Ted Fernandez - Chairman and CEO Robert Ramirez - Chief Financial Officer.

Jason Kreyer - Craig-Hallum Capital Jeff Martin - Roth Capital Partners Vincent Colicchio - Barrington.

Welcome to The Hackett Group Fourth Quarter Earnings Conference Call. Your lines have been placed on a listen-only mode until the question-and-answer session. Please be advised that the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO, and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin..

Thank you, operator. Good afternoon everyone, and thank you for joining us to discuss The Hackett Group's fourth quarter and full year results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of The Hackett Group, and myself, Rob Ramirez, Chief Financial Officer.

A press announcement was released over the wires at 4.07 PM Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the Investor Relations page of our website.

Before we begin, I would like to remind you that in the following comments and in the question-and-answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws.

These statements relate to our current expectations, estimates and projections, and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and which may not be accurate. Actual results may vary.

These forward-looking statements should be considered only in conjunction with the detailed information, particularly in the Risk Factors that are contained in our SEC filings. At this point, I would like to turn it over to Ted..

Thank you, Rob. I will start by providing some overview comments on the fourth quarter and the annual results. I’ll then turn it back over to Rob, so that he can provide details relative to our operating results, cash flow and also provide the details of our guidance.

Rob will then turn it back over to me and it will provide me with an opportunity to make some comments relative to market and strategic related comments, and then as we customarily do, we will then open it up for Q&A.

So let me start first with our quarterly overview highlight and start by thanking everyone for joining us for the fourth quarter earnings call. This was another strong quarter.

This afternoon we reported revenues of $70.1 million, up 5.6%, or 6.5% when adjusting for constant currency and pro forma earnings per share of $0.26, up 24%, both above the high end of our guidance. For the fiscal year, revenues increased 11% to 288 million, while earnings per share increased 25% to $0.94.

What makes this year so special is that the results are on top of the two previous pro forma EPS results, which were up 34% in 2015 and 37% in 2014 respectively. Solid U.S. demand drove our results along with the anticipated improvement in European results led by our European EPM business.

The quarter included the seasonal increase of vacation dates driven by the end of year holidays in both the U.S. and Europe, which decreased available days by 8% on a sequential basis. Revenue in the U.S.

was up as expected with Hackett revenues up 7%, offset by the decrease in SAP revenues, which were impacted by the decreased software sales in the current quarter when compared to the prior year. Europe had better than expected results as prior investments in the development of our European EPM practice have started to pay off.

We continue to believe that our revenue and earnings per share growth as a direct result of several key strategies that we implemented several years ago. So let me go and review those.

One, the strong positioning of our brand that I think we probably don’t mention enough, which is led by our so called Wedge or Benchmarking and Best Practices Advisory offerings, that leverage our IP and provides strategic access to the leading global companies.

Investments in dedicated sales channels and downstream revenues that have led to increased business transformation and EPM revenue growth which have come with higher margins.

So that entry way of the Wedge offering as an extending through our consulting offerings is a great example of how the unique of our intellectual property extends through our consulting offerings.

Increasing revenue per client, the consolidation of Hackett strategy and business transformation practices has resulted in improved collaboration and cross-selling and its allowing us to serve clients more broadly.

Third, our continuation of the upgrading of our talent and building a more efficient resource pyramid which has improved gross margins as we have increased the headcount.

And lastly, identifying new opportunities for our benchmarking and best practice intellectual property and leveraging new channels through strategic alliances to introduce new recurring revenue, high margin offerings that could redefine our organizational model as we have started to refer to as an IP as a service business.

On a longer term basis, we're also seeing that the rapid development of the emerging cloud and digital transformation of everyday activities may result in one of the most significant enterprise transformation period that we have ever experienced. I will expand on these thoughts a little later in my strategic overview section of our call.

On the balance sheet side, we continue to generate strong cash flows from operation. This has allowed us to aggressively pay down our credit facility leaving us at the end of the quarter with only $7 million outstanding and growing net cash position, which at the end of the year was nearly $13 million.

On the investment front, we continue to develop new technology delivery platforms. This helps us further differentiate and leverage our benchmarking and best practice intellectual property into existing and new offerings to our clients as well as through alliance partners.

