Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mark Murphy from Piper Jaffray.
Mark Murphy - Piper Jaffray
Thank you. Congrats on the margin progress during the quarter.
Harry, from talking to a number of your partners it sounds like they are actually seeing deal pipelines that are up year-over-year and so it probably becomes a question of close rates. Does that correlate to what you’re seeing in the pipeline?
And, with respect to the Q2 guidance can you talk to us about what your license close rate assumption might be versus historical norms?
Harry Debes
Sure Mark, first of all you are right. We do feel good that we are building a solid pipeline, that our pipeline is in fact strong. But I think, as I mentioned in my prepared remarks, it is not that we are not winning deals, it is just that the deals even when won aren’t being funded by boards of companies because they have some sense of nervousness about their predicaments and I think they are in cash preservation mode right now. As I also said, I don’t expect that to go on forever and at some point I think the dam is going to break here and we are going to see back to normal kind of patterns.
In terms of our close rates I can’t give you the exact percentage, because I don’t think we quote on that, but it is less than what it has been. For example, in fiscal 2008 when we weren’t experiencing that, you know this kind of anxiety in the market. Does that answer your question?
Mark Murphy - Piper Jaffray
Yes thank you very much.
As a follow up for Rob, I think you talked about maintenance pricing having been very healthy in the quarter. Have you seen any change in maintenance renewal rates or are there any customers, even if it they are small in number, that are attempting to say ?let’s save a few bucks and see if we can go a few months or even a year without the maintenance??
Then as a sub question, how do you think the maintenance revenue would trend this year if 2009 does end up being a very challenging economic climate?
Robert Schriesheim
We haven’t experienced any change in our maintenance business. That is the simplest answer to your question.
Harry Debes
And you know Mark, it is actually a little bit surprising because we expected that we might, because we have heard all this noise about what’s going on with SAP. But don’t forget, our tactics and our response to the customers situation have been quite different from that of SAP’s. Instead of raising their rates to an usual level, we figured out how to deliver more value for approximately the same rate that we have been charging historically, aside from normal increases. So, we have had very little push back from our customers. Nothing more than what we have had in the past.
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