Good day, ladies and gentlemen, and welcome to the Fiscal Q3 2018 Commvault Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I’d like to introduce your host for today’s conference, Michael Picariello, Director, Investor Relations. You may begin.

Thank you. Good morning. Thanks for dialing in today for our fiscal third quarter 2018 earnings call. With me on the call are Bob Hammer, Chairman, President and Chief Executive Officer; Al Bunte, Chief Operating Officer; and Brian Carolan, Chief Financial Officer. Before we begin, I’d like to remind everyone that statements made during this call, including in the question-and-answer session at the end of the call, may include forward-looking statements, including statements regarding financial projections and future performance. All of these statements that relate to our beliefs, plans, expectations, or intentions regarding the future are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations. Actual results may differ materially due to a number of risks and uncertainties, such as competitive factors, difficulties, and delays inherent in the development, manufacturing, marketing, and sale of software products and related services, and general economic conditions. For a discussion of these and other risks and uncertainties affecting our business, please see the Risk Factors contained in our Annual Report in Form 10-K and in our most recent quarterly report in Form 10-Q, and in our other SEC filings and in the cautionary statement contained in our press release and on our website. The Company undertakes no responsibility to update the information in this conference call under any circumstance. In addition, the development and timing of any product release, as well as any of its features or functionality, remain at our sole discretion. Our earnings press release was issued over the wired services earlier today and also has been furnished to the SEC as an 8-K filing. The press release is also available on our website. On this conference call, we will provide non-GAAP financial results. Commvault adopted the new revenue standard ASC 606 on April 1, 2017. Our adoption was done on a retrospective basis over all prior periods and our financial statements have been adjusted to comply with the new rules. As a result, the results in growth percentages we will discuss today are on a comparable basis using the new rule. A reconciliation between the non-GAAP and GAAP measures can be found on Table IV accompanying the press release and posted on our website. This conference call is also being recorded for replay and is being webcast. An archive of today’s webcast will be available on our website following the call. I'll now turn the call over to our CEO and President, Bob Hammer.

Good morning and thanks Mike. Good morning, everyone, and thanks for joining our fiscal third quarter FY18 earnings call. We made good forward progress in Q3 versus our Q2 results. We had good sequential increase in our software growth, solid billings growth and strong operating cash flow. I am also encouraged by our progress on certain key strategic initiatives including the launch and early traction of our Commvault HyerScale Appliance and good funnel build with our Commvault HyperScale Software. We expect revenues from these two initiatives to positively impact Q4 ’18 revenues. We also made very good progress on improvements in services revenues. During the quarter, we repurchased approximately 80 million or 1.5 million shares of our common stock. Let me briefly summarize our Q3 financial results. Software revenues were up 13% sequentially and 4% year-over-year. Total revenues were up 8% year-over-year, EBIT margin was 12.2%, EPS was $0.30 per share. Here are some of the highlights for the quarter. We achieved record quarterly revenue of $180.4 million highlighted by sequential software growth of 13%, and driven by an increase in enterprise revenue transactions. We saw solid billings growth driven by a 19% year-over-year increase in deferred revenue. We saw good growth in EMEA. We had solid services revenue growth at 12% year-over-year with much improved professional services results. Operating cash flows were $31.2 million, up 17% year-over-year. We continue to make excellent progress with our subscription-based pricing models, which now represent approximately 20% of our Q3 and year-to-date software revenue, more than double our historical run rate, which is contributing to our growth in deferred revenue. We had good progress in managing data in the Cloud, approaching 200 petabytes in the Cloud, which is approximately 3x over the prior year. We also successfully launched Commvault HyerScale Appliance, which I…