I will comment further on strategy and market conditions, but let me first ask Rob to provide details on our operating results, cash flow, and also comment on outlook.

Rob?.

Thank you, Ted. As I typically do, I'll cover the following topics during our call. An overview of our 2016 fiscal year results as well as our fourth quarter results along with an overview of the related supporting key operating statistics.

I'll give an overview of our cash flow activities in the quarter, and I will conclude my section of this discussion with our financial outlook for the first quarter of 2017. For purposes of this call, any references to Hackett Group will specifically exclude SAP, ERP solutions.

Correspondingly, I will comment separately regarding financial results for The Hackett Group, SAP Solutions and the total company. Please note that all references to gross revenues in my discussion represent revenues including reimbursable expenses.

Additionally, references to pro forma results specifically exclude non-cash stock compensation expense, intangible asset amortization expense, acquisition related charges and gains, and assumes a normalized long-term cash tax rate of 30%.

A few highlights from fiscal 2016, our annual revenues totaled 288.6 million, an increase of 10.6% over the prior fiscal year. Pro forma earnings per diluted share were $0.94 in 2016, compared to $0.75 in 2015, an increase of 25%.

North American revenues were up 13%, with international revenues down 3% for the fiscal year on a reported basis, but flat on a constant currency basis. Pro forma EBITDA for the fiscal year was 46.9 million, an increase of 27% over the prior year. This also represented 18% of net revenues, a 220 basis points improvement from fiscal 2015.

During fiscal 2016, we continued to utilize our strong cash flow to return capital to our shareholders. We declared dividends of $0.26 per share for a total of 8 million paid semi-annually. The semi-annual dividend declared in December 2016 was paid shortly after the end of our fiscal year.

In terms of moving to our fourth quarter results, as I mentioned on our third quarter call when discussing our fourth quarter guidance, the fourth quarter was negatively impacted by the typical seasonal increase in holidays and vacation utilized in both the U.S.

and Europe, which unfavorably impacted available days by approximately 8% on a sequential basis. Having said that; for the fourth quarter of 2016, total company gross revenues were 70.1 million and above our fourth quarter’s guidance, this represents year-over-year growth of 5.6% or 6.5% on adjusting for constant currency.

Gross revenues for the Hackett Group, which exclude SAP Solutions, were 59.9 million in the fourth quarter of 2016, an increase of 7.8% on a year-over-year basis. Hackett U.S. growth was 6.5% and international, which is primarily Europe grew 14% on a reported basis, but up 21% on a constant currency basis.

Hackett Group annualized gross revenue per professional was $343,000 in the fourth quarter of 2016, as compared to $360,000 in both the fourth quarter 2015 and in the previous quarter. This decrease was primarily due to increased hiring activities and lower than expected consultant turnover.

Gross revenue from our SAP Solutions group, which consists of our SAP reseller, Implementation and Application Managed Services group’s totaled 10.1 million and consistent with our guidance decreased 6% on a year-over-year basis, primarily due to decreased software license sales when compared to the previous year.

SAP Solutions hourly gross realized billing rate per hour was $129 in both the fourth quarter of 2016 and the fourth quarter of 2015. This includes the impact of our offshore resources, which are more than 40% of our SAP, ERP, Implementation and AMS resources.

SAP implementation and AMS utilization was 70% for the fourth quarter of 2016, as compared to 69% in the fourth quarter of the prior year. Total company international gross revenues accounted for 15% of total company revenues in the fourth quarter, as compared to 14% in the fourth quarter of 2015.

Our recurring revenues, which include our AMS groups as well as our Executive Advisory practices, now make up approximately 17% of our net revenues and 21% of our pro forma pre-tax practice profitability.

Total company pro forma cost of sales, excluding reimbursable expenses and stock compensation expense totaled $36.6 million in the fourth quarter of 2016 or 58.2% of net revenues, as compared to $35.4 million or 58.7% of net revenues in the previous year.

Total company consultant headcount was 940 at the end of the fourth quarter of 2016, as compared to 942 in the previous quarter and 842 at the end of the fourth quarter of 2015. Total company pro forma gross margin was 41.8% of net revenues in the fourth quarter of 2016, as compared to 41.3% in the fourth quarter of the previous year.

