John McDonald - Chairman & CEO Timothy Mattox - President & COO Michael Hill - CFO

Bhavan Suri - William Blair Terry Tillman - Raymond James Richard Davis - Canaccord Genuity Richard Baldry - ROTH Capital Spencer Bogart - Needham

Thank you, and good afternoon, everyone. Welcome to our Q3 Earnings Call.

I've got Tim Mattox, our President and COO; and Mike Hill, our CFO here with me. On today's call, I'm going to summarize our results and some recent highlights.

Following that Mike Hill is going to provide a more detailed look at the Q3 numbers and share with you our guidance for the Q4 and for the full year 2016. And then finally Tim will cover sales and operations highlights from the third quarter.

We will then open it up for Q&A. But before we get started, let me ask Mike to read the Safe Harbor statement.

Thank you, Jack, and good afternoon, everyone. The press release announcing our quarterly results and our business outlook, as well as a reconciliation of management's use of non-GAAP financial measures as compared to the most comparable GAAP measures is available on the Investor Relations section of our website at investor.uplandsoftware.com.

During today's call we may include statements that are considered forward-looking within the meanings of the securities laws. In addition, we may make additional forward-looking statements in response to your questions.

These statements are subject to certain risks, assumptions and uncertainties that could cause our actual results to differ materially. We caution you to consider risk factors and other uncertainties that could cause actual results to differ materially from those in the forward-looking statements contained in the press release and in this conference call.

A detailed discussion of such risks and uncertainties are contained in our Annual Report on Form 10-K filed with the SEC. The forward-looking statements made today are based on our views and assumptions and on information currently available to Upland management as of today November 10, 2016.

We do not intend to undertake any duty to release publicly any updates or revisions to any forward-looking statements, whether as a result of new information, future events or otherwise. On this call, Upland will refer to non-GAAP measures that when used in combination with GAAP results provide Upland management with additional analytical tools to understand its operations.

Upland has provided reconciliations of non-GAAP to the most comparable GAAP measures in our press release announcing our second quarter 2016 results. To learn more about our outreach plans, please feel free to contact us at [email protected].

And with that, I'll turn the call back over to Jack.

Thanks, Mike. So this was a great quarter.

Record revenues, record EBITDA, strong and improving gross margins and remember, roughly 90% of our revenues are high margin contractually recurring revenues that make our business both more profitable and more predictable. Q3 also saw significant customer expansion bookings.

So we are feeling more and more confident than ever about Q4. The full year end our prospects going forward and you'll note that in our strong Q4 guidance which is north of 20%, 21% EBITDA now at the midpoint.

So really executing against what we committed to and beyond. That confidence that we have in the future comes from the work we've done over the past four years.

We've built a business on long-term sustainable customer relationships that it's dedicated to 100% customer success and we as a company define that success as every customer realizing all the value they expect from our software and being delighted by the experience of being an Upland customer. We measure that success using industry standards like net promoters score or NPS as its known, by surveying our customers twice a year and redirecting that feedback into further operational improvements and we're heartened by our progress and our level of customer loyalty.

And we're delivering that success through a number of key operational initiatives. Our premier success program, our customer-informed product road maps, our quality-driven R&D that leverages the DevFactory platform and our enterprise class cloud and operating platform and we're going to be talking more about these core operations both on this call and on future calls.

But the results they deliver are clear, they're a rallying point for our team internally, they drive top and bottom-line growth through strong renewals and expansion sales and customer references that support efficient new customer sales and thereby drive shareholder returns. We've built an efficient machine that not only delivers a great customer experience, but it's also a platform that can effectively and efficiently support future acquisitions and we feel good about our M&A pipeline and what the next few quarters will hold in that regard.

