Q4 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Romine Street fourth quarter in fiscal 2019 earnings Conference call.
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I know what Dan the conference over to your Speaker today, Mr. Dimple VP of Investor Relations. Please go ahead Sir.
Oh.
Thank you operator, I'd like to welcome everyone to remain is through its fourth quarter in fiscal year 2019 earnings conference call on.
On the call with me today, South Raven, our CEO and Stanley Boardwalk, our Chief Accounting Officer today, we issued our fourth quarter in fiscal year ended December 31st 2019 earnings press release, which can be found on our website. A reconciliation of GAAP to non-GAAP financial measures has been provided in the table.
Following the financial statements in this press release.
An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about non-GAAP financial measures and certain key metrics a copy of the press release, it financial tables, including the gaps in our GAAP reconciliations and other supplemental financial information.
It would be viewed and download it from the Investor Relations section of our website under investor events.
As a reminder, today's discussion will include forward looking statements that reflect our current outlook. These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially. The statements made today. We encourage you to review our most recent FCC filings, including our form 10-K for.
The full year 2019 that won't be filed by March 16th 2020 for discussion of risks that may affect our future results or stock price.
Before taking questions, we'll begin with prepared remarks with that I'd like to turn the call over to stuff.
Thank you deem it thank you everyone for joining us today.
For 2019, we achieved record fourth quarter in fiscal year revenue that exceeded management guidance increased our gross margin and continued to improve our balance sheet with reduced at an increased cash. Additionally, we experienced improved performance ROI investments in global sales the launch of new products and services.
And expanded geographic operations.
For the fourth quarter in fiscal year ended December 31st 2019, we generated revenue of 76.1 million and 281.1 million year over year increases of 11.7 in 10.9% respectively.
Gross margin was 62.6% for the full year 2019 up from 62.1% for the full year 2018.
We exited the fourth quarter with annualized subscription revenue of 302 million.
Revenue retention rate for subscriptions, which makes up most of our revenue remained above 90%.
More than 70% of subscription revenue non cancellable for at least 12 months on a rolling basis.
For the full year 2019, our global service delivery team closed over 31000 support cases across 55 countries and delivered more than 70000 tax legal and regulatory updates to clients at 38 countries.
We achieved an average client satisfaction rating a 4.8 out of 5.0 on the company's support delivery were 5.0 rating is considered excellent.
In 2019, we were honored with 34 awards, including two awards for company of the year One award for customer service outstanding performance of the year at 24 other awards for customer service excellence.
Also in 2019, the remaining Street foundation funded exclusively by Romine Street, Inc. and its subsidiaries proudly partnered with 68 charities around the world to provide financial contributions in kind donations and hundreds of employee volunteer hours to those in need.
The year end employee count totaled approximately 1270, a year over year increase of 17%.
We ended the year with 2063 active clients, which includes 100 fortune 500, and Fortune Global 100 companies, representing a year over year active client net increase a 14.5%.
Notable client wins.
During 2019, we announce some notable global sales wins across our Oracle safety and Salesforce supported product lines and I've saved clients nearly $5 billion in total maintenance costs since our inception in 2005.
Wins included Hyundai Kia Motors, you switched to remaining street for support and maintenance of its global database portfolio.
San Phan Chemical company, who switched to Romines Street for supported with Oracle E business suite application and Oracle database software and sole semiconductor and high Mark in Korea, we switched to remaining street for supported their S.A.P.C.C. systems.
Wins also included cross sells to clients branch safe way in ABS go industries, each of whom expanded their existing Romine Street support contracts do include Romine Street application management services for Salesforce.
Investments initiatives in market opportunity.
We followed up our 2018 launch of application management services for sales force with the launch in 2019 of our application management services for S.J.P. an oracle.
Application management services, commonly known as am mass is where we run the system for the client and support services, where we provide technical support and required updates to an internal or an A.M.S. team who runs the systems for the client.
Romine streets expansion in day en masse allows us to integrate our ultra response of traditional support services, where the clients day to day needs to run their system.
We believe our integrated support services, an A.M.S. offering is unique and valuable competitive offering in the market.
