could help me here, but the as reported year-on-year OpenEdge growth I believe plus 2%?
- Chris Perkins:
- Correct.
- Scott Zeller:
- That’s correct. The estimate what it would have been if you had not bought Telerik, [would you] talking about negative growth?
- Chris Perkins:
- No, no the Telerik again if a OpenEdge partner or customer consumes one of the Dev Tools goes to the website download that use it, used it for their development. That revenue is included in the app dev revenue. So there's no Telerik revenue that’s included in the OpenEdge business. Today what Phil is referring to is that our objective is to help them grow their sales and customers and therefore grow the OpenEdge business and I think it would be difficult to attribute much of that directly in the second quarter since we own the business that their – the OpenEdge sales to their end user customers have grown because of the impact of Telerik, I would tell you the it wouldn’t be measurable or meaningful. But I think an opportunity long-term is what Phil was referring to. But any revenue or any consumption of the Telerik Dev Tools products by our OpenEdge base would be included in our app dev revenues. And I would say that's not a significant number at this point in time.
- Scott Zeller:
- And the last – just quick one. Can you - Chris tell us your assumptions again for the revenue contribution from both BravePoint and Telerik for the year I believe previously referred the fiscal year would be a $100 million? Could you please update us on that?
- Chris Perkins:
- We haven't given any specific numbers as far as what the revenue is but again Telerik when we acquired it they had a trailing 12 month revenue of $60 million when we announced the acquisition and our guidance was that we think the Telerik revenues will grow in excess of 20% year-over-year and we’ve said that of the growth that we will see in the OpenEdge business 6% to 7% of that is related to the year-on-year addition of BravePoint revenue related to the acquisition.
- Stan Berenshteyn:
- Okay. It sounds like there is no change to your assumption?
- Phil Pead:
- No, change to the assumption at this point.
- Stan Berenshteyn:
- Okay, all right. Thank you very much.
- Operator:
- We will go next to Glenn Mattson with Ladenburg Thalmann.
- Glenn Mattson:
- Yes, hi, gentlemen.
- Phil Pead:
- Hi, Glenn.
- Glenn Mattson:
- As we look at the model a little bit nice job on the cost control. I guess I'm wondering I know obviously you’re not going to have any guidance for 2016. But I am kind of wondering is the product development inflated this year as you integrate all these acquisitions and directionally do you expect that number to be I guess flat or down or up next year. And then I guess part of that is also, do you feel like you are getting to the spot with the past, the app dev solution set is getting pre-built out or is just a lot of more that you want to add in there either through purchases or internal development?
- Phil Pead:
- Let me take the last one right Glenn and I’ll hand it back to Chris. I don't think we’re ever done in the development world given the speed with which things are going on in the marketplace right now that we have a very good roadmap and I think the team that we have in place to deliver on those roadmaps are working hard to do that. I'm looking at 2016 as a year that I see some areas that we clearly need to accelerate and most of this by the way, comes from just looking at the growth in certain areas that we see that have great synergies or adjacencies with our existing business that we maybe able to take advantage off, but I think that in terms of the overall engineering capacity that we have I think we’re in pretty good shape right now with the resources that we got to deliver on at least the foreseeable roadmap.
- Glenn Mattson:
- Okay. So that would maybe imply that general trend wise would be more of a flattish number in 2016 perhaps for the line item.
- Phil Pead:
- I certainly would say that we have an expectation of rationalization through integration of the businesses. So I would not project it go down. Again we think our investments and our products are key to our future success in our growth objectives. So certainly what we factor down and again we haven't given any outlook for 2016 yet, but going back to rationalization.
- Glenn Mattson:
- Okay. And then just a follow-up you did a pretty sizable repurchase during the quarter. So as you think about capital allocation is there plans to continue to look at that because I think you are getting close to exhausting the current authorization?
- Chris Perkins:
- Yes, as I mentioned we have $15 million left at the end of the quarter, we had $50 million left under the authorization. Yes we’ll continue to evaluate that – we saw great opportunity. We see value in making investment in our stock during the second quarter it will continue to monitor that with our board in evaluating our overall capital allocation strategy going forward. So again we’re very pleased to go ahead and execute what we did in the second quarter.
- Glenn Mattson:
- Okay, great. Thanks.
- Operator:
- We’ll take our next question from Greg McDowell with JMP Securities.
