Max Mayer - Chief Administrative Officer Alan Trefler - CEO.

Andrew Doupe - Wedbush Securities Mark Schappel - The Benchmark Company Greg McDowell - JMP Securities Matthew Galinko - Sidoti & Company.

Greetings and welcome to the Pegasystems’ Fourth Quarter Fiscal 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host today, Mr. Max Mayer, Chief Administrative Officer and Senior VP of Corporate Development. You may begin sir..

Good evening, ladies and gentlemen, and welcome to the Pegasystems’ Q4 2015 earnings call. Before we begin, I’d like to read our Safe Harbor statement.

Certain statements contained in this presentation, including but not limited to, statements related to future earnings, bookings, revenue and mix of license revenue, may be construed as forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

The words expects, anticipates, intends, plans, believes, could, estimates, may, targets, strategies, intends to, projects, forecasts and guidance, and other similar expressions, identify forward-looking statements, which speak only as of the date the statement was made.

Because such statements deal with future events, they are subject to various risks and uncertainties. Actual results for fiscal year 2015 and beyond could differ materially from the company’s current expectations.

Factors that could cause the company’s results to differ materially from those expressed in forward-looking statements are contained in the company’s press release announcing its 2015 year end earnings, and in the company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2015, and other recent filings with the SEC.

Although subsequent events may cause the company’s view to change, the company undertakes no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise, since these statements may no longer be accurate or timely.

With that, I’ll turn the call over to Alan Trefler, Founder and CEO of Pegasystems..

Thank you, Max. Let me just say that Q4 was a terrific quarter capping off a tremendous year of Pegasystems. We ended 2015 with record revenue, backlog and bookings and closed the year on a very strong position.

For the full year we grew non-GAAP revenue to $683 million exceeding our original guidance of $653 million by $30 million, and increasing it 15% compared to 2014. Our full year non-GAAP license and cloud revenue was $306 million, up 22% over the prior year. And importantly, we did this while also increasing backlog by $55 million.

And despite continued investments in growth, we exceeded EPS guidance by $0.03 achieving non-GAAP net income of nearly $64 million. Let me start with a bit of strategic overview to give some context for what we achieved and where we’re going.

Today more and more companies are recognizing the strategic role software plays in their businesses and in many cases the limits your legacy systems put on the ability to evolve as quickly as needed and clamouring for lots of things and there's a lot of hype in this market, but Pegasystems offers technology that can really deliver what these organizations truly need.

The pressure is complemented by the shifting regulatory environment, the volatility we all see in the global markets and rapidly changing customer demands that require to drive with digitization and require all organizations to adapt more quickly.

Now to take advantage of this environment we saw unfolding, about two years ago we began to transition to leverage our world-class build for change technology and position PEGA to be the leader in software for strategic business application, with a focus on delivering sophisticated CRM applications.

Now in both the areas of customer experience and operational improvement, clients are viewing and using these applications to gain competitive advantage, to better meet the needs of today's more digitally oriented customer and to provide seamless experiences across the organization.

To achieve this, clients had told us that the software must be able to do three things. First, provide a strong basis of the context that’s needed in serving customers which we deliver to our industry-leading case management technology.

Secondly, provide deep analytics and decisioning which we deliver through real-time interaction management, and the intelligence behind how to best handle every decision and every interaction. And third, support sophisticated business process management which is the muscle behind automation and the efficiency of interaction.

Sometimes I’d like to draw this to a human analogy. To be highly effective an individual needs context, needs memory, needs intellect, needs decisioning and needs muscle to be able to execute. Only PEGA is the category leader in every one of those critical areas. We’ll talk a little bit more about that later.

Now in 2015 we were once again recognized as the category leader in these areas and we think this is a key competitive differentiator but we’re not resting on our laurels. We’re continuing to build and expand our capabilities the power the entire CRM and customer experience stack.

As we think about the scale of this opportunity we see it is conservatively sized as about $30 billion of software. However we think it will be much larger and continue to grow over time.