So we've taken time and work to get these core platforms in place and while we're not perfect and still strive to improve every day, we are starting to see real benefits manifest themselves and those benefits are reflected in the great numbers this quarter, in our strong outlook for Q4 and also in the confidence we have in our outlook going forward as we continue to grow the top line and as we scale up to our target 30% EBITDA margin. With that, I'm going to turn the call back over to Mike who will give you a more detailed look at the Q3 numbers and our guidance.

Mike?

Thanks, Jack. Today I'll cover the financial results for the third quarter and our outlook for the fourth quarter of the full year 2016.

Total revenue for the third quarter was $19.2 million, representing a growth of 12%. Recurring revenues from subscription and support grew 21% year-over-year to $17 million.

Professional services revenue was $9.1 million for the quarter and 23% year-over-year decline. Perpetual license revenue was $0.3 million for the third quarter for a decline of 39% year-over-year.

As planned, professional services and professional license revenue has become a smaller portion of our overall revenue mix with recurring revenues now representing 89% of total revenue in Q3. Moving down to P&L to gross margins; overall, gross margin was 65% during the third quarter and our product gross margin remains strong at 67% or 73% when we add back depreciation of equipment and amortization of acquired intangible assets.

Professional services gross margin was 44% during the third quarter which was a nice over performance relative to our normal target of 30%. Turning to our operating expenses, research and development expense, net of refundable Canadian tax credits was $3.6 million for the third quarter representing 18% of total revenue; sales in marketing expense was $3.1 million, representing 16% of total revenue for the third quarter; general administrative expense was $4.7 million in the third quarter, representing 24% of revenue excluding non-cash stock compensation third quarter G&A expense was $3.6 million or 19% of total revenue.

Acquisition-related expenses were $1 million in the third quarter which were driven by a recent acquisition activity and includes charges that we are taking to consolidate our office locations, which Tim will discuss in a moment. Operating loss was $1.3 million in the third quarter compared to a loss of $1.8 million for the same period in 2015.

GAAP net loss was $2.4 million or a loss of $0.14 per diluted share, compared to a GAAP net loss of $2.3 million or loss of 16% per diluted share in the third quarter of 2015. Non-GAAP net income was $1.8 million or non-GAAP net income of $0.11 per share in the third quarter of 2016 compared to non-GAAP net loss of $0.1 million or non-GAAP net loss of $0.00 per diluted share in the third quarter of 2015.

Our third quarter 2016 adjusted EBITDA was $3.6 million, up 225% compared to $1.1 million for the same period last year. Now on to our balance sheet and statement of cash flows.

We ended the third quarter with $17.5 million in cash. Cash flows used in operating activities were $2 million for the trailing 12 months ended September 30, 2016.

Now I want to cover Q4 in full-year 2016 guidance for the quarter ending December 31, 2016. We expect total reported revenue to be in the range of $18.5 to $19.3 million including subscription and support revenue in the range of $16.6 to $17.2 million.

This would represent growth and recurring revenue of 15% to midpoint over the quarter ended December 31, 2015. Adjusted EBITDA is expected to be in the range of $3.7 million to $4.3 million for an adjusted EBITDA margin of 21% at the midpoint, representing growth of 104% at the midpoint over the quarter ended December 31, 2015.

For the full year ending December 31, 2016, we expect reported total revenue to be in the range of 73.9% to 74.7% including subscription and support revenue in the range of $65.1 million to $65.7 million for growth in recurring revenue of 14% at the midpoint over the year ended December 31, 2015. Adjusted EBITDA is expected to be in the range of $12.1 million to $12.7 million for an adjusted EBITDA margin of 17% at the midpoint, representing growth of 181% of the midpoint over the year ended December 31, 2015.

With that, I'll turn the call over to Tim Mattox, our President and COO.

Thanks, Mike, and good afternoon, everyone. I'm going to cover our sales, product and operating areas.

The results continue to show that our enterprise customers are achieving greater success and improved outcomes by relying on the Upland family of products. Upland continues to demonstrate to both new and existing customers -- wire products are the choice for those who require exceptional technology and service.

