Oct 28, 2009
Executives
Marc Chardon - President & Chief Executive Officer Tim Williams - Chief Financial Officer
Analysts
Phillip Rueppel - Wells Fargo Securities Ross Macmillan - Jefferies & Co John Neff - William Blair & Company Sackett - J.P. Morgan
Operator
Good afternoon ladies and gentlemen. Thank you for standing by.
Welcome to the Blackbaud third quarter 2009 earnings conference call. Today’s call is being recorded.
(Operator Instructions) I would now like to turn the conference over to Mr. Tim Williams, Chief Financial Officer of Blackbaud.
Please go ahead.
Tim Williams
Thank you very much everyone for joining us this afternoon. We are here today to review our third quarter 2009 results and with me on the call today is Marc Chardon, President and Chief Executive Officer.
Marc and I have prepared remarks and then we will open up the call a bit later for the questions. Please note our remarks today contain forward-looking statements.
These statements are based solely on present information and are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Please refer to our SEC filings, including our most recent Annual Report on Form 10-K and the risk factors contained therein, as well as our periodic reports into the Securities Act of 1934 for more information on these risks and uncertainties and on the limitations that apply to our forward-looking statements.
Also please note that a webcast of today’s call will be available in the Investor Relations section of our website. With that, I’d like to turn the call over to Marc and I’ll come back a little bit later to give some further details regarding our financials.
Marc?
Marc Chardon
Thank you Tim, and my thanks to all of you on the call for joining us today to review our third quarter 2009 financial results. We are very pleased with the company’s better than expected performance for the third quarter, particularly considering the economic environment which remains quite challenging.
The enterprise component of our business continues to be an important driver of a very solid overall results. We also continue to strengthen our leadership position in the online fund raising segment of the market.
We are generating strong growth of our subscription revenues sources and believe the company is well positioned to return to low to mid teens revenue growth when the economic environment eventually improves. Let’s take a look at financial highlights for the third quarter.
Our total non-GAAP revenue of approximately $79.7 million was above the high end of our guidance, up from $77.2 million last quarter, went down 3.6% when compared to the year ago period. The company’s expense management has been very strong throughout 2009 and we executed particularly well in this area during the third quarter.
Our profitability was well above our expectations and we now expect to exceed our full year non-GAAP operating margin target. Tim will cover this in more detail in a moment.
This is a significant accomplishment considering the investments that we continue to make in our growth initiatives combined with the challenging economic environment in which we are operating. Looking at the components of our revenue, subscriptions remained the highest growth component in the third quarter.
It seems it was only a short time ago that we were attempting to project when subscriptions would eventually be larger than license revenue. In Q3, subscriptions were more than three times as large as license revenue, which now is the smallest contributor to our total revenue.
Even with two eCRM software sales that closed and we recognized during the third quarter, that shift in our revenue model for other parts of our business towards the subscription model is quite clear. This transition will continue moving forward and is consistent with the direction of our long term product road map.
Although the transition to a software as a service model result in lower first year revenue when compared with the upfront revenue generated by a perpetual license sale, we believe this is a very positive long term development for our shareholders. Now, let me address the current state of our market.
From a high level perspective our view is very similar to what we shared with you last quarter. Though we are very pleased with the company’s financial performance once again exceeded our expectations, we did not see a material change in customer buying behavior during the third quarter as compared to recent quarters.
There are certain segments in the markets that continue to perform better than average, such as higher education and the enterprise segment generally. However, other verticals such as arts and cultural remain quite challenging, and the low and mid market continue to face greater head winds from a broader economic perspective.
This general characterization makes sense, considering that larger non-profit typically have dedicated IT organizations with greater access to capital budgets and more experience in deploying technology to optimize and improve their business performance. Conversely, when budgets are tight in smaller organizations they need to make sure they are applying every possible dollar to address the mission for which they exist.
While the selling environment is very challenging interest levels for our suite of solutions remain quite high. In addition, Blackbaud’s performance against our competitors across the entire product suite which was already solid is continuing to improve.
As you noted previously, this has been a particular area of focus of our management analysis, our product positioning and our sales strategy and execution. The biggest factor impacting our selling efforts though is not our competitive offering; it is rather the cautious reluctance of many, if not most, non profits to actually commit to a technology investment in this environment.
As a result, we continue to plan to manage our business in a manner that does not assume any near term improvement in the macro environment. We do not currently have plans for sweeping changes to our cost structure.