And we believe we’re uniquely positioned to win in this market with both the unmet software that supports our clients and the terrific customer references we have of clients who are on the street with us and continuing to grow with us as they work to improve their customer experience while achieving operational excellence.

So PEGA gives clients the unique option to buy applications from us, would have built their own applications on our platforms to meet their goals. You know, it's interesting because technology is central but when we look at what our clients are doing, we’re seeing many of today's CRM solutions as running out of runway.

They get customer started, they do a lot of fancy things upfront, but are ultimately unable to handle the complex needs of organizations as they try to move from a simple interaction in one channel or one operation to an omni channel cross functional world.

Additionally, clients increasingly want the capability to operate both on the cloud and on premise and to move back-and-forth between the two as their business and operations dictate.

We think that PEGA has a unique opportunity here to offer the world-class offerings in both areas to give customers a functionality and a convenience they will increasingly seek and need. Thus only PEGA provides a combination of case management decisioning world-class BPM and scalability to let organizations deliver the CRM of the 21st century.

So recognizing this we are setting our strategy to take advantage of this larger market with four key execution initiatives. First, we’re going to continue to prioritize and extend the advantage of our unified architecture, PEGA 7 with a significant focus on mobile, analytics and cloud.

Second, we’re going to deepen our CRM application, marketing, sales automation and customer service all built on and getting the full power of the unified PEGA 7 platform to make it easier for clients to identify our solutions for speed of implementation and increased ease-of-use.

We’re working to move to more digital marketing ourselves consistent with the way that today’s clients’ mode of buy, coupled with awareness marketing to bring clients to our digital platform. In 2015 we did our first paid advertising ever and we’re going to continue to push to become recognized by more clients who can take advantage.

And then to benefit from that, we’re going to invest in broader market coverage, both deeply within our enterprise accounts where we go to market vertically and with the addition of a geographic salesforce focused on opportunities in the global 3000 accounts, what we call our corporate market initiative.

The record results we saw this year give us confidence that our strategy and execution are working, and I am going to take a moment to summarize some of the progress we’ve made over the year and the results we’re seeing.

In terms of platform, as I said we continue to invest to extend our world-class Pega 7 platform, it’s the foundation for our strategic applications and it’s industry-leading pretty much across the board. We’ve made significant enhancements in mobile decisioning and cloud that also drive improvements to both our horizontal and vertical applications.

And we launched Pega Express in the middle of the year, a new application design experience within the Pega 7 platform that radically accelerates the speed of building applications. Pega Express helps customers start quickly and simply while maintaining the ability to add sophistication using our existing application development tools.

And Pega Express is also getting extensive use as the basis for our free cloud-based hands-on experience to trial Pega software. Moving beyond the platform, we’re going to materially deepen our CRM application.

We've already done a lot of work on Pega marketing, Pega sales automation and customer service and we’ve developed a market-leading customer decision hub which includes predictive analytics, next best action and real-time events consumption, all across our complete suite of CRM application, adding contextual intelligence to all of marketing, sales and service interaction across channels.

We improved Pega sales automation to provide deep support for both B2B, business to business, business to business consumer and business to consumer use cases, enhanced Pega marketing to improve personal customer engagements and launched a number of enhanced customer service apps for our target vertical.

And earlier this month we launched a new Pega Field Service application that brings our superior customer service capabilities to field agents and technicians in multiple industries, with both online and off-line mobile capabilities.

In 2015 we were recognized by both Gartner and Forrester as a leader in customer engagement, especially for large organizations. And this focus on CRM is driving the majority of our sales. Now regarding our marketing initiatives, as we've talked about -- historically Pega was a pure relationship focused business with very little marketing support.

We made several years ago a conscious decision to begin to change this based on the way clients want to buy and what we saw was an opportunity in an extended market.

Consequently, we made significant improvements to our own digital platform, our website, to make it easier for clients to engage with us and support the shift in how organizations want to explore and understand capabilities of a vendor.

