Rimini Street, Inc. (RMNI) Q3 2020 Earnings Report, Transcript and Summary

Welcome to the Rimini Street Third Quarter 2020 Earnings Conference Call. My name is Anna, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we’ll have a question-and-answer session. [Operator Instructions] I’ll now turn the call over to Dean Pohl, Vice President of Investor Relations. Dean, you may begin.

Thank you, operator. I’d like to welcome everyone to Rimini Street’s third quarter 2020 earnings conference call. On the call, with me today is Seth Ravin, our CEO; and Michael Perica our CFO. Today, we issued our third quarter ended September 30, 2020 earnings press release, which can be found on our website. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading About Non-GAAP Financial Measures and Certain Key Metrics. A copy of the press release and financial tables, including the GAAP to non-GAAP reconciliation and other supplemental financial information can be viewed and downloaded from the Investor Relations section of our website under Investor Events. As a reminder, today’s discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent SEC filings, including our Form 10-Q for the second quarter of 2020 for a discussion of the risks that may affect our future results or stock price. Before taking questions, we'll begin with prepared remarks. With that, I'd like to turn the call over to Seth.

Thank you, Dean, and thank you everyone for joining us today. For the third quarter, we continued to execute well against our strategic growth plan. We achieved record quarterly revenue above guidance, record new sales invoicing and backlog, calculated billings growth of 33.3% year-over-year, quarterly gross margin above guidance, maintained a revenue retention rate over 90%, produced another consecutive quarter of net income, further strengthened the balance sheet with record total cash of $83.7 million at quarter end, and generated $31.8 million in year-to-date operating cash flow of a 51.7% year-over-year improvement. We also continued making investments to take advantage of growing global demand for Rimini Street support solutions, including our new AMS services and additional demand driven by the pandemic and global economic challenges. Today, we're issuing guidance for fourth quarter revenue raising the full year 2020 revenue guidance range and affirming our continued commitment to the long-term goals of improving free cash flow and growing GAAP profitability. We ended the third quarter with 2,365 active clients, a year-over-year net increase of 16.4%. Sales activity remains at historically high levels. And to date, we have signed over 3,700 clients including over 180 Fortune 500 and Fortune Global 100 companies, and a growing contingent of government organizations in many different countries. In September, we celebrated 15 years of service and saving our clients nearly $5 billion in total maintenance cost savings. Our quarter end global employee count was 1,384, a year-over-year increase of 13%. Pandemic impact. During the third quarter, we experienced both the opportunities and risks of the pandemic. Like the second quarter, we signed some new opportunities attributable to the pandemic and believe the pandemic has added meaningful additional pipeline opportunities for future quarters. However, we also had some existing Rimini Street clients enter bankruptcy and others received special discounts at extended payment terms to help them navigate these challenging times. All in all, based on the facts in our analysis, we still believe the opportunities created by the pandemic and global economic challenges far outweigh risks and that our strong balance sheet and cash position will provide us with the business flexibility and agility to help prospects and clients with special needs while providing us protection against downside risk. The full extent to which the pandemic impacts our business going forward will depend on numerous rapidly evolving factors that we cannot reliably predict. Client wins. During the third quarter, we completed 240 geographically diverse new sales transactions. In addition to the many global sales wins shared in press releases, I wanted to share a few additional significant sales wins to highlight how clients are leveraging Rimini Street support to achieve strategic goals and how we are growing sales through both new client transactions and expanding our footprint with existing clients. First, Hyundai-Kia Motors, a leading global auto manufacturer, switched from Oracle to Rimini Street support for its Oracle database software in 2019. They recently expanded the agreement to include all their affiliates and operations globally, based on their high satisfaction and success with Rimini Street support services and the positive impact it has made into their business. With the time cost and resources save by switching to Rimini Street support, Hyundai-Kia Motors was able to reinvest its significant support and