As Jack referenced earlier, we have continued to focus our efforts on those areas that our customers value the most, using the methodology called net promoter score or NPS. I use this methodology as being where it originated and it dealt to improve customer loyalty to great success.

On the sales front, we continue to focus our efforts on expanding our relationships at the existing customers, building on our improvements in net promoter score. We expanded relationships of 125 existing customers including eight major expansions over $25,000 of annual recurring revenue.

Further, 28 of our expanding customers increased their annual recurring revenue by 25% or more. Examples of major renewals and expansions were our global financial services firm, recommitting to our IT financial management platform for over $150,000 per year.

A large global manufacturing company recommitted to our supply chain management platforsm for over $240,000 per year. The division of the federal government expanded by 100% over $100,000 per year of ARR with our project and portfolio management offering; a large financial industry cooperative expanded the use of our professional services automation platform by over $50,000 per year.

In addition, six other key customers expanded to tune of over $280,000 as well. We also acquired 90 new customers of which nine were major accounts, by leveraging references from our existing customer base.

Some examples of major new customers include a cross-sell to a leading international entertainment and media enterprise who committed to over $450,000 per year to our IT financial management offering; a global nonprofit organization committed to over $200,000 per year to our mobile messaging platform; and a global industrial conglomerate committed to over $70,000 per year to our project and portfolio management product. On the product front, we continue to focus on customer-driven innovation in delivering consistent reliable service through a strong technical foundation.

In Q3, these investments in our technical foundation resulted in improved performance, reliability and security. Q3 also included major product releases with customer-driven productivity-enhancing features.

Within our projects in IT management applications, we improved our program management capability, integration, workflow automation and usability. We enhance the reporting and integration capabilities of our project and portfolio management application by improving the reporting wizard, work dashboards and the data extract functionality.

All features that our current customers were looking for. Our IT financial management application improved the usability and analytics by improving the administration features and enhancing the reporting and data analysis functionality.

Within our workflow automation applications, we improved our integration and training capabilities. We released new integration functionality with implementations to three key customers leveraging the Upland integration manager powered by Dell Boomie.

This allows customers to integrate with other third-party applications as well as other Upland products. We also launched the supply chain management module delivering new features to address the unique needs of the raw material certification and inspection process.

For our digital engagement applications, we released a number of customer-driven enhancements and improved the underlying product platform of our two-way application-to-person text messaging offering. We expanded our message scheduling feature, enhanced bilingual messaging support and added new report functionality.

We also strengthened our platform infrastructure in order to accommodate volatility and platform usage. We improved the performance and usability of our web analytics offering as well.

With respect to our operating platform, we have launched a series of initiatives designed to accelerate the improvement and efficiency effectiveness and scalability of all major aspects of our business. Over the last six months, we have consolidated our number of offices from 10 to four, successfully implementing a flexible work environment.

We also reduced our total number of data centers by 30% from 20% to 14%, with plans to be below 5% by the end of 2017 including our international business. We will do this while continuing to improve reliability, performance and scalability of our cloud offerings.

We'll continue to leverage AWS or similar services to enable increased operational and capital efficiency. We have also improved the efficiency of our sales and marketing organization by reducing cost while exceeding quarterly bookings target.

These operational changes have resulted in a sequential decline in our total operating expenses as a percentage of revenue in Q3 and helped to improve our profitability. In summary, we have a lot of high impact initiatives under way that are yielding great results and over time, we believe will enable us to scale the business even more effectively.

With that, I'll turn the call back over to Jack.

Thanks, Tim. So again in summary, great quarter, strong top line, strong EBITDA, feeling great about the business that customer success focus where the platform can take us over the next several years.

You look at the Q4 guidance where at the midpoint approaching a dollar a share in EBITDA is really some dramatic growth in EBITDA that we've seen quarter, by quarter, by quarter and again we feel very confident about the outlook going forward. With that, let's open the call up for questions.

Operator?

Hey, guys. Can you hear me okay?

