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Datawatch Corporation F3Q10 (Qtr End 06/30/10) Earnings Call Transcript

Datawatch Corporation F3Q10 (Qtr End 06/30/10) Earnings Call Transcript

Datawatch Corporation (DWCH)

F3Q10 (Qtr End 06/30/10) Earnings Call Transcript

August 10, 2010 2:00 pm ET


Dan Incropera – VP and Corporate Controller

Ken Bero – President and CEO

Murray Fish – CFO and VP, Finance

John Kitchen – SVP and Chief Marketing Officer


Dan Zeff – Zeff Capital

Jim Lieberman – Wells Fargo



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Greetings and welcome to the Datawatch Corporation third quarter 2010 conference call. (Operator Instructions) It is now my pleasure to introduce your host, Dan Incropera, Controller for Datawatch Corporation. Thank you, you may begin.

Dan Incropera

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Good afternoon everyone. Thank you for joining us today for the Datawatch Corporation third quarter of fiscal year 2010 earnings conference call. I am Dan Incropera, Vice President, and Controller at Datawatch. Joining me today is Ken Bero, our President and CEO, John Kitchen, Senior Vice President and Chief Marketing Officer and Murray Fish, Chief Financial Officer and Vice President of Finance.

You can obtain a copy of our earnings release, which was distributed earlier today by emailing us at This release is also available on our website at Let me first outline for you this afternoon’s agenda.

I will present our Safe Harbor statement followed by Ken who will provide some general comments and update on the business. Murray will then present a summary of our third quarter and year-to-date results. Following our prepared remarks we will open up the call for a question-and-answer session.

Before we begin, I would like to review our Safe Harbor statement with you. While we do not share projections of our future performance, we need to remind you that any statements we make that do not describe historical facts, may constitute forward-looking statements, and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any such statements are based on our current expectations, but are subject to a number of risks and uncertainties that could cause actual results to differ materially from current expectations.

For more information I refer you to the subscriptions of these Risk Factors found in our earnings release as well as the company’s Annual Report on Form 10-K for the year-ended September 30, 2009, its Quarterly Report on Form 10-Q for the quarters ended December 31, 2009, and March 31, 2010 and other publicly available documents filed with the SEC. Any forward-looking statements should be considered in light of those factors.

I will now turn the call over to Ken for a discussion of business results

Ken Bero

Thanks Dan and good afternoon everyone. I will share some opening comments about her Q3 performance and following my remarks, Murray Fish our CFO will provide more detailed information regarding our financials for the quarter. John kitchen our chief marketing officer is also in attendance for the call and following Murray's remarks we will open up the meeting for questions.

As reported this morning revenues for the third quarter were approximately 4.6 million. Q3 revenues were slightly lower than Q3 revenues one year ago and slightly ahead of our fiscal year ’10 Q2 revenues.

For the quarter Datawatch generated net income of 221,000 as compared to net income of 275,000 a year ago. We were pleased with the Q3 operating results.

It is noted in the press release this morning the quarter’s positive outcome resulted from stabilized quarter-on-quarter revenues as well as continued expense management. We had a solid enterprise quarter while results were good in the US we also had significant contributions from our European operations.

Few significant orders were from existing customers for our document management product BDS, one order was the result of a substantial increase in user licenses due to acquisitions with the other coming from a large customer in the financial sector who will be doing a major BDS version upgrade and conversion to new hardware over the next year.

We continue to see positive results from both our Monarch Data Pump solution as well as sales growth from our dashboard products. Monarch revenues for the quarter were slightly below results from Q2 the difference between the two quarters being lower sales in the UK and Europe.

US Monarch training revenues continue to increase for Q2. We also had a strong maintenance quarter, we believe this indicates our customers remain committed to our product offerings and are receiving strong value from their solutions.

Expenses for the quarter were substantially reduced as compared to Q2. During the second quarter, the business had a retroactive state unemployment tax increase related to fiscal year ’09 headcount reduction as well as legal fees incurred to end our relationship with Avanquest UK Ltd. Our second quarter coincides with the beginning of the calendar year quarterly payroll tax levies and payroll benefit accruals are at the highest levels of our fiscal year. These expenses were not incurred or were lower for Q3.

During the quarter we saw expected cost savings due to the termination of our arrangement with Avanquest for the management of our UK, European, Middle East and Africa Monarch sales and operations.

Going forward we will continue to have increased flexibility managing the EMEA operations and sales staff providing us with the ability to more effectively address market conditions and opportunities as they are identified.

While operating income for the quarter was strong the final net income results was negatively impacted by currency losses resulting from translation of Euro based assets into functional currency of our UK subsidiary.

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