The integrated service offering creates a significant opportunity for us to secure additional long term subscription service contracts grow revenues and increased the wallet share of our clients I teach bad.
Our integrated service offering can provide clients, a better model better resources and better outcomes with higher client satisfaction and significant savings of time labor and money.
Well, just considering the software vendor products for mainly street services today, our launch a horrible in S.A.P.A.M.S. essentially doubles, our target addressable market from 14.5 billion for just support services to more than $29 billion for support services.
And application management services.
Already we have achieved sales wins with our new application management services, and we're successfully delivering our integrated support in application management service offerings to clients across a variety of industries and geographies.
Competition.
Competition with our primary support service competitors Oracle in S.A.P. remains fierce both software vendors are engaged in continuing efforts to force their licensees to upgrade and migrate from current stable software releases to the vendors newest immature products.
Oracle in S. safety or planning to and full support a major product releases by 2030.
We believe this creates tremendous opportunity for Romine Street, because many licensees do not see the value in spending for what they believe or unnecessary expenses and disruptions that do not improve their competitive advantage or contribute to their growth.
Romine streak provides significant savings a more robust and responsive service offering and allow clients to invest the financial on labor savings into innovation and strategic projects that support their growth.
Survey results, we've shared with you in the past found that approximately 80% of CIO responded are not planning to move we're unsure about migrating to or color resi piece, new software and plan on remaining on their current systems until at least 2025 or beyond.
We've also seen the growing opportunity for third party support noted by leading industry analysts, including Gardner.
Their recent Gartner predicts 2020 research report noted a 50% increase in client inquiries related to third party support during the first nine months of 2019 compared to the first nine months of 2018 and they believe the third party software support market will grow from three.
851 million in 2019 to 1.05 billion by 2023, a 200% increase.
In addition, Gardner states that for many third party support is no longer seen as quote out of the ordinary or ask quota carrying more than an acceptable risk.
More buyers are aware of the value added offerings from third party support providers, such as custom codes support interoperability support and global tax regulatory and security services. The uptake of independent third party support is expected to increase substantially.
These Gardner figures do not include additional sales of application management services that can significantly increase remaining streets revenue opportunity with clients.
Additionally, we believe the hybrid I T environment that will integrate existing licenses, new SAS licenses and cloud deployments will be the I.T. reality for much longer than expected and the majority of ERP workloads will continue to be on premise or simply lifted and shifted into a cloud for.
Continuing a long term use.
Recent Oracle litigation developments.
With respect to Oracle versus remaining street that was filed in 2010 and went to trial in 2015, we filed the second to appeal to the U.S. Supreme Court on November five 2019, asking the core to review in 2019 ninth circuit decision that affirmed but narrowed the scope.
The existing permanent injunction.
Although the U.S. Supreme Court, except that our first appeal lumpy prevailed, where the unanimous court decision against Oracle on January 13, 2020, the U.S. Supreme Court declined to hear our second appeal.
Previously however, the U.S. ninth Circuit Court of Appeals ruled that remaining street lawfully competes with Oracle.
With respect to remaining street versus Oracle filed in 2014, we're still awaiting rulings on submitted summary judgment motions trial is not currently expected to occur until 2021 or later.
Corona virus covert 19 operating plan.
Remaining street is prepared to under its global emergency operating plan to continue delivering uninterrupted mission critical 24 by seven by 365 support services to its thousands of global clients. During the current covert 19 virus outbreak.
Many street has hundreds of engineers working in 17 countries, none in China that provide extensive global workforce redundancy in resilience to enable uninterrupted service 24 by seven by 365, even if some of our workforce will never be offline for a period due to illness.
In addition, we have a unique innovative and secure global remote connectivity infrastructure and data center model in place that enables our entire workforce of thousands of Romine Street professionals to securely perform their work from any location with internet connectivity, giving us the flexibility to close.
One or all of our global facilities, if necessary, while continuing to provide uninterrupted mission critical client support under our contractual service level agreements.
Remy Street is already taking some actions under the global emergency operating plan designed to reduce employee exposure risks at our facilities and when traveling globally.
