Rightnow Technologies Q3 2010 Earnings Call Transcript

Rightnow Technologies Q3 2010 Earnings Call Transcript
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Rightnow Technologies (RNOW)

Q3 2010 Earnings Call

October 28, 2010 4:30 pm ET

Executives

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

Greg Gianforte - Founder, Chairman and Chief Executive Officer

Todd Friedman - Managing Director

Analysts

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

Keith Weiss - Morgan Stanley

David Hilal - FBR Capital Markets & Co.

Mark Murphy - Piper Jaffray Companies

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

Goran Vasiljevic - Roth Capital Partners

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the RightNow Technologies Third Quarter 2010 Earnings Call. [Operator Instructions] And now I would like to introduce your host for today, Todd Friedman of Investor Relations.

Todd Friedman

Thanks, John. Good afternoon, everybody, and thank you all for joining us on RightNow's third quarter 2010 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 the company, I'll read our Safe Harbor statement. During the course of this call, we may make projections of forward-looking statements regarding future conditions or events, which may drive our future business, current and new products and services and their performance, 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 the obligation to provide updates in the future. We caution you that such statements are just projections and actual results and events may differ materially from what we discuss today. Please refer to the documents we file 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'll be discussing on the call today. In addition, an updated Investor Presentation has also been posted to the site. During the course of the 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'll turn the call over to Greg.

Greg Gianforte

Thank you, Todd, and good afternoon, everyone. As you saw a couple of weeks ago from our pre-announcement, we had terrific third quarter with continued growth in revenue, recurring revenue and EPS. I'll keep my remarks brief today since we saw many of you saw at the Summit, our User Conference in Colorado Springs.

For those of you who did attended the event, it was great to see you, and I hope you got a first-hand view of the momentum in our business and the passion in our customer base. For those of you who are unable to be there in person, the webcast from our Analyst Day is still available on our IR site and some keynote videos are still available on the website as well.

There are four primary points I want to cover on the call today. First, we are executing well against our financial goals. Secondly, as we lay out on our Analyst Day, our growth is being fueled by the momentum in our core business, which is benefiting from a tailwind of four mega trends that I'll discuss. Third, we introduced Wayne Huyard at the Summit as our new President and Chief Operating Officer. And fourth, we believe the business outlook remains strong. We're continuing to invest across the entire business, but you'll notice a definite shift in our focus to investing more in sales and marketing as we move forward.

Let me start with some of our key financial metrics, which in the final quarterly accounting, we're slightly ahead of our preliminary results. Recurring revenue, a key measure of our growth increased 13% over Q3 a year ago, which we believe continues to be amongst the highest of the SaaS vendors. We've made a tremendous progress over the last year and a half. And you can clearly see how we're gaining momentum and leverage in the model. Both revenue and EPS were above guidance. Revenue for the quarter was $48.6 million and non-GAAP EPS was $0.15. We also had 17 deals over $1 million in the quarter.

Next, let me take a few minutes and talk about the key points from our Summit, and I'll focus on the four mega trends that I outlined there. You recall our top level message that we're continuing to invest for profitable growth. Over the years, we've made significant investments throughout our organization to drive solution leadership, sales capacity and competitive differentiation. These investments have created scale in the business while driving continued momentum. We believe these investments also squarely positioned us to take advantage of the four key mega trends that are creating a very large opportunity for us within the customer experience market.

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