Yes, Bhavan. How are you?

Good. How are you guys?

Congratulations. Great job on the top line and EBITDA obviously.

I'll just dive in with one of my quick questions. The growth rate in subscription is really healthy and quite a bit better than what we've expected.

I guess maybe to Tim or Jack, just some sense of with the organic growth was there and Tim, you dubbed into some of the expansion activity, but it's actually better than we'd actually expected. Was there something specific that's driving you -- you laid out the initiatives.

It was one, a bigger driver than the others?

Yes, Bhavan, I think it's a combination of things. We're seeing as we focus our efforts not only in the product features that I alluded too, but also operationally on the lighting customers.

It's really providing results not just in terms of retention, but also expansion. So that helped to deliver certainly.

In addition, the major cross-sell that I alluded to with the media company was actually an interesting deal and that it was a different decision make and we talked about this in the past, how cross-sells sometimes have a life cycle similar to getting new logos, but the ability of that company to talk to other people internally about another product they use from us in our project in IT management area help to give them confidence in doing the deal. So that certainly helps as well as combination of things in terms of churn improving as well as our bookings.

Bhavan, this is Mike. Just to take your question regarding organic growth.

As you called out, our overall growth and recurring revenue for Q3 was 21%. Organic growth was 3% and if you look at the nine out of 10 products where we're actively investing in sales and marketing which represent over 92% of our recurring revenue, organic growth was actually 7%.

Going forward, we see organic growth in these core products of plus or minus 5%.

Got it. So pretty consistent with what we've seen historically.

And I'm just turning quickly to EBITDA. You've been pretty clear about the levers that are going to drive continued EBITDA margin expansion, the margin expansion, but just an update on sort of what ending are we with those operating efficiencies?

How much impact are we going to see potentially in '17? I'm not asking for guidance.

Does that trend continue and where does that 30% get us? That two or three years?

How should we think through those metrics?

I would say in terms of what inning we're in on operating efficiencies, here we are at 20% EBITDA. I'd say we're in about the middle of the fourth or the fifth innings.

So we've got a lot of upside from where we are presently. We talk about 30% long-term target, we have visibility to that number and ultimately beyond that at greater scale.

To us, this is not something that's years off. In terms of more specific timing on that when we provide guidance for 2017, we can kind of zero that in.

You look at it right from the beginning of 2016. First quarter we had 300,000 -- this is from memory here.

I may be a little off -- 300,000 of EBITDA went to $700,000 in the next quarter, one, one, one, five, two, it's just stairs stepped up. We see that stairs step continuing nicely into 2017.

That's helpful, gentlemen.

Yes. I would also comment, Bhavan, you can see in our cloud operations there, there's opportunity as we've reduced the number of data centers that clearly have some ways to go there.

Also with our model, with acquisition that will scale our G&A, part of the plan as well. Yes, pretty happy with it.

And when you look at the mouse trap that we've built around everything from orders and renewables to account management, to our premier success offerings, to leveraging the DevFactory platform, to drive quality-focused R&D to the discipline we've brought to the table around customer-informed product road maps, to the cloud and operations platform that Tim is talking about where we scale from a peak of 20 data centers with all those acquisitions down to 14, on our way to just a couple three and then really migrating the AWS as we move into 2017. The platform is really coming together and we're seeing that reflected in those results and then again to hit what Tim said as we add additional revenue here through M&A and we feel good about the M&A pipeline, we're going to get a tremendous amount of fixed cost operating leverage.

We think the lights are green there going forward on where we can go with EBITDA. We feel very good about it.

That's really helpful, guys. Thanks for taking my questions and congrats.

Really nice job again. Thank you.

Hi, guys. Good afternoon and great job on this quarter.

Thank you.

Jack, first question is last quarter, you gave us an update and just based on the progress you think, it seemed to increase your confidence and ability to do bigger deals as we get into '17. Could you maybe give us an update on that philosophy and after this third quarter and like you said, strong expansion both in doing a lot with the assets you have, does that still hold true or just give us an update on the acquisition strategy and the M&A trade we might see in '17?

