Salesforce, Inc. (CRM) Q4 2010 Earnings Report, Transcript and Summary

Good afternoon. My name is [Marcelo] and I will be your conference operator today. At this time I would like to welcome everyone to the Salesforce.com Q4 Fiscal 2010 Financial Results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) I will now turn the call over to Mr. David Havlek, Vice President of Investor Relations. Mr. Havlek, you may begin your conference.

Thanks, operator and welcome everyone to Salesforce.com’s fourth quarter fiscal year 2010 earnings conference call. Joining me as always to discuss our outstanding quarter are Marc Benioff, CEO and Graham Smith, CFO. Following Marc and Graham’s prepared remarks, we will open things up to your questions. A complete disclosure of our fourth quarter results can be found in the press release issued about an hour ago as well as in our Form 8-K filed with the SEC. Additional information including historical financials beyond what is provided in the press release will also be made available on our website. A webcast of today’s call is available on our website for 90 days and a dial-in replay would be available through March 19. Our fourth quarter commentary today will be in GAAP terms unless otherwise stated, at times in our prepared comments or in response to your questions. We may offer certain additional metrics to provide a greater understanding of our business or our quarterly results. Please be advised that we may or may not update these additional metrics on future calls. Looking forward to FY ‘11, I am happy to make you aware of an important addition to our financial reporting beginning with our first quarter results, the company will be reporting its operating metrics and results in both GAAP and non-GAAP formats. Our outlook today reflects this additional disclosure. Graham will discuss a detailed during his prepared remarks and a full reconciliation of our GAAP and non-GAAP outlook can be found in our earnings press release. With that said, let me make today’s call official by reminding you that the primary purpose of today’s call is to provide you with information regarding our fourth quarter fiscal year 2010 performance. However some of our discussion or responses to your questions may contain forward-looking statements. These statements are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize or should our assumptions prove incorrect, actual company results could differ materially from these forward-looking statements. All these risks, uncertainties and assumptions as well as other information on potential factors that could affect our financial results are included in our reports filed with the SEC including our most recently reported Form 10-Q particularly under the heading risk factors. To access our Q4 release, the additional financial detail, the webcast or any of our SEC disclosures or simply to learn more about Salesforce.com, I encourage you to visit our investor relations website at Salesforce.com/investor. Finally, please also be advised that any unreleased services or features referenced in today’s discussion or in other public statements are not currently available and may not be delivered on time or at all. Customers who purchased our services should make the purchase decisions based upon features that are currently available. With that let me turn the call over to Marc.

Thanks very much, David. Our fourth quarter caps off the biggest year in Salesforce.com’s history and I am delighted to be able to share with you today our outstanding results. While most software companies are still trying to forget the past year, our fiscal 2010 was perhaps our most memorable and exciting year ever and some of the highlights from our full year included $1.3 billion in revenue, the first enterprise cloud computing company ever to reach this scale; revenue growth of more than 20%, the fastest growth of any comparably sized software company in the world. While most of the software companies went backwards last year, Salesforce.com went forward in a dramatic way, and more than a quarter of a billion dollars in operating cash flow and a balance sheet with more than $1.7 billion in cash and equivalents and more than 72,000 customers globally including an amazing 17,000 net new customers joining our ranks in the fiscal year, this represents a 31% year-over-year increase in our customer base, more than 2 million subscribers including more than 500,000 net additions during the year, an increase of roughly 35% year-over-year. And we closed the year by hosting the biggest cloud computing event ever Dreamforce 2009 in December. It was an simply an amazing year. We closed the year by delivering the biggest financial quarter in our history. Fourth quarter revenue rose 22% to $354 million. At this level, we have broken through yet another huge milestone, the $1.4 billion annual revenue run rate. Fourth quarter growth of 22% was our best performance in more than a year. GAAP EPS of $0.16 increased from $0.11 a year ago; that’s an increase of more than 40% and more EPS in a single quarter than we achieved in all of fiscal year 2008.…

