Saba Software (SABA)
Q1 2012 Earnings Call
September 27, 2011 5:00 pm ET
Bobby Yazdani - Founder, Chairman of the Board and Chief Executive Officer
Roy Lobo - Investor Relations
William Slater - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Ian Kell - Northland Securities Inc., Research Division
Mark W. Schappel - The Benchmark Company, LLC, Research Division
Scott R. Berg - Feltl and Company, Inc., Research Division
Eric Martinuzzi - Craig-Hallum Capital Group LLC, Research Division
Kevin Liu - B. Riley & Co., LLC, Research Division
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Thank you, Gloria. Good afternoon, everyone. Welcome and thank you for attending Saba Software First Quarter Fiscal Year 2012 Earnings Conference Call. With me on the call today is Founder and Chief Executive Officer, Bobby Yazdani; and our Chief Financial Officer, Bill Slater. If you have not received today's earnings release, you may download a copy of the press release from our website at investor.saba.com.
Before I turn the call over to our executives, I would like to remind everyone that during the course of this conference call, we will be making forward-looking statements regarding our business outlook, future performance and expectations of future events. These statements are based solely on information available to us today and are subject to risks and uncertainties.
For information concerning factors that could cause actual results to differ materially from those in the forward-looking statements, we encourage you to review our annual report on Form 10-K for the year ended May 31, 2011 and subsequent Saba periodic reports, which are available through the Investor Relations section of our website or through the SEC's website at sec.gov. We assume no duty or obligation to publicly update or revise any forward-looking statements. In addition, we intend to discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP results is included with the financial statements accompanying our earnings release.
With that, I would now like to turn the call over to Bobby Yazdani, our Founder and Chief Executive Officer. Bobby?
Thank you, Roy. I am pleased to announce that the first quarter of fiscal year 2012 got off to a strong start. Total billings grew 18% in the quarter, which is at the high end of our fiscal year guidance of 16% to 18%. Total non-GAAP revenue grew 14% in the quarter to $30.9 million, ahead of analysts' expectations. Cloud billings grew 81% and Cloud revenue grew 59% in the quarter.
The strength we experienced in the quarter was spread across all geographies. In the current economic environment where job creation is very gradual and markets are global, organizations are looking to rapidly and continuously scale their people and transform the way they work and perform across their value chain. In addition, organizations are looking for a state-of-the-art, reliable, unified and complete solution delivered in the Cloud. Saba is uniquely positioned to address these requirements.
We are one vendor that can deliver on these tenets and we are establishing ourself as the vendor of choice and a strategic partner to our global enterprises, whether they are large enterprises or mid-market enterprises.
Our Saba People Cloud applications that include learning management, Talents Management, enterprise social networking and realtime collaboration enable organizations to leverage their people networks to transform the way that people work, collaborate and learn in order to maximize their competitiveness. In short we are not just a point vendor, but a strategic partner to our customers and we have been increasing our value to them over the past few years.
Let me give you a few examples. For one, we are no longer only selling learning management as a compliance tool to HR departments. We are successfully expanding beyond HR and can effectively sell to almost every line of business within an organization including sales, services, operations, customer support and channels. For another, we can sell enterprises, a broader set of innovative solutions including performance and Talents Management, virtual classroom, testing and assessment, realtime collaboration and enterprise social networking. This quarter, we saw a healthy attach rate of our collaboration solutions to LMS deals. And we saw a number of customers who had previously purchased our LMS solutions return to purchase our collaboration solutions including AstraZeneca, John Deere, Home Depot and FedEx.
We also saw a healthy contribution from our testing and assessment solutions, including customer wins at Merck and BMW. We are also increasing our value to our customers by being able to service them on a global basis. We have delivered our solutions in 195 countries and support 33 languages. We have 5 data centers around the world including 2 in North America, 1 in Canada, 1 in Australia and 1 in Europe. All in all, we are growing the engagement with our customers and increasing their adoption of our solutions.
To complement our direct sales, we are continuing to strengthen our channel strategy. In the quarter, we signed an agreement with Kronos, whom we will partner with for recruiting solutions. We also signed a deal with Accenture, who will be identifying opportunities with Saba's People Cloud applications on Accenture's BPO business to provide a strong value proposition to customers. In the quarter, we also announced Saba Content Connect, an innovative program that brings Saba content partners and customers together in an interactive online community. As we progress through fiscal year '12, we will continue our focus and our efforts on growing the business and increasing the strategic value to customers. With respect to growing our business, we will emphasize cross-selling performance and Talents Management, as well as our collaboration solutions to the install base. We also plan to expand our efforts to grow internationally. We have seen healthy growth from emerging markets and with our newly launched operations in China, we look to report strong progress from that region.