Brian Flanagan - IR Phil Pead - President and CEO Jerry Rulli - COO Chris Perkins - CFO.

Steve Koenig - Wedbush Security Glen Mattson - Ladenburg Thalmann Mark Schappel - Benchmark.

Good day and welcome to the Progress Software Corporation Q2 Investor Relations Conference Call. At this time I would like to turn the conference over to Mr. Brian Flanagan. Please go ahead, sir..

Thank you Rachel. Good afternoon everyone and thanks for joining us for Progress Software's fiscal second quarter 2016 earnings call. With me today is Phil Pead, President and Chief Executive Officer; Jerry Rulli, our Chief Operating Officer; and Chris Perkins, our Chief Financial Officer.

Before we get started, I'd like to remind you that during this call we may discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives, or other information that might be considered forward-looking.

This forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties. Please review our Safe Harbor Statement regarding this information which is available both in today's press release as well as in the Investor Relations section of our website at progress.com.

Progress Software assumes no obligation to update the forward-looking statements included in this call whether as a result of new developments or otherwise. Additionally, on this call, all of the revenue, operating margin and diluted earnings per share amounts we refer to are on a non-GAAP basis.

You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers in our earnings release issued today. Today we published our financial press release on our website and also furnished the information to the SEC in an 8-K filing.

These documents contain the full details of our financial results for the fiscal second quarter 2016 and I recommend you reference these documents for specific details. Today's conference call will be recorded in its entirety and will be available via replay on our website in the Investor Relations section. With that, I'll now turn it over to Phil..

Thank you, Brian. Good afternoon everyone and thank you for attending our second quarter earnings call. I'm pleased to report that we had a strong second quarter, with revenue at the top end of our guidance range, over-achievement in earnings per share, and strong cash flows.

Our OpenEdge partners had another solid quarter and OpenEdge maintenance renewals were once again well above 90%. Sales of Sitefinity and Telerik platform grew rapidly and we had a very strong quarter in our data business. I'm also pleased with the progress we are making in the areas I mentioned on our first quarter earnings call.

As I outlined at that time, our Telerik bookings were not meeting our expectations. As we continued our review of the bookings issues, we confirmed our initial assessment that this was an execution issue, not a market or product competitiveness issue. During the second quarter we made additional adjustments, particularly in the dev tools area.

We made some additional hires to meet our target headcount and improve some of our processes to support our renewals teams. The result was a better bookings performance in our second quarter, with 18% sequential growth versus Q1. We still have work to do but the results have the right trajectory.

Turning to our OpenEdge Direct enterprises, as we've discussed in the past, license sales to these customers often tend to include larger deals, resulting in a lumpier business when compared to the steady quarter-to-quarter performance of our ISP partner base.

These larger deals are inherently more difficult to forecast and predict and some of the opportunities we had expected to close during Q1 did not materialize.

As previously discussed, we reduced our outlook for license sales for these customers for the rest of this year and also took a more cautious view on timing, shifting some of the opportunities we had targeted for Q1 and Q2 into the second half of the year instead.

Consistent with this revised timing, sales to OpenEdge Direct customers were down year over year in Q2. On the positive side, we did close some midsized deals during the quarter, and with improved confidence in our pipeline, we expect that some of the larger deals we're targeting will close during the second half.

Our OpenEdge partner business, which represents more than 60% of our OpenEdge revenues, continues to be strong and steady and remains the primary revenue contributor for the company. In fact, more than 30% of our OpenEdge ISPs license revenue is now SaaS-based. This is an important metric in many respects.

First, it speaks to the growing percentage of recurring revenue in our OpenEdge segment, which when including maintenance now exceeds 65%.

Second, and even more importantly, it demonstrates that our OpenEdge partners are utilizing our open modernization framework to update their technology, integrate many of our Telerik solutions, and move their applications to the cloud. Let me remind you that OpenEdge is a state-of-the-art development platform.