Thank you, Marc. Our fourth quarter was a great finish to a fiscal year that started with some uncertainty but that ended with superb execution in terms of new business, revenue and cash flow. The last 12 to 18 months tested many companies’ business models and yet Salesforce.com was able to deliver another outstanding year with record revenues, operating income and cash flow. Our cloud computing was tested and we passed we believe with flying colors. So fourth quarter revenue rose 22% from a year ago to roughly $354 million; strong new business along with good in-quarter linearity and lower attrition rates helped to drive this result. Our business continues to show strength across the board with Europe and Asia slightly outpacing growth than the Americas. As a result, international revenues reached 31% of our total revenue; that’s the highest level in our history. Let me briefly review revenue performance by region. In the Americas Q4 revenue growth was 17% year-over-year with roughly $244 million of revenue. In the Americas this quarter we are fast approaching an annual revenue run rate of more than $1 billion in that region alone. In Europe, fourth quarter revenue rose 33% from a year ago to $64 million while a weaker dollar added 13 percentage points to this growth rate, constant currency growth was still a very solid 20%. Finally, Asia continues to be really strong. The big deal activity we have been discussing in Japan throughout the past year contributed to Q4 revenue in Asia of $46 million; that’s an increase of 42% from the year ago quarter. In constant currency terms growth was 40%. Our Asian business alone now has an annual revenue run rate of almost $200 million. In total foreign currency boosted our Q4 revenue growth rate by 2 percentage…

(Operator Instructions) Our first question is from the line of Brent Thill with UBS. Please go ahead with your question. Brent Thill – UBS: Thanks good afternoon. Graham, on your 16% to 17% guidance for the year, does that include anything from Chatter? Because we understand it, that’s coming in the second half. And then if you could just also address on the operating margin side, you mentioned a hiring on the sales side. Is that a pure reason for the operating margin to be more restrained this year or there are other areas that you’re going to invest as well?

We haven’t announced final pricing yet on Chatter. So I think at this point that group range is based on the products that we are selling today. So that will be used for the future I guess as we actually launch Chatter to general availability. In terms of the operating margin expansion, I think we feel with the growth in our products with Chatter launch, we see that as a huge paradigm shift in collaboration in the enterprise. We just want to be in a position this year to have the flexibility to invest in sales, marketing and so on. So I just think it makes sense for us heading into this year with a great Q4 performance behind us to give ourselves a little bit more flexibility around the operating margin percentage improvement.

Yes, and I would just add to that that obviously we have had a great ending to the fiscal year. We are starting this new fiscal year in a growth stance and we are preparing to grow. And as part of that we want to be able to invest more heavily specifically in our distribution organization to take advantage of the weakness of our competitors in cloud computing and to take advantage of our strength. And as you mentioned, with Chatter we have some great new capabilities coming as well that not only further differentiate the products that we already have because Chatter is deeply integrated into the Sales Cloud, Service Cloud and Custom Cloud as well as being its own collaboration cloud but we really want to be able to have the distribution capacity to be able to fully execute and realize our potential.

Our next question is from the line of Heather Bellini with ISI Group. Please go ahead with your question. Heather Bellini – ISI Group: Hi, thank you. I had two questions, just a follow-up on Brent about the hiring. The pace of the hiring, what is the trajectory that we should expect? Is it going to be more front-end loaded than back-end loaded? And then my follow-up would be, Marc, is there anything that you could share with us, I know you talked about how the non-sales bookings or the non-sales applications you have are about 30% of new bookings. Anything you could tell us or share with us specifically about how fast the Service Cloud piece is growing?