And you'll see if you go on to the site significantly improved organization navigation search across the platform and we’re seeing substantial increases in site traffic and engagement. Our client testimonials are unmatched in the articulation of the tremendous returns and competitive advantage clients are seeing from using Pega software.

I urge you to go to pega.com and look at the newest customer videos from organizations like State of Maine, AIG, Xchanging and ANZ Bank, and to show you how we’re broadening our base, you can look at a little bank called ME Bank, Members Equity from Australia.

This is an institution that used Pega to go from bricks mortar to all digital and it shows how Pega can now work all the way from small institutions right up to the big monoliths that we started with. Now in terms of broadening market coverage, that fourth area of focus this year, as we are looking to expand the addressable market.

This involves obviously product changes, go to market changes, and will be able to look to support a different mode and different style of selling. Now we’ve had success in addition to this in existing accounts winning both new logos in our target verticals and expanding our footprint.

For example, in financial services we significantly increased our footprint and accounts like Scotiabank, American Express, JPMC, Bank of America, World Bank of Scotland, Deutsche Bank and Standard Chartered but we also sold new financial services logo, like Fifth Third Bank, Mizuho in Japan and Moody’s and Société Générale which is using Pega’s know your customer and on-boarding for financial services application to meet the regulatory requirements and improved global on boarding process.

In communication, we materially increased our business in companies like Deutsche Telekom, Vodafone, Verizon, and Telecom Italia but during the year we also won great new logos such as T-Mobile, Plusnet, British Telecom, SingTel and Sprint.

It was interesting Sprint’s initial implementation of Pega marketing went live in 90 days and CEO Marcelo Claure told Fortune Magazine, he is using Pega to improve all customer satisfaction rate, which is customer churn, and improve new offer acceptance. It's a thrill to see that their last quarters have been materially better.

Manufacturing has become a significant growth business for us. And in 2015 we won terrific new business with companies including Navistar, Nissan and Toyota and grew our business with clients such as Ford, Cisco, and Siemens.

Nissan bought Pega customer service as well as our platform to replace an aging warranty management system and improve customer service and reduce unnecessary dealer chargebacks.

And we are seeing increased traction in the public sector with new clients in 2015 including the government of Canada, the Massachusetts Department of Revenue, several divisions of the Australian government as well as increased business, including the South Carolina Health and Human Services, the US Departments of Treasury and Justice, the New Jersey Courts and other organizations that are using this to both improve service and drive efficiencies.

Interestingly New Jersey Courts is using it for a very sensitive area, trying to overhaul the state’s probation system which they think they can do a vastly better job at getting people home and making sure they’re taking care of their citizens.

As I mentioned in 2015, at corporate market initiatives now covers many many more companies and we’re seeing great success with this team even though it’s very early.

We’re able to support sales to clients we previously would not have remotely covered and that success is largely based on front office applications and most of the business is as a result of the cloud, really validating some of the investments and work that we had previously done.

And interestingly and importantly we’re seeing sale cycle significantly shorter than in our traditional enterprise sales as well and we think this is further evidence that this will help us achieve our goals.

At the same time we’re continuing to build out our ecosystems to assure availability of the necessary resources to support the increasing demand for our software. In 2015 our ecosystem grew by 30% including certified partners, customers and independent developers.

Today we offer more than 200 interactive self-paced online courses at Pega Academy site and to date have delivered more than 2.8 million lessons to nearly 35,000 students around the world. And just last month we introduced the university program to train and certify Pega resources.

We have four universities across North America and India with more than 600 students enrolled who will graduate with Pega certification and is the beginning of what I think will be a major influx of additional resources into the ecosystem.

We expect to expand this program to additional universities in North America, India, Europe and APAC allowing us to really build just a new feeder system for both our clients, our partners and ourselves. So in summary, looking at 2016 and beyond, 2015 was a record year for Pega. We continue to invest and execute against our long-term goals.