Yes. Definitely holds true.

We want to be increasing deal size as we go into 2017 and again, these don't need to be huge deals, but you move just in the mid $10 million to $15 million average revenue range that has a dramatic impact for a business of our size. We feel good about where the pipeline is with M&A, there are never-ending guarantees on timing, but we've got a number of interesting opportunities, we've got resources to execute and then to your point, Terry, our confidence in the operating platform and being able to buy quality products that are strategic to the areas that we're focused in and to quickly improve those products and improve customer experience of those acquired products by leveraging our more mature operating platform.

It just continues to grow. Feel even more strongly than we did previously about the strength of the operating platform and our ability to acquire and integrate additional acquisitions.

Okay, that's good to hear. And I guess maybe this is for Tim in terms of delighting customers and the journey around NPS.

Where are you in terms of low-hanging fruit and also in relationship to that, do you have to going forward, spend money for certain initiatives in order to keep on that journey of NPS and customer delighting improvement? Thank you.

Thanks, Terry. Yes, it's a continuous improvement journey, so it's really -- as you alluded to -- it's not a destination, but a journey and through going on excellence, strong customer experience results and certainly you prioritize, but you hear based on the volume of customer input and particularly from the larger customers as well.

At least identification becomes easy at that point, so it doesn't take a little bit longer in terms of getting the repairs or fixes in depending on what the nature of the issue is. But clearly we've improved the product foundations, the quality, stability, performance, reliability that really are table stakes.

You can't really have a conversation after that until you have that in place. And once you get that, you start getting to discussions around what features and capabilities could add more value to how you're using the products, and that just a different level of discussion.

That's helpful with our products road map. I would say we're well down the road with respect to finding those road maps in that direction.

Also in the service and support area, we use it as a continuous improvement lever as well both to evaluate individual engagements, so that customers or even support calls that they're having as well as initiatives that we might want to launch -- for example enhanced training that can help our customers get even more value out of the offerings that they have. So it's a program that we think is going to be in place for the long haul and we think the benefits are going to continue to accrue to us, but we've really been happy with the progress thus far.

Okay. Maybe if I could slip one in for Mike.

Don't want to leave you lonely there, Mike. So we've got the professional services and the perpetual license businesses that are in decline and that's planned for.

But as we get onto next year though, at some point, could there be an inflection point in the professional service and that could actually start dwelling again? And then also talk about maybe gross margin profile as we move forward because you've been outperforming so far.

At least the last couple of quarters were this 40% plus. Thanks.

Yes. Sure, Terry.

I think we'll continue to focus on recurring revenue and really not expect an inflection in either perpetual or professional services. We're just trying not to do a lot of those kinds of things.

So staying relatively flat will be fine. It's really what we're kind of expecting.

On the growth margins as you noted, Q1 2016, 61% overall. We've ramped up to 65% as we have talked about on these calls previously this year and so do we see some more room there?

We do. We've made a big move so far in growth margin improvement.

We still see a little more room there for improvement as well as Tim alluded to and Jack have talked about in terms of data center consolidation and things like that. Yes, still room to go there as well.

All right, thanks.

And I think, Terry, the other thing I would just add there is that it's 'declined' in PSO or perpetual, it's really been a more purposeful move away from those revenue sources as we've taken new opportunities. It's really only one product that we've got today that has a prep element to it where we purposely move to selling more cloud there as opposed to perp.

So it has become a smaller and smaller part of the revenue base and obviously the services load reflects that.

Thanks.

Operator, it looks like we've got a few more questions in the queue?

Hey, thanks. Now it's football season.

You guys used a football analogy and you could say like a team with seven and one at the halfway point going to the Superbowl or something, but that's just me -- with weighted balls. Anyways, quick question, you're really increasing your margins -- that's awesome and I can't believe I'm asking this -- but if you made an acquisition, how much would you be willing to dilute your margin structure down at all?