Well, the Service Cloud is doing amazing and basically, we haven’t given the actual bookings rate year-over-year, have we? But it is our fastest growing product line. This is a market that used to be filled with lots of very competitive companies who are offering incredible solutions but unfortunately, as the move to cloud computing has happened we are really left as the only ones who have a solution that is multitenant, shared, fast, easy to get going but as in the multitenant knowledge management system, agent consoles, customer portals, deep integration with all of our CRM and custom cloud capabilities, mobility, and that has really propelled that offering this year which was accelerated by that InStranet acquisition that we did now about 18 months ago and it’s far exceeded really I think our expectations. It’s led by a spectacular executive inside the company and that we have more to announce on April 8 in New York around the Service Cloud and I will invite you to that presentation now, Heather. Heather Bellini – ISI Group: And Marc, can I just ask a follow-up on Service Cloud then?

Yes. Heather Bellini – ISI Group: How would you compare its trajectory of growth versus given how long the product has been on the market versus where you were during – if you go back to where the business was when you just had the Sales Cloud?

It’s far exceeded my personal expectations because our Sales Force has really has now an aptitude for being able to sell it; they are not just able to sell Sales Force Automation but they recognize the potential for Service Cloud and they understand the differentiation that Custom Cloud brings it in. I don’t know if you saw on YouTube last week we put a kind of a preview of what’s coming in April 8 with the next version of Service Cloud integrated with Chatter, but that’s up on YouTube and I think that when you see that you realize we are really on our way to a huge breakthrough in terms of what we can do for customers, in terms of productivity. So I am very excited about that opportunity and then we want to couple that with the distribution expansion and we want to hire as many sales people as we can to get out and reach customers all over the world small, medium and large sized customers in the U.S., in Asia, and Europe, still relative against our main competitors that in the enterprise, Oracle, SAP and Microsoft. Our sales force is extremely small and when we get in there we are more likely to win because their technology is outdated. So we are trying to expand distribution while at the same time being mindful that our investors want us to have operating margin expansion. Certainly this year we delivered operating margin expansion. As Graham said, we are going for another 125 to 150 basis points of operating margin while also continuing to grow the top line and we are very focused on that $2 billion revenue number. We are really going, “Gee, you know, when are we going to get into that zone?” It’s only a year or two ago we were talking about a billion internally. All of our planning is around getting to that $2 billion number as fast as possible and that’s all about distribution.

And, Heather, just to be specific on hiring, in FY ‘09 we hired net about 950 during the year; FY ‘10 year that we just finished we hired around 400. I don’t want to be too specific because I think it’s, as Marc said, we are certainly going to be trying to get a fast start with all the sales hiring. I would expect our full year hiring to be somewhere between those numbers and that’s probably as much as we want to say right now.

Our next question is from the line of Adam Holt with Morgan Stanley. Please go ahead with your question. Adam Holt – Morgan Stanley: Good afternoon. If I heard you correctly, it sounds like the add-on and upgrade business was very strong in the quarter. I was wondering are you starting to see an acceleration of cross sales into the base or are you actually starting to see people start to re-expand seats. And then secondly, I guess my follow-up would be, to the extent that billings growth over the last couple of quarters has been very strong even ahead of what you guided to for revenue next year, do you think billings growth should continue to outpace revenue as we get into the recovery a little bit?

So, Adam, on your first question around add-on upgrade, it was strong in the fourth quarter. I think if you remember we have talked in the past about a lot of our business and field sales in the enterprise happening in the fourth quarter and so we tend to get a natural little boost in add-on upgrade in the fourth quarter. So I wouldn’t characterize it as unusual for the fourth quarter but it was very heartening to see it return to that level whereas if you remember earlier in the year there was no – certainly that number was down pretty significantly. So I think all those things that Marc talked about with the Service Cloud, we are seeing a lot of follow-on business there in existing accounts that’s definitely helping. I think that’s probably as much as we want to say in terms detail around that. On billings growth or the billings growth number that you guys calculate, we don’t provide guidance around that and I have given you obviously revenue estimates for Q1 and I have given you what at least directional belief is in terms of deferred revenue for Q1 and I think obviously you can do the math from there.