We continue to believe that the key to a sustaining long-term revenue growth will be executing on the strategic initiatives we’ve been discussing, specifically building out the applications to better match the problems our customers want to solve, dramatically improving our own digital engagement to support how clients want to buy and broadening our coverage to better serve the larger addressable markets.

We continue to be very positive about how the value proposition is being received and as the pace of change in organizations is increasing we think the need for the strategic scalable in both technical and functional means CRM applications will drive organizations even those that made other choices to come to Pega so that they can truly deliver build for change results and true value to their clients.

We think we’re uniquely positioned and very exciting by what’s going on. And with that, let me now turn this over to Max Mayer to give you some more of the details. .

the deferred license and cloud revenue as posted on our balance sheet and license and cloud contractual commitments that are signed but not yet recorded on our balance sheet. As a reminder, you can find details of both elements in our 10-K on Page 34 and a summary table in our press release both of which we filed earlier today.

We finished the year with $420 million of total license and cloud backlog, an increase of $55 million or 15% over the prior year. And at year end the current portion of backlog stood at $187 million, an increase of 23% over the prior year. Turning to cash flow.

For the year after the strong sales results in the fourth quarter, the company produced $63 million of operating cash flow while our accounts receivable increased by $62 million. The majority of this AR increase will be collected in the early part of 2016.

We finished the year with total cash and marketable securities of $219 million on our balance sheet, an increase of 4% over the prior year. And for the year the company repurchased approximately 952,000 shares for $23 million. As of year-end we had a balance of $41 million available for repurchase for the coming year.

On headcount, we finished the year with approximately 3300 employees, up 10% from last year. Now to guidance for 2016. As disclosed in the press release issued earlier today, we provided revenue and EPS guidance for fiscal year 2016. We expect both GAAP and non-GAAP revenue for the full-year 2016 to be approximately $780 million.

Consistent with prior years we expect our revenue will be somewhat backend loaded and our best estimate of first half revenue is approximately $360 million. Also, as in the past few years, in 2016 we expect license and cloud revenue to grow faster than total revenue while professional services revenues are likely to continue growing at a slower pace.

While we work to balance the mix of deal type, our customer preferences ultimately determine how individual deals are structured, thus creating potential for variability in our financial results. For the full-year of 2016 we expect to earn approximately $0.95 per diluted share on a non-GAAP basis, based on an expected non-GAAP tax rate of 34%.

GAAP earnings per diluted share for the full-year 2016 are expected to be approximately $0.50 primarily due to increased stock-based compensation expense associated with an increase on the aggregate value and number of equity awards to attract and retain top talent and on an expected GAAP tax rate of 35%.

We are continuing to make every effort to position the company to accelerate achievement of our longer-term objective.

In 2016 we are continuing to make investments to support key corporate strategic initiatives to lead the platform market for strategic business applications with a focus on mobile, analytics and cloud, to continue to grow market share with our leading differentiated CRM applications, marketing, sales and onboarding and customer service, execution of new market growth initiatives, further expanding coverage within the global 3000 and the buildout of our digital marketing platform and awareness marketing to support the way clients want to buy.

In summary, we are very pleased with the company's performance for the year ended December 31, 2015. We made meaningful achievements from both the sales and product development perspective, including advancing our Pega 7 technology and enhancing our capabilities in strategic applications.

Given these achievements we plan to sustain slightly elevated rate of investment in our research and development and marketing efforts in 2016. We look forward to sharing more as we continue introducing a number of new products and implementing key newest initiatives throughout 2016.

Before I conclude, I would like to remind our analysts and investors to save the dates for Pega World June 5 through June 8 at the MGM Grand in Las Vegas with an investor focused session on June 6. For more information please email us at pegainvestorrelations@pega.com. And with that operator, we will open the call to questions. .

[Operator Instructions] Our first question comes from Steve Koenig with Wedbush. .

This is Andrew Doupe on for Steve this afternoon. I, first off, just wanted to congratulate you guys on the strong finish to the year, and I wanted to bring up your guys’ long-term targets the $1 billion of revenue and the 20% operating margins.