Thanks, Bob, and good morning, everyone. I will now cover some financial highlights for the third quarter of fiscal 2018. Q3 total revenues were a record $180.4 million, representing an increase of 8% over the prior year period and 7% sequentially. Quarterly billings, which we define as total revenue plus the sequential change in deferred revenue was approximately $192 million, up 13% over the prior year period and 12% sequentially. We reported software and products revenue of $81.4 million, which increased 4% year-over-year and 13% sequentially. We are pleased that our continued shift to subscription pricing models is resonating with customers. Subscription-based pricing represented approximately 20% of software revenue in both Q3 and year-to-date fiscal 2018, more than double our pre-fiscal 2018 run rate. We are encouraged by the growth in this repeatable revenue stream. Revenue from enterprise deals, which we define as deals over $100,000 in software revenue in a given quarter, represented 57% of software revenue. Revenue from these transactions was up 4% year-over-year and 9% sequentially. Our average enterprise deal size increased 3% year-over-year to approximately $268,000 during the quarter. During the quarter approximately 56% of software license revenue was sold in a traditional per terabyte capacity basis. This is down from 68% in Q3 '17 and 59% in Q2 '18. We anticipate that sales of our traditional capacity based licenses will continue to decline as software license revenue shifts to standalone solution sets in our platform pricing model. From a geographic perspective, Americas, EMEA, and APAC represented 50%, 36%, and 14% of software revenue respectively for the quarter. On a year-over-year growth basis, EMEA and APAC were up 12% and 5%, respectively, while Americas was down 2%. The revenue mix for the quarter was split 45% software and 55% services. Total services revenue for Q3 was…

Thank you, Brian. I’d like to spend a few minutes reiterating our strategy talking about whether we believe the industry and our market is going and significant near term adjustments we are making to accelerate growth all at the same time to drive improvements and operating margins. The headline here is that the best way for us to drive increased short term revenue growth and earnings growth is to significantly improve sales force productivity with a more efficient go to market strategy in our core data protection business. The deployment in this journey is helped by our early success by Commvault HyperScale software and appliance. And our ability to drive the client by functionality in automated data protection software solutions both of which are key enablers for channels of distribution. This effort will primarily be funded by bootstrap effort by redeploying existing resources. Let me put this in context to our broader strategy which has been communicated on prior earnings calls. The major elements of our strategy remain intact they are built upon our continuous success with helping customers on the journey to the cloud both public and private. Increased share in our core data protection business in both enterprise and mid market with expanded and broaden solutions and used cases including our HyperScale, our secondary store for the enterprise and our HyperScale appliance for the mid market. Cyber tools for threat mitigation and high volume recovery and updated core data protection solutions. We will also expand into outcomes based services and SaaS and lastly we plan to open up significant new market opportunities for the foundation for business and operational analytics. The larger share of our revenues remains tie to big enterprise deals for enterprise wide data management. The journey to the cloud, the move to move sophisticated data…

Thanks, Bob. Operator, please open the lines for questions.

Certainly. [Operator Instructions] And our first question comes from the line of Joel Fishbein from BTIG. Your line is now open.

Hi, guys. I have two questions, one for Bob and one for Brian. First, Bob I know you addressed the steps you are taking to fix the execution issues in the call. But investors are concerned that you continue to see some pushouts. You've had North American sales execution issues for several quarters and you got -- you're talking about lower close rate. How do we know that these issues are fixable and they're not competitive related, what should give us confidence that you've got this under control?

Well, there's two things here. One, we've taken specific action, one within the America's certain areas of leadership, areas of distribution and some areas in the territories. So, those address specific sales execution issues, as our AMEA business by the way is executing quite well. But there are competitive trends in the market that we needed to address. Now fortunately, and that does include simplification in particularly in the midmarket where customers clearly would prefer simplified solutions and that is until they figure out that they need more complex solutions for a governance or cyber or other key elements of how they completely manage across the enterprise and move to the cloud. And we're addressing those issues. Our appliance in HyperScale are designed to provide both distribution leverage and to address shifts in the competitive market place. So, the answer to all is a combination of both, it's not just one. And the other thing we're doing is taking in another term we were successful in our call at turn one you know to get the company back from negative growth to positive on our stuck on standalone solutions and we're doing some additional things to the software to make it easier to drive those solutions to the channel. So, there's no simple one answer, you got major shifts in the market and we started way back when we started to put together our turnaround strategy going back three four years ago. And the reason we can go into market with HyperScale or HyperScale Appliance is our new software, our new ways to in-depth test, our new ways to GDPR, all the investments we made over the last several years. So, strategically we're in pretty good shape. It is now working through and executing across these elements. So, they're in our hands, it's not something that we're missing but we've got that but some of these initiatives are a little bit early on and then we just introduced a lot of this technology a quarter ago and the results have been pretty good.

So, I guess that in terms of the pushouts of the lower close rates based on your commentary, it's not necessarily be a large competitive issue where some of the other guides in the market are getting strong and you're getting weaker. Is that how we should take this away or?

