Qumu Corporation
Q4 2014 Earnings Call Transcript

Published: 6 Mar 2015

[Operator:]

Greetings, and welcome to the Qumu Corporation Fourth Quarter Full Year 2014 Earnings Conference Call. At this time, all participants will be in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Doug Sherk, Investor Relations for Qumu Corporation. Thank you, sir. You may begin.

[Doug Sherk:]

Thank you, Operator, and good afternoon everyone. After the close of the market today, Qumu issued a press release announcing its fourth quarter 2014 financial results. The release is available on the Company's corporate website at www.qumu.com. Before we get started, during the course of this conference call, the company will make forward-looking statements about its future plans, objectives, beliefs, expectations and prospects. For this purpose, any statements made today that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are not guarantees of future actions, outcomes, results or performance. By their nature, these forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from the results discussed in or implied by the forward-looking statement. A discussion of the risks and uncertainties that affect Qumu's business is contained in the company's SEC filings, particularly under the heading Risk Factors, and in the press release issued this afternoon. Copies of these documents are available online from the SEC or on the Qumu website. These forward-looking statements are made only as of the date this conference call was initially held and the Company assumes no obligation and does not intend to update these forward-looking statements after the date of this conference call, whether as a result of new information, future events, developments, changes in assumptions or otherwise. Now, I would like to turn the call over to Sherman Black, CEO of Qumu.

[Sherman Black:]