And I was wondering if any of that’s changed as far as the timeline or your thought process there and if you could also just provide some general kind of guidelines on how you plan to achieve that goal now?.

I think to really understand the margins of the business and what happened, I think you need to do a little bit of math around the change in backlog that occurs.

One of the downsides of a year like this or what we hope will be a year like next one is when we sell lots of business in the then current year, we really don't defer the commission typically even through the revenues are deferred.

I think if you take a look at the jump in backlog we have and think about that, our margins actually look a lot better than the stated number, and I think that for an analyst that’s probably a healthier way to look at it. I believe that we have the opportunity to have almost any margin number we want.

It’s all entirely about our posture towards investment, and I do believe as I said in the past for this company to cross the $1 billion mark they should be at or approaching sort of a 20% margin. So we’re not backing off of that conceptually.

I will tell you though that a lot of it’s about what we see happening and when you take a look at what was an absolutely tremendous year like this one, we think that investing in the corporate markets, opening up from the 600 accounts to the 3000 accounts, these are things that will be crazy not to do and it makes good sense for the investors and it ultimately will pay off really well.

So no, I haven’t backed off on that concept but we’re not bound to that based on what we see happening in the market, what we see happening is terrific..

And then I also just was wondering if you could provide some more detail with respect to color and size on some of your larger deals that you won in Q4.

Did you win any over -- or how many did you win over 1 million, did you win any of over 5 million, etcetera? And if you could also, maybe provide a couple of anecdotes on the value proposition that Pega provided for some of those larger deals. .

Sure. We have in the course of the year three whales which for us is not a particularly large number, you get a couple and we don't push for the whales. The whales we described in the past is a piece of license business over $10 million in revenue.

The way they develop and the way these develop is we would typically go into an organization with something that was somewhat smaller out of success and then in the case of some of these organizations have to make a massive commitment to the use of the technology.

Well, frankly that whale does not represent what we ultimately expect to sell to this customer, just what we would expect to sell over the next couple of years.

And so you have institutions like – I’ll think of an example of what people might not think of one of our biggest institutions but was one of the companies that made that sort of commitment to us, the Scotiabank, and Scotiabank was an organization we went in, they’ve been a customer for a while, we did some new work with the Pega 7 platform, they just loved Pega 7, they saw exactly what we have been building and trying to do.

They had a quick success earlier in the year and they decided that they wanted to rethink the organization around this sort of miracle of case management, real-time decisioning and process. And that’s actually pretty much the characteristics of all these large deals.

We generally build on success which is why it's so exciting to have so many new customers that we now have the chance to be successful. .

It’s just that we had a very strong working set – is what we call sort of the active opportunities in our pipeline and that continued strong. And we had deals -- multiple deals over $1 million in each of our application areas and in each of our verticals that we target..

Thank you. Our next question comes from Mark Schappel with Benchmark. .

Alan, starting with you, based on the guidance it appears that any operating margin leverage is being reinvested back into the business and would it be fair to assume that most of that reinvestment will go right back into sales?.

I think a big chunk of it will go into sales, a big chunk will go into marketing. One of the interesting things we have is we historically have not invested in marketing more consistently with firms of our size.

And so we're being very thoughtful I think about where and how we’re investing in marketing but we’re going to make sure that we get the word out about Pega through a whole combination of initiatives that range from public relations to improving our digital presence to some of the first paid advertising that we’ve done, all of which we are managing very very tightly.

A lot of it will be going into sales as well both in the mainstream sales force but also in the corporate markets group. And in terms of engineering, we expect that to grow at a slower rate, because we’ve built the software already really, really good here in the states.

So we’re really looking to find greater distribution but we will continue to invest in that. We’re at a point now where things like our cloud presence is taking off and it’s really causing us that to want to drive, for example, more automation and other types of things into the way that we deploy and manage that environment.

You guys may remember we do that on top of AWS. So we don’t actually do the underlying infrastructure and we do it quite a bit of work with AWS to make sure that we’re bringing additional benefits to that. Those I think will lead to margin expansion and much greater efficiency in 2017 that will require some additional work this year.

