Nov 10, 2014
Executives
Greg Kleiner – IR Zack Rinat – Founder, Chairman & CEO Mark Tisdel – SVP & CFO
Analysts
Sterling Auty – JPMorgan Nandan Amladi – Deutsche Bank Tom Roderick – Stifel Nicolaus Owen Hyde – Pacific Crest Brian Peterson – Raymond James Scott Berg – Northland Capital Markets
Presentation
Operator
Welcome to the Model N Fourth Quarter Fiscal Year 2014 Earnings Conference Call Period. (Operator Instructions).I would now like to turn the conference over to Mr.
Greg Kleiner, Investor Relations for Model N period. Thank you, Mr.
Kleiner, you may you may begin.
Greg Kleiner
Thank you, good afternoon and welcome to Model N's fourth quarter fiscal year 2014 earnings conference call. Joining me today are Zack Rinat, Model N's Founder, Chairman and CEO and Mark Tisdel, Model N's SVP and Chief Financial Officer.
Following their prepared remarks we will take questions. A press release was issued after the close of market and is posted on our website where this call is being simultaneously webcast.
Primary purpose of today's call is to provide you with information regarding our fourth quarter fiscal year 2014 performance in addition to our financial outlook for our first quarter and full-year fiscal 2015. Commentary made on this call may include forward-looking statements; these statements are subject to risks, uncertainties and assumptions.
Please refer to the press release and the risk factors in documents filed with the Securities and Exchange Commission including our Annual Report on Form 10-K and quarterly reports on 10-Q for information on risks and uncertainties. Should any of these risks or uncertainties materialize or should our assumptions prove to be incorrect, actual company results could differ materially from these four looking statements.
In addition, during today's call we will discuss non-GAAP financial measures. These non-GAAP financial measures which are used as measures of Model N's performance should be considered in addition to, not as substitute for or in isolation from GAAP results.
You can find additional disclosures regarding these non-GAAP measures including reconciliations with comparable GAAP results in our press release. At times in response your question, we may offer incremental metrics to provide greater insight into the dynamics of our business or quarterly results.
Please be advised that this additional detail maybe one-time in nature and we may or may not provide an update in the future on these metrics. I encourage you to visit our investor relations website at investor.modeln.com to access the fourth quarter fiscal year 2014 press release, periodic SEC reports, and the webcast replay of this call, which will be available for the next 45 days period.
Finally, unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of our fiscal 2013. With that let me turn the call over to Zack.
Zack Rinat
Good afternoon, everyone and thank you for joining us today. I would like to start the call with a summary of Q4 and fiscal year '14 and then cover our strategy for fiscal year '15 and beyond.
Mark Tisdel, our CFO will follow my remarks with details of the financials. Model N executed well in fiscal year '14 across vertical, geographies and functions demonstrating that the tremendous market opportunity for revenue management and the positive results from our cost and strategic initiatives.
We also saw a transformational shift in our business towards recurring revenue streams throughout the year, a trend we expect to continue going forward based on a number of factors that I will outline in a moment. Our Q4 results represented another quarter of improved performance as we exceeded our guidance on both the top and the bottom line.
Furthermore, our first quarter revenues grew from Q3 '14 marking what we believe was the trough in our revenue. We’re confident that we have addressed the sales execution challenges we encountered in fiscal year '13 and we expect to return to year-over-year growth in Q1 and fiscal year '15 as a whole.
Let me begin with a discussion of some of the highlights from the fourth quarter. In Life Sciences, we have signed several deals including one with the Bristol-Myers Squibb for the Global Price Management, or Revvy GPM is a SaaS offering based on Revvy CPQ that enables life sciences companies to manage their prices on a global basis.
Leveraging GPM, BMS will enable worldwide collaboration and transparency for the global organization. GPM will enable BMS to maximize the revenue by reducing price and revenue erosion via best practices and sophisticated analytics.