maintenance savings into funding innovation projects, including autonomous driving and vehicle connectivity and electronization, to drive growth in a fiercely competitive automotive market. Next Vedacit, a leading manufacturer of construction products based in Brazil, switched to Rimini Street for support of its Oracle JD Edwards and database software. By switching to Rimini Street support, Vedacit was able to free a significant IT budget to drive innovation projects and support its corporate initiative to double revenue by 2023. Specifically, Vedacit leveraged its savings to help fund five product development start-ups through Vedacit Labs, the company's innovation incubator that accelerates start-ups and pioneers ideas for the civil construction industry. The company's CIO was tasked with revamping the IT department, and like many companies, Vedacit discovered that they were spending approximately 80% of their IT budget on daily operations and enhancements, leaving just 20% for business transformation initiatives that support competitive advantage and revenue growth. By switching to Rimini Street, the organization was able to right-size this budget equation. And today, the proportion of the budget is closer to 60% for IT maintenance with 40% left over for innovation. Lastly, Green Cargo, the Swedish state-owned rail logistics operator, has renewed and extended their Rimini Street support and maintenance for their mission-critical SAP ECC platform. Green Cargo first switched to Rimini Street support in 2017 and is continuing to leverage our ultra responsive, high-quality support model to enable their continued focus on its transformational initiatives, including the adoption of an agile, low-code application strategy. Green Cargo remains confident in the knowledge that its core SAP applications will remain reliable under Rimini Street support for many years into the future and leveraging Rimini Street support has enabled Green Cargo to stabilize their core SAP systems and reduce a massive backlog of business development and compliance activities that had built up when there was little investment in IT. Products and services update. During the quarter, our global service delivery team closed over 8300 support cases across 46 countries and delivered nearly 14000 tax legal and regulatory updates to clients in 38 countries. We achieved an average support delivery client satisfaction rating of at least 4.8 out of 5.0, where a 5.0 rating is considered excellent. With respect to other offerings in our expanding product and services portfolio, we are continuing to see growing pipelines and sales in our maintenance business and are executing our go-to-market strategy for our new SAP or own sales force application management services commonly known as AMS. AMS is where we run the systems for the client day-to-day and support services where we provide technical support required updates to a team who runs the systems for the clients day-to-day. Our early experience indicates the AMS service is often 2.0x to 3.0x the annual Rimini Street support fees. Further sales of AMS to existing clients is proving that an integrated Rimini Street support and AMS solution is creating a unique value proposition for the client and demonstrating the new AMS product line strength as a cross-sell opportunity. We are also seeing growing interest, pipeline and sales for our innovative advanced database security, advanced middleware and application security and browser proxy interoperability solutions that more and more clients are successfully deploying and using across large server and application landscapes. Competition. Software support vendors are engaged in continuing efforts to force their licensees to upgrade and migrate from current, stable software releases to the vendor's newest immature products as part of an expensive and low-value ERP refresh project. Oracle and SAP are planning to end full support of certain major product releases by 2030, leaving current licensees facing either a major upgrade or migration project or potential move to Rimini Street. Accordingly, more and more companies are evaluating the cost benefit of the vendor's pressured ERP refresh projects and evaluating our Rimini Street support alternative. Many licensees do not see the value in incurring unnecessary expenses and disruptions that do not improve the competitive advantage or contribute to their growth. Further many licensees are taking steps to maximize the value and extend the life band of their robust and mature current releases and switching their annual support to third-party support providers like Rimini Street. Today given the added financial and economic challenges around the pandemic, we are seeing companies prospects and existing clients who had planned to invest in expensive new ERP refreshes delaying the move off their existing stable systems to preserve cash and focus their limited budget on strategic investments and initiatives. As we have