These measures aligned to the U.S. center for disease controls guidance to mitigate the spread of acute respiratory viruses.
With respect to marketing and sales, we're scaling back our global event participation and employee travel where we feel prudent.
We're also adjusting our marketing mix and sales processes for even more digital and remote activities.
2019 summary in 2020 objectives.
Financially, we improved our balance sheet in part due to a lower cost of capital for the full year.
This allowed us to invest in the business reduce debt and increased cash.
To recap capital market activities between 2016 and 19.
In 2016, we completed 125 billion dollar credit facility.
In 2017, we completed a $50 million common stock merger an IPO.
In 2018, we raised approximately $140 million than a convertible preferred stock financing, allowing us to repay the expense of 2016 credit facility in fall.
In 2019, we upsized the convertible preferred stock by 10 million to complete the full planned issuance of that security.
The balance sheet improvements from year end 2019, compared to year end 2018, including increasing our cash position by 13 million an increase in deferred revenue by 39 million and with the exception of capital leases pay off most of our debt.
Operationally, we were pleased with the progress made in 2019.
As we enter 2020, we're focused on executing to our plan and capitalizing on the investments made in prior periods.
We have the global assets in place to service, our growing global client base and offer new and existing clients a wider range of innovative premium service solutions that meet their strategic financial and operational needs.
Now over to you Stanley.
Thank you said.
Let me begin with a summary of the bulk of the adoption of the new revenue accounting standard also known as if they seek so six revenue from contracts with customers.
Okay. This new accounting standard in the fourth quarter 2019, when afford introspective basis effective January one 2017, a blanket guthman each brand Peter deported studying with full year 2017 to September thought give 2090.
Fourth quarter and full year 2019 white imported into if he speaks you'll see a summary confusion from six to five two S. C seeks a big is included in our earnings press release in additional details wouldn't be we'd be provided you know if you see form 10-K.
The analysis that follows including guidance based on these new accounting Stan.
Generally speaking revenues now recognize taking into account the contract economics over the entire noncancelable, Peter as opposed to revenue recognition for each of these Peter to separate.
Yes, they seek so six revenue adjustment for the previously reported nine month ended September 32019 was an increase of one point didn't meet on dollar.
40 of 2018 revenue adjustment for six weeks. He was an increase the revenue of $700000, which includes an increase of $400000 for the fourth quarter 2018.
In addition cost to obtain a contract largely sales commission on now come to life and recognized in two expense over four years, which is the estimated cost them a light Brian as they seek so six commissions were expensed when in car.
As of December 31st 2019, we had $28 million thing before corporate costs can be recorded this is expensed in fiscal 2020 and beyond.
Now, let's discuss the results and guide.
Revenue for the fourth quarter was $76.1 million and 40 AD revenue was $281.1 billion.
Year over year increases over 11.7% and 10.9% respectively.
Q4, Andre subscription revenue was approximately $302 million up 11.4% year over year.
For the full year 2019 glance within the United States comprised 64% of total revenue.
International clients with 56% representing aggregate year over year total revenue growth rates up 10% for the U.S. and 13% for international flight.
Gross margin was 60.2% for the fourth quarter and 62.6% for full year 2019, compared to 64.6% for the fourth quarter and 62.1% for full year 2018.
During 2019, we benefited from operational efficiencies or wherever in the fourth quarter, we experienced gross margin pressure. It's increasingly we are like the cross to expand savvis capacity for new products and services, including costs associated with the global rollout of a application management services 40, 50, an oracle.
We continue to believe that gross margin from I stopped. He started system continues to expand and would have partially offset the M.S. and other new products, it's obvious ramp up costs.
Therefore, we expect overall gross margin to be around 60% to 61% for full year 2000 into one.
Sales and marketing expenses as a percentage of revenue was 39% for the fourth quarter and 38.2% for the full year 2019, an increase from 36.4% for the fourth quarter and 35.3% for full year 2018.
We continue to build out our sales capacity in product offerings, such as the increase in sales reps by 21%. During 2019, we've got to do you expect sales and marketing expenses to be in the range of 37% to 39% of revenue fall of 2020.
