Question-and-Answer Session
Operator
Thank you, Mr. Cashman. (Operator Instructions). Our first question comes from Greg Dunham with Deutsche Bank. Please go ahead, sir. Your line is open.
Greg Dunham - Deutsche Bank
Thanks for taking my question. I do want to focus on that last bit about the winding the guidance range. Given the amount of leased business and the much smaller piece of now perpetual license business, I am getting to at least the 20-point swing in expectations. You mentioned that you are including some stabilization in the business, but not a whole lot. I think was your exact quote. My question is, what kind of close rates would you need to have, what kind of improvement in close rates would you need to have to hit your high end, and how much of deterioration in close rates would you need to have at the low end?
Jim Cashman
Well, like I said, we were not predicting a whole lot of improvement or hoping for a lot of that. So we are building that in, the bottom line is there is unpredictability. And anybody that tells you there isn't should really be scrutinized. We have less unpredictability for many companies because of the recurring rate that we have built for year upon year. And we have also demonstrated over that same period the ability to capture any available upside revenue.
So, our major customers are the ones that are most likely to invest. So, we have that and by this we are not placing any bets on how long or what those are. But with this we can buffer the short-term, be able to meet almost any demand. A couple things also to factor in is that by virtue of the Ansoft business being more skewed toward paid up, having a much lower base recurring rate that alone adds in certain levels of unpredictability. But you also have the same situations that are spread out by the macro climate.
So, essentially we tried to build upon the [loans] we have with the recurring business space, holding some of the assumptions that we have seen in terms of close rates which are a little bit down, not expecting them to climb much in the first half of the year even. But in Q3, it's kind of a toss-up because we have said for years it's always that one with all the vacation patterns. It's slightly less predictable.
- To read the full transcript on Seeking Alpha, click here »