Thank you, Doug. Hello everyone and thank you for joining us on our conference call. This afternoon, we will review our fourth quarter and 2014 financial performance as well as our outlook. With me today is Jim Stewart, our Chief Financial Officer. The fourth quarter capped a very active and important year of transition for Qumu. During 2014, our efforts were focused on shaping Qumu to take full advantage of our leadership position in the growing enterprise video market while achieving several stretch financial targets. I am very pleased with the results and I would like to review them with you. We entered 2014 with a belief that adoption of video in the enterprise would continue to accelerate and provide Qumu the best opportunity for growth. Results of the past year reinforce that belief. Entering 2015, adoption of video continues to expand within the enterprise. The rapidly growing use of videos in consumer applications has led the way for increased demand in the enterprise where videos are viewed as authentic, engaging and an excellent communications tool. This growing demand for videos in business applications extends to both, internal and external audiences. To take full advantage of the opportunity in enterprise video, we sold our disc publishing operation in July. The sale allowed us to focus all of our attention and resources on the pursuit of this market opportunity. It also provided us with additional funds to enhance our leadership in the market. In October, we used some of those funds to acquire Kulu Valley, strengthening our competitive position and expanding our market reach. Kulu Valley's strength in cloud-based video content creation complements Qumu's leading content management and delivery capabilities. Both Qumu and Kulu Valley are known as technology leaders in the enterprise video market and both place a premium value on quality and customer service. As another testament to our superior technology, last month Qumu was named by Forrester as a Leader in Enterprise Video Platforms and Webcasting. Kulu Valley was named a Strong Leader in the same report. In determining these rankings, Forrester evaluated 16 enterprise video and webcasting providers on 24 criteria. To quote Forrester, Qumu offers "feature-rich portal and webcasting applications, a comprehensive set of integrations and robust mobile brows1er and app support." The report said Kulu Valley adds outstanding content creation capabilities and an easy to use interface for companies looking for a versatile, powerful and secure video platform. These are important differentiators and they are being recognized in the market. Kulu Valley's customers have largely been at the departmental level within an enterprise, where videos are most often used for external use cases, such as sales and marketing enablement and other external communications. Qumu has traditionally sold at the highest levels of an organization, where buy-in and approvals are required up the line and the videos are employed primarily for internal use cases. Kulu Valley's solutions are generally offered at a lower price point and the sales to deployment cycle is faster than Qumu's. While Qumu''s sales cycle is typically longer, pricing is higher, and if it is a term license, there may be a longer commitment. The combination of our strengths and go-to-market approaches allows the new Qumu to approach the market with best-in-class technology, strong service and video solutions that can serve the needs of the widest range of customers within the enterprise. We believe, we are approaching the market from a very strong position and are focused on driving scale in 2015. The execution of our 2014 plan resulted in Qumu achieving the financial metrics we established for the year. We generated contracted commitments of $39.4 million, an increase of 85% from 2013. Without the $2.6 million contribution from Kulu Valley, contracted commitments were $36.8 million, an increase of 72%. This performance met our 70%-plus target for contracted commitments for the year. We achieved record backlog of $27.3 million at the end of 2014, excluding Kulu Valley. Including Kulu Valley, our backlog totaled $31.6 million. Revenue for 2014 grew 49% from 2013 to $26.5 million. Excluding the $500,000 contribution from Kulu Valley, revenue was up 47%. We began 2015 well positioned to expand our growth in the market with a broader product line and an enhanced international presence. Our focus this year will be on taking advantage of these opportunities to drive strong revenue growth and to scale our operations. We are one company and we are now we are operating solely under the Qumu brand name. Kulu Valley products are now Qumu Cloud. Legacy Qumu products are marketed as Qumu Enterprise. I would like to spend a little time on the specific initiatives we are focused on for the year. We believe our Qumu Cloud product has great potential for global expansion beyond Europe, but it will take some time to establish a sales team. To that end, we are in the process of building a U.S. and Asia Pacific-based account executive sales team. Throughout the year, we will be augmenting our Qumu Enterprise sales team with dedicated staff to pursue Qumu Cloud opportunities in these geographies. We are also in the process of expanding our Qumu Cloud local language support to enable success in new markets such as Japan. We are consolidating our cloud operations to IBM’s SoftLayer global platform that will allow us to reach into all markets around the world. Finally, with our Qumu Cloud offering, we can target our sales and marketing efforts on external use cases in addition to internal use cases. We also have several key initiatives for Qumu Enterprise this year. We are focused on improving our international sales execution and driving more scale in that part of our business. We are targeting a higher attach rate of professional services to licenses, which should improve our profitability and customer satisfaction. We believe, we can achieve faster deployment of our solutions and improve our time to revenue recognition. With the Kulu Valley acquisition, we doubled our number of customers and we will pursue cross-selling opportunities within the combined client base. To support our growth expectations, we are working aggressively to scale our back office operations. This year, we will complete the separation and end our dependencies on the Rimage disc publishing operations, back office infrastructure and personnel. We will also fully integrate the back office operations of Kulu Valley. These projects are well underway and will improve efficiencies and accommodate our growth. We look forward to a successful 2015. The initiatives we have established and begun to implement will drive strong revenue growth and substantially improve profitability in 2015. We expect our financial performance to improve throughout the year as we continue to build out our sales force and as our international operations gain momentum and scale. We have an aggressive plan, but I can tell you based on our recent worldwide sales kickoff meeting and other interactions with Qumu employees, there is a great amount of enthusiasm in our ability to execute. I would like to thank the Qumu employees for their hard work and dedication that contributed to our successful 2014. Those are my prepared remarks about the growth and progress we are making at Qumu. I would like to share with you one other development this afternoon. As most of you know, Jim Stewart has been our Chief Financial Officer since July of 2010 and he has been a key contributor in our success ranging from optimizing the disc publishing operations to helping develop and drive our transformation strategy, so it is with very mixed emotions and deep appreciation that I share with you today Jim's plan to retire as our CFO as soon as his successor is on board. His last day of employment will be September 30th of this year. I appreciate the ample notice that Jim has provided. This allows us to conduct a broad and thorough search for his successor and manage a steady transition. To assist in the process, we have retained Heidrick & Struggles to execute a search for Jim’s successor. Once we identify a successor and the candidate has come on board, Jim will be working to ensure an orderly transition. On behalf of the Board of Directors, I want to thank Jim for his contributions and dedication to Qumu. Now, to review our fourth quarter and full year 2014 financial highlights, I will turn the call over to Jim.

[Jim Stewart:]