General and administrative expenses as a percentage of revenue, which excludes outside litigation cost was 16.7% for the fourth quarter and 16.9% for full year 2019 up from 11% for the fourth quarter and 14.7% for 40 of 2018 during two.
The than in 18 previously accrued still stocks it was reduced due to negotiate that stuck settlements we southern state.
Routing the sales tax accrual reversal, yeah. They would have been 16.6% of revenue for the full year 2018.
In addition, we experienced increased cross during 2019, the limited to the adoption of the S. C. Seek so six revenue standard and the implementation of the new leasing stranded costs to obtain lease up did an accounting standards have plateaued at 2020 guidance for GE any expenses.
We currently expect <unk> expenses as a percentage of revenue being the reach of 16% to 18% for the full year 2020.
Litigation expense was 1.8 million dollar for the fourth quarter and that's created over $844000 for full year 2019.
The litigation expense for 2019 was offset by that he's done a $4.8 billion plus $200000. It's both judgment interests as reported by the U.S. Supreme Court for me to division on much for 2019. He lived after nontaxable expenses I won't be toward according to thousand in 16.
Our outside litigation spend is not linear and it can fluctuate each quarter based on litigation activity.
Got to do you expect litigation expense to be in the range of $13 million to $15 million.
Full year 2020.
Net loss was $207000 for the fourth quarter and net income was $17.5 million before do you have 2019 compared to net income of 5.4 million dollar for the prior fourth quarter on a net loss of $64 million for full year 2018.
They are fully out 2018 results, Hawaii, PUC didn't materially, but noncash expenses to be limited to the appeal for pro forma clearly facility.
Non-GAAP net income was $3.3 million for the fourth quarter and $22 million before do you have 2019 compared to non-GAAP net income over 11.8 million dollar for the prior fourth quarter in a non-GAAP net loss of $4.7 million for full year 2018.
Adjusted EBITDA was 4.7 to meet on doors for the fourth quarter and $27 million before do you have 2019 compared to adjusted EBITA of $13 million for the prior fourth quarter and $35.3 million for full year 2000 <unk>.
Dividends on the CDC, if we find it was $3.9 million for the fourth quarter and $15.1 billion for full year 2019, well be many kind dividends said already include Fracs, yes, what's the $1.2 million for the fourth quarter and $4.5 million before do you have 2019 I.
Accretion of that be five spoke discount was $1.5 million for the fourth quarter and $5.8 million fully at 2019.
Basic and diluted net loss per share attributable to common shareholders was 10 cents for the fourth quarter and 12 cents for the full year 2019 compared to a net loss per share once and for the prior fourth quarter and a net loss per share of $1.22 cents before 2018. This takes into account caution.
Because of dividends for the city safety products, though.
Deferred revenue from December 31st 2019 was approximately $235.5 million up 19.7%.
$196.7 million from December 31st 2018, we ended the yeah. We studied point $4 million startup costs are not policy for the full year 2019 cash flows from operations was $20.4 million compared to $22.4 million for the full year ended December 35.
Then in 18.
Backlog, which includes the family Butte deferred revenue and I'm Cancelable future revenue was approximately $468 million as of December 31, 2019, I'm, 21% from $397 billion out from December 30, plus 2018.
Now with respect to revenue guidance, we expect fourth quarter of 2020 revenue to be in the range of $76 million to $78 million and we expect full year 2020 revenue to be the range of $310 million you got to $20 million.
And we thought operator, we'll now take questions.
As a reminder, ladies and gentlemen to ask a question you will need to press Star then one on your telephone keypad to withdraw your question press the pound Keith.
Please standby we've compiled acuity roster.
My first question comes on line out directly with Cowen and company. Your line is now open.
Great. Thanks, Good afternoon Seth.
Are you guys delivered some nice upside on revenue, but deferred revenue was was well below we're looking for and the number of net new customers was was down quite a bit year on year, but but I understand that assay six assets had some meaningful impact on that on the deferred side I think if I look at that apples to apples the short term.