Yes. I mean, those deals almost every one of them is still in the bond, I guess. It's agonizingly slow and the point we're making is internally is you can't depend on that. It's just at least for the near term. I think I honestly believe by the way this could be another major shift in this market going out a couple of three years tied to things taking place in cyber and analytics. But in the meantime we want to get this company, we want to accelerate growth and want to improve operating margins in the near term and I think we can do both.

Okay. Hey Brian, just for you real quick. I think investors can understand the shift of the subscription based model and the impact on near term results. Obviously that's a good thing over the term. But maybe you could just talk about the components because you said 20% of product and obviously a lot of I mean is the components of the recurring revenue story and maybe give us that as a total percentage because obviously the story is becoming much more better recurring revenue mode. And I think that will be helpful.

Yes. So, I mean just to trying to answer that in the context of what we said within the script. It's now representing 20% of software revenue. And again, that's double what it was pre fiscal 2018. It's also helping to drive growth in differed. So, you can see it show up in our billings growth number that we stated which is up 13% year-over-year. So, we were pleased with those stats and also we mentioned that some of these subscription elements will also start showing up in terms of some level of off balance sheet backlog and we have other things working for us in terms of unfulfilled orders that are also disclosable in the queue. So, once we had all those elements together, I think we're pleased with the progress we're making on both subscription and the new product offerings that we rolled out.

In addition to that which you don’t see Joel but just starting to show up in the numbers is this thing really is strong growth in our managed service and SaaS offering which show up in our services line.

Thank you. And our next question comes from the line of Jason Ader from William Blair. Your line is now open.

Yes, thank you. I've two questions, one for Bob and one for Brian. Bob, just on the lower close rates, I'm assuming that's primarily in North America and you talked about the strength in AMEA. Is there any one or two themes that you can point to, it don’t sound like it's competitive so much about why are the sales cycles more extended today then maybe they were several quarters ago. And then for Brian, just wanted to talk about the subscription shifts. I'll hold off on that.

By the way, complement to Jason, you were spot-on on your pre earnings note. It's a good job.

Broken clock.

Well, I think you were just spot-on on that note. So, yes the close rate issue is primarily in the Americas. One of the reasons is these are multimillion dollar deals. That's not going to mean it doesn't have multimillion dollars but the Americas has a lot more of them and each one of them is a story. There is no theme, effect is a -- this significant amount of those in the funnel in the Americas for Q4 but we kept our prudent on our guidance because our history of closing them has not been good. But they're actually increased quite a bit going into this quarter. So, there's no theme if not competitive as just the ones that are in the funnel and closing at this just dragging them through. So, I don’t think the competitive landscape has changed at all in the enterprise. In fact, in many respects we've gotten stronger not in line with our technology but with some of our new partnerships.

Okay, thank you. And then Brian, just on the subscription mix, I think I understand it but it’s a little confusing because you already did an early adoption of 606. So, I would have thought that the subscription mix weren’t really changed that much because you have to recognize the software upfront anyway.

Yes, sure.

So, can you just walk through the mechanics there for why it would be driving greater differed revenue growth and dampening software growth on a like-for-like basis?

Sure. I mean, just the pricing economics when you compare a subscription deal. So, a committed subscription arrangement and let's just say for example, it's a three year commitment. On a like-for-like basis, we compare it against a traditional perpetual transaction. It's going to be a little bit lower, there's a small haircut on that subscription commitment. Now, the good news is that it's helping to drive other aspects of our business in terms of repeatable revenue stream, differed revenue, and now fast-forward three years from now we're not going to start to have the annuity stream of the subscription deals coming up for renewal suggest again as we went through this, it's been I think faster than expected while we didn’t expect it to ramp up this quickly going into FY'18 but we view that as a good thing in the longer term.

It's small but it's a big enough incentive of our customers to -- we made it large enough Jason for customers to move to subscription versus perpetual. So, I want to give impression that's tiny because it's meaningful to our customer to move to a subscription.

Thank you. And our next question comes from the line of Abhey Lamba from Mizuho Securities. Your line is now open.

Yes, thank you. Bob, just continuing our near answer to previous question about the deals that have slipped. I understand there's no theme but maybe if you can talk about the top two or three deals that's slipped and what's going on. Why is it taking more as long as it's taking in closing them?