It offers a true multi-tenant database, a critical feature that enables OpenEdge applications to efficiently scale in a cloud environment, plus embedded BPM, mobile app development, and integrated business rules and analytics.

Almost half of our large partners have taken advantage of OpenEdge's architecture and advanced features to now offer their applications in the cloud with a modern look and feel that keeps them competitive in today's markets. I'm very pleased with the strength of our data business.

Our contracted backlog continues to grow and we are proud to partner with the largest software companies in the world, enabling their customers to connect to disparate and exponentially growing data sources reliably, securely, and with the highest possible speeds.

Our second quarter was one of our highest bookings quarters ever for our data solutions.

Our solutions are used by an ever-growing community of at least 1.9 million developers to create engaging intuitive user experiences across applications and websites, and power enterprise applications and data connectivity for some of the world's largest companies.

All of our solutions are compelling on their own and we will continue to achieve success by driving point sales of our products.

However, our opportunity to increase our deal sizes and accelerate our revenue growth lies in the combination and integration of these products into a powerful holistic platform which meets the needs of enterprises as they seek to transform their businesses to compete in the digital economy.

Digital transformation is an imperative for businesses and represents a significant opportunity for us.

A recent global survey that we commissioned found that almost all organizations, 96%, see digital transformation as important or critical and feel that they have one or two years at best to make significant inroads in this area before they are negatively impacted both financially and competitively.

However, very few have a defined strategy and fewer still have reached full production and rollout.

According to respondents, improving the customer experience is their number one priority and they have plans for significant investment in their digital transformation strategies with a focus on security, speed, consistency and personalization as key customer outcomes.

IDC's forecast affirms this level of investment as they estimate that businesses will spend more than $1.3 trillion on digital transformation over the next five years.

The digital factory solutions we recently announced are specifically targeted towards providing personalized, optimized and localized customer experiences while maintaining security and content consistency across all channels and devices. This fits perfectly with the priorities of businesses undergoing digital transformation.

These are cloud-based solutions that will enable collaboration, flexibility and ease of use for developers, IT, marketing and business users looking to implement digital transformation within their organizations. It's important to recognize that this is a multi-disciplinary challenge, not just the purview of marketing or IT for example.

Our strength in helping businesses solve this challenge is our significant developer community who, in conjunction with digital marketing teams, can enable personalized customer engagement with powerful and easy-to-use tools. There are early signs that digital transformation is a real growth opportunity for us.

Since we announced our digital factory solutions, we've received a very positive response from industry analysts and have seen a large spike in developers, marketers and IT professionals visiting our website for digital transformation solutions, both excellent examples of the level of interest and customer reaction we're experiencing.

Although our potential for accelerated growth through digital transformation is still in its early stages, I remain confident in our prospects for the remainder of fiscal year 2016. We have a number of large opportunities that we are engaged in with our OpenEdge Direct enterprise customers.

We expect double-digit growth from our data business and have seen increased momentum in our Telerik bookings, all of which make us optimistic for a strong second half of the year. I'll now turn it over to Jerry who will provide a more detailed review of our operational results for the quarter.

Jerry?.

Thank you, Phil. Good afternoon everyone. Overall I'm pleased with our revenue performance for the second quarter. We had a very strong quarter from our data business, improved bookings from our Telerik products, and our OpenEdge partners contributed another solid quarter. Let's review each of our segments all on a constant currency basis.

OpenEdge segment revenue was $68 million, down 6% for the quarter compared to last year, while revenue from our ISV partners again showed steady growth. Sales to our OpenEdge Direct enterprise customers were significantly lower year over year, but in line with the expectations we set during our Q1 call.

As still noted, a large direct enterprise license deals we've been working on are progressing well as we move into the second half. Based on our current pipeline, we're confident that some of the large opportunities we've been working on will close during the remainder of FY16.

We continue to grow our SaaS-related revenue for OpenEdge with revenues of approximately $5 million for the quarter. We expect this trend to continue throughout FY16, further increasing the percentage of revenue that is recurring in nature.

