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Guidance Software Inc. Q4 2007 Earnings Call Transcript

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2008-02-28 18:35:15.0

Tags: Guidance Software

Question-and-Answer Session

Operator

(Operator Instructions)

Our first question today comes from Philip Rueppel with Wachovia Securities.

Philip Rueppel - Wachovia Securities

Great. Thank you very much. Just a little bit of clarity on your commentary. You're obviously maintaining guidance, so you're positive about 2008, but you did talk about the cautious macro environment. Are you seeing any particular segments of your business, or customer delays or longer sales cycles, or is it really just that, in general, things could get worse later in the year?

Victor Limongelli

Phil, this is Victor. It's more of the latter. It's February still, and we feel good about our business. Things look good to us. But we're conscious of the news and everything that's happening in the macro conditions. And so, we're keeping eye on it. But we feel good about our business. Does that answer your question?

Philip Rueppel - Wachovia Securities

Yes, it did. Second of all, just as far as the mix between license and service, obviously, licenses grew less than services did in the fourth quarter. Is that just because of the more lumpy nature of licenses, or is that something that we should expect to continue that services and maintenance would grow faster on a year-over-year basis?

Victor Limongelli

Obviously, Q4 numbers stay where they are. Our expectation is to continue to drive our software sales and to get our growth out of our software. However, as you see, our services groups have been doing very well and are accelerating very quickly. I think that healthy growth out of both is what you should expect, and I don't think of any specific trend for any quarter, but we'll continue going forward.

And just a follow-up on what Frank was saying, we actually see our services business as a crucial strategic way for our software business. We had a very good quarter out of our professional services division, and what they do very often is go on to a customer site or a prospect site and deploy our software, and use it to accomplish a specific task. That's great, brings in revenue for us, it solves the customer's immediate problem, but it also serves as a paid proof of concept, where the customer can see the software working on their network. And we think that's a great opportunity for us to follow up on services engagements by achieving software sales later on.

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