Okay, Abhey. I mean, we're not going into naming companies. One company is I think a discussion between operations and procurement. So, it's some, has nothing too accountable, it's just some internal issues that they're dealing with and until they get resolved, we're kind of right in the middle of it. And maybe went through that with the customer, we'll see. It's possible that deal will close this quarter. Another customer had a major acquisition. So, they put things on hold and so that's opening up. I mean it's there's no theme to it. It's just its very customer specific, you know?

Yes.

Yes.

Got it. And in terms of GDPR, we've been hearing about it for some time and you have the products in place. When should we start seeing some meaningful adoption of those products?

I think in the June quarter.

Got it. And lastly, you talked about new pricing models that are causing confusion. Can you just elaborate more of them that what's causing that and what are you doing to fix that. That's it for me.

We went to the subscription, we also went from as we are advancing this platform, we went from frontend pricing to backend pricing on the platform. That caused some issues. Those were the major ones. But Jason Ader had a pretty walkthrough the key. He must have been talking to a few people but clearly the combination of those changes caused more confusion than help and we're rectifying it.

Thank you. And our next question comes from the line of John DiFucci from Jefferies. Your line is now open.

Thank you. Bob, can you explain a little bit further when you were talking about the strengthening the midmarket and channel. You said you were going to be realigning field resources. Can you give us a little more detail on what that means?

Well, we've done it and not completely but we started it last quarter in the Americas. What we did is clearly we have to get operating margins where they need to be, we got to solve the sales marketing issue. It's too high. So, and so you need higher growth and it's there. So, what we did is we start, we formed a much stronger alliance with Microsoft and we put resources on to the existing field management reps and moved them to align with some of the things we're doing with Microsoft. We did the same thing for Cisco and we did the same we moved resources to align with the channel partners for Appliances. So, the moves we made, again just to summarize, we moved the existing resources for Microsoft, Cisco and the Appliance. More to come in terms of some of the other things we're going to do there. Additionally, we needed a stronger more consistent, more efficient better market capability in that midmarket to make it a lot more self-sufficient and drive growth. So, because we want our midmarket channel not to have to depend on our sales reps which is expensive. And make sure our key sales teams are focused on big enterprise. Because that's the big enterprise is still going to be the major play but we want more balanced more leveraged growth in the midmarket. And when you look at the models, the transition to do this, it takes a little while. But I think the markets very receptive to the moves we're making to help them succeed. And we're also it's not just be pulling and moving, we're also making those products easier, simpler after sales so they can be driven through those channels.

That's helpful, Bob. And I guess, one other question for you --.

I mean, so the issue is you can add resources but we pull the company and I'm a long share holder. And to do it effectively and it's more risky the way we're doing it but it's I think it's the right way to do it for shareholder value is to make better use of your existing assets versus heading assets. That's what we do.

Okay, and then that makes sense. But and on the HyperScale launch, it's good to hear if you're getting traction I think you said in orders but I just want to be clear. I would assume that you really didn’t have much revenue at all for that yet, is that true in this quarter or have you started to see material revenue?

The material revenue, that's going to mean something. Yes, we did have worse last quarter but I think in June -- in the March quarter you could expect that to be impactful to our revenue earnings growth in the March quarter.

Okay. And if I might just quickly for Brian. Brian, you didn’t give a number, I mean wiggle and look at the repatriation of cash, we think. We come up with a number of about a 115 million of extra foreign cash you have access to, to be able to use however you want to use it. Can you talk at all about what you might use that for?

Yes. Talk about mechanics of, get in there.

Sure. So, I think we disclosed is about 40% of our cash balance is sitting outside the U.S. our current policy election is that that's permanently reinvested overseas, however we're going through the exercise now of looking at both the repatriation but also if you look at local foreign tax laws to see what it costs to move money out of those countries. So, while it might be favorable in terms of the U.S. tax reform laws, there still maybe some unfavorable foreign tax laws that we still need to go through. We're spread around in 30+ countries throughout the world. It's a complex study. More to come on that.

So, the answer is we don’t know how much of that will be available. And clearly, our use of cash I think we're starting approach somewhere across a 600 million of what we've brought back since we went public. We got back 80 million last quarter. Our primary use of cash has been for share buyback and that's likely to be our primary use of cash going forward.

Thank you. And our next question comes from the line of Alex Kurtz from KeyBanc Capital Markets. Your line is now open.