Hurt revenue growth looks up quite a bit better but could you just unpacked. How you have your overall bookings and did for the quarter versus expectations and maybe touch on how you felt a about the net new customer number.
Yeah. Okay. Thanks, you know I think again, we did what we wanted to do choose went out there to build out the sales force a in 2019 start ramping up capacity getting people trained up we went out to the market with new marketing message.
Hinges, we expanded out into new global markets. So I think we I think we did what we wanted to get done in the fourth quarter. You know there's always a few deals that we wanted to bring in that that slipped past the date and as you know in our world of the maintenance side, if we don't close it by the time, we get to a renewal date.
And it flips over to be an opportunity for the next year or whenever it's up next for renewal. So there were probably a few deals more we would've liked to have gotten done that we felt were potentials. They were little bit on the stretch side, but other than that I think we got we got the quarter, where we wanted.
Okay and so.
Stanley I mean can you just touched on I'm kind of why why there's such a big write down on deferred under six or six for you guys.
I think for your question at this point seeks to walk into significantly Bucks door.
The teacher and just how we recognize revenue generally although I'd be noncancelable, Tom about contract and therefore, I didn't being a big impact.
Overall, our deferred revenue has grown from the <unk> previous he has and we don't expect that 66 at least on the revenue side will be I'm, a big impact on the on the <unk> cost side or commissions are being capitalized and recognized up for you.
Right, because we used to use it as you know Derrek Weaver, we've always expensed off the commission so we changed those right.
Yeah, Yeah, so I guess staying on that.
Line of thinking with respect to guide it so it looks like the 66 revenue impact was a two to 3 million for 2019 I mean.
Looking at 65 or six to six is that kind of to the degree of the impact that we would've assumed for 2020.
The <unk>, usually about 1% to 3% that would be the range. Brady 19 was actually was a 1.4 million dollar theme park.
A lot of not is just how we change revenue cycle, where do you spend a lot longer period of time as opposed to just one here.
[music].
And on the on the cost side, how much of a benefit was it for you to go to that to the deferred commission structure.
A week up 200 up you can quantify that all at the end of the yeah. We would take it out of a four year. So it's a bloody about $5 million for the year.
Okay.
That said, so so nice to see guidance, calling for the potential for growth acceleration, but I just I wanted to drill on how you guys you're thinking about potential macro disruption. So first could you just can you talk about how much your your businesses high touch in requires travel in terms of signing new deals versus you know deals done over the phone or locally.
It required travel and I, just I guess, how much go to market change you may need to do to adjusted the environment right now.
Well I I mean like everybody else right. This is a story that's evolved the by the day. So we're all in our guidance is based on a few different things first.
Look at the size of our recurring revenue stream and the fact that either here you are getting close to $300 million of recurring revenue, 70% plus is committed for 12 months or more so we're starting to see that really good base built in then you add in the revenue retention.
Fund raising the you know 92% so when you add all those together I think you create a nice floor, a and when we think about the macro environment not too in any way you to dismiss how serious everything as but just from the point of view that we're in a business that benefits from uncertainty.
Whether that's financial or whether its political all those things when you bring uncertainty into the picture what happens with uncertainty people push off big investments and changes in these times than we saw this of course during the economic downturn 2005 to eight remaining street flow.
First a extensively as we'd like to say, we're not we're not a contrarian business in the sense that we do well when things are bad and we don't do as well when things are good we do well when things are good we do really well when things are uncertain and so we look at the macroeconomic climate and say you know.
It's the biggest risk when people leave Romines Street why did they leave because they're doing some other big project and change in an environment like this and I think because we're all watching this and well you know people are looking their wounds from from from days of being beaten up on the market.
You can probably imagine that there's a lot of big projects hundreds of millions of dollars or projects that are probably going to get delayed they're probably going to get kicked down the road because people are lost confidence in spending that kind of money in a market, where everybody's trying to figure out how they're going to sell in this in this type of climate again.
Run their business differently and I think once the once we get past hopefully this you know very urgent period.
We get into a period of where folks are looking at hey, I've got it keep my costs down I need to stay steady I think that bodes well both for potential upside to our revenue retention keeping those contracts in place and I think it creates new opportunities. So you know.
