Question-and-Answer Session
Operator
(Operator Instructions). Our first question is from the line of Greg Dunham with Deutsche bank. Please go ahead with your question.
Greg Dunham - Deutsche Bank
I really want a hit on kind of the end results from the net and demand perspective. Clearly, if you look at the million dollar deals, your commentary on pipeline, and also the fact that renewal rates have actually improved even in this environment, what is the net effect? We are seeing increased signs of deflation, yet companies are forced to be cutting costs. You see that as a demand driver overall or is the hold up effect negating any kind of need to implement these solutions here near term?
Robert M. Calderoni
Greg, without a doubt, this current economic environment is creating a greater need for our solutions, and we see that from all of the things we do, whether it be our pipeline of deals and again from all the marketing metrics we measure, attendance at spend management days, you just have to go to any one of our spend management days, and you would see the crowd there and the interest level there, so this economic has clearly, clearly put pressure on companies to do more of this. To date, I feel very, very good that it has translated into excellent demand. I mean, think back this quarter and the quarter before. The last two quarters have been very good quarters for us. The demand has been good, the growth in our subscription business has been very good, but what I see happening at the same time is what I call there is chaos in a lot of organization. If a company is in the middle of executing layoffs or if a company is in the middle to trying to plan layoffs and reorganization, it is a major distraction for that organization, and I believe that that is going to translate into a lengthening of sale cycles, and while the demand is there, it may be harder for us to convert that demand into sales in the near term given the economic headwinds. Now, to date, we have not seen it.
The numbers that we talk about, the number of deals, the bookings, etc., in our subscription business have continued to be strong. I just think that to assume that going forward would be risky, and hence we are not signaling weakness of demand for Ariba, we are signaling that we think it is better for us to assume the worst, take out cost, and be pleasantly surprised in the future rather than react to any impact it may have on the business, and that is I think an important characterization that I would like to make.
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