So definitely more in the sales and marketing realm, that’s definitely where you see most of the growth, and we’re seeing a pay-off of it. .

And then could you also talk about what you saw geography wise during the quarter? I note that earlier in the year, you saw some challenges in Europe, I was wondering if you're still experiencing challenges?.

We actually have a very strong quarter in Europe in Q4 and we did have weakness in the geography earlier in the year but they really had a terrific Q4 and overcame whatever headwinds there are in the macro macroeconomics of the region.

We also had a very very strong year in Asia-Pacific and quite honestly the US consistent with I guess its overall economic growth was also very strong for us. .

That wasn’t carried by any one vertical, any one geography. .

And then professional services the last couple of quarters had some very strong quarters year-over-year particularly this quarter, how should we think about modeling professional services going forward? So, this quarter and last quarter, just a little bit of abnormality or it’s just the normal. .

Well some of it is a function of the lumpiness if you will in our booking. We’re modeling professional services next year at kind of a 7%, 8% growth. Remember our strategy is primarily to have partners do the professional services so we can focus on the software business.

Obviously we have to build a strong professional services capabilities in terms of our expertise. But you're right, we did see as a result of some of the very strong bookings in the US earlier in the year, we saw some really good growth in professional services in the latter part of the year..

And then finally the foreign exchange impact on revenue, did I catch that correctly, it was a negative $4 million. .

It was a $4 million impact, yes, on our bottom-line earnings, it was about a $7 million impact on our revenue..

I assume that’s a negative impact..

Yes. .

[Operator Instructions] Our next question comes from Greg McDowell with JMP Securities..

Hi, thank you very much. Hi Alan and Max, it's great to see a strong end of the year.

I guess my first question is just based on your tone and your revenue guidance it would seem – it doesn't feel like there is any slowdown in IT spending out there just based on what I've heard so far and we heard a lot of companies in this earning season talk about sales cycles elongating and you're talking about sales cycles shortening.

So I was just wondering like, is it just feeling good for you guys out there or are you seeing any sense of any slowdown or changing customer behavior out there. Maybe, I'll just start there. .

I spend a tremendous amount of time out in the field as you might imagine. And I think depending on company, you're either seeing a big slowdown or even negative versus what we’re seeing. And these investments we’ve been making are entirely about not just trying to maintain but working to accelerate growth.

A lot of companies I think cheat in some ways because if you go out and you buy a technology with another company, where you go and create a little venture fund, fund stuff that a couple years down the road you buy, you’re able to avoid the expense for a lot of years.

This is true of almost entirely organic growth and the investments I think are enormously paying off, and the customers see a difference.

We have clients who have dabbled with some of the other new cloud solutions and have decided that they really do see a big difference with Pega and are either weaving us into those other previous purchase and in some cases completely replacing them.

So now there is no sense of doom gloom or fear here, though I do want you to know we do spend with our money with caution and we do try to make sure that we’re going to get our return for it. But we’re really quite bullish that we can grow and 780 is a big number. It's within spitting distance of a billion. .

I would just add to that, that, the volatility in the environment that’s going on is actually a benefit for us and our tagline Build for Change and Alan talked about it numerous times. Clients are really struggling to keep up with complexity and volatility and change.

And so we have a value proposition that enables them to do something that a lot of people can't do. .

It's great to hear. I guess my second question has to do with momentum of Pega 7 Express and maybe what you're seeing as you guys go more and more into the SMB market, any update there would be helpful. Thank you..

I don’t think we’re actually in the S market – it depends on the M market. Now it’s funny we get these interesting things starting to happen.

So in last quarter we won a piece of business, this cloud business, with Stanford, which is their engineering group, which is right in sales force backyard, it’s real privilege for them to pick our cloud solution. And it’s an example of a much faster sales cycle very much driven by the client being able to get online access to the software.