Even though you know we're looking at a 12% growth because we believe as we talked to everybody in our prior calls we believe that 2019 would present the trough of the and the continual dips in the and the annual year over year revenue growth because we got enough structure in there we would start turned the corner, we would get billings out.
And then we would start coming up and that's really what you're seeing reflected in our guidance, which is a you know moving from a from a you know a high tends to a 12 moving past the trough starting that the up the other side.
Return on the you and I think that all of those reasons that we see in the market in the macro environment should provide potential upside to us the caveat of course for everyone is.
No one knows what's happened here nobody understands how long it'll happen the impact to sales environment. You know what can we get people to buy on the other side can people focus even in a crisis can they get passed the crisis and start to buy and I think every one of US every company out there is trying to figure out is this something thats.
Just disruptive for a week two weeks or not well know we're getting near the end of our quarter. You know, we're we're back end loaded a and really we'll see it I think at the very ended the Q1 results, which will come right into this period.
Great. That's good color I guess last one for me. It's just how you how are you feeling about sales capacity build it and where you are with respect to hiring plans well, we're going to hold where you know were around 70 677 hires on the sales side per our prior calls we've switched from number of.
Bodies right now to really focused on sales enablement and effectiveness.
We held our big Global sales conference Luckily, we got that end about conferences were still happening pretty much on the tail end before you saw everybody else canceling, there's and that was very effective for us I think in moving our sales force further down the field in dealing with the new wider breadth of products that we have.
You're going to see us focus in on the up sell a and I think this is really about getting more out of each sales rep are still holding quotas for the average sales rep around $2 million a year, we did create some new higher level sales positions at 2.5 million, which is new to our sales structure, because we have some super sellers.
We're getting bigger quotas bigger comp plan a into the mix. So I do think that we have.
Moved to a more sophisticated next level of sales we've deployed more people globally. So yeah. I think we're I think we're well positioned to again reap the rewards of of the investments that we've made over the last 21 22 months in sales capabilities.
Okay could drop thanks, thanks for the color. Thanks Derek.
Our next question comes from Brian Kinstlinger with Alliance Global Partners. Your line is now open.
Great. Thanks, so much.
I'm curious I know, it's very early but how or prospective customers.
Already dealing with a video conferencing incident face to face are you touching perspective customers as much you, taking a bit longer to get in touch or get in front of customers I'm. Just curious their reaction right now yeah. I think you know certainly at the same question for everybody right. The difference is I think Brian is that.
We have built in remote selling has been part of Romine Street since the beginning in fact in the first few years, we were nearly 100% remote selling so we have a strong history of using web based products you know everything from Webex now were teams base, but we do a lot of.
Remote selling activities in any given sales cycle of what's new in this crises right now is nobody's taking a meeting in person. So if you think about a I would say my guesstimate is we'd probably do 30% of our selling in person and 70%.
End of activities and in all total sales cycles remote.
But now that 30%, everyone, saying, let's just do it on the phone people have closed campuses. They don't once you coming on site writes an unusual experience, but so for US. This is really probably a shorter change or a smaller change to the overall process than a lot of other companies, who haven't been into business I've remote selling so.
From that point of view, we certainly feel we manage that risk in that transition to 100% remote sales much easier than a lot of other companies. We have the infrastructure every sales rep is used to selling remotely and that's you know the risk is is that 30% that we were doing and person tended to be bigger large.
And your deals where you might have 2030 stakeholders, you've got again alignment with and so you know doing that all by phone.
Might be a little more challenging so yeah, I think it does introduce a bit or risk on some of these bigger transactions in the it because we can't get in front of them. We're gonna have to do it all by phone and that's where the risk realize.
Great.
And then with recent discussions.
In the past few weeks prospective customers do you get a sense that.
Switching to a low cost third party meetings provider is something that you can be at the latest Susan is it.
Hi in a priority list I mean I take it you know executives are so focused on so many it's usually to their business with Corona that I Wonder you know how much cost of their business becomes an issue.
Well I I agree with you I mean this is what I was just saying a second ago, Derek which is.