Our next question is from the line of Laura Lederman with William Blair. Please go ahead with your question. Laura Lederman – William Blair: Thank you for taking my questions and great quarter; I appreciate it. Can you talk a little bit about the quarter enterprise versus middle market versus small business, was it strong across the board? Also if you would share your churn assumptions for ‘11, how much do you expect that to come down? And then I have one final question. Thanks a lot.

Well, I just think that we saw a strong execution across the board in all segments in all geographies and I think that there were a general rebound of the technology market at least for us or I would say at least with the cloud computing market; and we saw that in small, medium and large, we certainly saw that in the U.S., in Europe and Japan. Laura Lederman – William Blair: Great. And then the churn, sort of assumptions of what you are thinking of for ‘11?

So, Laura, we haven’t talked specifically about that in the past. I think we have got what we consider to be an appropriate assumption for attrition; we have seen a couple of quarters of slight improvement. I think I even said in the past, the number went up very slowly and we kind of think it will go down very slowly. So we think we have made sort of appropriate assumptions around churns for this fiscal year.

Yes, and I think that the way we look at that is we just went through one of most horrific times of all time for technology spending, one of the most difficult times for a lot of companies and certainly difficult times for our peers. And yet, Salesforce.com kind of sailed through it really well. There were times, of course, where we had a slight downtick in bookings and we had a slight uptick in attrition, but at the end of the day, we came through this stronger and better, more differentiated and ready to compete in this market than ever before. In terms of a ship that went through a difficult storm, we came out the other side with no damage. So I am extremely optimistic about that because if anything was going to injure us, it’s kind of what we would have just gone through and because we didn’t see that we feel good. Of course, you never know what the future holds. There is always going to be, there is always issues, this is a complex industry, it has involved complex technology but, boy, after making it through so successfully over the past 18 months, we are feeling pretty good here in San Francisco.

Our next question is from the line of Sarah Friar with Goldman Sachs. Please go ahead with your question. Stephanie Withers – Goldman Sachs: Hey guys, this is Stephanie Withers on for Sarah. You noted strong growth in operating expenses across the board this quarter specifically though in G&A and R&D. Can you comment a little bit on what drove that and then also should we expect that growth to continue through fiscal 2011?

There were a lot of different factors that affected those; obviously we will go through that list. I mean there are no single items that caused those changes in the fourth quarter. Certainly you have seeing a trend for us, investing more in R&D and that’s clearly to fund the development of all the great products where we are producing in the market. G&A tends to be driven by more short-term charges here and there. So we will certainly go through that list in our filings.

Our next question is from the line of Kash Rangan with Merrill Lynch. Please go ahead with your question. Kash Rangan – Merrill Lynch: Hi, thank you very much. Marc, one for you. If you look at customer support, Siebel, when they sold the company to Oracle, roughly they had about 4 plus million users in production and they said that more than half of that was in customer support. And it looks like Siebel’s business peaked in the early 2010 timeframe. Just curious, what kind of legacy replacement cycle are you seeing for the heavy duty big iron, big volume Siebel implementations? And more generally, maybe just broader legacy customer support systems and how big of an opportunity do you think this could be for fiscal 2011? Also while you’re at it, how should we think about the core Sales Force Automation market? Is it anywhere close to maturity or are you in the first, second, third, fourth, fifth innings of Sales Force Automation? That’s it from me, thanks.