Yes, thanks guys. We're taking a couple of questions. When we look at the fiscal '19 operating assumptions, could you give us more color on how you guys are thinking about large deal transactions and sort of close rates versus what you saw in fiscal '18? The transition to subscription, I know Bob in the past you had mentioned that that may have marked up some of the deals, some of the new pricing. I was wondering if the subscription adoption is part of your working assumption in the fiscal '19 guidance. And then my third question is just for Appliance impact for fiscal '19. Do you really see this as incremental, is there some cannibalization of sort of existing demand in the market from the Appliance launch. So, just some color on those items would be helpful. Thank you.

So, on the Appliance, it's likely to be significant for FY'19 and yes, Alex, it will be a combination of new and there'll be some cannibalization of data protection. Because right now those appliances are mainly target against virtualization data protection. That will chime because of our breadth and depth of what we can do with the appliance well of other use cases that we can go into marking with it. But for data protection, it will be new and or be cannibalization and it will cannibalize some of our data protection revenue. But net will be positive. HyperScale is similar. So, HyperScale is just much higher scale implementation. Is I mean start getting into petabyte multiple petabyte, you would use our HyperScale software and with solutions like we're doing with Cisco and it's a lot more efficient than just scale our appliance boxes and doing it that way. And that will be a combination of I think it will be less cannibalization and more opening up a new market into big data and some of these other things in the HyperScale software that versus the Appliance. We also close a very large multi petabyte deal recently with HyperScale, where the company is using it to mitigate cyber. Because we can do things with the software that others can't do in terms of not only mitigating an attack but providing massive fast recovery on 100s of 1000s of servers would do that really quickly and doing that in combination with our HyperScale solutions. So, Brian will take that.

Yes, go ahead Brian.

Yes, to Alex. So, I think that customers want options, so not everyone is going to want subscription, not everyone is going to want perpetual. Our job is to do that in a way that doesn't confuse the market. And I think we've got some great models to offer and as long as it's okay to have a couple of different models as long as they are the right fit for the market. So, we do see subscription continuing to increase, I don’t know it ever it never going to be a complete one 80% to a 100% subscription. That's not what we're messaging but it's going to be done in hopefully a very methodical way. We've had some early success with it and we're going to continue to embrace it for the time being and try to hit our near term and FY'19 objectives at the same time.

And we'll try to give you some color. Deals, we are seeing some really good acceleration in managed service and SaaS. It should be a lot more meaningful to our FY'19 results than ' 18.

Okay. All right, thanks guys.

Thank you. And our next question comes from the line of Aaron Rakers from Wells Fargo. Your line is now open.

Okay, right. This is Joe Piellucci [ph] on for Aaron. Just a couple if I could. When I look at your software growth expectations for the fourth quarter, I think going back to last quarter, you talked about a mid-teens growth rate. How do we think about the so the delta there, so the 10%, how do we think about the drivers there. Is it breakdown of subscription versus deal closure rates versus kind of some changes going on in the sales go to market?

I'm not sure I understand the question. The question is the -- what?

Yes, certainly. As we said on the call, so we would expect that again the subscription had a slight dampening effect in Q3 to a tune of a few million dollars. That's kind of embedded into our Q4 guidance and expectations. And in the near term, we still are relying upon large deal closure rates. We've got a good big deal funnel but in some of our deals from Q2 and Q3 are still viable. And it's just a matter of execution at this point. So, it's a combination of both the move to subscription and improved and large deal close rates.

Thank you. And our next question comes from the line of Andrew Nowinski from Piper Jaffray. Your line is now open.

All right, thanks. I just have two questions. So first, in your new guidance for software licenses in Q4, still equates to about 15% sequential growth which you haven't even come close to doing in Q4 any time over the last 10 years. So, why would we think the business can significantly accelerate this quarter? And then second, you talked a lot about Cisco being a material contributor in Q4 and FY'19 but what about what was the contributions in the other OEM partners like Microsoft and Amazon and how should we be thinking about the contribution from those two in FY'19? Thanks.

Andrew, we're struggling with the 15% sequential growth a bit. We are seeing something in the mid single-digits in terms of the sequential growth. Yes, I don’t know where you are getting that number, it's nowhere near that.

Okay, sorry. Maybe I had the wrong calculation. Then I guess just as a revision to that question, do you have any colors of what change from when you talk about doing mid-teens growth on a year-over-year basis in March quarter versus the 10% now. Was it just something anything changed specifically over the last three months when you gave that last guidance?