Hackett Group pro forma gross margins on net revenues, was 42.4% in the fourth quarter of 2016, as compared to 39.6% in the fourth quarter of 2015. This was primarily due to resource mix on engagements as we utilized a higher ratio of employees sub-contractors during the quarter when compared to the prior year.

ERP Solutions pro forma gross margins on net revenues, was 38.3% in the fourth quarter of 2016, as compared to 49.5% in the previous year. This decrease was primarily due to decreased software license sale in the period when compared to the prior year.

Pro forma SG&A was 14.1 million or 22.3% of net revenues in the fourth quarter, as compared to 14.9 million or 24.7% of net revenues in the prior year. This 240 basis point improvement is primarily due to continued leverage on increasing revenues.

Pro forma EBITDA in the third quarter of 2016 was 12.9 million or 20.4% of net revenues as compared to 10.6 million or 17.6% of net revenues in the fourth quarter of 2015, an increase of 21%.

Total company pro forma net income and earnings per diluted share for the fourth quarter of 2016 totaled at 8.5 million or $0.26, which as Ted mentioned was above the top end of our fourth quarter’s guidance. This compares to pro forma net income of $6.9 million or $0.21 per diluted share in the fourth quarter of 2015.

These results represent an increase of 23% and 24% on a year-over-year basis for pro forma net income and earnings per share respectively.

Total company pro forma net income for the fourth quarter of 2016 excludes non-acquisition stock compensation expense of 2 million; acquisition related stock compensation expense of 316,000, and intangible asset amortization expense of 275,000. Pro forma results also assume a long-term cash tax rate of 30% or 3.6 million.

GAAP diluted earnings per share was $0.19 for the fourth quarter of 2016, as compared to GAAP diluted earnings per share of $0.12 in the fourth quarter of 2015, an increase of 58%.

Fourth quarter 2015 GAAP results were unfavorably impacted by non-recurring, non-cash compensation expense relating to performance based stock appreciation rates that were issued in 2012. The company's cash balances were $19.7 million at the end of the fourth quarter of 2016, as compared to $14.4 million at the end of the previous quarter.

Cash in the fourth quarter was generated from net income adjusted for non-cash items, partially offset by the pay down of our outstanding debt. Net cash provided by operating activities in the fourth quarter was $12.1 million, which was primarily driven by net income adjusted for non-cash items, and increases in account payable.

Our DSO or days sales outstanding at the end of the fourth quarter of 2016, was 62 days, as compared to 59 days at the end of the previous quarter. During the fourth quarter of 2016, the company paid down 6 million on its credit facility. At the end of fourth quarter, the company had 7 million of long-term borrowings outstanding.

During the fourth quarter, we did not repurchase any shares of the company’s stock in the open market and our stock repurchase authorization remains at 4.4 million. Before I move to the guidance for the first quarter of 2017, I would like to remind everyone of the seasonality of our business relative to cost as we move sequentially from Q4 to Q1.

Specifically consistent with first quarter guidance provided previous years, our first quarter guidance for 2017 will reflect the sequential increase in U.S. payroll related taxes and the sequential buildup of our vacation gross.

We expect total company gross revenues for the first quarter of 2017 to be in the range of 72 million to 74 million, with a reimbursable expense estimate of 11.3% on net revenues. On a total company basis, we expect revenues to be up 5% to 7%. We expect moderate U.S.

revenue growth of approximately 2% to 4% with SAP flat and European revenues are expected to be up by approximately 30%. As such we expect our pro forma diluted earnings per share in the first quarter of 2017 to be in the range of $0.22 to $0.24, this compares to $0.20 in the first quarter of last year.

Our pro forma guidance excludes amortization expense; total non-cash stock compensation expense and includes a long term cash tax rate of 30%. We expect pro forma SG&A and interest expense for the first quarter to be approximately 15 million.

We expect our cash balances excluding the impact of share buyback activity to be down on sequential basis due to the payment of 2016 performance related bonuses and the fourth quarter dividend declaration that was paid early in the first quarter as well as payments of estimated U.S. Federal corporate income taxes.