What we have been doing is working well and we will continue to focus on those efforts to identify and eliminate additional inefficiencies on a day to day basis. From the start of the year, we have been able to reduce our spending levels by approximately $19 to $20 million on an annualized basis utilizing this approach.
As a result, and as I intimated earlier, we believe we are now in position to exceed the 20% full year non-GAAP operating margin target that we established at the beginning of 2009. While we are taking actions that we believe are instrumental to delivering strong current period operating profitability and cash flow, it’s important to remember that we also are continuing to invest in initiatives that are driving growth in today’s difficult market environment, and which we believe will enable Blackbaud to reaccelerate growth when the economic environment does eventually improve.
During the third quarter, the performance of our enterprise sales organization and the eCRM product offerings were particularly strong. We reached agreements on three deals for eCRM bringing the total for the year-to-date of eight deals.
Specifically, we closed a major contract for both eCRM and target analytics with the University of Michigan. Following an intensive selection process we let a year long comprehensive assessment with the University to ensure that our eCRM solution could support their needs, and after successfully completing that assessment the University agreed in Q3 to move a head with the full implementation.
Blackbaud ECRM will centralize data from more than 40 University fund raising units located on three different campuses with more than 1000 users that access constituent information in different ways, and require different views on the data. In addition, we will provide the University’s offices with real time data and prospect information via our target analytics solutions.
The goal is for the University of Michigan to better serve their constituents, increase support and improve the overall user experience. We are very excited to partner with the University in what represents the most comprehensive eCRM engagement that Blackbaud has signed today.
As we previously disclosed, the revenue related to this contract will be recognized over the next two to three years but we do not expect a material impact during the remainder of 2009. Also in the higher end sector we are close to a very sizable eCRM engagement with the Ohio State University in the quarter.
Blackbaud’s efforts in building up the vertical functionality required by the largest institutions of higher education is clearly paying dividends and we believe that we will be able to leverage these early stage development efforts to help win and scale future customers in the higher end sector. Like the vast majority of the eCRM engagements we have signed to-date, OSU has signed a perpetual license.
However, unlike many of the others we recognize the license revenue component of that transaction upfront in accordance with the specifics of the contract. This positively impacted our license and total revenue in the quarter though we still would have exceeded the high end of our revenue and operating income forecast even without this particular contract.
Importantly, we also continue to focus our efforts on constructing eCRM deals in ways that build our revenue visibility. During the third quarter, we continue to see solid demand for our subscription based online fund raising solutions.
You will recall that last quarter we commented on the tremendous out of the gate market acceptance of our new Blackbaud NetCommunity grow offering which packages a subset of the core components of net community with a prescripted implementation and ongoing e-marketing consulting structured as a three year subscription. We think this is a strong offering, good functionality, very quick to implement, easy to use with attractive pricing, and while we believe growth benefited from a level of pent up demand in the second quarter, we continue to see high levels of interest in the solution in the third quarter.
This is a good example of how we are moving more of offerings to a subscription based model as I mentioned earlier. We also continued to be pleased with the performance of Blackbaud’s Sphere, which we have owned now just for over a year.
Customer satisfaction levels continue to raise and the related renewal rates and expansion of existing agreements is very encouraging. The combination of Sphere’s best in class capabilities with a success of NetCommunity grow and the benefits associated of the integration of Sphere and NetCommunity with our flagship Raiser’s Edge solution we believe we are well on our way to becoming the clear long term winner in online solutions for the non profit market.
From an overall perspective, I’m more encouraged about Blackbaud’s market position been than at any time since I had been with the company. We have the industry strongest product line up from both the breadth and depth perspective.
We are making solid progress against each of our growth initiatives the high end market for general relationship management solutions with eCRM, the low end with eTapestry, online fund raising with Sphere and NetCommunity, and we are strengthening our competitive position by continuing to invest in R&D. Among other things these investments are expanding the capabilities of our new offerings and helping to bring our product suite on to the Infinity platform, which will give us a huge technological advantage as we move our core offerings to a SaaS environment.
Our business model is being transformed as we increasingly and effectively shift more of our revenue towards a recurring model. Our subscription revenue is now at an annual run rate of $76 million, and in Q3 subscription revenue grew at 19% on a pretty much apples-to-apples basis to last year.
We have achieved the success and improved the company’s competitive market position and expanded our market opportunity during one of the most challenging economic environments in decades. We don’t know when that economy will turn for the better, but we are optimistic that Blackbaud will be a substantial beneficiary when that time comes.
