Lucas Skoczkowski – Chief Executive Officer David Charron – Chief Financial Officer

Steven Li – Raymond James Michael Urlocker – GMP Securities Todd Coupland – CIBC Paul Treiber – RBC Capital Markets Justin Kew – Cantor Fitzgerald Scott Penner – TD Securities

Great. Thank you.

Good morning, everyone, and welcome to Redknee’s first quarter conference call. I’d like to draw your attention to Slide 2 of our presentation, where we have outlined the company disclaimers and cautions regarding forward-looking statements.

I’m Lucas Skoczkowski, Redknee’s Chief Executive Officer, and joining me on today’s call is our Chief Financial Officer, David Charron. Today, we’ll be discussing the results for the first quarter of fiscal 2015, which were issued after the close of market yesterday.

The press release and accompanying financial tables are available in the Investor Section of our website. If you haven’t done so already, I encourage you to download the presentation which provides further analysis of our quarterly results.

David and I will be referring to this presentation during today’s call. Following my opening remarks, David will review our financial results and then I’ll return to give you an operational update before we open up the call to your questions.

During the first quarter of fiscal 2015, we made solid, executing -- progress on executing our operating plan and we are encouraged by our order bookings, steady revenue mix improvement, and EBITDA margins. We look to build on this to address further mix improvement while continuing to solidify our EBITDA margins and drive improvement in our cash flow generation.

Our revenue came in at $60.6 million in the quarter. And more importantly, our gross margin was at 58% of our revenues.

This resulted in adjusted EBITDA of $11 million or 18% of revenue and on trailing 12-month basis, 7.4%. Our focus remains on revenue quality and we have made progress in continuing to drive towards a software product model, while minimizing low or negative margin items from our top-line.

Recurring revenue in the quarter was 44% of the total revenues or $27.4 million and we anticipated the final tool former NSN customers will roll off our platform by the end of the fiscal year, which combined we expect we know the account for more than 10% of the current quarterly run rate. Our order backlog at the end of the quarter stood at $171 million giving us good forward-looking revenue visibility.

Our cash balance at the end of the quarter was $101.5 million. Within the quarter, we saw the impact of foreign exchange rate fluctuation on our business.

However, with the natural hedges, we build into our operating model, the full impact has been minimized. Specifically, isolating for the fluctuation in foreign exchange rates on the constant currency basis, adjusted Q1 revenue would have been $53.7 million.

Applying the same principle, our order backlog would have otherwise been $175 million. Conversely, our operating expense would have been approximately $52.1 million, instead of $51.4 million, the net was as the result of adjusted EBITDA is minimum.

I’ll provide a more detailed operational update in a few minutes. However, first, I’d like our CFO, David Charron to walk you through the financial results for the quarter.

David?

Thank you, Lucas and good morning everyone. I’d like to spend the next few minutes summarizing our financial performance for the first quarter of 2015 and to put this discussion in context, I encourage you to review the company’s financial statements, MD&A and earnings release which are posted on SEDAR and are also available for download on our website.

Please note that our financial results are presented under International Financial Reporting Standards and are presented in U.S. dollars.

And for comparative purposes, our previous year’s results are also shown under equivalent accounting standards and functional currency. Now, onto our results.

Overall, total revenue for the first quarter increased 4% to $62.6 million from the $60.4 million in the same year ago quarter. The improvement was driven by a 53% increase in software and services revenue.

And as Lucas mentioned if you would isolate for the impact of foreign exchange rates which varied greatly in the quarter, our total revenue would have been $63.7 million. Recurring revenue, which we define as revenue from support and maintenance agreements, term-based product licenses and long-term service agreements was $27.4 million or 44% of total revenue in the quarter, as compared to $33.4 million or 55% of revenue in the same year ago quarter.

Gross margin was 58% of revenue as compared to 55% in the same year ago quarter. Adjusted EBITDA was $11 million in the quarter or 18% of revenue compared to an adjusted EBITDA of $5.4 million or 9% of revenue in the same year ago quarter.