In the high-tech vertical, I wanted to highlight two new start deals we signed with industry icons, Intel and Virtual Semiconductors, for Intel, we signed a new relationship with their the Internet of Things or IOT group as they were looking for sophisticated and agile revenue management platform to help scale their business. Our revenue management enterprise solution will enable the IOT group to price "based on the bundle of silicon software and services while managing incentives such as rebates and market development funds".
In in addition, they will be able to analyze and optimize the revenue via our revenue management intelligence analytics offering. We (indiscernible) we signed the deal to manage the global revenue leveraging both our revenue management enterprise and revenue management intelligent solutions period.
We plan to replace the legacy systems with an end to end revenue management platform for Model N, enable them to leverage best practices to manage both direct and channel sales on a global basis period, by standardizing in coordination with their revenue management functions, Virtual [ph] will be able to maximize the revenues and gross margins by reducing revenue leakage. We also signed several deals for our Revvy CPQ product including Remsoft a Canadian Software and Services Company focused on the healthcare industry.
Remsoft was looking to standardize and simplify the sales proposal but also to drive cross-selling by offering optional features automatically in the proposal process, by adopting Revvy CPQ, Remsoft ran soft will be able to maximize the revenues and opportunities by leveraging a sophisticated pricing model based on a variety of inputs such as a number of patient studies, service options and product selections. We’re also pleased to announce that David Bonnette, Chief Executive Officer of Lanyon has joined our board of directors.
David has served as a variety of executive roles in the software industry over his nearly 20 year's career. Before joining Lanyon, David was CEO of BigMachines, a leader in the CPQ market that was acquired by Oracle.
Overall, fiscal year fiscal year '14 was a year of tremendous process for Model N as we improve our go to market process, grow our booking and took several steps to further transform our business to recurring revenue model. Importantly, we believe that we have an opportunity to continue the shift to recurring revenues in fiscal year '15 and beyond based on the following four factors.
First, increased acceptance of SaaS as a delivery vehicle within the large life sciences company along with some new revenue management as a service offering. Second, further penetration of the midmarket opportunity of the Life Sciences industry was such as the preferred delivery model.
Third, increased percentage of overall revenues from the technology vertical where SaaS is widely accepted in the delivery model. And, finally, Model N products and offering that our mark [ph] is such only such is our Revvy family of products.
Let me discuss each item in a little more e more detail, we’re seeing an increased interest from large life sciences companies for SaaS versions of our product. In addition, we have launched several new revenue management as a service offering designed to help our current customers migrate their existing on premise implementation to SaaS including efforts on upgrade, application management and complete migration packages.
Fiscal year '14 demonstrated that that there is a significant market opportunity in the midmarket for life sciences where Model N has traditionally had a limited presence and SaaS is by far the preferred delivery vehicle. In Q4 we officially launched Express, a solution providing a comprehensive preconfigured SaaS revenues solution.
Express is built on the best practices we have gathered over the last 14 years working with the largest brains in life sciences and is optimized from midsize Pharma and medtech companies. In our high-tech vertical, we announced a Dreamforce 2014, our Revvy's sales offering, the first CRM solution specifically designed for semiconductors and component manufacturers.
Revvy sales was built on a partnership between Salesforce.com and Model N combine Salesforce.com leading CRM solutions and Model N's unique vertical expertise. Unifying CRM with revenue management created a greater powerful combinations and significantly increased the total addressable market for Model N.
We anticipate that the opportunity to create this combined offering as well as the absolute opportunity for Revvy sales in our install base will enable us to increase the percentage of our business overall from the high-tech vertical, enhance the percentage of recurring revenues as well. Finally, the growth of our Revvy family of products built on force.com.
I mentioned our Revvy GPM and our Revvy sales application earlier. In addition we expect further growth from our Revvy CPQ Configure, Price & Quoting Solution.