With that let me turn it over to Tim
Tim Williams
Thanks Marc. Let me begin this afternoon by providing some further details of our third quarter operating results followed by our guidance for the fourth quarter and wrapping up with a very quick review of our capital management program.
First, let me start with the income statement. As you heard already GAAP revenue came in at $79.2 million and after adding back $500,000 for the third quarter impact of the purchase accounting write down associated with Kintera’s deferred revenue, you get to non-GAAP revenue of $79.7 million.
This was $1.7 million above the high end our guidance range but represented a decrease of 3.6% on a year-over-basis. We estimate that Q3 revenue would have been down a little over 2% on a constant currency basis.
Obviously, these year-over-year movements are well below our long term target of low to mid teens growth which we believe is the consequence of the difficult economic environment impacting our end markets. One other point that is worth noting here is as we have now passed the one year anniversary of the Kintera acquisition and we are no longer going to report growth rates for performance with and without contribution from the Kintera assets.
Looking further at the details of our total revenue, non-GAAP subscription revenue was $19.3 million, an increase of 19% on a year-over-year basis, increased to 24% of our total revenue in the third quarter, up from 20% in the year ago period. It’s worth pointing out that this growth compares favorably with many of the pure play subscription based software companies in the current economic environment.
License revenue was $5.9 million in the third quarter compared to $8.1 million in the year ago quarter. The decline in license revenue is principally a result of the fact that the majority of our license revenue has been generated from the mid market segment of our market, which has been more heavily impacted by general economic weakness.
In addition, the fact that we are selling more of our solutions on a subscription basis and recognizing many of our larger deals using contract accounting also impacts this component of our revenue. Our non-GAAP services revenue came in a $23.2 million, a decrease of 20% on a year-over-year basis, but up 1% sequentially.
This year-over-year decline is a natural derivative of the reduction seen in license revenue which has also resulted in a reduction in the sale of services engagements. In addition, another consequence of the difficult economic environment is that it is not uncommon for some customers to delay the delivery or performance of certain of our services engagements training in particular.
That said, we been managing attrition and recruitment very carefully over the last several quarters in anticipation of lower services volumes, and as a result the sequential growth in revenue combined with a cost of services reduction of approximately $200,000, produced 130 basis points improvement in our services margin compared with the second quarter. Our non-GAAP maintenance revenue represented the largest source of our revenue during the quarter, and it came in at $29.8 million, an the increase of 8% on a year-over-year basis and up 3% sequentially.
Our maintenance renewal rates continue to be in the mid 90% range despite the economic environment. Turning to profitability, and to be clear here all non-GAAP expense and profitability percentages that I will refer to are based on non-GAAP revenue amounts.
So, starting with gross profit we generated $51.4 million and non-GAAP gross profit in the quarter representing a gross margin of 65% which was up over the last quarter and flat compared with the year ago quarter. Turning to operating expenses, as Mark noted earlier our continued focus on identifying cost savings enabled the company to maintain the non-GAAP quarterly operating expense run rate achieved in the second quarter while revenue increased.
The combination of better than expected revenue and continued solid cost management led to non-GAAP operating income of $18.9 million, which was well above the high-end of our guidance of $16.5 million and represented a non-GAAP operating margin of 23.8%. The effective tax rate for non-GAAP results in the quarter was again that 39% leading to non-GAAP diluted earnings per share of $0.26, which was again well above the high-end of our guidance range of $0.22 to $0.23.
Let me remind you here that we fully tax non-GAAP EPS amounts, even though the company’s cash tax rate is much lower due to our deferred tax assets and other tax benefits associated with recent business acquisitions. In our earnings release, there is a four tabular reconciliation between our non-GAAP and GAAP results which include the deferred revenue add back from Kintera and the impact of stock based compensation expense and amortization of intangibles associated with acquisitions.
In summary, GAAP net income was $9.8 million in the third quarter of 2009, compared with $2.3 million in the third quarter of 2008. While GAAP diluted earnings per share was $0.22 compared with $0.17 in the same period last year.
One other point I should bring to your attention here, you will know that GAAP net income for the quarter includes a lower tax rate, this is principally because of a discrete tax benefit of approximately $1 million or approximately $0.02 per share related to certain tax credits we have identified related to prior years. We claimed approximately half of these credits on our recently filed 2008 return and we will be filing amended returns to claim the remainder of these credits.