And as presented in the reconciliation of net income to adjusted EBITDA in our press release, the Q1 2015 net profit includes $0.4 million of costs linked directly to the BSS acquisition as well as $0.3 million in costs related to the restructuring plan and $2.7 million of losses due to the impact of foreign exchange rates in the period. Net income for the quarter was $2.2 million or $0.02 per share compared to a net loss of $3.1 million or $0.03 per share in the same year ago quarter.

And excluding the impact of the acquisition, changes in FX rates and the restructuring costs incurred in the quarter, adjusted net income was $5.4 million or $0.05 per share. Now looking a little more closely at revenues for the quarter, we saw software and services revenue increase 53% to $33.8 million or 54% of total revenue from $22.1 million or 37% of total revenue in the prior year quarter.

Breaking down the software and services revenue further on slide 8, we see that in the current quarter or estimated sprit for revenue was $20 million for software licenses and $13.8 million for services revenue, compared to $12 million for software revenue and $10.1 million for services revenue in Q1 of fiscal ‘14. And on a trailing – for quarter basis, our average split for quarter was $19.1 for software revenue and $12.5 million for services revenue.

The other point I’d like to make here is that we have grown our software revenue substantially in the last six quarters from $7 million in Q4 of fiscal ‘13 to $20 million in Q1 of fiscal 15, which shows the progress we’ve made and improving the quality of our revenues and service of transitioning to a software business model. Support and subscription revenue decreased to $24.6 million or 39% of total revenue on this compares to $33 million or 54% of total revenue in the same period last year.

The decreases mainly the result of the transition of specific customer contracts off Redknee’s platform. These customers had indicated their intent to leave prior to the acquisition and this is in line with Redknee’s three-year post acquisition plans.

Sales of third-party hardware and software components in the quarter decreased to $4.2 million or 7% of total revenue from $5.3 million or about 9% of total revenue one year ago. Gross margin improved in the quarter as a result of improved revenue mix as well as decreased dependence on outsourced contractors.

During the quarter, operating expenses adjusted to exclude acquisition, restructuring and amortization costs was $25.6 million or 41% of total revenue compared to $27.6 million or 4.6% of total revenue a year ago. Now discussing each of the OpEx lines separately, first, in the quarter sales and marketing costs totaled $9.5 million and a 11% increase over the same period last year.

And as a percentage of total revenue, sales and marketing expenses were 15%, up slightly from the 14% recorded one year ago. This was due to both investments we’re making and growing the overall sales team as well as some increased sales compensation costs in the quarter.

Second, general and administrative costs decreased to 14% to $7.1 million in the quarter from $8.2 million in Q1 of fiscal 2014. And as a percentage of revenue, G&A expenses decreased to 11% from 14% of revenue reflecting our continued efforts to improve the leverage we’re driving and corporate overhead.

Excluding amortization G&A costs decreased to $5.1 million or 8% of revenue. R&D expenditures decreased to $12.3 million compared to $14.9 million for the same period last year.

And as a percentage of revenue, R&D expenditures declined to 20% from 25% in the comparable period. The decline was largely a result of the following three factors.

First, the impact of the reduced use of external contractors, which is a major focus area for us as we have discussed on previous results calls. Two, with the transfer of some results just cost of goods sale for work done on specific projects.

And third, is a one-time credit, which benefited R&D expenses. Total cash cost related to the acquisition in the quarter was $0.4 million compared to $0.9 million in the same year ago period and this reflects some settlement of severances and other compensation per the BSS framework agreement.

Last year, we announced details of our Normal Course Issuer Bid under which we could purchased up to $9.4 million common shares. The NCIB commenced on June 3, 2014 and will terminate on June 2, 2015.