We announced a Dreamforce Revvy CPQ for MedTech, a solution designed specifically for that market segment as well a program to replace legacy CPQ solutions with Revvy CPQ. We expect these four factors to enable our SaaS and maintenance revenue to grow faster than our life sciences and implementation revenue once again in fiscal year '15 and we intend to focus on continuing this path going forward.
Overall I'm encouraged by the progress we have made throughout the year in our go to market execution. Model N has made and will continue to make significant investments in sales and marketing.
These investments made solid contributions to the results of Q4 and fiscal year '14, and we expect them to make even bigger contribution in the foreseeable future as we continue the transformation of our business model to include more recurring revenues. The people and processes we have put in place have helped to increase the consistency of our performance and the positive outlook for the future in addition.
Our enhanced go to capabilities and leading products suit position us well for continued success. I'm confident that we have turned the corner in our sustained growth trajectory.
Let me now turn the call over to Mark to discuss our financial results and guidance in more detail.
Mark Tisdel
Thank you, Zack. Total revenues for the fourth quarter were $20.3 million, above our guidance range of $19.5 million to 20 million.
This compares to $27.8 million in total revenue in the year ago period. Year-over-year decline was driven by the sales execution issues discussed in recent periods with particular concentration in the license and implementation line.
However, as our guidance will outline in a moment we expect the recent improvements in our execution will allow the business to return to year-over-year growth in the first quarter as well as the upcoming fiscal year. Total revenue license and implementation revenues were $7.9 million and SaaS and maintenance revenues were $12.4 million for the quarter.
In the fourth quarter of fiscal 2014 the amount of revenue coming from existing customers within the revenue in each of the last four quarters was $72.5 million compared to $92 million for the fourth quarter of 2013. We ended the year with 80 customers compared to 69 at the end of fiscal 2013.
Before I move on to profit and loss items, I want to remind you that my commentary will be based on non-GAAP results. A reconciliation of non-GAAP to GAAP results provided within our earnings press release issued earlier today.
Gross profits for the fourth quarter was $11.8 million compared to $16.3 million in the fourth quarter of fiscal 2013. Similar to recent quarters gross profit in this quarter included an impact of roughly $400,000 from the amortization of capitalized software that began upon the launch of our Revvy CPQ offering.
Overall gross margin in the quarter was 58.4% compared to 58.6% in Q4 of last year. Research and development expense was $4 million compared to $3.8 million in the fourth quarter of fiscal 2013.
We are continuing to invest in our new products but did begin to capitalize the expenditures related Revvy sales which amounted to approximately $400,000 in the quarter. Sales and marketing expense was $6.8 million compared to $4.4 million in the year ago.
This increase was driven by our continued investment in sales and marketing personnel, marketing program spend, and the marketing expenditures supporting our involvement in Dreamforce this year. G&A expense was $4.1 million compared to $4 million in Q4 of fiscal 2013.
Operating loss to the period was $3.1 million compared to an operating profit of $4 million in Q4 of last year and above our guidance of an operating loss of $4 million to $4.5 million. Net loss in the fourth quarter was $3.3 million compared to net income of $3.8 million in the fourth quarter of fiscal 2013, this produced a net loss per share of $0.13 based on a share count of 24.9 million shares compared to a net income per share of $0.15 based on the fully diluted share count of 25.9 million shares in the fourth quarter last year.
This is above our guidance of a net loss of $0.16 to $0.18 per share. Adjusted EBITDA for the fourth quarter was negative $2.3 million compared to a positive $4.5 million in the year ago period.
We ended the fourth quarter with $101 million of cash and cash equivalents down slightly from $103.2 million at the end of the third quarter. At the end of the fourth quarter our accounts receivable balance was $15.2 million and our total deferred revenue was $26.5 million.
As mentioned previously, we believe our accounts receivable and deferred revenue balances are not a meaningful indicator of the business activities during any particular quarter and the timing of the invoices under contract impact these items as we do not bill all of our customers up front for total contract fees. For the fourth quarter, cash flow used by operations was $2.6 million which after considering CapEx of $300,000 and $400,000 of capitalized software produced a negative free cash flow of $3.3 million.