This item however, had no impact on cash flow for the quarter, but will reduce future quarterly tax payments beginning next year. There is also no impact on our non-GAAP net income since, as I noted previously, we use an effective tax rate of 39% in this determination to normalize from one time items.
Let me now turn to cash flow and our balance sheet. At the end of the third quarter with $22.2 million in cash, up $3.7 million from the end of Q2, cash flow from operations was $25.8 million in the third quarter and $60.4 million for the first nine months ended September 30.
This represents an increase of approximately 26% compared to the first nine months of 2008. Accounts receivable dropped this quarter to $51.3 million of $59.2 million at the end of the prior quarter.
This decrease is very much in line with normal seasonal movements we see in accounts receivable. Our DSO at the end of the quarter was in the mid-40s, generally consistent with our historical performance, we believe that performance here reflects strong collections overall again in a very difficult environment.
We ended the September quarter with approximately $19.1 million in debt which compared to $42.3 million at the end of the second quarter. In Q3 we reduced our outstanding debt by approximately $23 million.
We are now in a net cash position and remain extremely comfortable with our inability to service our remaining debt load based on strong cash flow of the company. Total deferred revenue came in at $133.6 million, which was up $10.7 million or 8.7% on a year-over-year basis.
And at the end of the quarter, the company’s deferred tax asset had a balance of $67.8 million Again, let me remind you that this asset adds roughly $8 million to our cash flow on an annual basis in addition to another annual cash flow benefit of approximately $3.5 million associated with the structure applied to our three most recent acquisitions. Turning to the guidance for the fourth quarter, we are now targeting non-GAAP revenue of $77 to $79 million with non-GAAP operating income of approximately $16.5 to $17.5 million leading to non-GAAP earnings per share of $0.23 to $0.24.
This will then translate into full year non-GAAP revenue of approximately $310 million to $312 million, non-GAAP operating income of $66 to $67 million and non-GAAP earnings per share of $0.91 to $0.92. We currently expect to deliver a non-GAAP operating margin approaching 21.5% for the full year which is well above our original goal of a 20% non-GAAP operating margin.
Finally I’d like to finish with a very quick update on our two part capital management program. First, we announced today that our Board of Directors has declared our fourth quarter dividend of $0.10 per share payable on December 15th, 2009, to stockholders of record on November 27, 2009.
Second, we did not make any share repurchases during the third quarter. We still have approximately a $30 million in capacity remaining out of our $40 million share repurchase program and we will continue to balance the best ways to use our cash flow to enhance long-term shareholder value through this program.
In summary, we continue to be pleased with the company’s execution and ability to deliver solid financial results in the phase of very difficult economic circumstances. We’ve exceeded our quarterly revenue targets in each quarter during 2009 and we’ve increased our full year profitability objective based on continued expense management out performance over the first nine months.
With that let me turn it over to the operator and we will begin the Q-and-A session. Operator.
Operator
(Operator Instructions) Your first question comes from Phillip Rueppel - Wells Fargo Securities.
Phillip Rueppel - Wells Fargo Securities
A couple of things around the success you are having in the eCRM space, especially in the higher education arena. I know in the past you had mentioned a catalyst what’s also necessary for some of these universities to switch such as the capital campaign, are you starting to see that we are just going ahead and moving forward without such catalysts.
Then second of all, is the competitive environment different in some of these larger eCRM deals and kind of what are you replacing there, lots of home grown systems or multiple competitors?
Marc Chardon
Thank you, Phil. To answer your first half of your question is that we’re not seeing any material change in the factors that drive the purchase behavior in these organizations, nor are we seeing any material change in the competitive outlook, typically in the university segment we’ve been replacing BSR system, typically in the sort of family human services and development environments we are most frequently replacing either something that was home grown or a service bureau type offering plus something that was home grown.
Phillip Rueppel - Wells Fargo Securities
Then just a second question if I might; you mentioned Mark that the market, it’s pretty similar to what you had mentioned a quarter ago. Are there any signs that you’re looking for that might lead to an ability to predict pick up in the nonprofit spending perspective, do you think after we see sort of year end fund raising funds you will have a better idea sort of how 2010 will play out?
Marc Chardon
Well, again it’s very dependent on the sector. So yes, we are seeing some slight improvements in what you would call same-store fundraising for online fundraising, for example, so sometimes that we maybe bottoming out in some of those online segments.