And that’s an example of where the investments and things like Pega Express, yes, it’s going to take a while for that to pay off as we open the aperture but there is no question on our mind that it really makes our technology much more accessible.

But what I love about that, unlike some of our competitors who have all these frankenstack products that are glued together and you’re kind of in one product with another.

With Pega Express you’re actually in the Pega application, it’s just really an easier guided experience that works regardless of the size of the firm, and then as you need to do things that are getting more complicated, it’s not like you have to drop in to doing computer programming or writing strange code.

You get to actually just use the entire model driven environment and have the computer write the code both the simpler code and the more complicated code. And what we hear from clients is a lot of them are worried that their current sort of quick fixes they've picked are going to run on a runway, that they are not having this ethical integrity.

And as we get that message out, we think we can challenge, actually we proved, we can challenge both some of the sexy new players as well as I think really take a bite out of the older legacy stack, the Oracle, SAP that have got. .

Thank you. Our next question comes from Matthew Galinko with Sidoti..

Hey good afternoon guys. Quick question in terms of the sale cycles I think you mentioned in the prepared remarks that it came in a little bit in regards to the applications.

So I'm wondering if you could start to quantify how different you might think we'll see that going forward or just what's the difference that you think we'll see between the traditional BPM sales and some of the newer application sales?.

So the traditional BPM sale particularly at these large target organizations, was a sale where we go in and basically say, hey, show us your product list – project list.

Show us the projects you’re trying to do and if we could develop a good relationship with the client, where they share that list with us, it’d be pretty common for business process management and case management to be able to help them materially address a quarter or third of the items on that list.

But if you think about it was very much, think of a design win sort of sale.

When we now walk in with a world-class CRM solution, targeted at financial services, targeted at the other verticals that we’re in and we can actually show them real life examples that drive improved service, reducing costs or that drive selling strategies or that drive churn reduction in the telco.

That sales and implementation cycle get much much faster because instead of operating it’s kind of this high conceptual level, we’re at a much more tangible level.

Now some of our clients do want to still do the more strategic things and frankly for the customers who are buying the application, the fact that they can extend it up with all that power into the other parts of the organization and across their business, those are huge differentiators for us.

But I am optimistic that the sales cycle will continue to shorten as we go through this year because frankly the applications and products just really continue getting better. .

And then I guess on the BMP side as well, what do you think competitively in that market, anything different in the recent quarter or two?.

So I think in the BPM if you are asking about the dynamics in the traditional BPM market, we’ve been just pretty much seeing IBM continue to fall away. They lost a lot of their ratings in some of the labs, they really fell off in some of the labs analyst reports.

And in the field I frankly find – it’s wonderful to give one of our BPM customers dozens of highly referenceable clients and have them ask IBM to give anything similar.

So we’re seeing just I think a real – I think we’ve really moved to dominate that market and -- particularly it’s the place that we want to play which is where we’re uniquely suited if you want to understand why, if you go to our website to this tap called insights, we have something called the Whiteboard videos which are these little two-minute videos, examples of where we put out I think really well received marketing information, where you can actually see things like what we call our layer cake or mashup architecture, that just really far outpace anybody in that sort of space, coupled with the fact that we’ve got case management and decisioning, they’re just part of the same architecture and platform.

But we think it all works best when we can go to end to end and you can go from that whole customer service touch point right through the execution and we’ve been pulling a lot of these BPM clients whether new ones, older ones, it’s allowing them to pull of, I’d say, into the front office.

And that’s why we think that these applications and the BPM strategies are really synergistic. End of Q&A.

Thank you. At this time I would like to turn the call back over to management for closing comments..

Thank you for joining us today and we look forward to seeing many of you in San Francisco next week at the JMP Securities Technology Conference on Tuesday and at the Morgan Stanley Technology Media and Telecom Conference on Wednesday where we will be both presenting and doing exclusive one-on-one. So with that, thank you very much everyone. .

Thank you. .

This does conclude today’s teleconference. You may disconnect your lines at this time. And have a great day..