Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Wayne Johnson – Raymond James.
Wayne Johnson – Raymond James
My question is how should I be thinking about general administrative expenses, sales and marketing expenses as a percentage of revenues going forward since a major part of any fixed cost story is that we tend to have some kind of stabilization or continued decline in those two expense items. Could you give me any color that you could on that?
Ronald W. Johnston
Let’s split them in to the varying pieces of sales marketing and G&A. A substantial portion of our G&A includes our platform costs so unlike some technology companies that breakout their development cost, we include ours in G&A. We feel very strongly that G&A will be relatively fixed so that if you look at today’s expenses – and fixed on a step-by-step basis. So, if you look at today’s costs you should not see substantial increases going up other than some modest increases short of inflationary costs.
In the sales and marketing area, you will see increases in sales and marketing but we do not believe that those increases will equal the increases in sales growth. So, I would say you’re going to see productivity coming out of sales and marketing and you’re going to see a basically fixed G&A costs over the next couple of years.
Wayne Johnson – Raymond James
So given the level where we are now, that’s a pretty good run rate for going in to 2010/2011 on G&A?
Ronald W. Johnston
What you need to be careful about are the seasonality aspects of the business more so on sales and marketing than in G&A. But, the fourth quarter of our fiscal year is one of the lower quarter activities for us. Some of the sales and marketing, particularly some of the partnership expenditures are not made in that quarter. So, if you’re going to annualize the quarter expenses I would caution you to look more at the annual expenses rather than picking a quarter and annualizing.
Wayne Johnson – Raymond James
If I take a look at the datacenter consolidation progress that you guys are making and given what’s going on with the margins you’re definitely making progress there. Would you say that there is more or less than 50% completion on that project at this time?
Nina K. Vellayan
Wayne from a datacenter standpoint, if that’s what you’re being specific about, we’re about 50% there. The goal is as we said to complete by mid calendar year 2010.
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