And as of December 31, we have not purchased any common shares under this NCIB. However, this opportunity remains available to us and we’ve also announced last night that we’ve instituted an automatic share purchase program under the NCIB.

At this point, I’d like to turn your attention towards some specific balance sheet items that we’ve reported in the quarter. Cash and equivalents totaled $101.5 million at the end of the quarter and this represents an $8 million decrease and a $109.5 million cash balance we’ve recorded at Q4 of 2014.

Primarily as a result of the following three factors; first, about $3.5 million of cash payments that were made toward the restructuring plan, two, with a negative translational impact of foreign exchange rates which impacted a cash balance by about $1.9 million and the impact of the increased accounts receivable due to the timing of collections at the December year end quarter. And as a result of our last point, accounts receivables increased 6% from $71.4 million in Q4 to $76.2 million as of Q1 fiscal ’15.

And the corresponding day sales outstanding increased to 107 days compared to 101 days we reported in the prior quarter. I’ll note that this is still in line with our targeted DSO in the range of 100 to 110 days.

We saw small increase in unbilled revenues from $42.4 million in Q4 to $43.6 million in the current quarter and conversely deferred revenue decreased $2.3 million to $21 million from the $24.3 million last quarter. I’d like to point out that we saw some improvements in other balance sheet accounts, specifically our accrued liabilities decreased by $6.5 million to $32 million in the quarter as compared to $38.6 million at year end.

We also saw inventories decreased to $2.6 million from the $5.2 million at the September quarter end. Overall, working capital decreased slightly to $131.9 million from the $132.2 million reported last quarter.

Our order backlog was a $171 million versus the $169 million we recorded Q4 of 2015 and have the $171 million backlog approximately 80% is expected to be recognized as revenue over the next 12 months with the remaining to be recognized over future periods. This completes my financial summary and I’d like to turn the call back over to Lucas for his operational update.

Great, thank you, David. We feel it is important to view our financial results within the context of our overall growth strategy.

Here, I’d like to update you on two areas. First, I’d like to discuss a short to medium term management priorities and then I’d like to discuss our long-term growth strategy.

With regards to our short and medium term management priorities, as previously discussed, we see a significant opportunity to continue to build the value for our shareholders. During the first quarter, we continue to progress steadily towards achieving these objectives.

Number one, with regard to the support values, we’ll continue to see gradual improvement in the support margins as well as deriving from our existing customers. Update on the last call, we expect to complete the renegotiation of this support contracts by April 2015 that we update also that in fiscal ’15 we will see some lumpiness to support values as it continues through this process.

At the same time, we also expect to see margin approach our target EBITDA margin as it began to replace underpriced contracts with more of industry standard evaluation. Number two, with regards to upgrades and upsell of our software, we have continued to close on upgrades, license expansion and upsells providing validation for our customers that we are taking care of their investment while providing them with a competitive advantage through the latest version of Redknee Unified platform.

We’re pleased with the traction we’re experiencing here as we had strong bookings and secured over 95 purchase orders for new licensees, upgrades, upsell and expansions. Finally, I’d like to provide you with an update on our long-term growth strategies and these are comprised of three main elements, which build upon the short-term objectives we have described earlier.

Number one, continued evolution of our business critical software product offerings, number two, market share growth and leadership in our served addressable market, and number three, an increasing proportion of sustainable recurring revenues. Expanding on these.

On the product offering front, in the quarter, we’re continuing to announce secured contracts for our core telecom business. Redknee connected suite, a software platform that fully leverages Redknee Unified product line to support the Internet of Things market.

Number two, on expanding our market share and leadership, we currently are deployed with over 200 global service providers supporting approximately 2 billion subscribers. As a company, we’re relentless about our customer-for-life approach.

This approach to customer service is why we have continued to retain all of our clients and we have not lost any customers from that [indiscernible] to-date. More importantly, we see the remaining two existing customers will revolve I mentioned before but end of the fiscal year.