- Rishi Jaluria:
- Hi, this is Rishi Jaluria dialing in for Greg McDowell. Thank you for taking my question Lot of them have kind of been answered just one or two quick ones. First, you talked a little bit about how Telerik is tracking with your expectations at roughly over 20 percentage growth. You also talked about how you saw Telerik bookings accelerated in the quarter I guess when you anticipate seeing that acceleration from Telerik on the top line?
- Phil Pead:
- Well, again I just give a background on making sure we’re clear on the revenue recognition related to Telerik. Telerik you know as we generally that sold where clients buy, when they buy a solution they pay for them but all the revenue is recognized ratably after the transaction takes place. So it’s generally recognized ratably over year there can be multiyear agreements, but so it’s ratable revenue recognition so very much it takes a while for that revenue once as there is growth it takes some time for revenue growth to show in revenue, so it is ratable revenue recognition. Then we will continue to give information on how our bookings and our outlook is trending, but again we feel it has met our bookings trajectory to support our expectations over 20% growth rate for this year, so that’s really all we’ve given and as we get some more time with that being part of our business and going into 2016 we’ll update that outlook.
- Rishi Jaluria:
- Okay. Great, thanks and then a quick follow-up so we’ve spoken a lot about Telerik, how does BravePoint perform so far relative to your expectations does that being tracking closely with expectations?
- Chris Perkins:
- Yes, it has. From a financial perspective it has tracked close and well with our expectations it's part of our modernization strategy which Phil has talked about today and in previous calls as well, so it’s a very good addition for us, it’s very well received by our partners and they are the tracking within our expectation.
- Rishi Jaluria:
- Okay. Great, thank you so much.
- Operator:
- And we will go to Steve Koenig with Wedbush Financials.
- Steve Koenig:
- Hi gentlemen thanks for just taking one follow-up here. I was curious on Sitefinity understand that you got the data connectivity portion and got the cloud functionality, can you tell us a little bit about who you are seeing in the marketplace either in CMS or marketing and who you might expect to see going forward in terms of kind of more modern next generation type providers?
- Phil Pead:
- Yes, it depends on the customer Steve it could be Sitecore is a big CMS vendor in the marketplace and we see them a lot obviously Adobe is a big player in that space then you got to move downstream depending on the price point of the customer, but essentially I would say that Sitecore is probably the biggest competitive for us in this space right now.
- Steve Koenig:
- And do you expect your differentiation here is going to be based on the data connectivity in the cloud or there other things as well that you are having more portfolio in the marketplace?
- Phil Pead:
- Yes, this is a very interesting market because the marketing technology space has being driven primarily by companies that are offering very specific point solutions to marketeers by that I mean that the product is something that you build out specifically for either content management, marketing automation, campaign management any of those multiple requirements that CMO's have for the enterprise. What we see as one of the biggest reasons that folks choose Sitefinity is because of the app dev [slam] to it that this is really an extensible platform so while you are solving the initial problem of delivering omni-channel content to multiple devices and being able to serve up content that’s very specific to your prospects interest. The developers within your enterprise can take that platform and start adding new applications or customizing the platform in a way that continues to create better conversions for the enterprise. And so if you think about websites today they’re actually a very sophisticated intelligent application platform. If you think about all the banking websites out there that the website itself is just the point of entry most people that are accessing those websites are actually conducting and transacting financial transactions on that platform that moving money around, they are looking at balances, they are buying stocks, they are selling stocks there is enormous amount that goes on that connects to their backend systems. And one of the key differentiators in this space for us we believe is the fact that we have a great appeal to the technologists within the enterprise who are trying to serve up to the CMO new ways of discovering prospects and customers and Sitefinity is an incredible platform to do that. So we look at this as both the data connectivity play, but probably a bigger portion of this is really the focus on app dev.
- Steve Koenig:
- Great, thanks so. Appreciate it.
- Phil Pead:
- Yes, thanks Steve. End of Q&A
- Operator:
- That concludes today’s question-and-answer session. At this time, I’ll turn the conference back to management for any additional remarks.
- Brian Flanagan:
- Thank you all for joining the call today. As a reminder, we plan on releasing financial results for our fiscal third quarter of 2015 on Thursday, October 1st, 2015, after the financial markets close, and holding the conference call the same day at 5
- Operator:
- This concludes today's conference. Thank you for your participation.
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