This compares to cash provided by operations of $300,000 in the fourth quarter of last year which after considering $600,000 of CapEx and a 1 million of capitalized software producing negative free cash flow of $1.4 million. Similar to prior commentary in regards to our receivables and deferred revenue balances, there can be some quarter-to-quarter variability in our cash flow as it is impacted by the timing of invoicing under our contracts.
Moving on, let me now outline our guidance for the first quarter and full fiscal year 2015. For the first quarter ending December 31st, we expect total revenues to range from $21.6 million to $21.9 million, non-GAAP loss from operations in the range of $2.5 million to $2.8 million.
This would lead to a non-GAAP net loss per share in the range of $0.10 to $0.11 based on a weighted average share count of 25.3 million shares. For fiscal 2015 as a whole, we expect total revenues to range from $92 million to $93.5 million or growth of 13% to 14% for the year as a whole.
As Zack mentioned earlier, we do expect revenues from our SaaS and maintenance lines will grow faster than our revenues from our license and implementation line in the upcoming year resulting in a further improvement in the percentage of revenue coming from occurring sources. We expect non-GAAP loss from operations in a range of $8 million to $9.5 million.
This would lead to a non-GAAP net loss per share in the range of $0.31 to $0.37 based on a weighted average count of 25.9 million shares. In addition to formal guidance, I do want to add one comment regarding our past profitability, it is our current expectation that we will break even on an adjusted EBITDA up basis in the fourth quarter of fiscal 2015 and make further improvements in our profitability in fiscal 2016.
As mentioned previously, we have continued to invest our return to growth in recent period but expect to see increased leverage on these investments as we move forward. In summary, we have strong confidence in our outlook based on the recent pace of our business, our current backlog and pipeline, along with our improved ability to execute consistently.
We believe that we have put the right pieces in place to continue the transformation of our business and assurability to grow and move towards profitability on a sustained basis. We will now open the floor for your questions.
Operator
(Operator Instructions). Our first question is from Sterling Auty of JPMorgan.
Please go ahead.
Sterling Auty – JPMorgan
I was just want to go into a couple of questions, actually first on the last comment about the adjusted EBITDA profitability in the fourth quarter, how do we think about that relative – does that mean that perhaps you would be cash flow positive in that quarter as well?
Mark Tisdel
It's possible pick as far as the matching of the cash flow and the EBITDA if you look at it over a four-month or four quarter rolling period, you would expect to see that that would match up very closely within the quarter itself, there can be variety of comparability, but we do expect it would be very similar results in Q4.
Sterling Auty – JPMorgan
But I would imagine for the full year, still cash will burn?
Mark Tisdel
Yes we would expect to be burning cash in fiscal year 2015, correct.
Sterling Auty – JPMorgan
Okay and on the shift that you are undergoing in terms of moves for the recurring and SaaS, any sense I know you told us it's going to grow faster but any sense of what the mix of bookings look like or what the mix of revenue might look like exiting here?
Zack Rinat
What we see is an outline rapid shift towards SaaS into a recurring revenues and we see right now quite a fast deduction for SaaS even at the high end of life sciences and definitely is the preferred model in high-tech and kind of midmarket. We also have a set of offerings right now that our revenue management as a service that we offer both to new customers as well as to the existing current [ph] install base and because of this we expect that we are going to continually see this shift.
We don't want to give a specific numbers that we see definitely a bigger part of our bookings and revenue moving forward.
Sterling Auty – JPMorgan
Okay, last question from my side, big transition here, you made a lot of changes, just curious where you are in terms of sales management and sales rep? Are all the rules filled?
Are you comfortable with the force that you’ve going into new fiscal year or is there any further changes that are not correct.