previously stated, we believe the hybrid IT environment that will integrate existing licenses, new SaaS licenses and cloud deployments will be the IP reality for much longer than expected and a majority of ERP workloads will continue to be on-premise or simply lifted and shifted into the cloud for continued long-term views. Rimini Street is well positioned to compete. Gartner notes Rimini Street as the leading provider of third-party support for Oracle and SAP products by annual revenue and client count and its published data implies that Rimini Street has captured over 86% of the global market. Gartner is currently predicting a 200% increase in the third-party software support market expecting the market will exceed $1 billion in 2023. Recent Oracle litigation highlights. With respect to Oracle versus Rimini Street that was filed by Oracle in 2010 and went to trial in 2015. The cases run its course of all appeals. Presently, the parties are engaged in a dispute over the permanent injunction that has been in place since 2018. The injunction does not prohibit Rimini Street's provision of support services for any Oracle product line, but rather defines the manner in which Rimini Street can provide support services for certain Oracle product lines. On July 10, 2020 Oracle filed a motion with the court contending that we are violating the injunction. We filed an opposition demonstrating our ongoing compliance with the injunction and entirely refuting Oracle's contempt theories. The matter has been submitted to the court. To date there has been no finding by the court that Rimini Street has violated the injunction and there is no known time line for any court response. We are prepared if necessary to vigorously defend against Oracle's contentions. With respect to Rimini Street versus Oracle, the case we filed against Oracle in 2014 in a proactive effort to obtain a judicial declaration that our revised processes referred to as Process 2.0 and including our automated framework development tools, do not infringe and do not exceed the scope of the relevant Oracle licenses. During the third quarter the court issued its order resolving all summary judgment motions that have been pending since December of 2018. Amongst other findings favorable to Rimini Street, the court rejected Oracle's key infringement theory regarding Rimini Street's ability to leverage its own experience and know-how which is also a key theory in Oracle's contention that we are violating the injunction, did not find that Rimini's Process 2.0 or automated framework tools infringe as a matter of law, awarded no damages and deferred our primary declaratory judgment claim for trial as we wanted. In addition, we are committed to seek injunctive relief against Oracle for unfair competition. Rimini Street is not required to change any support processes as a result of the court's finding. The order also addresses support provided by us to a limited set of clients acquired after the cutoff date for the previous trial. But before the transition to Rimini Street's revised Process 2.0 was completed by July 2014. As expected, the court found based on the findings on our Process 1.0 that Rimini Street infringed certain Oracle copyright servicing this client using our legacy Process 1.0. The court also found infringement involving the support of two specific Rimini Street clients noting that these two matters were limited cases and involve limited circumstances. However, we do not believe we should have any additional damages to Oracle. The Rimini 2 jury will determine whether any damages are warranted. To summarize, third-party support and customization of enterprise software is permitted and Oracle licensees have a choice of support vendors. Rimini Street as deemed by the United States Court of Appeals is a lawful competitor and no client of ours received any Oracle software from us that they had not already paid Oracle for the right to use. Our litigation with Oracle is about the manner in which Rimini Street performs its support services and we continue to believe and assert that our current support services and processes are non-infringing. Trial is not currently expected to occur until the first half of 2022, but could occur earlier. Please see our quarterly 10-Q filing for additional litigation disclosures and information. Summary. We believe the company executed well in the third quarter. We intend to continue executing our 2020 plan focused on revenue growth, disciplined cash management and improving free cash flow and GAAP net profitability. Lastly, I'd like to introduce our new CFO, Michael Perica who joined us on October one and brings extensive public technology company financial leadership and capital markets experience to Rimini Street. Most recently, Michael served as Vice President of Finance and CFO of the $1.4 billion energy systems global business unit at EnerSys a global leader in stored energy solutions. Welcome, Michael and over to you.