Number three, on a sustainable recurring revenues front, our recurring revenues are primarily comprised of support and SaaS, or term licenses that together in the quarter compared $27.4 million or 44% of revenues. As previously discussed, there is expected decline in the recurring revenue related to specific remaining two customers that have made the decisions to move off of the platform prior to Redknee’s acquisition of the Nokia Networks BSS asset.

As part of this, we see a great opportunity to continue to increase the support margins while providing more opportunities for SaaS or term licenses. We continued to focus on sustainable group – sustainably growing our recurring revenues while progressively scaling our EBITDA margin.

We do see opportunity for us to continue to grow our EBITDA margin, from where we are today, towards our long-term growth of 20% to 25% of total revenues over the medium to longer term. In summary, we are seeing continued growth in our order backlog as we execute on our three-step plan.

We’re building strong quality revenue streams, improving gross margins and EBITDA margins while looking to further improve our cash flow. Before opening the call to your questions, on behalf of the entire management team, I would like to say thank you for the continued support from our employees, our partners, and our customer base.

Now with that, we’re ready to open the call for your questions. Operator, please provide the appropriate instructions.

Thank you. Hi, David and Lucas.

Lucas, on the support with the expected churn, did you say it’s not – it’s worth not more than 10% of the quarterly run rate, which means it should bottom around $22 million?

No, as I was looking more at the combined recurring revenue, so I think recurring revenue is about 27 and a bit. So I don’t – I see it getting closer to 24 and then for us to rebuild that towards the larger numbers over the following quarters.

Okay, so bottomed around 24 and so can you grow in 2016 and what would be the drivers for the support revenue growth?

So I think it’s a very good question. I think if you see this quarter, I think we provide additional, I guess insights on how which changing the model towards software.

So following the feedback from the long-term investors, we thought it was important to demonstrate how our software line is growing. As we sell more software, this is going to bring within, usually the first year of software accounting online based on existing agreements, the support actually comes online as well.

So we would felt packing up though – appreciate support, increased support values and we start seeing that in 2015 and beyond.

Okay. And how about this – the pricing increase you talk about in the process, that also going to be fact in 2016?

Yeah, I think from the – so we within the contracts we’ve seen improvement especially in the first four months post acquisition. Over the last 12 months I would say the improvement that offset by also I think probably customer focused on some of that OpEx reduction on their side.

I would say we still see opportunity on that contract-by-contract basis to drive improvement in margin contribution and in pricing power. So we do see and we have a plan account-by-account to drive improvement.

But this is not something that happened, the cycle here is annual versus quarterly. So we need every year.

We use opportunity to upsell and increased the value from the customers.

Yeah, thank you. Lucas, I think it’s certainly good to see the strong EBITDA margin and the strong EBITDA in the quarter.

But what I’m struggling with and probably lot of investors are trying to understand is, there seems to be lot of parts still moving as the company is undertaking some cost cutting, some sharing of low margin business, there was a spike from a catch-up contract or what was previously delayed contracts, there was recognized in this quarter. So what we’re really trying to understand is, what’s the sustainable level of EBITDA and EBITDA margin that the company can generate.

Now I know you don’t like to give guidance, but anything you can offer that helps us understand how the business and the financial model is evolving will be helpful.

So I think from what we have said, we have been talking since really April of 2013 at the new platform that we had in the company. Our view has been to move the company towards increased proportion of licenses both perpetual as well as term licensees.

We have I think as David spoke to increase that prior to Redknee acquiring the BSS asset, we are roughly between $3 million to $4 million at the estimate of licensees. Following the acquisitions, that numbers are seven, so incrementally we only are driving few million dollar of licenses from the acquired business.

Today, I think the average run rate is in probably have high teens, probably on $90 million over the last 12 months. So to me we have taken the business which was generating $3 million and added increment of $50 million of licensees to really change the equation.

I think with the work is ongoing; we do see additional opportunity which we’ve spoken to over last several quarters about driving term licensees. We’re making gradual improvement and my view is as opposed to being ahead of ourselves.