Well, I would say that it’s hard to make comparisons between Siebel and Salesforce.com and the reason why is is that Siebel was mostly a customer service and call center company. They didn’t really have a successful SSA business and they certainly didn’t have a platform business. They had an ERM business, employee relationship management business, which mostly failed and the UAM business, which mostly failed. We haven’t entered any new businesses that have failed because we have one integrated offering, our sales, service, and platform are all integrated services as well as the collaboration; they all are kind of are meshed together and synergistically make a better technology overall. I think you will find that when I do my demonstration tomorrow at the Goldman Sachs Conference in the morning and the Pacific Crest keynote at lunch tomorrow on Thursday. You will be seeing me demonstrate some new technologies that emphasize the enhanced competitiveness of both the sales technology, the Sales Cloud, the customer service call center, customer portal technology, the Service Cloud, when it’s enhanced with Chatter and how those services are deeply integrated. We still see strong growth obviously you can see by these numbers in Sales Force Automation, in customer service and support and also the platform and we are also entering the collaboration cloud. I have said this before and I still believe it that this is mostly a distribution constrained organization and that we have the market opportunity and the product and the technology and we need to expand our distribution rapidly to take advantage of the kind of very week and poor execution by our competitors, especially when you look at companies like SAP who kind of try to hold the cloud computing industry back. They give – provide all this kind of fear, uncertainty about lack of vision. I mean it’s one of the key reasons I think that they have such a big shake up there. I mean they have really become the anti-cloud in so many ways. So that’s why I think customers are hungry for new technology, new solutions, lower cost, easier to use. Of course, they want social, they want mobile, they want real time. And that I think is a huge refresh cycle on sales, service, on all applications and especially collaboration, especially when you look at Chatter against these really legacy products like Sharepoint and Lotus Notes; I mean Lotus Notes was conceived before Mark Zuckerberg was, I mean, come on. I was just going to mention Kash, that don’t forget if you look at the 4 million subscribers with Siebel, they didn’t have a significant SMB presence. So a lot of about 2 million subscribers that we have are in that market that Siebel never got to. So we definitely view this being a huge long-term opportunity ahead of us, Kash.

Our next question is from the line of Thomas Ernst with Deutsche Bank. Please go ahead with your question. Thomas Ernst – Deutsche Bank: Good afternoon Marc and Graham. Thanks for taking my question. With a growing experience base you’ve got behind Service Cloud 2 now, what is your experience on the profitability of this business? And if is there any difference in this business model versus the SFA business model from a pricing or the amount of sales and marketing spend necessary or perhaps gross margin? Thank you.

Thomas, as far as we can see, it’s very comparable. If you look at all the major sort of variable, pricing looks very much in line with SFA opportunities, and in fact one of the things we have been delighted about is certainly that our sales cycle now is very comparable to SFA sales cycle. So certainly at this point we don’t consider there is going to be any sort of dramatic change or difference here in the economics between the Service Cloud and Sales Cloud.

I would also just add that we get a tremendous economies of scale. When you look at the global data centers, marketplace and how companies run and execute their products, we have almost 75,000 companies using Salesforce.com now. I asked Craig Mundie at the World Economic Forum, I was sitting next to him. I said, “You know, if Salesforce.com did not exist, how many servers would have had in SQL servers and application servers and software and hardware and data centers would have to been bought and installed, how much energy would have had to be consumed as a direct comparison to what we are doing?” And he said, “Well, yes, probably more than a 100,000 servers would have had to be bought and consumed and all the energy and all the waste that goes with that.” I mean we have only a couple thousand servers in our whole company, they are PCs and those are shared by those 75,000 customers, I mean that’s an incredible economy of scale. When you take our software, which is the kind of the integration of the sales service platform and collaboration, it’s kind of one piece of software. It gets integrated into those couple thousand PCs and then we get just tremendous economies of scale and efficiency and then you add on to that some of this great new technology. We have had tremendous success with the with Dell’s new Nehalem technology. We had tried it in several of our servers over the weekend and we saw massive capability that we did not see before and through a hardware change, that just was awesome what is happening on the hardware side. It really emphasizes what a scam traditional enterprise software and hardware is and also what a huge hog it is on kind…

Our next question is from the line of Brendan Barnicle with Pacific Crest Securities. Please go ahead with your question. Brendan Barnicle – Pacific Crest Securities: Thanks so much. Marc, with four major product lines now and a bunch of new sales hiring going on, is there going to be any kind of major restructuring or change to sales comp plans or go-to-market strategy as you bring on these new hires and really go aggressively after these new product lines?