At this point, I would like to turn it back over to Ted to review our market outlook, the strategic priorities for the coming months..

Thank you, Rob. And before I move on to those comments, let me first remind everyone that in the most recent meeting of our company’s board of directors, board authorized an annual dividend increase of 15% taking on annual dividend from $0.26 to $0.30 per share which will continue to be paid semi-annually.

As I look forward, let me take a moment to speak more broadly about the demand environment that we have been experiencing and more importantly that is emerging.

As I had mentioned in the last several quarter the rapid development and move to cloud applications and infrastructure along with the improving mobile functionality and user experience being introduced into the market place by technology providers is dramatically influencing the way businesses compete and deliver their services.

This will disrupt entire industry at an accelerated pace, forcing organizations to fundamentally change and adapt new capabilities in order to remain competitive. The speed of change will only be limited by the ability of these technology providers to deliver on their functionality, security and performance of promises.

But regardless of their delivery limitations, the mere threat or opportunity promise will lead to one of the most significant enterprise transformation periods of our lifetime.

This will redefine traditional sequential and linear based business models and activities to fully network the dynamic automated workflow and events with enhanced analytics that will finally deliver on the much anticipated predictive analytics and artificial intelligence expectations.

This so called digital transformation era is very attractive to our organization, since we believe our clients will increasingly turn to us to provide them with best practice insight on what technology can actually deliver; what changes in business models actually work and will justify significant investments that they must consider.

On a near-term basis, we expect continued growth in Q1 from our U.S. business, although it will continue to be tempered by the temporary transition from on premise to cloud software offerings as sales channels improve its message to client and clients assess and react to this new paradigm.

We believe in the near term this transition from on premise to cloud and the related sales of channel changes may impact U.S. growth of our business.

We believe that if the cloud offerings mature, there will be an accelerated migration to the new cloud software that will create increasing activity as the product and sales channel capabilities fully align and mature. Having said that; we don't expect our total company long-term growth rate of 5% to 10% to change in 2017.

In Europe, we expect our revenues to be up strongly and be favorable to our 2017 growth prospects. Two years ago, we made the conscious decision to expand our service offerings to more closely mirror our U.S. makeup.

We are now seeing a meaningful impact from this investment and expect the Enterprise Performance Management group in Europe to represent a growing component of our European revenues in 2017. Additionally the growth in our IP as a service offering should continue to grow and be noticeable to our 2017 result.

As I previously mentioned we continue to expect one of the key drivers of our growth to come from the growing leverage of our so called Wedge or Benchmarking and Best Practice Advisory services.

Our Benchmarking and Best Practice Advisory offerings are highly differentiated and have been providing significant and improved cross-selling leverage for our business transformation as well as our technology consulting services.

In fact when we look at our 2016 revenues over 85% of our revenues came from Hackett clients and users which are former clients within former clients. We refer to this group as our high Hackett user base or Hackett install base.

We believe that this level of client loyalty and repeat business is directly attributed to the unique value of our IP and one of the key reasons we are so positive about our growth prospect.

We plan to continue to invest heavily in these areas as we have been previewing, we planned to rollout a new benchmarking offering that we are calling quantum leap that will fully incorporate our HPE technology and other innovations into our benchmarking platform offering that will improve and further differentiate the unmatched value delivered through our benchmarking offerings.

We expect this launch to happen in the first half of 2017. In Advisory, our IP alliance relationships are helping us invest in new technology and offerings that will improve our clients access and leverage of our proprietary insight that we deliver from our best practice program.

Another key driver of our growth strategy has been to continue to expand our market-leading Enterprise Performance Management or business analytics business. At the heart of the digital transformation era, I just referenced is business analytics, which now represents nearly 50% of our Hackett U.S. revenues, and 44% of our Hackett global revenues.

Our ability to assemble terrific talent and our unique ability to leverage best practice configuration and organizational excellence intellectual property is responsible for this success.

Our long-term strategy is to continue to build our brand by building new offerings and capabilities around this unmatched best practice intellectual capital in order to serve clients strategically and, whenever possible, continuously. At the end of the quarter, our Executive and Best Practice Advisory members totaled 1,075 across 330 clients.