Thanks for those kind words, Sherman. I will begin with a review of the key components of our income statement, which is focused on the continuing software operations. As a reminder, the financial results of our disc publishing operation, which we sold on July 1st, are now reported as discontinued operations. Starting with the top-line, revenue in the fourth quarter was $8.3 million, an increase of 98% from $4.2 million revenue in the fourth quarter of last year. Kulu Valley, acquired in October, contributed $500,000 to this total. Kulu Valley revenue was negatively impacted by a $500,000 purchase accounting adjustment related to deferred revenue. Without this non-cash accounting adjustment fourth quarter revenue would have been $8.8 million. Excluding Kulu Valley, fourth quarter revenue was $7.8 million, up 88% from the prior year's fourth quarter. Contracted commitments totaled $11.1 million in the fourth quarter, including $2.6 million from Kulu Valley. Excluding Kulu Valley, fourth quarter contract commitments were $8.5 million compared with $9.8 million last year. Last year's fourth quarter commitments included a large $3.1 million booking from a large European financial institution. This year's fourth quarter commitments did not include such a large booking. The recent fourth quarter commitments represent a range of vertical markets, including aerospace, oil and financial services. As we have discussed before, our revenue will vary quarter-to-quarter based on the type of contract Qumu enters into with each customer. Perpetual contracts generally result in revenue recognized closer to the contract commitment date while term and subscription contracts result in most of the revenue being recognized ratably over the period of the contract. For the full year 2014, combined revenue was $26.5 million, an increase of 49% over the comparable period a year ago. Excluding Kulu Valley, revenue grew 47% from 2013. Combined contracted commitments for 2014 totaled $39.4 million compared with $21.4 million in 2013. Kulu Valley contracted commitments were $2.6 million of the total in 2014. For total year 2014, 57% of our contracted commitments were perpetual bookings and 43% were term or recurring bookings. Excluding Kulu Valley, we ended the year with backlog of $27.3 million, an increase from $26.6 million at the end of September and up significantly from $16.7 million at December 31, 2013. Including Kulu Valley, the combined backlog was $31.6 million. Moving down the income statement, gross margin in the fourth quarter was 48% compared to 50% in the fourth quarter last year and 45% in the recent third quarter. Without the deferred revenue purchase accounting adjustment for Kulu Valley, the fourth quarter gross margin would have been 54%. Excluding Kulu Valley, fourth quarter gross margins improved slightly from last year's fourth quarter, due to the increased revenue. For the full year, the gross margin was 47% in 2014 compared with 59% last year. The lower gross margin reflected investments we have made in customer support and professional services to support growth, the expensing of some of these services costs prior to recognizing the term revenue on some of our larger deals and an unfavorable sales mix. We anticipate that the gross margin will improve with the full integration of Kulu Valley and as more of the backlog of term-based license and maintenance contracts is recognized into revenue. Operating expenses in the fourth quarter totaled $12.3 million compared with $7.7 million last year. The increase reflected the added expenses associated with Kulu Valley and its acquisition, as well as higher sales and marketing and G&A expenses. The increase in sales and marketing expenses was primarily due to increased headcount, additional spending on marketing programs to drive future revenue growth and higher sales commissions resulting from the higher revenue. The higher G&A expenses were largely due to expenses related to the separation of back office processes and systems of Qumu from the disc publishing operations and Kulu Valley deal expenses. Operating expenses for all of 2014 increased 36% to $40.8 million, the higher operating expenses were due to increased sales headcount, increased spending on marketing programs, higher sales commissions, transition expenses as we complete our back office separation from disc publishing and the acquisition of Kulu Valley. The operating loss in the fourth quarter was $8.3 million compared with $5.6 million a year ago. The total year 2014 operating loss was $28.6 million versus $19.6 million last year. On a consolidated basis, including both, continuing and discontinued operations, the Company is estimating a net loss of approximately $8.3 million, or $0.91 per share for the fourth quarter of 2014 compared with a net loss of $2.7 million or $0.32 per share, in the fourth quarter of 2013. For the full year 2014, the consolidated net loss is estimated to be approximately $8.4 million or $0.95 per share compared with a net loss of $9.7 million or $1.12 per share, in 2013. The estimated consolidated net loss provided is subject to change as we finalize our tax provision for 2014 prior to filing our Annual Report on Form 10-K. At that time, we will report the fourth quarter and December 31, 2014 fiscal year and comparable prior year period net loss from both, continuing and discontinued operations. Now turning to our cash position, cash and marketable securities totaled $35.2 million at December 31, 2014 compared with $50.6 million at the end of September. The expected decrease reflected the expenditure of approximately $11.1 million related to the Kulu Valley acquisition and $4.3 million from cash used in operations. Not included in the year-end cash number was $2.3 million in disc publishing sale proceeds that are in escrow and are reported as restricted cash on our balance sheet as of December 31, 2014. This amount will remain as restricted cash until the escrow is released in October, 2015. Capital expenditures were approximately $400,000 in the fourth quarter and totaled $1.2 million for 2014. Turning now to our outlook, with strong growth in the enterprise video market and our successful execution, we expect to achieve some significant financial targets in 2015. As Sherman commented, these targets will be achieved over the course of the year as the sales force ramps and as our international operations gain traction. For 2015, we expect revenue growth in excess of 60% compared to 2014. We expect gross margins to increase closer to 60% and we expect to end the year with cash and marketable securities of between $20 million and $25 million. That concludes our formal remarks. Now, operator, would you please open the line up for Q&A?