The license decline in the OpenEdge segment was partially offset by an increase in maintenance revenue, driven by a renewal rate that was once again well over 90% for the quarter. Our OpenEdge renewal rate continues on its improved trend, evidence of our partners' and customers' overall continuing satisfaction with their relationship with Progress.

They are also pleased with the new technology and support we offer, including our modernization framework.

As I mentioned before, modernization is an ongoing process and provides a technological path, a path that includes many of our Telerik products for our partners to follow to ensure their applications remain up to date and competitive in their markets.

A great example of our OpenEdge partners adopting our new technology is a Sitefinity sale that we signed during the quarter. One of our largest partners is a $1.5 billion ERP vendor that markets a highly successful manufacturing application built on OpenEdge.

In order to retain and grow their customers and acquire new customers, they recognized that their existing model of customer engagement needed to change.

They needed to develop a web-based digital marketing plan that would allow them to personalize content and optimize the customer journey in order to handle the 4 million to 5 million inquiries that are funneled through their websites each month.

After evaluating both in-house and competitive solutions, they selected Sitefinity and Digital Experience Cloud to help them deliver on this promise. Because of their time to market, ease of use, and ability to manage and maintain their more than 100 websites.

The end-result is a long-time partner being able to expand their market by adopting the new technologies we have to offer. Corticon license sales were down year over year but we're beginning to see traction through our partnerships with systems integrators and consulting firms.

Corticon is one of the key ingredients in the recently announced Digital Factory Solutions and the product we feel is a significant differentiator for us as we help businesses move through digital transformation. Bookings for our application development and deployment segment were $22 million for the quarter, an increase of 7% versus Q2 of last year.

Dev tools bookings were down slightly year over year but renewals improved substantially versus Q1 and were much more in line with our expectations. Sitefinity and Telerik platforms both showed very strong bookings growth and Q2 was a record bookings quarter for our ALM testing products.

As Phil mentioned, we made significant improvement in our dev tools bookings execution in Q2 but there's still work to do, and Chris will provide a revised expectation of the full year in his prepared remarks.

That said, our longer-term expectation of 20% plus bookings growth has not changed as we continue to drive rapid growth in Sitefinity and Telerik platform products and build on our Q2 momentum and dev tools. Revenue for the app dev segment was $19.7 million and included SaaS and subscription revenue of approximately 1.1 million.

In May we released NativeScript 2.0 for mobile app development with Google's Angular JS framework, one of the most popular open source JavaScript framework for application development. NativeScript is also an open source - it's also open source.

It enables JavaScript developers to build mobile apps around an all-major mobile platforms without using native technologies and without having to rewrite for each specific operating system.

This new release significantly reduces the learning curve and ramp-up time for developers and lowers the cost of mobile apps by enabling them to reuse existing skills and code from the web to build their mobile applications.

Enabling developers to build native mobile apps without having to use native technologies is one of the reasons that Telerik platform was recently named a Visionary in Gartner's Magic Quadrant for mobile application development platforms.

Gartner noted that Telerik platform is one of the few mobile platforms that can address mobile and desktop web, hybrid and native application development all with its own tools. They also cited a powerful analytics, feedback management and lifecycle management tools included with our platform, along with this integrated mobile test automation.

This is the third year in a row that Gartner has included Telerik platform in its Magic Quadrant, something we're very proud of. Revenue for our data connectivity and integration segment was $10 million for the quarter, an increase of 38% versus last year.

Our multiyear bookings of 23.5 million at the end of Q2 is an increase of 38% year over year and 39% sequentially versus Q1. Several of our large OEMs renewed and expanded their distribution agreements during the quarter, which contributed to the large growth in both revenue and backlog.

Developers continue to demand easy, fast and secure access of the ever-exploding number of data sources, and our data products allow them to focus on designing beautiful, intuitive applications and interfaces without having to worry about data connectivity challenges.

