Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Tony Wible – Citigroup.
Tony Wible – Citigroup
I was hoping we could start with the Dash acquisition. Can you share some of the growth and profitability drivers behind that acquisition? Just for our modeling purposes, it would be helpful.
Mark N. Greene
Tony, we are not actually disclosing any of the historical data on Dash. This is really the purchase of a capability that will be finding its way into our suite of products and we feel will drive our ability to address some of the needs of our largest customers. As you can tell from the purchase price, it’s a relatively small company. By virtue of this we haven’t really adjusted our guidance for their revenue alone, but instead recognizing this is a capability that will fuel our growth here in the future.
Tony Wible – Citigroup
Your current guidance that you are providing includes just the integration assumptions on Dash?
Mark N. Greene
Correct.
Tony Wible – Citigroup
Can you walk through what led you to go down the path of buying Dash as opposed to doing share repurchases with the stock down at these levels?
Mark N. Greene
Sure, I think two parts. I’ll take the strategy reason and then Chuck can speak to it financially. We had a very high win rate with these guys. One of the things that makes for a successful acquisition is when you partner with somebody and you realize that you win consistently against the competition. We had very high odds of winning when we were partnered with Dash. So, it’s something the market values and it was filling in a hole in our product portfolio so it strategically made a lot of sense.
As to whether this deal was the best use of our working capital, Chuck?
Charles M. Osborne
Well as part of an M&A agenda, we certainly target returns much higher than what we would think even at these prices our cost of capital is. The objective here is to invest in an operation that frankly fuels recurring revenue and recurring revenue growth over time or in an extended period of time and put us in a very good competitive position against others in the marketplace as opposed to simply the one-time repurchase of, in this case, maybe 1.5 million share at these prices.
Tony Wible – Citigroup
Just to double check, I didn’t hear anything along these lines, but in the sales cost line item, were there any one-timers that drove it down to that level in dollar terms? We hadn’t seen it down at this level in about a year. In other words, have there been bonuses or something that’s been pulled out of that number?
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