Thanks?

When we look at acquisitions, we look at strategic fit, we look at bringing to the table additional products and solutions that conserve our existing client base. We look at products that can ultimately drive both expansion and cross-sell.

We want fortune 2,000 customer base -- all the things that serve the overall model that we've built. On the financial side, we'll only do acquisitions if they are accretive to EBITDA per share, adjusted EBITDA per share within the first year and we jealously guard our product contribution margin.

So as we see this EBITDA growth path, we look at our EBITDA contribution margins across the board, we look at those centralized costs and so our plan is to continue to add products that we can operate at a product contribution margin consistent with our existing family of products so that every acquisition means better fixed cost operating leverage and expanding margins overall. Short answer is we're not looking to dilute EBITDA margins through acquisitions.

As I look at our current pipeline, I don't see any potential transactions in there that would do that.

Great. Thank you so much.

Thanks. When you think about the companies you've acquired and the products that have got, do you think that as you add to the stability, security, functionality, have you seen any pricing power either on renewals or making new deals that's also helping with the growth?

It's a great question, Richard. Tim here.

I would say that we're seeing more expansion and reduced churn as a consequence. So we haven't really translated that into price increases per se.

Now that said, we do see an opportunity to offer enhanced services and an enhanced support experience that can play into that occurring revenue as well. Jack alluded to our premier success program which is a combination of things.

First and foremost, it's centered around enhanced communication to our customer base. They know where we're going and what we're doing and that we systematically touch each customer on a regular basis.

Further, there's a set of offerings around that -- standard, gold and platinum -- that allow us upsell opportunities with customers that have very strong NPS with us and want to do more business. And then obviously as we've talked about in the past, we have cross-sell opportunities.

They're about the same as new logo in terms of duration, but they're much more efficient in terms of lead identification and ultimately closing a business. That pipeline has been growing as well.

That's how the benefits are manifesting themselves and today, I'm pretty comfortable with the price position of our products and don't see a need to move up or down.

And it's interesting, the premier success program that we're rolling out, we think it's a great opportunity. It has already been launched for some of our products, we're going to be rolling it out to the remainder of the products over the next couple of quarters here.

There is an opportunity to increase account value while also increasing the quality of the customer experience, by really going after those accounts whereas Tim alluded to, we've got high NPS today where there's a need and an opportunity to provide an enhanced level of services and support. And that can drive additional organic growth beyond the numbers that Mike was alluding to earlier, but we're not assuming any of that upside in our forward outlook.

That's icing on the cake as we roll it out. So we do think there's some interesting opportunities there and we'll love to see the impact of those over the next four or five, six quarters as we fully roll out that program and see its benefits.

I guess I'm a little surprised that the number of data centers and offices can be consolidated both maybe this quickly and down the numbers you're coming down to. Did you expect it to be that easy to pull it down between headcount challenges, personnel, I guess?

Do you think you can get it further still, or do you think you get to a certain level [indiscernible] we need to be geographically representing these areas so it doesn't make any sense, you could push really much further than where we're at?

Well, I think if we look at the business today, we can operate very productively with three significant offices. There may be an annex or a little bit of month-to-month space, but really you're talking about three offices and that's where we need to go and that gives us the coverage, we think that we need.

And on the data center side, so much of that is just contracts that you pick up through these acquisitions. Tim mentioned we've already seen a 30% reduction there from that peak of 20.

Ultimately, that can get down to a handful two or three and remember, we're going to be moving a lot of this to AWS and similar services. So ultimately, you could remove the data centers entirely and that is our longer term plan there.

And again, it's a purposeful by-product of the model that we built here, which is a customer center model where we have a core common set of prosthesis [ph] around all the products. So it's one orders and renewables team, one account management team, a consistent premier success offering across all of our products, one R&D platform -- where we're leveraging third-party platforms like DevFactory to help reduce our headcount, increase our efficiency, have more automated testing, improve quality -- one 24/7 global customer support operation -- again supporting all products -- and then efficiency on the sale side as well.