Its subscription and its impact and we have tapping down our large deal assumptions for Q4.

Okay, got it. And then Microsoft and Amazon?

No, the Microsoft relationship continues to go extremely well and it's becoming more and more impactful and stay tuned on Amazon, we are doing something with them as well. And when we in appropriate time we'll communicate that to the market. And we are doing things with Google also but the difference is we are very programmatic with Microsoft. This program that’s this joint marketing efforts et cetera, we don't have yet that structure with AWS. Although, our cloud growth is still stronger in AWS than it is with Microsoft in spite of that programmatic, those efforts. So, we got I'd say good strong positions in both of those and stay tuned to on AWS.

Thank you. And our next question comes from the line of Eric Martinuzzi from Lake Street. Your line is now open.

A question on the pace of investment. Historically, in a given fiscal year you guys would do a good bit of the first half there would be kind of sales and marketing ramp on boarding of new cohorts of reps and marketing programs, go to channel investment, go to market investments with channel partners. Any change to that historical investment seasonality with FY'19?

Well, we're trying to do this with redeployment of resources versus adding them and at the appropriate time I'll let but we are going through that exercise right now. So, that's what we historically have done. Going into this year, we're trying to do it differently because plus we have the products and channels that will enable us to do this differently than in past years. So, directionally it will be less obviously for us to drive operating margins up. We got to do it more efficiently and we have got the products and the new distribution channels and partners now that will enable us to execute our strategy like then.

Okay. And then you talked about HPE relationship with the --maybe it was a press release but that's what I haven’t heard you guys talk about historically. Obviously, you are working with a lot of partners, the marquee ones, the Microsoft, and AWS, and CISCO, but HPE was a new one for me. Can you talk about that one little bit?

Well, what we just announced was our relationship with the managed service businesses which they call GreenLake but we've broadened our interrelationship with HPE. So, that is the first announcement with them. We are working more and more closely in the field with HPE. And I think it's indicative of a broader trend in the market where the major players that we are investing in either in services like GreenLake or they're focusing more and more on primary and or on managed services and that aligns well with our capabilities particularly in secondary storage and operations and automation.

Both on HyperScale.

So, -- yes, and our HyperScale secondary storage.

Well, certain that have servers and storage on both.

Yes, good point. Well, I was saying is partners like HPE that have servers are natural partners for our HyperScale software.

Okay. And that just specifically here we are talking software form factor as opposed to appliance form factor. Just --.

Correct. That is correct.

Okay, thanks.

Thank you. And our next question comes from the line of Srini Nandury from Summit Redstone Partners. Your line is now open.

All right, thank you for taking my question. Bob, can you talk about the positioning of CommVault versus your combination HyperScale, Super Micro, Huawei, HPE, this newer guys are growing very rapidly and are you guys bumping into them at all? Thank you, Bob.

Yes, we bump into them every day, I think. I mean it's the lower end of the market, we clearly see those competitors out there. And fortunately we started this program well before they came into market, so we got into market relatively quickly with our HyperScale Appliance. I'll let Al make some comments on that regard as well.

Yes. Bob had it pretty well. I think as he said, they were in a little bit before us. What we have seen out there is we're pleased with our performance and our capabilities and our competitive advantages. We believe we have more to offer for less money. That simple equation that doesn't always work. So, we are battling a little bit on as Bob said earlier on our messaging, on our focus. It's all around data protection and also focusing on all the enhancements and capabilities we've made around simplicity and practicality of solution here. So, we're feeling good about where we are. We need to keep being aggressive here, particularly as we get into the channel side of the equation and again as Bob said "All along strategically, we are in a good place."

So, Srini just to remind everybody that the big issue and the biggest weakness CommVault has is in distribution. And these products are designed want to meet market needs but they when we started to mark on this several years ago, it was clear we needed products that were much more aligned with the channel. And then you have to put an organization in place that's much stronger for the channel and the incentives that go along with it. So, the first thing you had to do is get the product. Normally, in parallel with that, we've established a much stronger channel organization and you got to put those things together driving into market. But -- so, it's not just technology, its technology and distribution and we've addressed both of those.

Thank you. And I'm showing no further questions at this time. This concludes the question and answer session in today's call. Thank you for your participation, you may now disconnect. Everyone have a great day.