[Operator:]

[Operator Instructions] Our first question today is coming from Mark Argento from Lake Street Capital Markets. Please proceed with your question.

[Mark Argento:]

Good afternoon, guys.

[Sherman Black:]

Hey, Mark.

[Jim Stewart:]

Hi.

[Mark Argento:]

Jim, congrats on the pending retirement, sure we could better places to be than Minnesota when it has come below zero.

[Jim Stewart:]

I will try.

[Mark Argento:]

Just a couple of quick questions here, looks like pretty solid numbers, is executing kind of to plan, maybe little ahead of the plan. Sherman, maybe talk about you mentioned in the prepared remarks about the sales force and building that out, could you talk about where you are in terms of number of reps kind of the composition, the sales force, where you are today and where you hope to be hopefully by over the next few quarters as you build up a team?

[Sherman Black:]

Absolutely, I would be glad to Mark. We have got, I think around 31 quota-carrying reps, these are reps that have direct quotas. There is no overlay that they have got a hard number they have got to deliver. We got about four people that help lead and manage them and they have got an overlay or combined quota across those 31. What we have done in, I would say, the last three months and probably in some cases, we are less than 60 days into it, we brought on about six or seven new, what we call account executives and these are executives that are being put in place to sell Qumu Cloud, the Kulu Valley product and we are expecting to get obviously much faster selling cycle from them as they are going at the departmental level as opposed to an enterprise-level and it is a very different product, different sale. They are brand-new, so they are in the process of getting their feet under them. We did kickoff our marketing efforts around that product back in Q4, so there are leads there are moving from our business development reps, our inside sales people into their hands and they are now taking off and running with them. That was in the U.S. Internationally, we want to expand as well. We have about three of those account executives right now based in London. They are on the ground. We want to expand into Germany, we want to expand into perhaps Northern Europe, so those are hires that we are still off to go do and we also think that this product has a significant amount of opportunity in Southeast Asia and in Japan and we are going to focus predominantly in Asia-Pac region really in three markets Japan, Singapore and we just put a new rep in place in Australia. We are starting to canvass and really cover the global space for that, but it will take some time before we start to see the momentum on those. We also have, Mark, I think some expansion on the enterprise side as well. In the Americas, we are in good shape. We are really I think where we need to be. We see a significant amount of opportunity in the Middle East and we want to put a person there now today, we are trying to cover that very remotely and it is hard to do business there, but there is a lot of money in certain countries in the Middle East. I think that we probably have maybe an opportunity somewhere in Southern Europe [ph] fleet to make it work. That is uncovered territory for us today. Then I think there is probably one more, maybe two more expansions in Asia, but I want to wait and see is that going to be more of a cloud sell or is it going to be more of an enterprise sell and we just do not know at this point. As we see opportunities, we will continue to add to that.

[Mark Argento:]

In terms of the enterprise, you are still seeing robust demand for the legacy Qumu product or is it more of the cloud or more of the Kulu Valley that seems to be the focus with new customers and new potential customers.

[Sherman Black:]

It is certainly both. I think, you know, it is obviously easy to get someone excited about $50,000 deal. They lately look at it real quick and oh yeah I can do that, and you start talking to them, and they want to quickly, you start explaining where here is what you could do from an enterprise integrations, how deep you want to go on to your enterprise, how elaborative delivery would you like to have? How elaborate of content management would you like to have and workflows, so the art for us I think over the next six months as we sort this out is making sure we have really crisp sales processes that lead the customer in the sound right direction, we try to do as much of that as we can in the early stages of the deal qualification, but when you get in there, you may find that there is a bigger opportunity. The thing that I feel great about as opposed to where it was a year ago, a year ago I did not have that product, so today we do and where we are going to be a year from now will be even more integrated from product perspective.

[Mark Argento:]

That is helpful. Then last question for Jim. Now, with the Kulu Valley integrated into the P&L. On a run rate basis, on the operating expense line, rose roughly $12.3 million this quarter. Maybe there were some integration costs. Is kind of $12 million a good quarterly run rate number here given your expectations for some of the CapEx or more importantly some of the investment you are making in the future that $12 million number quarterly run rate a good number maybe help with…

[Jim Stewart:]

I think, if you look at the fourth quarter, the $12.3 million was impacted by some acquisition expenses that we had. In addition, it was a really good revenue quarter for us, so our sales commissions were higher in the quarter as well. As you look to 2015, I think you need to take that into consideration as you are building out your model. I think, two, we also need to take into consideration some of the comments that Sherman made. We are ramping up a little on the sales side in this account executive area and there is definitely a carryover of that, so net-net, are we going to see a large increase in OpEx? No. I think, there are some pluses and minuses to think about as you are modeling that for 2015?