Well, certainly, Brendan, from a sales comp plan point of view, we have made some minor changes this year but nothing of any real significance, more what I would call fine tuning. Certainly, some of the large accounts we are paying some element of compensation on renewals but clearly the focus is still on driving new business, in as many accounts as possible. And I think certainly from an organizational point of view, no, there has not been any changes, we don’t plan any significant changes on the sales side. As Marc mentioned, all our sales people sell all the products and I think the big difference I think in terms of our execution, one of the big factors in FY ‘10 that just finished was I think our sales people really got comfortable selling Service Cloud products and we have seen that in the acceleration of the growth rate there. So we are very happy with the way we are set up right now.

Yes, we just finished our sales kickoff in Las Vegas last week and we had our entire sales organization there. I would just say that for them there has never been a better time to be, in sales and in cloud computing. In Salesforce.com, we have a fantastic product line. We understand the compensation formulas to create their success – we understand the formulas to create the customer success. We are just distribution constrained. We are just not in enough deals. We need to reach this total market and we need to continue to grow. We need to continue to visualize ourself beyond that $2 billion revenue number with that fully diversified product line and that’s where we are moving at Salesforce.

Our next question is from the line of Richard Baldry with Canaccord Adams. Please go ahead with your question. Richard Baldry – Canaccord Adams: Thanks. Maybe talk about post deal having now the cash [hoard] up to $1.7 billion, whether you think that will have a meaningful impact on your acquisition pace. Maybe describe what those strategies might be, more along the lines of whether you see technology as you have seen in the past being key, if there are any ways to maybe use acquisitions to accelerate your distribution, which seems to be the other core focus now. And then maybe you can talk about whether you think that you see the scale of acquisitions you would go after sort of changing, noting the successes maybe that you have had in the past or things like in the Service Cloud accelerating via any acquisition you had done. Thanks.

Yes, completed a very successful convertible that Graham articulated. I mean the numbers just made a huge amount of sense for the company and I just want to congratulate for my finance organization of pulling off what I thought was just a spectacular transaction for the company to help us, fundamentally give us flexibility to make investments and to maintain leadership and to grow and do advance. That said our strategy is fundamentally unchanged. We want the flexibility, we want the cash in hand to be able to be moved if there is a deal to be done. But we are really focused on our three clouds and now the fourth cloud with Chatter. We have our hands full of technology and product and innovation. And we are going to continue to focus on our fundamental core, I would call it organic growth, I mean this is a company that is just growing organically only if we saw some technology that could really make one of those clouds that were in better, more differentiated, grow faster, expand our distribution, when we start to look at something. At the same time, we are going to be very, very conservative in doing that because everything is working so well here. That’s why what you have seen us do is a lot of very, very small deals. Our most recent one was with this company called Group Swim, which was this kind of intelligence on – it’s a future version of Chatter that’s coming farther down the road. That will be smarter about how you get your feeds and become really intelligent. We are already using Chatter now internally at Salesforce and it’s amazing. I mean it’s I think fundamentally changing our work. If you are with the Salesforce.com employee, have them show you what it looks like in production. It’s really spectacular. I will be showing it off tomorrow at the two conferences that I will be speaking at. So when we go to look at M&A, look, we are really going to mostly just focus on the strategy that we have and that’s working because that seems like our best opportunity. We want to be opportunistic but the reality is at the same time, we don’t want to feel rushed to do anything but boy, it’s great to have $1.7 billion in cash, so that if there ever was a situation we could act if we had to.

Our next question is from the line of Karl Keirstead with Kaufman Brothers. Please go ahead with your question. Karl Keirstead – Kaufman Brothers: Thanks. Graham, question on the margin guidance for fiscal 2011. (Inaudible) of the other SaaS firms that had more muted margin guidance have cited the fact that the recent bookings surge in the last couple of quarters creates natural accounting driven margin pressure going forward as you need to expense a number of costs and obviously defer revenue recognition. I’m curious, does Salesforce.com have to absorb that and is that baked into your operating margin guidance? Thanks.