These numbers exclude the new client that we have been adding from our new ADP and CGSB program through our CIMA alliance that we refer to as our IP as service alliances. As we announced last year, we are now seeing opportunities through our new alliances and channels to use our IP and to help others sell and deliver their offerings.

In the fourth quarter of 2015, as you know we have launched the dedicated Hackett Best Practices program for ADP's Vantage HCM or Human Capital Management solutions. All indications continue to be very favorable, from channel as well as clients.

Given our early success, we are now developing plans with ADP to expand our offering to additional platforms that expect to migrate to Vantage as well as expanding within the Vantage offering itself. These new programs will expand our opportunities with ADP throughout 2017.

Relative to our new Certified GBS Program's alliance with CIMA, we believe that this relationship will allow us to build an entirely new professional development business that provides globally recognized certifications and in this case for shared services and global business service professionals.

During the fourth quarter we launched our last remaining managerial diploma course, this now provides us with a fully completed curriculum. During the quarter, we continue to sign up new companies and continue to build our pipeline with major global organizations with significant shared service and GBS organizations.

We now have over 125 companies who are using our entry and executive level courses for their assessments. As companies complete their pilot programs, our goal will be to gain a larger and longer term commitments from these companies that are currently piloting our two - which now has expanded to three course programs.

This should enable us to grow our recurring revenue and client relationships in this area throughout 2017. Today, we also issued a release announcing our new enterprise analytics training and certification course and the introduction of Hackett institute.

We believe that analytical skills will significantly grow over the next decade as company realize the value of data and the related insight and realize the need to extend these skills in a meaningful way throughout the entire enterprise. We decided to launch our offering without an alliance partner.

However, we are assessing academics in institutions that can extend the value of our content and the branding and value of our planned course offering as well as certification. Given the unique nature of our best practice content, we recognize the value we have experienced with our CGBS offering.

We now believe that continuing education provides significant revenue growth opportunity for organization. We continue to expect the CGBS and ADP programs and now our newly announced Enterprise Analytics offering activities to build throughout the year and to become noticeable to our 2017 result.

Our Benchmarking and Best Practice IP as a service strategy allows us to increase our client base, profitability, and increase revenue per client. It would also represent an increase in recurring revenue at much higher margins due to the way these services are provided and contracted.

Lastly, even though we believe that we have the client base and offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our IP, add scope, scale or capability which can accelerate our growth. In summary, we reported another strong quarter and an outstanding year.

More importantly, we are seeing the improvements and investments we are making to our intellectual property, our expanded EPM capabilities, our new IP as a service offerings and the related alliance and our digital transformation focus will continue to drive sustainable structural growth.

As always, let me close by thanking our associates for their tireless efforts and always our attempt to stay highly focused on our clients, our people and the exciting opportunities available to our organization. Congratulations on another strong quarter and an outstanding year. Operator, those are my comments.

I’ll now turn it back over to you so that we can commence the Q&A..

[Operator Instructions] Our first question is coming from George. Your line is now open..

Hey, Gentleman, good afternoon. This is Jason on for George Sutton. Congrats on the nice results.

I’m wondering if you can talk a little bit more about, obviously you are winning lot of deals for digital transformation; just maybe you can give some examples of some wins in the quarter where you done in with an advisory service and you have been able to expand that into more of a larger scale digital transformation deal..

Let me be even more specific, as I mentioned in the current quarter over 60% of our total fourth quarter sales came from an advisory relationship.

So best example is the client engages us in one or multiple of these advisory programs, they are functional program so it could be a program in finance and accounting or HR or IT or procurement or in shared services like GBS centers or in enterprise performance management and those are, that percentage of the client use us in order to have access to all of our IP, performance metrics in the area research that we conduct, our access to best practice insight that they want to look at or consider as they are looking as some transformation initiatives but basically they gain access to all of the Hackett insight and people for an annual fee that we refer to as a subscription or a retainer.

But by providing clients with - responding to their strategic questions by providing them with examples of how leading global companies are addressing the similar issues that they may be approaching us with. They quickly understand the capabilities of the organization.