[Mark Argento:]

Okay. Great. Thank you, guys.

[Jim Stewart:]

Thanks, Mark.

[Operator:]

Our next question today is from Jeff Van Rhee from Craig-Hallum. Please proceed with your question.

[Jeff Van Rhee:]

Great. Thank you. Hey, guys. A couple of questions from me, just first, Jim, I guess or I guess it could be Sherman as well. On the Kulu Valley, if I recall you were looking for another 500K above what it came in this quarter regardless of whether it is with or without the write-down just thoughts on Kulu both, in terms of what it delivered this quarter relative to expectations. Then also when you acquired it, I think you had mentioned it was a 50% grower, you still have those kind of expectations although I realize you are trying to integrate and brand differently, but if you could just walk through kind of what it brought in relative to expectations and how you think about your growth?

[Sherman Black:]

Hi, Jeff, thanks for joining. This is Sherman. I think that in terms of what we saw in Q4, we did the deal in early to mid mid-October. We were able to close their traditional deals they have, but the thing that was probably a pleasant surprise for us was just the larger opportunities. There were a couple of really large opportunities that Kulu team had been working on for a long time both, financial institutions with global footprints and those fields were much larger than what they had traditionally been part of the conversation, certainly expanded into some fairly robust content management and delivery capabilities. We signed some contracts with these guys that we have already got the money in the bank, but for the first year on those term licenses, but it is going to take us a while to recognize revenue, because we have got some capabilities that will not be available until the middle of the year on those two contracts. That was the only thing I would say that was a pleasant surprise in all regards and felt good, but the rest of it felt pretty normal what we expected. Our challenge is just getting that sales footprint expanded to where it needs to be to take advantage of the opportunity and that is the investments that we are making right now.

[Jim Stewart:]

I would just add to that Sherman, yes, it was a real strong bookings quarter for Kulu Valley. The recurring first part of the revenue came in pretty much as we expected. Services were a little bit below what we expected, but overall we are pretty pleased with how Q4 came in.

[Jeff Van Rhee:]

Your thoughts on that 50% growth nothing shakes you from what had been a 50% grower do you think that is something you can maintain?

[Sherman Black:]

No. I hope we did, because we better got to be - a lot of boots on the ground, Jeff, so I got to grow that a lot more than that.

[Jeff Van Rhee:]

What was the Kulu bookings number for the compare in the comparable year earlier period? I might have missed it.

[Sherman Black:]

We did not disclose that.

[Jeff Van Rhee:]

Can you give me a sense of what it represents growth wise?

[Sherman Black:]

It would have been fair amount less than that, because they did not have the size of deals that we had in this fourth quarter.

[Jeff Van Rhee:]

Okay. Then how do you think about '15 now that you have got - obviously, you have got the core business which has kind of bounced around a bit in terms of the mix of Qumu Cloud and then obviously you had Kulu Valley bringing a lot more clouds, so how do you think about the year when you look forward at '15 in terms of the bookings both, what you expect for a split there.

[Sherman Black:]

Yes. We have not given any guidance this year on the bookings, but obviously we are looking for continued growth in bookings, but we have not given, Jeff, any kind of guidance on that. We are sticking to revenue and that is greater than 60% year-over-year. The only other thing I would emphasize Jeff is we did just talk about 57% of our bookings this last year. We are perpetual and 43% were recurring, so I think we are in that same probably a little bit more recurring obviously with adding Kulu Valley.

[Jim Stewart:]

Actually more recurring…

[Sherman Black:]

As we look at 2015.

[Jeff Van Rhee:]

Could you just explain maybe a little bit more on the pipe as it relates to the core enterprise deals, just a sense of sort of the composition of the pipe, big deal, small deal, different verticals, sort of the magnitude of the pipe versus six months ago a little. Any other expanded color you could give us there in terms of what you have seen on the core enterprise business?