Zack Rinat
Yes, so we made a few changes in the organization both structurally and also size wise. We made investments in sales and in marketing as you can see from our financials and as I mentioned in my comments we saw solid performance from the SaaS organization that contributed to the results of Q4 into the year and now that we have these people on board for sometimes we feel that they're going to make much greater contribution when they have a full year to sale for the company where they are fully ramped up.
This is also true in the management side of the business and across the Board, in all of our go to market functions, so for real that we have both the structure, the organization and the leadership to leverage in what we did in fiscal year '14 and moving forward.
Operator
The next question is from Nandan Amladi of Deutsche Bank. Please go ahead.
Nandan Amladi – Deutsche Bank
Zack, first question for you, I know you made reference to the fact that you plan to add sales capacity in fiscal year '15. How much did you grow sales capacity in fiscal year '14 and what is the plan for '15?
Zack Rinat
So we do not give a specific on the number of sales that people think that we had, but again if you look at the financials on sales and marketing, you can notice that we made some pretty significant investment and I want to say something more than that that the people that we had to deliver on fiscal year '15, they are basically in their seats in the beginning of the year and so that’s something that we did specifically in the second half of fiscal year '14. In order to ensure that we have the capacity to move it forward and I want to say that this is not just in the United States, we also have the capacity in Europe and we also have the right leadership in the Americas and in Europe.
We augment this also under that aspects of the various aspects the go to market, and so one of the things that you can get from this answer is that Model N when we started the fiscal year, we had basically the full capacity to deliver on the guidance that Mark outlined.
Nandan Amladi – Deutsche Bank
Okay, but you do plan to add more salespeople through the year in fiscal '15?
Zack Rinat
Sure. As we look at what it is that we are going to need for fiscal year '16 and beyond, yes we will have add more capacity but I want to make sure that you know that we did not depend any person, we’re going to add this year in order to deliver the guidance pick.
Nandan Amladi – Deutsche Bank
And one other question, in terms of your – since you’re expanding more meaningfully into the tech vertical, what is your emphasis on the Lend versus Expand [ph] also because your revenue mix is shifting from license and implementation towards SaaS? So how should we think about the trajectory of both the license and subscription business but also relative to life sciences versus other verticals?
Nandan Amladi – Deutsche Bank
So you’ve in the outline, we’re very excited about lending both Intel and Virtual [ph] as customers and both of them are SaaS deals and SaaS deal is by far the accepted delivery model for high-tech models including some of the largest ones such as Intel. So this is one aspect of high-tech, the second aspect of this is that the product that we announced, the Dreamforce that we’re going to be genuinely available [ph] later in the quarter in in December and there will be sales at the first CRM solution designed for semiconductors and component manufacturing is a product that we can also go and lend and expand to the install base as well as sell to other companies that are interested in CRM.
So we believe that that’s going to have an acceleration of our revenue in high-tech because it is a solution that is a combination between the sales force, sales cloud and that Model N vertical expertise. It's designed with an effort – industry and we had just tremendous acceptance to this product at rainmaker and before this – so that’s going to accelerate also high-tech and also accelerate the percentage of recurring revenue for the company because it's only offer as a multi-tenant SaaS kind of a SaaS platform.
So this combination of these two things, A, you’re going to see high-tech going faster, it's going to be a higher percentage of our revenue and hence is going to be a higher percentage of recurring revenue for the company.
Operator
The next question is from Tom Roderick of Stifel. Please go ahead.
Tom Roderick – Stifel Nicolaus
So Zack, I was hoping you could talk a little bit more about the Revvy GPM product, global price management I think you mentioned you had a win with Bristol-Myers Squibb in the quarter and as a product we haven't heard a ton about would love to just a little bit more sort of the key competitors, you bump in that market, what the ASPs look like and any limit to differentiation that really sort of standout in the product line there.
Zack Rinat
Absolutely. Revvy Global Price Management is the multi-tenant SaaS platform that we introduce on the force.com platform.