Based on our current pipeline and visibility into our OEM contract renewals, we're confident that we'll also show revenue growth from our data business in the second half and for the full year. In closing, our Q2 revenue performance provides us with confidence and momentum as we move into the second half of the year.

We continue to strengthen our relationship with our customers and partners and we'll host over 1,500 of them at Progress user group meetings at all of our regions across the globe for the next few months.

These user groups are a great way for us to get feedback on our technology and vision, and one of the key areas we'll cover during the meetings is digital transformation, making sure our customers and partners understand our strategy for driving accelerated growth in the future.

I'll now turn it over to Chris to review in more detail our second quarter financial performance as well as our expectations for the third quarter and for the full year of 2016.

Chris?.

Thank you, Jerry, and good afternoon everyone. All of the revenue, operating income and earnings per share amounts I'll be referring to in my remarks are on a non-GAAP basis. For our GAAP results, please refer to the earnings release. As Phil and Jerry both noted in their remarks, we had a solid performance in our second quarter.

We reported total revenue that was slightly above the high end of our guidance range for the quarter, EPS that was well above our expectations, and strong free cash flow. Revenue was $97 million for the third quarter, compared to $101 million in Q2 2015, a decrease of 4%.

Revenue decreased by 3% on a constant currency basis, with a negative year-over-year impact from foreign currency translation of $700,000 due to the strengthening of the U.S. dollar. Our second quarter earnings per share was $0.33, down $0.02 when compared to Q2 of 2015.

In addition to lower year-over-year revenue, the decrease was also due to a $0.01 negative impact from currency translation. We over-achieved versus our guidance range of $0.26 to $0.29, primarily driven by lower operating expenses during the quarter as well as our slightly above guidance revenue performance.

Revenue includes acquisition-related revenue adjustments for Telerik totaling $600,000 in the quarter. As I discussed in our March guidance call and consistent with previous quarters, GAAP rules require us to eliminate certain pre-acquisition revenue classified by Telerik as deferred revenue.

But we include this revenue on our non-GAAP quarterly reporting to better reflect our true business performance on a normalized basis. The year-over-year revenue decrease was primarily due to license revenue, which was $29 million for the quarter. This represents a decrease of 9% at actual exchange rates and 8% on a constant currency basis.

The license revenue decline was primarily due to the decreased sales to OpenEdge Direct enterprise customers, the declining Corticon license sales, and lower AD&D revenues due to the shortfall in Telerik bookings during Q1, all of which Phil and Jerry mentioned in their remarks.

The overall license decline was partially offset by a very strong quarter from our DCI business, primarily due to the renewal and expansion of several of our larger OEM distribution agreements during the quarter, as well as a large DCI deal with a customer in Japan.

Maintenance and services revenue was $68 million for the quarter, down 2% from last year at actual exchange rates and down 1% on a constant currency basis.

The decrease in maintenance and services revenue was primarily due to the favorable impact on our revenue in Q2 of last year when we recognized a larger portion of deferred revenue related to certain Telerik product releases in that quarter, which we discussed during our March call.

This decrease was partially offset by an increase in OpenEdge maintenance revenue due to a maintenance renewal rate that was once again well above 90%, along with SaaS revenue generated by our AD&D segment. On our revenue by geography, North America was $54 million for the second quarter, down 8% from the same quarter a year ago.

On a constant currency basis, EMEA's second quarter revenue was $32 million, down 1%; Latin America revenue was $5 million, up 10%; and APJ revenue was $7 million, up 14%.

The year-over-year decrease in North America was primarily due to the favorable impact that I just mentioned - that I just referenced from Telerik's deferred revenue in Q2 of 2015, as well as lower levels of OpenEdge Direct enterprise licenses and Corticon's license sales in Q2 2016.

The decreases were partially offset by an increase in revenue from our DCI segment due to the renewal of several large OEM distribution agreements which I mentioned earlier. The increase in Latin America was due to strong OpenEdge maintenance renewals. And the increase in APJ was due to the large DCI deal with a customer in Japan.