Thank you, Seth and good afternoon, everyone. I'm glad to be here at Rimini Street. Q3 2020 results. As Seth noted, for the third quarter we achieved record quarterly revenue of $82.5 million, a year-over-year increase of 19.3%. Third quarter annualized recurring revenue was $327 million a year-over-year increase of 18.6%. Revenue retention rate for subscriptions, which makes up the majority of our revenue remained above 90% with more than 80% of subscription revenue non-cancelable for at least 12-months on a rolling basis. For the third quarter, clients within the United States comprised 58.4% of total revenue, while international clients contributed 41.6% representing aggregate third quarter of 2020 year-over-year revenue growth rates of 8% for the U.S., and 40% for international clients. Our international strength was led by strong results from our Asia Pacific region. Gross margin for the third quarter declined year-over-year as expected to 61.2%, but exceeded the high end of our guidance. The reduction represented a continued investment in the global service delivery capability for our new products and services, including application management services for SAP, Oracle and Salesforce, SAP S/4HANA support services, advanced security solutions and advanced technical solutions. We continue to expect our full year 2020 gross margin to be in the range of 60% to 61%. Operating expenses. Sales and marketing expenses as a percentage of revenue were 35.5% for the third quarter compared to 38.7% for the third quarter of 2019. This 320 basis point year-over-year decrease is primarily due to travel cost savings and reduced physical trade show participation resulting from a switch to virtual marketing and selling. We now expect full year 2020 sales and marketing expenses to be in the range of 36% to 37%. General and administrative expenses as a percentage of revenue, excluding outside litigation costs was 15.8% for the third quarter compared to 16.0% for the third quarter of 2019. We expect the cost of maintaining the recently updated accounting standards, continued internal control compliance requirements and planned systems implementations to put upward pressure on financial spend for the remainder of 2020. We now expect G&A expenses as a percentage of revenue to be within the range of 16% to 17% for the full year 2020. Net litigation expense was $3.8 million for the third quarter of 2020 compared to $3.3 million for the prior year third quarter. Our outside litigation spend is not linear and can fluctuate each quarter based on litigation activities. We continued to expect litigation expense to be in the range of $13 million to $15 million for the full year 2020. GAAP net income was $3.3 million or $0.04 per diluted share for the third quarter of 2020 compared to prior year third quarter and net income of $1.4 million or $0.02 per diluted share. Non-GAAP net income was $9.3 million for the third quarter 2020 compared to a non-GAAP net income of $6.3 million for the prior year third quarter. Adjusted EBITDA was $11 million for the third quarter 2020 compared to adjusted EBITDA of $7.3 million for the prior year third quarter. Year-to-date adjusted EBITDA for the first three quarters of 2020 was $29.7 million or just over 12% of revenue. Basic and diluted net loss per share attributable to common shareholders was $0.05 for the third quarter of 2020 compared to a net loss per share of $0.08 for the prior year third quarter. This EPS metric takes into account cash and non-cash dividends as well as the amortization for the issuance discount, which is also non-cash. All of these items are related to the Series A preferred stock. Moving to the balance sheet and cash flow. We ended the third quarter of 2020 with total cash of $83.7 million compared to $42.2 million toward the prior year third quarter. Moreover, following the close of the quarter, we repurchased $5 million face value of our Series A preferred stock at an approximate 10% discount with no make-whole payment and we retired the purchase preferred stock. Moving forward, we will continue focusing on free cash flow generation and reducing our cost of capital and will opportunistically take advantage of opportunities if and when they present themselves across all capital market instruments as we strive to optimize our capital structure and improve GAAP profitability. For the nine months ended September 30th, 2020, operating cash flow increased to $31.8 million compared to $21 million for the nine months ended September 30th, 2019. Backlog which includes the sum of billed deferred revenue and non-cancelable future revenue was approximately $504 million as of September 30th, 2020, up 19% from the $423 million as of September 30th, 2019. Finally, deferred revenue as of September 30th, 2020 was approximately $204.3 million, up 9.3% from $186.9 million as of September 30th, 2019. Now, with respect to revenue guidance. We are currently providing fourth quarter 2020 revenue guidance to be in the range of $82.5 to $83.5 million and we are raising full year revenue guidance to a range of $321.5 million to $322.5 million, up from our previous guidance range of $314 million to $320 million. This concludes our prepared remarks. Operator, we'll now take questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And we have a question from Richard Baldry from ROTH Capital. Please go ahead.