Yes, I mean clearly we amortize the commissions that relate to sales over the life of the contract along with the revenue and clearly when we have a huge fourth quarter like we just had, we end up paying generally higher commissions because sales people hit their accelerators. But I don’t think – I mean that’s only part of the equation. I think what I said earlier about the margin expansion that we have done three years, we have successfully come close and demonstrated 300 basis points a year. I think this year we signaled early that we would probably not be expecting to quite be at that rate. That’s because I think this year we feel we’re back in high growth mode, we have got huge opportunity and we want to be able to hire sales people and you know there is obviously a delay between you a hire sales person takes a while to be productive, then they get bookings, then they finally that turns into revenues. So there is sort of lag in the expense versus the revenue. And then, because of Chatter and all these new products we are coming out with, we just got a lot of opportunity I think to really build market presence. So I think that we want to be able to have the flexibility to invest in all those things this year.

Our dominant cost remains distribution. This isn’t a company that’s structured kind of like Omniture or some of these on-demand companies where like the quarter of our revenues gets shot into CapEx or something like that. We have tremendous economies of scale and efficiency in our data center architecture and then the fundamental way that over a last 11 years we have architected our software to be really efficient in managing these 75,000 customers and millions of users. And our cost structure and our investments going forward are really about how fast do we want to grow distribution. If we had our way, we would just double, triple, quadruple distribution because we see that kind of opportunity out there. But the reality is we are also very sensitive to our investors and while we want to grow the top line, which we are doing, we also want to expand the margin and that’s why this year we are committed to another 125 to 150 basis points while also having delivered really terrific operating margin growth over the last several years. If you look at the numbers over the last several years, they are really spectacular while heading towards this $2 billion number. So we are just continuing to execute our winning formula. Operator, unfortunately, we only have time for one more call and I want to apologize to all those in the queue. We still have a double-digit number of folks in the queue. It’s a quality of problem to have but unfortunately we only have time for one more call. So one more question. So with that, we will take our last question.

Our last question is from the line of Ross MacMillan with Jefferies. Please go ahead with your question. Ross MacMillan – Jefferies: Thanks a lot for taking my question. Just a couple of recaps really, I think as you thought about business in fiscal ‘10, you had a turnaround in the third quarter where you said new business was likely to be flat to up. Could you qualitatively just kind of describe how that ended up in terms of new business for the full year?

Ross, we gave I think a lot more commentary around bookings this last year because we felt there was a change in trend that was important to point out for our analyst investor community. I think suffice it to say, I think you can look at the deferred revenue number and probably come up with a pretty good proxy of just how strong our fourth quarter was. But I think when we are back in growth mood, we are not going to be giving a lot of sort of color on numbers or anything like that around that new business growth.

And I would just add, I think that when we are working on writing the press release over the last week, we were just very, very grateful for all the support that we have gotten from the over the past year. It’s been a difficult year for a lot of companies. We have obviously had a great year. We are really delighted. We want to thank all of you for supporting us this year. I want to thank our customers, I want to thank our employees and we are looking forward to having another great year in fiscal year ‘11 and looking forward to speaking with all of you over the next couple of days at the conferences coming up, and again seeing you for several major product announcements on April 8 in New York City. Thank you so much.

It’s probably a good way to end our call today. So I want to thank everybody for joining us. Also I want to remind everybody that Marc will be appearing at the Goldman Sachs Technology Conference tomorrow morning at 9 AM Pacific. We will also be keeping –

That doesn’t sound very funny, 9 AM.

And he will be at the Pacific Crest Conference tomorrow doing a lunch time keynote at 12 noon. We look forward to talking.

Talking (inaudible) I will be more awake.

Right. We look forward to talking with everybody in the coming days and in the coming months. Thanks and have a good day.

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