Operating expenses were $70 million, down $3 million from a year ago. The net decrease in operating expenses year over year is primarily due to decreased costs for external services and lower variable compensation expense, partially offset by a higher compensation and benefit expenses related to an increase in our headcount of 3%.

Operating margin in the second quarter was 28%, flat to last year. Moving on to a few balance sheet and cash flow metrics. The Company ended the quarter with a strong balance sheet, with ending cash, cash equivalents and short-term investments up $229 million.

After making scheduled principal payments during the quarter, our ending debt balance for Q2 is $139 million. Net DSO for the second quarter was 45 days, down 14 days sequentially and down 5 days from Q2 2015.

We had a strong collections performance during the quarter across all of our geographies and businesses, including Telerik, and the quality and ageing of our receivables continues to be very good. Deferred revenue was $142 million at the end of the second quarter, compared to $130 million in Q2 2015, an increase of $12 million.

The increase was driven primarily as a result of Telerik bookings, partially offset by a decline in deferred maintenance revenue for our legacy products due to the normal seasonality of our billings.

As a reminder, sales from our Telerik products and services are generally billed and collected upfront, while revenue is recognized ratably over the term of the arrangements. Adjusted free cash flow was approximately $26 million for the quarter, compared to $19 million in Q2 2015.

The strong cash flow performance for the quarter was driven primarily by the improved collections I had discussed earlier and lower cash base expenses. Our year-to-date adjusted free cash flow for FY16 is $49 million. We repurchased 1.9 million shares in the second quarter at a cost of approximately $48 million.

Year to date we have repurchased over 2.4 million shares at a cost of approximately $60 million. As of the end of our second quarter, we had approximately $155 million remaining under the $200 million share repurchase authorization of our Board in March 2016, which we intend to spend by the end of the fiscal year market conditions permitting.

Turning to our updated guidance for fiscal year 2016, we expect revenue to be between $412 million and $418 million, which at actual exchange rates would be a flat year over year at the low end of the guidance or 1% at the high end of the guidance.

At constant currency rates, this guidance represents an increase of 1% to 3%, as this includes an estimated year-over-year negative currency impact on our 2016 revenue of approximately $6 million to $7 million. Our previous annual revenue guidance was between $414 million and $420 million.

Overall we are taking a more cautious view related to uncertain economic environment in the European markets, exacerbated by the recent Brexit vote. EMEA is an important market for our business and represents approximately 34% of our year-to-date 2016 revenues.

This guidance assumes approximately flat revenue from our OpenEdge segment, mid-teens growth in our DCI segment, and low single-digit revenue growth from our AD&D segment.

Additionally, while we are still confident in meeting our longer-term growth objectives for Telerik bookings, we are lowering our outlook to mid-single-digit growth for the full year.

Although we are lowering our outlook for the full year, our guidance reflects double-digit growth in Telerik bookings in the second half of the year, driven by continued rapid growth in Sitefinity and Telerik platform and improved execution on dev tools bookings.

We still expect a solid license performance from our ISV partners for the full year as well as a stable OpenEdge maintenance revenues due to our strong renewal rates.

We are also expecting improved sales to our OpenEdge Direct end-user customers in the second half of the year as we complete transactions that shifted to the second half, as Jerry mentioned in his remarks. Additionally, we expect our DCI segment will continue to show strong growth in the second half and for the full year.

Our 2006 operating margin guidance is 29% to 30% and our effective tax rate for the full year is expected to be approximately 32% to 33%. Our earnings per share guidance for the full year is $1.57 to $1.63, unchanged from our prior guidance.

This estimate reflects the favorable impact from the share repurchases we anticipate for the remainder of the year. Depending on trading volumes and the average repurchase price, this impact is expected to be approximately $0.04 to $0.06 on our full year earnings per share.