We want to stick to our target that which I talked back in 2013 and we continue to repeat that with effective, we’re now fairly in the second year of the three year plan and we want to drive on a September way mid-teens EBITDA margins. We need to prove that, I think last quarter that was in – last two quarters we seen I think some more tangible improvements on this journey and there is nothing I can say to give folks comfort, all I can say is we’re taking to our objectives we then execute and over next several quarters I called that we can have the more discussions about how we can create more value.

Okay, I think that’s helpful and I appreciated. And I know if we look at collections, I mean to be direct we want to see consistent cash collections every quarter and there is a small cash burn here.

Is there further improvement in process required here or how would you describe that situation?

I think so we want consistent cash collections more than you do in our company and gets paid on that metrics. So that’s very important.

I want to point out I think the team has done a very good job. I think in a quarter that two realities we need to remind ourselves, December is one of the more normal months than the shorter and also from most of our customers it’s end of the fiscal year.

So we can imagine our customers became less available as they want to mention own cash positions. But that being said I think we have a clear visibility and we are very diligent to making sure that we continue to drive improvement in collections as well as the metrics about as David spoke to about days outstanding, David?

Yeah, I think certainly we’d echo those comments that Lucas said, these comments may ring a bell hollow given the results, but that collection is front in center to the entire team and then we’ve made some great progress over the last couple of quarters to improve systematic processes internally with the challenges we had with Nokia in terms of disrupt process, point of view and I spoke to that in the past. So that’s behind us, what’s ahead of us is more continuous improvement of cash collection and managing our balance sheet.

So for those of you who had a chance to look through the financial statements, if you look at note 10, which is the change in non-cash working capital, we’ve consumed some operating cash to reducing some of our liabilities ahead of collecting and reducing our AR, so that’s a timing issue that in hindsight wasn’t the best approach but we’ve got a very good handle on the underlying processes, we are managing this and relationships with our customers in a very positive way. So I’m confident that in future quarters our cash collections will improve and we will be generating cash from operations.

Alright, close enough. Good morning, everyone.

I wanted to [indiscernible] specific on the bottoming of the support revenue. So David or Lucas, I think you said $24 million and that consequence to $27 million in the first quarter.

When do you think, which quarter, do you think it bottoms in, in 2015?

I would – so I’ll say that it really depends on the customers but we think somewhere between Q3 and Q4 and I also expect some of the additional support [indiscernible] in as of Q4 as well, so I think there will be kind of a crossover around that time, Todd, is that helpful.

That’s helpful.

Maybe I will just add to that, the dynamics that you’re seeing here is, customers have declared they are moving off, they have to move to somewhere and so therefore delays in the competing platform being available for them to transition subscribers, then they stay in our platform a little longer.

And to that, and it’s a fair point, some of the customers, we expected those to transition last year, it haven’t because there have been delays up to in over a year somewhat they will finish outside, that’s positive, but in my perspective, we are – what I more said about is the fact that we are winning some market customers and would begin them to align, and we would initiate to the customers for taking the value for that.

Okay. And then just, Lucas, what do you think the growth rate of your sort of target market is in 2015 and how can Redknee do against that market?

Thanks.

So I think it is – we were in a consolidate market, where we see overall the space for BSS, the Business Support Systems in our space growing somewhere in the low single-digits. We are actually growing faster, but you won’t see that because the way I look at the business is we are right now, generating double-digit growth internally to replace some of the low value business with profitable license business, term license business, and high value services business.

So this transition doesn’t necessarily make it easy, but from internal, external reporting – that will be judged based on the top line numbers, but as I said before, my focus is on running transition while delivering, tackling that into sustainable EBITDA margins. I think the KU of our discussion, tone of our discussion will probably will – as we execute will improve, because the people I think all of our stakeholders look for us to execute as opposed to talk about what we are prior to do.