We haven't talked as much about that, but using and leveraging low cost inside sales and then a small SWAT team of enterprise sales people that can really do rolodex, they selling and leverage strong customer references where we need to penetrate new accounts and even those sales people are going to be focused principally on the great opportunity we see in larger expansion deals inside our fortune 2,000 account. We love the model, it takes time to get it all in place and at $75 million roughly of revenue, I really start to see it coming together.

I think it's an inflection point for the business and now it's about growing the top line both organically and executing against a more aggressive M&A schedule over the next year or two. And again, you never know what M&A's exact timing and that kind of thing, but we've got the platform, we've got the resources to do it and we're optimistic.

So thinking about the scale now on the EBITDA side after run rate is around $14 million. This is the first quarter in a little while we've watched your total debt actually decline to cash flow payments have actually taken it down to I think it's around $43 million now, so less than three times run rate EBITDA.

Can you talk about what multiple EBITDA you'd feel comfortable on the leverage side to give us a feel for your organic ability to keep driving M&A as you're scaling the EBITDA side? Thanks.

It's in that roughly 4x EBITDA range and where these facilities are structured, you might be underwriting an overall recurring revenue number and earlier years of the facility and then you transition to an EBITDA multiple that's in the 3x to 4x range, so not crazy in terms of leverage. Similar to what we did at proficient where you smartly use well-priced capital from a credit facility to do acquisitions and then pay that debt down with free cash flow.

One thing we haven't done as much of yet and Upland has used our stock as a part of the purchase price and really that's a question of just valuation level. We believe that over the next few quarters, as we post the strong EBITDA numbers, we're going to see the stock start to reflect that value and when it does, then we have another arrow in our quiver in terms of using shares for acquisitions.

Again, only doing acquisitions that are accretive to adjusted EBITDA per share in the first year of those acquisitions, that gives us even more, but frankly, we can get there with the credit facility, seller notes and what we've gotten all for today.

Great. Thanks.

Hey, guys, quick one for you here. It seems like based on the prepared remarks and what we could see the expansion and new customer activity was pretty balanced across both product lines and verticals, but I'm wondering if there's anything that stood out that you really want to call out now?

This is Tim here. I'd say a few things.

It was pretty broad base, so no real dependency on any one product which is great. Certainly if I go through the product focus areas, the projects and IT management area had the larger deal sizes -- although we did see some big ones in the digital engagement area with our application-to-person to a text messaging platform, our workflow automation products tend to have smaller deals [indiscernible] business close through reseller channels are fairly efficient to get that business, so we handle the smaller deals and we can still be very profitable but a pretty balanced view in terms of those different businesses as well as the pipeline going forward.

Got it. That's helpful.

And then I guess we had a little bit of commentary on the overall M&A pipeline, but just looking forward and I guess may post-election -- I doubt you're seeing any impact -- but is there any change in the M&A environment going to 2017?

We feel good about the pipeline. It's been building as we've systematically been in the market.

For us, 2016, we announced a number of smaller acquisitions this year, but 2016 was very much for us a year of operationalizing a lot of the initiatives that we had in place and maturing our operating platforms so that we could hit the ground running on M&A and 2017 as we execute against our target to get this business to $100 million in revenue and beyond. So we feel good about it, we think the supply is out there, we think we're in a better position than we've ever been to execute against it, but as I always say when we're talking about M&A, there are no guarantees as to timing and we will only do deals in a disciplined way and if they're accretive.

Fantastic. Congratulations on the great quarter.

Okay. Thanks so much.

Operator, any additional questions?

Okay. Well, thank you on behalf of Mike and Tim.

Appreciate everyone being on the call and joining us this afternoon. Thank you and have a great evening.