We are seeing still a lot of pressure in the mid market, and that basically comes through in what you call no decisions, the number of deals in the pipeline is the same, are actually up from last year, but the number of no decisions if I member correctly is up 2.5 times from last year. So, I guess if no decisions start going in the other direction I’ll start telling you I’m beginning to feel good.
I don’t know anything other than the economy and unemployment as two factors in the lower end of the market to look as sort of indicators of when that might be though.
Operator
(Operator Instructions) Your next question comes from Ross Macmillan - Jefferies.
Ross Macmillan - Jefferies & Co
Tim, a question on the eCRM deals especially that you’ve got so many now in higher ed, and it’s about revenue recognition. I guess now that you sold so many you are probably delivering functionality that says sufficient for the customer to say that the obligation is fulfilled and therefore you could recognize the license upfront.
So, is it likely as if you sell more into higher ed that we’re going to see more of those deals done with the license component taken upfront? Thanks.
Tim Williams
Well I do agree with your premise about where the functionality is. At the end of the day it still is going to depend upon the terms and conditions and the nature of the services that we’re delivering under the contracts that we reach with these customers.
Although the functionality is getting to the point where increasingly it should be easier to have it be accepted as it is, I don’t think we are at the stage where we could say it’s likely to result in more revenue being recognized upfront, we are just not quite there yet. Certainly, we see some signs of that.
I would say however though in addition to this that, remember our strategy has been, and will continue to be, that we’re going to try to take the larger of these deal where we can and structure them in ways that we can recognize the license component over time as opposed to upfront.
Ross Macmillan - Jefferies & Co
Are you already, and this is just my ignorance, but are you already offering some of the core original products, like Raiser’s Edge under a subscription model?
Marc Chardon
We don’t offer the Raiser’s Edge under a subscription model in general. It is possible to do that, but it’s essentially zero.
What we do instead is we sell the license and then host the product, and I remind you it’s the client server generation product that uses Citrix as its method of access. So it’s not a web based on-demand meterable type of application.
So people pay for posting and they pay for it an annual maintenance fee.
Ross Macmillan - Jefferies & Co
And as we move to RE8 and the future roadmap will that ultimately change towards more recurring subscription?
Tim Williams
I believe that that will turn into that direction. The first version of our generation in products for the mid market will be the arts and cultural solutions and that will be offered first as a SaaS only product.
So we may find that in the low to mid end like with our eTapestry offering that more and more people are looking for no up front and ability to pay on an as you go basis, get the value and you pay for the money.
Ross Macmillan - Jefferies & Co
Tim, maybe just one last one; just on the guidance on Q4. Obviously there are some line items that you assume will decline sequentially, assume license and the services businesses are the ones that are most likely to see that, is that a fair assumption?
Tim Williams
Well, what are not, as you know we don’t give specific guidance on specific line items, but I think your general presumptions are probably not too far from reality.
Operator
Your next question comes from John Neff - William Blair.
John Neff - William Blair & Company
A couple of questions here, any sense of year-to-date and maybe in the quarter either revenue from eCRM or eCRM sales as a percentage of gross sales, any way we can sort of contextualize how important that product is relative to the overall revenue picture?
Tim Williams
Yeah, just in general as a practical matter we have not tried to give specific numbers for specific products in terms of their makeup in revenue, but sort of given the nature of eCRM and its importance to us. I’ll just give you a couple of data points.
First of all, in terms of revenue it represented just under 5% of a revenue in the quarter, eCRM did. But that can kind of be a little confusing if you don’t remember of course how big maintenance is as a total contributor to our revenue.
We think the more important things is that when you look at the bookings or the sales in the quarter, I believe it was close to 20% of the sales in the quarter came form eCRM.
John Neff - William Blair & Company
A question for you just on international and maybe international as a percentage of revenue in the quarter and any sort of trends or market observations you have about how the business is faring outside the United States?
Tim Williams
As far as its composition, I think on an as reported basis it was around 14%. When you look at the individual performance, really we had a weak quarter for Blackbaud Europe and continued weakness in Canada.
The Canada situation is sort of tied, if you will, although that’s what’s happening in the US. Europe on the other hand had been pretty strong for a couple of quarters, and really it was associated with this quarter more than anything else, but that’s roughly where we are, of course from a currency basis if you look at it on a constant currency basis the overall year-over-year comparisons would be a little bit better, but that’s the general picture internationally.