You know the need is there I mean, clearly be you see no huge number these clients back several of them you've seen in the news or in the middle of sales cycles with US. It you know in in terms of a you know looking at looking at alternatives and things like that so we definitely see activity related to.
Whether you call. It the current crisis the current macroeconomics crisis, but we've had remember stepped back a few weeks even before we really got into this this crisis on a more local level.
We've already had a slowing global economy.
We were already expecting to see auto sales down a couple points right. We've already saw Germany are teetering on recession. So I think we've accelerated into a negative economic situation, but it was our ready slowing and it was already driving what we saw increased inquiries.
So again I think that the the more uncertainty enters the market and this now accelerates it creates opportunities the risk again as you pointed out is they may be bleeding and they may be on fire and need cost savings and they need to figure out how to fund some items, but will they be so distracted.
By getting their own sales running at keeping their own company running that.
We just fall by the wayside because they just can't get to it right to many other distractions to many other crises I'm not seeing that yet.
But I think it's a you know that's a real risk I think all of us faces that everyone can get so focused on just keeping their company moving forward closing offices is sick employees a yeah. It can be a huge distraction to any sales cycle.
Yes, which leads me next question your business, obviously, a is around cost cutting to help companies and invest in other things and use their money, which is generally received well into recession can you talk about your business has performed in resections, maybe talk about how they performed in in a you know stepping away.
Right.
I don't know how small you went back and I guess, the only thing I'm not I don't I don't know where those were not audited periods. So I need to say that because we weren't public and it was right at the right back.
You know just anecdotally I can say you know we did have growth.
We I think we did well and that's what I said I always like to be careful about saying were contrary business because some people here that you grow well when things are are up in the air and there's there's you know there's a lot of doubt in the marketplace. Another issues, but you know because we do well in good times because budgets are always limited in I T. There's a thousand.
Things they want to invest in and they can only invest in a portion of them and so we help make sure that they can find a lot more of what they need so in downtimes, you're right. I mean people may switch from I want to take this money savings and invested in new innovation in competitive engine growth, which of course, they need to do but.
When things are at a crisis level [noise].
Cost savings can move to the top of the list I simply need to reduce the outflow.
And I need to do it quickly and I need to do it in a way that get it doesn't create risk for the business. It may create new opportunities and we've always played a very very good rolled there so whether it's just cost savings or or savings to innovate and invest somewhere else. We are the right answer for a lot of companies on both.
Wants.
Great last question of that is I'm hearing correctly, you had you exited the over 302 million in annual recurring revenue if I.
Assume the 92% held up you've got about to 78, Hey ended the year persons when it makes for that's what I'm hearing correctly and then how has it late December and so how is late December as well as early this year gone. It have you added meaningful bookings to that so are we closer to three.
Hundred at the bottom if everything went wrong and you know I'm just trying to trying to understand from a commitment standpoint, if what you've already.
Added where you're at and visibility.
I think again, we just refer to the Q1 guidance right for for Q1 numbers, you know for what for that for the backend.
December you know a lot of a lot of what we saw in the global crisis was still being here. It was primarily in China. We don't have operations in China, We service a lot of customers in China. So so we were not disrupted as a company in operations on the ground that we were.
Well servicing our clients a uninterrupted.
We do have you had size operations in Korea, and Japan, which did start to see towards the ended the year. We didn't move some people out of our offices as we saw numbers of virus issues and rising in Tokyo, Osaka, and sole and we did that without disruption and weve.
Continued selling we did close.
Very good business a in Korea in <unk> in Japan, So we didnt see it disrupt our business plan in those areas.
Great. Thanks, so much.
Sure. Thank you.
As a reminder, ladies and gentlemen that is star then one if you'd like to ask a question at this time.
I'm not showing any further questions at this time I'd like to turn the call back to Mr. Raven for closing remarks. Thank you very much and listen everybody, obviously very very complex difficult challenge for everybody and wishing you wishing you all well and good health size.
We all navigate the something we've never been through and look forward to hopefully this movie behind us and and look forward to talking to you all on our Q1 2020 call. Thank you everybody.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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