Thanks and congrats on joining the firm Michael good to work with you again.

Thank, you Richard.

Sort of curious about the guidance for the fourth quarter. If I look at the last two years sequential growth has been very strong between 8% to 10% roughly for the last two years sequentially in Q4. With the strength you've seen and whether it's deferred revenue new customer acquisitions sort of bouncing pretty strongly in Q3, is there anything else we should know sort of other than perhaps just conservatism and what's driving that sequential to look more flat than in prior years?

Hey Rich it's Seth. I think there's a couple of things you need to look at. First of all if you look at the revenue side, remember last year we had several million dollars that came in as a surprise in the fourth quarter to everybody because of the net downs that were released on a revenue basis. And that creates first of all a tough comp against the fourth quarter for us this year unless we have some additional revenue that's going to be released from the net downs as well. And those come from contingent contracts. And for a variety of reasons we may hold back revenue. So, that's certainly one component. The second component is yes, I think as you know we're pretty conservative in general. Because of COVID we've got lockdowns in Europe that are happening now. We've got some new things happening through the Middle East. And of course, the U.S. is a real challenge. So, these things don't affect demand, but they do affect ability potentially to execute when companies can't process the paperwork or we can't get everyone together for meetings. So, we just -- we're always going to play conservative in this COVID world the same way we've done every quarter. And we talked about last quarter; we mentioned that we had the biggest pipeline in our history on the back half of the year. I think you saw that come to fruition in the third quarter. And I think you're going to watch us continue to be conservative in the fourth quarter because of all these risks that come to it. And they also affect the ability to renew some customers. And because those retention renewals can provide some headwinds as well with customers who may be in financial trouble or need more time to pay, extended invoicing, all those reasons are baked into our numbers.

Okay. And to maybe do a walk-through again for the strengths that you've seen internationally how that's executing? They have a similar macro backdrop to the U.S. side. And what you are doing and can do to sort of take that U.S. execution growth rates et cetera up to that international benchmark?

Sure. And as you know we're extremely focused on the North American market and accelerating growth in North America. Where you saw the super strength was in Asia-Pacific where the COVID situation is well under control, business operations are fairly normal, and therefore, you're watching growth you're watching execution. A lot of the friction that we have in other parts of the world are certainly less. In the U.S., I think it's had a little more of a unique challenge in some of the execution in the Midwest and the East Coast. We were very strong in the west and through the Southwest and all the way to the southeast. Again some regional differences depending on where companies are. We've seen in the Midwest and the East some of these companies are having a harder time executing. They've got bigger challenges in day-to-day execution than we see along the Sunbelt from the U.S. perspective. From a global perspective, you've got Latin America between our operations based out of Brazil and Mexico obviously still significant COVID challenges that are affecting operations but we are doing some great deals in those areas and moving forward in Europe, again a lot of great deals happening but now we're back in lockdown again. Middle East, Israel was in locked down for weeks and we were still able to get some significant transactions done. There's some very big wins against Oracle. And Poland, in the Eastern European sector, we did our first deals in and closed several deals there. So, we're seeing some Eastern European strength. But again, COVID presents awkward challenges that are hard to predict.

And maybe talk about sort of the new deal size a number of new logos is for first nine months of the year is actually up pretty strongly versus last year which some people might have been surprised at. Are you seeing any changes to either average new deal sizes and/or this -- the duration of the sales cycle? Is it starting to pick up a little bit on either side, or maybe are people taking smaller bites but more willing to try out the service in a COVID environment?

I don't think we're seeing any real change to the business for that Rich. I think you're watching -- you may get a few smaller deals in the mix because of COVID presenting some of the SMB companies with bigger financial issues. The large deals imagine we're doing them all 100% remote. We're closing multi-million-dollar deals all over the phone and over Teams and Zoom. That is pretty amazing considering the fact that normally those would require a few on-site visits. I'm working with large numbers of stakeholders. So I just again think I'd point to the logistics as being really proven out that we're able to do that. We're getting these deals closed, but the number of cycles it takes -- so you might see some elongation of sales cycles simply because of the logistics you can't get everyone in a room. And normally you might get them all in a room and you're in there for three hours and you work through all the issues and answer everybody's questions. Today that may require multiple video calls and it may require different sets of people in them. So I think again just go to logistics being the main additional friction that's added into the process, but no change in the business buying pattern or in anything relating to the sales process itself.

Last for me would be, you're approaching a 20% growth rate and at the same time your adjusted EBITDA setting new highs. Can you talk about how you discretionarily or from a sort of intermediate term planning try to think about the balance between the growth rate you try to push for versus how much profitability you want to drive out of the model at the same time? Thanks.