John Neff - William Blair & Company
Then, I would imagine that that’s some of the lower cost versions of some other type of product, eTapestry on the low end, NetCommunity grow versus NetCommunity likely helping customers sort of cope financially with this down turn, any concern that it helps now and hurts later when things recover?
Marc Chardon
Well, I think that your assumption is probably only about half right at that. Certainly we’re seeing BBNC grow as a way of helping people spread sort of the upfront cost of getting on to internet platform.
So, yes, I think that there is really sort of a relatively high sort of relationship between those two. What you see there is that, it’s something 10% to 20% below the three year TCV when you do a grow versus a BBNC regular, but remember also we are doing less service.
So it’s not necessarily about things, and then obviously, once you go beyond four plus years the higher subscription level more than outweighs what would have been lower maintenance revenue. So from a shareholder value perspective I would say Grow is every bit as good as the BBNC deal, a straight BBNC deal.
From the respective Raiser’s Edge and eTapestry we see very little overlap in those markets, they truly seem to serve quite different customer bases. We do lead sharing, we spread maybe a 100 leads across the two teams from one team to the other over the past quarter, a very small number of those actually decided to go to the second offering and many of them came right back to the original offer, once they realized and had done a full comparison.
So, we are pretty good at segmenting those market subsets and pretty good at targeting the product which are quite different at different levels. So, I don’t see any impact in terms of long run value on this in any way shape or form, I think it’s modestly positive for Grow and I think the two markets right now that we cover with eTapestry are quite distinct.
John Neff - William Blair & Company
Then last question I guess for Tim, if you could just maybe refresh us on utility of deferred revenue growth and the percentage change from period to period, is that a clean metric for gauging subscription growth or is that skewed by invoice timing?
Tim Williams
No, it’s not a good metric for that, not yet. Certainly our aspirations are that subscriptions will grow to the point that it will be, but we still have, still the overwhelming portion of deferred revenue relates to maintenance, and therefore as we’ve described in the past there are some vagaries here in terms of the timing of when customers renew their maintenance.
We have a couple of times in the year where we have higher levels of maintenance renewals than other times in the year, and so, you can’t just look at sequential movement in deferred revenue and get a meaningful metric yet out of it.
Operator
Your next question comes from Sterling Auty - J.P. Morgan
Sackett - J.P. Morgan
This is [Sackett] from Sterling’s team, a couple of questions from my side. Tim you said that there were about three eCRM deals in the quarter, were all those signed in a perpetual basis?
Tim Williams
Yes, they were.
Sackett - J.P. Morgan
Then I think you also said that even if you exclude those three deals, you would have been above the high end of your guidance given that that was about $78 million, you came in at about 80, is it fair to say that those two deals we made up about $2 million in total license revenue?
Tim Williams
No, we’re not putting any number on the amount related to any of those deals individually or in the aggregate. I think, remember we have said with respect to Michigan that there was no material, specifically no material impact during 2009.
But with respect to the other two, I’m just not going to go there in terms of what the impact was.
Marc Chardon
The primary distinction would have been on the license revenue. It takes time to ramp up the services delivery in these contracts.
So, I would remind you that typically the services at the very low end might be one time the license, but typically there are more than --- more like two to four times the license revenue.
Sackett - J.P. Morgan
Last question, I know that you are not looking to provide 2010 guidance, but this year you have done a great job in delivering the roughly two eCRM deals for quarter. Looking at you pipeline as you sort of enter your 2010 budgeting process, do you feel that you can deliver on the two eCRM deals per quarter looking into 2010?
Marc Chardon
We feel pretty comfortable that the pipeline is there for that. We’re not - I certainly wouldn’t say that I’m going to see an acceleration.
In any given quarter, we had quarters of zero and we had quarter of four, we had eight quarter, one quarter with four. So I think saying that we can average two is probably a relatively good.
Marc Chardon
I won’t pay [Inaudible] economic environment, you never now
Operator
We have no further question in the queue. I would like to turn it back over to our presenters for any additional or closing remarks.
Marc Chardon
I would just thank everybody for joining us today, it’s obviously a very interesting economic time, but we are quite confident that we made the right investments and they are in a good position. The benefit from it is when things turn up and that we have the focus on cost and on sales effectiveness to see us through the downside if it continues for longer than any of that.
So we appreciate your attention and your time and look forward to talking to you individually in the coming quarter and then talking with you again in another quarter.
Tim Williams
Thank you so much. Bye-bye.
Operator
Ladies and gentlemen that does conclude our call for today. We thank you for your participation.