It's a product that enables the life sciences companies both the pharmaceutical and medical device to manage the reprices on a global basis. The challenge that this companies face, they start with a notion of reference prices without getting into too many details.
In the last decade also countries started to benchmark the healthcare system of other countries in order to ensure that they pay the lowest price, for example the German government will benchmark 15 other countries including Greece and Turkey and others in order to ensure competitiveness of the prices and that really forced these companies to ensure that we don't let the local decisions to impact the global pricing. For example somebody can make a decision right now, increase or reduce price but it's going to impact 50 other countries in terms of prices.
Furthermore, it also pushes them to really think about the way that they introduce drugs and medical device to the market because how you think about the sequence mix being different. We have a product that we designed also with and for the industry, we’re very proud about the that customers we have, we’ve icons of the industry, company's like Jensen, MV, Gilead, like AstraZeneca and with now Bristol-Myers Squibb and others on this platform and we took a very different approach, we took a strategic long term and investment approach in our R&D and we believe that we’ve highly differentiated product and we tend to compete in this market with small consulting companies that have a high content of services and a low part of product but they are still competitive in the market period.
Tom Roderick – Stifel Nicolaus
One follow-up question just to stick on the product set here, CPQ is something that – I guess we’re getting closer to a year since you announced it and launched it, what are we seeing in the CPQ market? It seems like that's a hotter space in general in pricing revenue optimization.
Anything in particular that's driving that and the price points hold up at the same level there as for the core product set?
Zack Rinat
That’s kind of a long discussion, but the CPQ market is a growing market. Look at statistics from Gartner, they expect that this market is going 15% to 20% a year.
It's a product, it's also a market that is highly segmented, it's highly segmented by geographies, by industries, by technologies and kind of known others [ph]. Our belief also is that CPQ is an integral part of revenue management as it has always has been it is always part of (indiscernible) our solution and furthermore we believe that we have unique competitive advantage, to reinforce we announced Revvy CPQ for medical device and what it is enabling actually customers and prospects in medical device to enable the research organization to configure, to price and to quote but they also have the ability to price based on contracts, based on real prices, based on terms that they already negotiate and actually get in the hands of the salesperson, the analytics and the actionable items that they need to go to drive it.
So we plan to be a player in the market and more than this we plan to use it as a vehicle to augment our revenue management offering.
Tom Roderick – Stifel Nicolaus
Last quick one from me, gross margins look like they are trending up here at least in the most recent quarter. What's the right way to think for that trend line as we move throughout the next fiscal year here?
Mark Tisdel
So yes, in the last quarter in Q4 we did see a trend up for the line two gross margins, line one was relatively flat quarter-over-quarter. We do expect as we go forward as we talked about in the past that we would be able to leverage our investment in the line two and be able to sequentially increase gross margin over time.
So I would believe in the long term we would expect to see that grow towards the 60% as we talked historically about. I wouldn't necessarily expect every quarter we would see a significant increase, but we would see that over time.
Operator
Thank you. The next question is from Owen Hyde of Pacific Crest.
Please go ahead.
Owen Hyde – Pacific Crest
Just wanted to follow-up on your earlier question, you guys mentioned you have been adding a lot of sales folks and it seems like some of the results came through this quarter. But I was wondering how long do you think it would us one of these sales people to become fully productive in operating it in peak capacity in terms of months?
Zack Rinat
When you look at the practical outcomes, the SaaS people that we have in the second half of the year, did all contribute to the results of Q4. So we saw a good result within a relatively short period from the sales organization and we started to recruit earlier in the year because we wanted these people to be in their seats and fully productive kind on the beginning of the – so when you look at this bottom line, it's like we have the sales force and the capacity to meet them in the guidelines that Mark, kind of outlined and we feel confident in our ability to bring new salespeople and get them productive as well.