Well I think as you know, we became net GAAP profitable a year ago and we set out a requirement for us in terms of operating plan that we wanted to continue to not only be profitable, but continue to improve that profitability. We think this is an important part of our value approach in terms of the company. As you know, we feel very strongly in traditional financial models that have real profitability in them. And I think that we continue to balance minimal growth or I should say reasonable growth on the bottom line in order to allow us to continue to invest for growth. We are from a philosophy standpoint, we will balance growth and profitability. We are continuing to focus on accelerating growth. I think as you well know, we have historically been a 30%-plus growth annual company before we went through our financing phases. And now that we've paid those off, we've made significant investments to reaccelerate our growth. And it will be lumpy. It's not going to be a straight line as you all know that's a complicated factor. And the way that we earn business on the back half of the year, but really don't get revenue on a ratable basis till the following year. When you're on a growth curve that's going to create some lumpiness as well, but it's all trajectoried in a higher growth model. So I think for us as philosophically, we believe that there is room to become reassume a 30% growth model. And we're going to continue to build the business towards that direction and trajectory.

Thanks. Congrats on a great quarter and congrats for your hire, Mike.

Thank you.

Thank you.

Our next question is from Jeff Van Rhee from Craig-Hallum Capital. Please go ahead. Q –Unidentified Analyst: Hi, guys. This is Rudy on for Jeff. Thanks for taking my question. I'm curious if there's any way you guys could quantify sort of the pipeline growth either year-over-year or maybe since pre-COVID? And then specifically within the pipeline how the AMS pipeline is building? Again, just curious if you could provide any color in terms of what percentage of the pipe it makes at this point and how that's trending?

Yes. Good talk to you. We haven't broken out those specific numbers yet or by product line. I think in general the pipeline as I mentioned last quarter was the largest pipeline in terms of dollars that we have ever seen as a company. I think you're starting to see that reflected obviously in the three-quarter close. And I think that from our perspective, all of our products are continuing to grow from a pipeline perspective. You know that we had set out to be prepared for 2021 to be an aggressive global push on our new product lines such as AMS and we've been building the infrastructure hence the reduced gross margin has been all the investments that we've been making in it globally. But to launch those kinds of product lines that big on a global basis eats into gross margin, but it's almost completed. We've already begun the engine of that global sales effort and we expect that to really start to show to the bottom line in the first quarter of 2021. Q –Unidentified Analyst: Got it. And then where does sales reps stand currently? I think it's been a quarter or two since you guys gave that. And then how have reps been ramping working from home and with COVID and whatnot? And then what are your guys' plans for incremental reps going forward?

Sure. We had set out earlier in the year, we had talked about targeting about 80 reps for the company by year-end 2020. We'll probably fall somewhere around the 75 to 80 numbers by the time we're done at the year-end. And we've been calling the team as you know and I've mentioned this on the last couple of calls reducing out non-performers, low performers replacing them with higher quality sales assets. And we've done now an attainment north of 100% in the third quarter. Very, very strong performance. And in terms of the overall force, we're probably about 70 reps somewhere in that range at quarter end. So we've got a few less reps we called down, but the overall productivity has gone up dramatically over the last couple of years. Just as we expected and we've been making those investments, we're going to continue to focus on driving more productivity out of the sales force. This is going to allow us to drop that sales and marketing, cost by reducing the overall cost for every dollar of revenue that we invoice out there. So we've been very focused on it. And I think we've been achieving that nicely in the third quarter and we expect to continue in the fourth. And total sales reps we would expect next year to be somewhere around 100 by year-end. Q –Unidentified Analyst: Got it. Very helpful. Thanks, guys.

Sure.

Our next question is from Derrick Wood from Cowen. Please go ahead.

Great. Thanks, guys. This is actually Nick Altmann on for Derrick. Thanks for taking our questions.

Hi, Nick.

Maybe just as a follow-up to the last question, just with the better sales productivity in 3Q. Are there any sort of tweaks or changes you guys can call out that have been working as to why that productivity has trended nicely throughout the year?