[Jim Stewart:]

We continue to see a lot of the same vertical markets. I think, from a financial services, we got into the petroleum business last quarter, which given what has happened to the price of petroleum I am glad we got one done there last quarter, but we also saw defense take off and got a win there in the last quarter, so we are starting to see a little bit of expansion, but I would say that the footprint still look the same, it is companies with lots of knowledge workers, so the whole discussion becomes do you want to get them all? How secure you want to be and how deeply integrated do you want to be and that will change the price of the deal and the selling cycle. What will be interesting for us, Jeff, is as we go in, where we would be able to get these guys more started on a departmental sale and then expanded up. As far as giving metrics on the pipeline, I think we continue to get crisper. I am not going to give anything today in terms of has it grown or shrunk or anything like that because I just do not have it on top of my head, but it continues to be healthy.

[Jeff Van Rhee:]

Then I guess just last one for me then. You talked quite a bit about the distribution side with respect to where you are now, where you want to be direct Kulu and Qumu, respectively. What about the channel or redistribution partners? I did not hear a lot about that. It has certainly been something you have talked about from time-to-time. How do you think about that in your priority list? What should we expect in terms of announcements, results expanded or new relationships for '15?

[Jim Stewart:]

Yes. We have four people on the ground working channel two in Europe, two here. What I think quite honestly we are trying to figure right now is which product do we go push into the channel. We did a lot of stuff with our enterprise product in terms of APIs last year to make it more channel-ready. As we look at what we have got in front of us, so right now we are probably going to lean a lot harder toward bring up Qumu Cloud in the channel let that be our focused on the channel. There would still be those large opportunities like we did back in the year, where we have got one channel partner that has the global 50 accounts they have got 40 of those where there are multi-million dollar account, I still want to get one or two of those every year, not three or four, because I think that could can really move the number for us, but I think that I really want to see what I can do with this Qumu Cloud, because I think it is going to be a lot easier sale. I especially think that is going to be the case in the international markets and we are looking at partners right now in South Africa, we are looking at a partner right now very deep in discussion with the partners in Japan, we have got a deployment plan laid out and the product is localized and ready to go and actually looking at standing it up in their cloud as opposed to where we are at today with SoftLayer.

[Jeff Van Rhee:]

Yes. Okay. That makes sense. Okay. Great. Thank you, guys.

[Jim Stewart:]

Thank you, Jeff.

[Operator:]

[Operator Instructions] Our next question is coming from Glenn Mattson from Ladenburg Thalmann. Please proceed with your question.

[Glenn Mattson:]

Hi, guys. Thanks for taking the call. Congratulations, Jim, on moving on.

[Jim Stewart:]

Thank you.

[Glenn Mattson:]

A couple of quick ones, did you mention how much revenue came out of backlog in the quarter?

[Jim Stewart:]

We did not mention that.

[Glenn Mattson:]

Okay. That is not something you are disclosing anyway?

[Jim Stewart:]

It is something that we will disclose from time-to-time. I think we have talked about it in different earnings call historically, but we did not disclose it this last quarter. I would say that it was not too dissimilar from what we have seen coming to the quarter from in prior quarters as well, so it was…

[Glenn Mattson:]

As a percent of the revenue or as a dollar number you mean?

[Jim Stewart:]

As a dollar amount.

[Glenn Mattson:]

Right. Okay.

[Jim Stewart:]

Dollar amount.

[Glenn Mattson:]

That is great. Then maybe just broadly competitive landscape you are seeing, Jim or Sherman we are seeing more deals where you going to head-to-head with people and how is it going?

[Jim Stewart:]

Yes. I think the landscape will change as we go into the external use case market. There are different people that will start to run into there. In terms of the enterprise markets, it is the same set of characters a key point for some a roll over and die, but they have not done that and it is still a site [ph]. I think what will change for us will be a competitive landscape, where we will run into different names as we pursue some of the external use cases.

[Glenn Mattson:]

Right, but for the legacy business, you are winning more on technology than price per share?

[Jim Stewart:]

Yes. It is still every day, we got a show up and fight, but the competitive, in my opinion has not changed on the enterprise side. I think it is still the same set of characters, it is still the same two or three people that we go up against and that has not changed.

[Glenn Mattson:]

Okay. Great. Thanks.

[Operator:]

Thank you.

[Jim Stewart:]

Thank you, Glenn.

[Operator:]

Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to management for any further or closing comment.

[Sherman Black:]

All right, well, thank you again, everyone, for joining our call. You guys of course know that Jim and I are available to answer any additional questions you have and please reach out to us if you do. We look forward to hopefully getting out and seeing many of you soon and we will be announce or updating you with our Q1 results either in late April or early May. Thank you again. Bye, bye.

[Operator:]

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.