Owen Hyde – Pacific Crest
And when you guys look at the pipeline for the coming year, any specific areas geographically industrywide that may have changed? Any particular areas of strengths or weaknesses?
Zack Rinat
I would say that when you look at the funnel [ph] and the pipeline and it is relatively similar to what we saw in the past, when you look at the areas that I feel right now are stronger. I would say in life sciences definitely global price management, the broader analytics capabilities and in medical device the ability to integrate the sales organization via CPQ and then in high-tech I would say Revvy sales, the CRM solution, we see a great interest and then we have bundle that combine both CRM and revenue management that we call CRM square that is also targeted to market, so this also has a lot of interest as well.
Operator
Thank you. The next question is from Brian Peterson, Raymond James.
Please go ahead.
Brian Peterson – Raymond James
You guys referenced pretty strong bookings activity earlier this year and I'm just curious how should we think about backlog coverage relative to your fiscal '15 outlook may be versus the prior couple of years?
Mark Tisdel
We have very strong coverage going into fiscal year 2015 relative to 2014 backlog, it is certainly a metric that we track very closely and we are at the high end of where we have entered previous year.
Brian Peterson – Raymond James
I appreciate the color on the mix for next year but would we expect license and implementation sales to be up next year or do you think they could actually be down?
Mark Tisdel
We would expect license and implementation, I'm going to speak to revenue versus bookings, but I guess they kind of go hand-in-hand. We would expect license and implementation dollars to be up year-over-year.
Operator
Thank you. The next question is from Scott Berg with Northland Capital Markets.
Please go ahead.
Scott Berg – Northland Capital Markets
A couple quick ones here for me. Zack, as the SaaS delivery model becomes more important to your overall operations – operating model, how much do you see customers moving from the existing on premise platform to the SaaS platform and then does that become more of a push – you pushing them to that model or pull where they try to get there at their own pace?
Zack Rinat
We always had the philosophy that we need to provide our customers with choices while our vision is always SaaS and recurring revenues we understand that our customers, especially the large customers in the life sciences have their own strategies and we offer a solution that enable them to go on premise, on SaaS and actually to transform. What we see right now is accelerated demand towards the SaaS and we see it in a couple of different ways.
So what we did is we introduced a service several offerings revenue management as a service both to new customers and to the install base that enable them to take a measure of steps towards the full SaaS and we see an enormous positive feedback from the install base on this. You’ve to remember that because of the relationship we have with the customers, because we work with them for long period of time, because they think about that as a strategic partner, we had discussions with them over a very long period of time and we actually developed this solution based on their input.
So I feel that they are moving in this direction and I feel right now that it's becoming to be more of a pull than a push.
Scott Berg – Northland Capital Markets
Then last question for me I guess is around your growth prior to investment, prior to '14, what's the right way to think about them? Is this more of a sales year trying to accelerate from what appears to be good sales in 2014 or is there a balanced approach with the products for the year?
Zack Rinat
Yes, I would say it's more of a balanced approach than just a sales and marketing. As a company we are very committed to provide our customers with innovative solutions.
We see opportunities come to our way and when we see opportunities like the one that we saw with Revvy sales, we believe that it's an investment that is going to yield a very high returns to the company and to our shareholder. So it's a balanced approach and when you look at the previous year we made big investments in sales and marketing.
We plan to continue to make them but it's a balanced investment also with R&D and the product.
Operator
Thank you. I would now like to turn the floor back over to Mr.
Rinat for any closing remarks.
Zack Rinat
Thank you all of you for joining us today. I'm very pleased with how we closed the fiscal year '14 and we have improved confidence in our ability to deliver consistent growth in the future.
We remain focused on executing on our strategic initiatives and capitalizing on the tremendous opportunity that is in front of us. I would like to thank all of you for your interest in Model N and we look forward to speaking with you again soon.
Thank you.
Operator
Thank you. Ladies and gentlemen, this does conclude today's teleconference.
You may disconnect your lines at this time. And thank you for your participation.