I think that the number one investment we made to get there was: one holding our sales reps due to better numbers. We have more business intelligence in the systems that we've put in. If you've ever -- I don't know if you guys know the system, Clari, very good product by the way. We deployed Clari on top of Salesforce gives a huge amount of AI information and predictability in pipelines. I credit Clari with some good additional insight into what the reps are doing activity wise, allowing management to better understand where the reps are spending their time, where the deals are on a mass basis with a large pipeline and hundreds of deals to manage Clari allows us to provide a lot of leverage for the sales management team and understanding. So that's number one. Number two, the investments we've made significant investments in our sales enablement and effectiveness organization. We brought in a brand new leader for that team a year ago, who's doing a great job. And at the same time we built out that team. And there's just really no way around it guys. You've got to make the investments to train a sales team, provide the enablement tools. And then we move to another product, which I will give you a very good additional reference on which is Highspot. As a tool used to distribute information to customers be able to track the sales assets that they look at, gives us a lot of data about what the customer and prospects are doing with the information we send them. So the combination of that has improved our overall effectiveness in managing a global sales force also the ability to work the deals better. And our sales team are better equipped to answer the questions. And then again, we called the team to have better sales reps, and the combination of that is yielding a much better optimization of our sales team.

Great. That's really helpful. You guys have talked about in the past maybe doing more television advertising. Can you maybe give us some color there on sort of the ROI you're seeing? And is there really any way to quantify the benefit you've seen there?

Yes. And I think the television and the radio advertising we've been doing, including we're on streaming video. It's amazing today that you can get so precise that we can target certain executives from even certain companies on these videos and these automatic systems that are out there. And the television advertising is giving us the air cover to introduce thousands of new executives CEOs, CFOs, CIOs, heads of procurement all of these folks that are very difficult to get to today on a one by one basis, we are hitting them on a global basis in 90 countries. And we've seen the results, really quantified in the fact we have the highest website traffic in our history. We have the highest inbound calls in our history. The phones are ringing more than ever. The fact that I get more letters from executives than ever saying, hey, senior advertising can we get connected with someone? We're interested in what you guys are doing. Can we have a call and get that set up? And it's led directly to new deals being done. So we have a very strong ROI model that we're seeing develop and it's growing pipeline from those advertising dollars. I think it's extremely efficient. And what we've done is we've replaced as out of necessity we moved out of a lot of those physical events that we used to go to globally and we shifted those dollars into TV advertising and all digital marketing. And we think it's paying off very, very well.

No. That's great. And then just the last one for me. Kind of going back to AMS. Can you talk about -- did you book any AMS deals in the quarter? And then you already kind of talked about the pipeline and 4Q pipeline. But how does that pipeline look namely for 4Q and then heading into next year? And do you think that can kind of be a more meaningful contributor to billings in 4Q in 2021.

Sure. We'll have some announcements coming on the AMS side as well as the support side, of course, coming up in the fourth quarter and beyond. But I think in general the answer to the question is, yes, I do believe those numbers will be more meaningful in 2021, because we've laid out the infrastructure. I mean, what we've done since 2018 when we started really investing in building out our vision on the AMS product line as well as global security and some of the other interoperability products. What we've done is we've built the infrastructure. We then had to get the first clients onboard and build a referenceable client base that are very, very happy with the service and perfect the service and we've done that. And now we're about to begin, as we said last quarter, now it's all about we're hiring specific sales reps for AMS. We're hiring specific sales reps for our strategic services group. All of these products are now getting additional overlay sales reps or specialists on top of our existing sales reps all designed for the go-to-market strategy on a global basis. And it's a huge rollout from a global perspective. So, yeah, it will kick in. The pipelines are building. The sales are building and we're going to continue we think to a meaningful number in 2021.

That's great to hear. Thank you.

Okay.

We have a question from Brian Kinstlinger from Alliance Global Partners. Please go ahead.

Hi, everyone. Jacob on for Brian. You mentioned some customer delays cancellations on past calls and some bankruptcies. I was curious if there are any updates there and if you're still seeing some customers ask for price concessions in 4Q? And also some of these delays and cancellations starting to materialize as wins, or do you believe they maybe pushed back into 2021?