We're also continuing to monitor exchange rates, and based on current rates, estimates -- we estimate the total year-over-year negative impact of currency movements on our EPS guidance to be approximately $0.03 to $0.04. We expect adjusted free cash flow to be between $80 million to $85 million, unchanged from our previous guidance.

We've had strong free cash flow in the first half of the year and our guidance reflects that the second half will be lower due to the timing of various anticipated cash payments and the more conservative collections performance driven partly by the potential timing of license bookings during the fourth quarter.

For our fiscal 2016 third quarter, we expect revenue to be between $103 million and $106 million, a year-over-year increase of 2% to 5%. Our guidance for the third quarter is based on current exchange rates which negatively impact our revenue outlook by approximately $1.5 million compared to the prior-year quarter.

Excluding the impact of currency translation, revenue growth would be approximately 4% to 7% for the quarter. We expect earnings per share of between $0.43 and $0.46 for the third quarter, an increase of $0.04 to $0.07 or 10% to 18% versus Q3 of 2015.

The impact of exchange rates on our third quarter EPS is expected to be approximately negative $0.01 compared to the prior-year quarter.

In summary, we're pleased with our Q2 performance, and while we do expect higher growth in the second half of the year, we are still taking a more cautious view of our bookings and revenue estimates in several areas. With that, I'd like to hand it back to Brian for the Q&A..

Thank you, Chris. That concludes our formal remarks for today. I'd now like to open up the call to your questions. I ask that you keep your remarks to your primary question and one follow-up. I'll now hand over to the operator to conduct the Q&A session..

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

Hi, gentlemen. Thanks for taking my questions. Let's see. So, yeah, the first one, I'd like to ask about the OpenEdge Direct deals. So, first of all, your guidance for flat year-on-year revenue makes me assume that you're looking for positive year-on-year growth out of OpenEdge in both Q3 and Q4. I'm wondering if you can comment on that.

And maybe a related question about the OED deals, as you've reviewed those deals, what are the primary causes you're seeing of the flippage? And also, who are you seeing competitively in those deals?.

I'll just make a quick first comment, that yes, our outlook does include positive performance year over year for OpenEdge, and both quarters in the second half. And Jerry, I'll turn it over to you..

Yeah, I think, Steve, yeah, this is Jerry, I think there is, on some of the larger transactions, they are obviously seven figures plus, and we're engaged in multiple areas of a company, including services. Some of these are modernization efforts which also include services. So you obviously are dealing with committees and so on and so forth.

And it's -- and while I would say it's competitive, it's not competitive with an outside vendors. It's competitive with companies' budgets, so to say. In other words, people are committing to these projects, Steve, but it's a timeline thing, versus whether they're going to do it, if that makes sense. So there's two things we look at.

It's scope and size of transactions and length of time getting it through their decision-making. It's not a decision of doing it or not, it's a timeline of them doing it.

Did that answer your question?.

Yeah, it does. So, Jerry, I'm assuming then that these are, you know, these are really primarily expansion deals at existing customers, would that be fair? And then I do have one follow-up if that's okay..

Yeah, that's a very fair assessment. Correct..

Okay, great.

And then in the dev tools area, who -- you know, I know there's a wide range of players, but who would you say Telerik is seeing most across its dev tools? Who's the most prevalent competition there?.

Hey, Steve. It really is across the board. And I will tell you that I think you're trying to look at whether or not the market is more competitive, I will tell you that we are the largest provider of UI tools, certainly in the dot-net segment.

And that market, while you might say it's a mature market, it's still growing at mid to high single digits, and we should be able to take market share in that. So I think you just got to look at this as we're working through our execution issues.

I feel confident that we're going to resolve those and that our bookings growth, as we've indicated, will reach double digits in the second half of this year..

Terrific. All right. Well, gentlemen, I appreciate all three of you answering my questions..

Thanks, Steve..

Our next question comes from Glen Mattson with Ladenburg Thalmann..

