Rightnow Technologies (RNOW)

Q1 2011 Earnings Call

April 27, 2011 4:30 pm ET

Executives

Wayne Huyard - President and Chief Operating Officer

Jeffrey Davison - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer

Greg Gianforte - Founder, Chairman and Chief Executive Officer

Michael Johns -

Analysts

Laura Lederman - William Blair & Company L.L.C.

Justin Furby

Brian Schwartz - ThinkEquity LLC

Thomas Ernst - Deutsche Bank AG

Nathan Schneiderman - Roth Capital Partners, LLC

Philip Dionisio - FBR Capital Markets & Co.

Mark Murphy - Piper Jaffray Companies

Tom Roderick - Stifel, Nicolaus & Co., Inc.

Chaitanya Yaramada - Robert W. Baird & Co. Incorporated

TheStreet Recommends

Terrell Tillman - Raymond James & Associates, Inc.

Gregory Dunham - Crédit Suisse AG

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the RightNow Technologies First Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Michael Johns, Director of Financial Reporting. You may begin, sir.

Michael Johns

Thank you. Good afternoon, everyone, and thank you for joining us on RightNow's first quarter 2011 conference call. Joining me on the call today is CEO and Founder, Greg Gianforte; and Chief Financial Officer, Jeff Davison.

Before turning the call over to Greg, I'll read our Safe Harbor statement. During the course of this call, we may make projections or forward-looking statements regarding future conditions or events which may drive our future business, current and new products and services and their performance, potential mergers or acquisitions, the size and strength of our market, and our future financial performance and outlook for the company. These forward-looking statements may include, but are not limited to, statements about revenue growth and profitability, our future strategic plans and perceived growth opportunities, market acceptance of our products and other statements relating to our operating results. These forward-looking statements speak only as of today and are based upon the information currently available to us. This information will likely change over time. By discussing our current perception of our market and the future performance of the company and our products with you today, we are not undertaking an obligation to provide updates in the future. We caution you that such statements are just projections, and actual events and results may differ materially from what we discuss today. Please refer to the documents we filed with the SEC, specifically our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections and forward-looking statements.

As a reminder, we are providing a supplemental data sheet for easy reference on our Investor Relations section of our website that contains historical information and other key metrics that we will be discussing on the call today. In addition, an updated investor presentation has also been posted to the site. During the course of this call, we will also be discussing certain non-GAAP financial results. We direct your attention to our reconciliations of GAAP, which can be found in our company's earnings release, which is posted on the Investor Relations portion of our website.

And with that, I will turn the call over to Greg.

Greg Gianforte

Thank you, Michael, and good afternoon, everyone. 2011 is off to a good start. I'm really excited to see our key carry the momentum from last year into 2011, and I believe we are squarely positioned to continue that momentum throughout this year. Our message is resonating with customers and our success in ridding the world of bad experiences. And more importantly, providing measurable returns to our customers is gaining notice at higher executive level. And our financial results and strong balance sheet are enabling us to ramp up our investments in sales and marketing to drive more profitable growth. So overall, as you can tell, we're pleased with how the year started.

To quickly recap, the financial results for Q1, recurring revenue, the key measure of our growth increased 27% over Q1 a year ago. Total revenue for the quarter was $52.3 million, and non-GAAP EPS was $0.10. Current software backlog, the best indicator of future recurring revenue growth, was up 38% year-over-year and 27% on a trailing 12-month basis.

During the quarter, we added new customers and renewed and expanded relationships with customers like Activision, Arbor Networks, CARFAX, Cabela's, The Container Store, CyberDefender, Electronic Arts, Ellie Mae, Equifax, KLM/AirFrance and Logitech. We believe these relationships are expanding for a number of reasons. Although one hand, our solutions meet the need to deliver exceptional customer experiences better than any other competitor.

At the same time, those needs are constantly evolving based on the 4 key mega trends that we've described some previously. Combined, this is creating a very large market opportunity for RightNow CX. Those 4 key mega trends are: one, the growing empowerment of the consumer; two, the increasing acceptance and need for cloud-based solutions; three, the rise in the number of consumer interactions that happen on the Internet and social networks and on mobile devices; and fourth, the wave of contact center replacements that's occurring in large enterprises as they recognize that their legacy call center solution simply can't handle their current needs.

Another factor we believe is driving our growth is the addition of Wayne Huyard as our President and Chief Operating Officer. Overall, his objective has been to drive higher productivity across all of our sales teams, direct or increase sales and marketing spend and increase our focus on new customer acquisition. As we look out the rest of 2011 and beyond, our sales and marketing teams will continue to push harder and become more aggressive as they spread the RightNow message in our target markets.

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