And once we help them identify or solve or research a specific issue and introduce to some of our people what they quickly have and obviously we want to quickly say is that we are every bit as good at helping you access or research an issue as implementing or architecting or implementing a solution.

And in most cases or in very limited cases we are only limited then by perhaps scale required for some of the requirements that they approach us with. But it provides us with a very strategic and trusted relationship.

We know what information they are trying to access, we know what areas they are looking into, it allows us to really help them think through things properly and quickly and early on position our ability then to help them either in the planning, the architecture or the implementation of those issues that they have approached us with that they have decided then to take action on.

Does that respond to your question Jason?.

Absolutely, no that was great.

You mentioned potentially expanding in two different additional modules with Vantage offering and I am just wondering if you can go into maybe a little bit more detail what that could be related to?.

Well, if you recall to give you an example - if you recall our relationship with vantage started with a minimum contract guarantee and it was available that acquired Vantage product plus one extra module, it was called Vantage plus one. We will soon introduce the Hackett Advisory Program will now extend to payroll only client.

So that we can help clients strategically even if their relationship with ADP through Vantage it starts as a payroll only user.

We think our ability to help them understand how to improve the intra-organization and specifically how to do that by leveraging our product offering is a great way for us to help them extend or up sell that client over the future period. So that is one example of something that we will be launching with them soon..

Okay and just a last one for me, maybe you can term as a little bit on the linearity of the results of the quarter, you know obviously strength but just wondering if there was any macro shifted all from the election that you saw things accelerate or thing slow down after that or perhaps things were slow flatter throughout the quarter..

No, we actually - we see the quarter trending pretty similar to prior year. January you always have open - you have a full available day period in January but we never seen to fully realize the deployment in January as people come back from vacation and that extended holiday period.

So know what we are seeing already right is a significant ramp from January to February and to give you an idea if that February ramp just continues in tomorrow just in fact was to continue to Q2, that’s the kind of visibility that allows us to stay that our long term growth rate remains unchanged..

Great thank you..

Our next question comes from Jeff Martin from Roth Capital Partners. Your line is now open..

Thank you.

Can you hear me operator?.

We can hear you great Jeff..

Okay, excellent. Ted, why don’t you get some additional reference around your comment about the transition from premise to cloud as being transitional and a little bit impactful on current period, just wondering if there is something specific driving that and that transformation thing going on for years now.

I’m just curious if there’s anything specific that’s triggering that right now..

No, I mean you could follow the software companies transition, their own transition from on premise license sales to cloud and you look at that shift right the rapid increase of one versus either some slow down and eventual if you play that out some deterioration of the other cloud software in their strategy, will fully replace on premise software over the next five to ten year.

It is simply getting it from the client and for the software providers, one they have changed over our driving doses - clouded option. It provides the client with options and when you provide the client with option that requires client to make a decision, that’s one and they are driving their sales channel through that.

The other one is making sure that the product is appropriate for the client regardless of scale or industry which also as you have early version of the product right may vary as well.

So some combination of the product maturity some combinations of sales channel and incentives as well of adoption that you can see in any of the results release by the software vendors.

We are simply following that activity and in doing that it changes a couple of things, that changes the implementation support we provide for person or the other and actually the resources cost and your ability to deliver implement these software alternatives differently and when you consider both of those changes, the clients going through that decision process, we are following - we are trying to follow that curve as closely as we can.

I believe it is disrupted - let’s go back, disrupted or incredible growth rates that we have had over the last couple of years.

We obviously are continuing to grow and we believe that product matures in the sales channel fully understand how to best position one alternative, the other in front of each and every clients, that you will see an acceleration of migration of cloud on premise.

So that maturity that will drive, we believe increased volume as clients not hold on to the on premise software as long as they traditionally done because the software providers are providing terrific incentives along with expanded and greater flexibility, significantly greater analytic capabilities that come with those products, so both the value, the way the product is sold, the way the product is financed is highly advantages as that transition happen, we are following it closely we believe that migration right now disrupts local flow of our of holiday incredibly high growth rate of the last couple of years which we benefited from.

It tempers our growth rates on; we believe that as we see that coming out, we will see the unit opportunity of cloud, from cloud to accelerate even though the implementation cost of those for similar company will actually decrease.