Hi guys. Just building on the last question a little bit on the OE side. So, understand kind of the challenges that are out there, but, you know, and I guess this is multiple deals, but it sounds like you have some that is closing this year in order to hit your numbers.

So, can you give us a sense of how big a swing factor you're talking about for those to hit your number? And then what gives you that confidence that you will get some of them over the goal line this year?.

Well, they're an important part of our OpenEdge performance in the second half of the year. So that is something that -- obviously when we -- when you look at our first half versus second half performance, that is a key driver of us being down in the first half.

But again those are going to be important in our overall expectations for the second half related to OpenEdge..

This is Jerry. I would just add, there are multiple transactions in multiple areas of the world. So they're not concentrated, which to me is a good thing, which means we have opportunities across the globe in these areas..

And so I guess there's enough opportunities out there and that's what gives you confidence that at least enough of them will close to get to your number, is that what you're saying?.

Yes, exactly..

And not only that, Glen, you know, as the year has progressed, we, you know, the sales cycle obviously becomes more evident. We move closer to the decisions. It gives us confidence that the second half will be able to close some of these big deals..

Okay. Great.

And then the strong growth in Sitefinity that you mentioned, can you talk about how big that sub-segment is now as a percent of the whole app dev group?.

We haven't historically given that information, but obviously I'll say that the dev tools is the large majority of the business. The dev tools probably makes up I would say over 50% of the total app dev revenue segment. Probably the next largest piece is going to be in Sitefinity..

Okay, great. And just last, do you ever break out by country what U.K.

is as a percent of revenue?.

We haven't historically. As I mentioned in the call, the European -- the EMEA market is 34% of our revenues. And I'll just say that the U.K. is an important market within our European operations. So it is one of our stronger markets that we participate in..

Okay, great. That's it for me. Thanks..

[Operator Instructions] Our next question comes from Mark Schappel with Benchmark..

Hi, good evening. Thanks for taking my question. Phil, starting with you.

The lower revenue for fiscal 2016, is that due solely to foreign exchange or are there some macro concerns baked in there as well?.

There's -- it's actually a very small, you know, the exchange translation, currency translation impact, is pretty close to where we were at when we talked at the end of Q1. So it's deteriorated maybe just slightly on the currency translation.

It's really -- it's going to be primarily driven by again our caution around some of our European -- our European business, as well as we did take down a little bit of pullback on our AD&D revenue outlook for the full year..

Great, thank you. And then if I recall correctly, Phil, you were making some changes to the Company, particularly in the sales organization, after last quarter. I was wondering if you could just review or just highlight a few of those for us..

I'll let Jerry take that. But before he does, this was really about making sure that we meet the targeted headcount that we had identified in our goals for the dev tools business primarily. So this isn't, you know, a major effort that was underway, Mark.

This was really part of our plan, the hiring, which we realize we fell short of in Q1, and that was one of the things that we adjusted as we went into Q2..

Yeah, this is Jerry. Mark, I think I'll just add to what Phil said. I think the major changes were focused on our Telerik renewals and dev tool business. We, I think we've done a very good job on the renewals business. The team has done a very good job reclaiming that business.

We instituted many of the same processes and metrics and technology, and so we're seeing the uptick in that I believe in Q2 from a renewals perspective and increase in dev tools. So I think we suspect we'll get that, continue to get that from a renewals perspective going forward, that same process and drive..

And while there's still work to do, Mark, you know, we said that we feel that the second half of this year we will -- we expect to achieve double-digit growth rates in our bookings for our Telerik solutions..

Okay, thank you..

You're welcome..

There are no further questions at this time. I'd like to turn the conference back over to our presenters for additional comments..

Thank you all for joining the call today. As a reminder, we plan on releasing financial results for our fiscal third quarter of 2016 on Wednesday, September 28, 2016, after the financial markets close, and holding the conference call at the same day at 5:00 p.m. Eastern Time. We look forward to speaking with you again soon. Have a good day..

This concludes today's conference. You may now disconnect..