Thanks. Good questions. We're all navigating COVID by the day. I mean, as you guys know we're at record numbers in North America with all these problems around the world. There is not really a let up, I would say, yet in -- like everybody else, everyone's getting clients calling asking for discounts and special terms, that has not let up at all really. I think it's going to continue based on what we're seeing globally at least through the end of this year. And I think it will go lighter, but I still think we're going to see some of that into next year. I've checked with a lot of other tech companies, whose folks are handling client engagement. Everybody is buried in these requests. And so from my perspective, I think you just have to expect it's going to be part of our landscape. And what I've been focusing people on is, when you look at our new client acquisitions, you look at the strength of the business on the front end, that's the real long-term business. That's the multi-years of renewals, the upsell opportunities that will come from that. We're going to all face some choppy waters and some headwinds on the renewal side and retention just because it's the economics. And I think you've probably got another year of that, but that's not the long-term business. That's a short-term issue. We'll manage our way through. And I think we've been managing our way through it. But I think the real focus for us has been on the revenue growth the expansion, and we'll handle the clients that need assistance on the back end. And we're in a financial position, with our cash and the strength of the business that we can afford to do some financings for some customers to help them through these tough periods. We do have cruise lines. We have airlines. We have hospitality. So we have all of those guys, including retail that have some weaknesses in them, but we continue to add clients in these areas, because we have a strong value proposition. And while they may have challenges for the next year, after that we expect, they'll emerge and they'll get back to strength, and we'll be there with them and growing our footprint with them for years to come. Q –Unidentified Analyst: Great. You've previously highlighted strong growth coming from APAC. And given the fact that they've been dealing with COVID better than the rest of the world, I was wondering, if you could give us any updates on how that's been going in terms of pipeline and backlog there?

Yeah. I would say, handling it better than the rest of us is probably an understatement. They're actually functioning fairly normally. And that's had benefits, because we've been able to function as a normal business there for the last couple of quarters and getting better. So from that point of view, I think that's certainly affecting and adding tailwinds to the building of pipeline and opportunities. We still can't fly around to various countries that's still locked down country to country, and that's limiting us just a tiny bit. But we're still getting deals done even in the countries we don't have people on the ground. I think that Asia Pac represents and will continue to represent from what I'm seeing, continued strength in terms of the ability and that's why you've watched us invest over the last six years substantially into APAC and that investment is bearing a lot of fruit. And I think it will continue to do so. And our plan is to continue to invest with Asia Pac being a strong leader. Europe, I think has a lot of strength opportunity as does Latin America, where we've added even more countries. So I do think globally outside of North America, there still is more execution going on. North America is having a little bit more trouble getting deals done with the companies here. But we're still doing some great deals and we're still growing. We're just not growing as much as we would like to and we're going to continue to work on that. Q –Unidentified Analyst: Okay. One more, I know you touched on this a little before, but I was curious how business trends have been evolving in recent months given the spike in COVID cases like month-to-month in October across the world and especially in Europe. And companies – are you seeing companies better equipped to deal with this?

Yeah. I think that, the great news is the human beings are adaptable. We're now what six months into COVID pretty much in North America. Europe is about nine months into it. Asia Pac is really rounding a little longer than that and they've sort of moved through it. So from my perspective, have we seen more challenges especially when we hit lockdowns that come up? Yeah, it's hard when we hit them in Israel and then we hit them – we worry about places like France, where we have wonderful customer base big opportunities. And France, when they locked down they're not doing work from home. They don't have a work-from-home culture. They just go home and work doesn't get done and that was the problem with their lockdown. So in some ways a lockdown in France is not the same as a lockdown in the U.S., where we have a lot of remote infrastructure people, just move and work from home, and we did a great job of adapting to that as a country, but that's not true everywhere else. And we have some of those problems in Latin America, where they're just not equipped to work from home still. They don't have the assets for it. And some places, it's like France, it's a cultural issue, not a technical issue. So yeah, these things will come up. That's why we continue to play conservative in saying, hey, there are upsides to this – to what's going on in the world and there are downsides. And we still believe the upside far outweighs the downside risk. And with our cash position, we feel we're well positioned to handle, any of those downside challenges that our customers face and really work with them to pull-through this next year. And I do think we have another year to get through. Q –Unidentified Analyst: Thanks so much. That's all for me.

I show no further questions at this time.

Great. Well, thank you very much everyone for the call, and please stay safe out there and have a good New Year, if we don't talk to you beforehand. And we'll get with you on the fourth quarter call, sometime after the end of the year. Thank you very much everybody.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.