We think it will generate or as for higher revenues that we were on the uptrend revenue and we think with the right resource changes which the cloud implementation provide will actually allow us to deliver it with higher margin..

Okay, great that’s good color, I appreciate that.

And then your transition to [indiscernible] that’s same thing you touched about mid-year 2016 if I recall, and that turn us around the automation of the input and enhanced service offering to that right?.

Yes, it dramatically improves our data capture capabilities. We think it could decrease client’s effort from a current benchmark, it could reduce it to as much as half as the current effort that they put today when they utilize our product.

But then the granularity of the information that they will receive and ability to update and get reporting capabilities that we built over the last couple of years will significantly improve both our ability to serve the client at that event and we have also built capabilities so that product then is utilized on a continuous basis.

So it will not only evaluate the opportunity at a point in time, it allows the client to up that information and significantly lower time and cost and it allows the company to track with some great granularity. The project improvement that comes from any of the initiative identified.

We think it will be a very significant improvement and our goal as I know my entire team involved in that area is listening very closely is to introduce that at our Best Practices conference and expose our most significant clients that will be attending our North American Best Practice conference in Atlanta in early May.

So you will see, our goal is to announce the launch before then and then to formally launch and to let client see it and touch it and be fully exposed to it and our best practice conference in Atlanta in early May, Jeff..

Okay, that’s great and then final question Ted, I mean IP as a service initiative; I know a lot of people out there that have following the story closely are trying to get their arms around what quantifiably that might mean.

Curious if you plan to quantify and expected and anticipated impact from that this year and if so, when might you do that and what kind of visibility are you waiting to see before you do that..

Well, I’m committed to providing more granularity when we reported the first quarter of 2017 and I still plan to do that.

That will provide - hopefully I can provide more color around what we consider to be noticeable and then meaningful which would we think would follow would simply be come multiples of whatever information I provide to you and when we report to first quarter..

Okay, great. Thanks Ted..

Thank you, Jeff..

[Operator Instructions] Our next question comes from Vincent Colicchio from Barrington. Your line is now open..

Yeah, Ted, nice quarter. I’m curious any lingering impact from the changes that occur on the sales side, it appears that there is not, I am giving you numbers just wanted to you hear at on that..

Well, as I was just trying to explain one - we obviously we outperform the guidance we provided and we grew at a better rate than we expected in the fourth quarter. And we are very pleased with the first quarter guidance, but no - I am - based on the comments Rob made, we’re saying that the U.S.

growth rate for us is being impacted by that transition from on premise to cloud. Having said that; I also responded to Jason, who is the first analyst to ask, we’re also saying that the current run rate that we’re on really provides the guidance for Q1 and provides us with - I think it positions us nicely into Q2. So even though the U.S.

growth rate in EPM is being tempered, we just don’t think that it changes our opportunity to be able to grow 10% to 20% and obviously provide a 15 plus EPS increase that we also provided as our long-term opportunity..

And you’re sounding a bit more confident in the turnaround that’s occurring in Europe. If you can give us some more color, I know you’ve invested on the EPM side and you’ve put more management attention there, any more color on why you feel to be more confident on that sort of things..

Well, the confidence comes from closing significant new business that allows us to provide that guidance for Europe in Q1 and allows us to be pretty optimistic about the impact that can have throughout 2017.

So we’re just - the team has been assembled, the team is having success getting in front of client and providing the client with our clause in that EPM space. We’ve closed meaningful business with a meaningful client and that’s providing the guidance that we’re providing and the optimism that we think we’ll have throughout 2017..

And meaningful is the UK and related to that, are you seeing any Brexit related changes in sales cycles?.

No, the UK is leading the way. So for us we’ve seen absolutely no Brexit disrupters at all..

Okay, thanks for answering my questions..

Alright..

At this time I show no further questions. I would now like to turn the call back over to Mr. Fernandez..

Thank you, operator. Let me thank everyone again for participating in our fourth quarter and fiscal annual results call. We look forward to updating you again when we report the first quarter in April. I’m sorry, in early May. So I stand corrected. I look forward to catching up with everyone at our upcoming May call.

Thanks again for participating on our call this evening..

Thank you for participating in today's conference call..