So my view is we are growing, we’re taking market share, and that converting into profit and then we can discuss how we see our competitive positioning improved, because from what [indiscernible] on the ground is, from a capital perspective we are well positioned and in fact then combined it with a solid financial performance, I think we can come back and profit again in the future about taking other competitors through acquisitions.

Thanks very much. You have a couple of large cash outflows in the next year, I think that the restructuring pass in the NSN earn out, what’s your confidence that you have sufficient free cash from the next year to finance those and then related to that.

Could you comment some of the covenants in your credit facility, just how much of a leeway do you have against those covenants currently?

Sure, thanks, Paul, it’s a good question. So from a cash perspective and you can see on our balance sheet, the – what we sort of recorded as a current liability for both the provision, which is a restructuring provision and a contingent consideration which is the earn out, those are the two items we’re talking about Paul, and they are both approximately $14 million each that we’re expecting would come out of cash for this year.

And as I said on previous calls based on the visibility that we have, I believe that that will be covered by operating cash flow and I know that the payments against restructuring from an accounting perspective is considered part of operating cash flow, but I think if you exclude that piece, the rest will be covered by operating cash flow, and that was first one. And second, regarding the covenants of our debt facility, so first of all I state that all debt facilities have covenants, I’m very happy to say that the covenants that we have and the relationship that we have with Wells Fargo is one where we have a lot of leeway in terms of room to achieve those and we have narrowed and come close to tripping those covenants in the past and I think given the trajectory we are on, in the last couple of quarters, we have even more revenues.

Thanks very much, it’s very helpful. One follow-up, the split between software and services you are now providing is very helpful, it looks like services is averaged may be 15% to 20% total revenue over the last year, is that the right mix for the business going forward or should we expect further declines in services and then Lucas, you mentioned profitable services, a couple of questions back.

Could you just elaborate on what that means in terms of gross margins on services and versus where it is right now?

Okay, so I think there is a couple of things, in terms of services, we believe that a healthy software business has kind of a 10% to 20% services mix because really our customers look only by technology but they won’t be able to use the technology in the business and we are probably best positioned to do it in the effective manner. So the way obviously what we’re doing is we’ve done more information in services, so that we can make people available to provide more of the expertise consultant and more of the transformation support to our customers to be able to transform the business and capturing new revenues in their business.

So we see ability for us to support, I think we still can improve margins there by probably I’d say over next 2 to 3 years, 20 points improvement from where we are today and we see improvement probably from where we see services, ongoing services business probably being at 35% to 40% margin range. That being said, we do see customers asking us to do more SaaS and more also managed service, SaaS is a higher margin than that whereas I’d say managed – onsite managed service tends to be bit lower probably in the kind of 20% to 30% range.

So that mix will flow by [indiscernible] somewhere being in that 35% to 40% on the services medium to long-term, is that helpful?

Thank you. Good morning, Lucas and good morning, David.

The first question, the R&D, David, you talked about a one-time credit in there, what is the, how large was that and how do we expect the R&D expenses to look ahead for the balance of the year.

Yeah, it’s good question, I think I’m going to say it’s approximately $0.5 million to one-time credit, just I wanted to be very transparent on it because I know we talked a lot about the improvements in our OpEx and I know you guys are trying to understand what’s kind of the sustainable run rate here, so I thought we would be transparent on that. I also mentioned that some of the resources that were part of R&D are being used for customer projects and so those are charged against the cost of goods sold.

So that would be also – in my explanation will change in R&D cost.

Yeah, thanks and then a follow-up question, Lucas just on because now we’re seeing -- so I just see your non-telecom deals, we’re starting to see those starting to flow now and so winning these deals, what kind of competitors are you seeing and where do you think you’ve got a unique positioning in terms of winning these deals.

Yeah, so I think those will be, I mean we have shout out loud a couple bullets to test the market, I think I’ve mentioned before for us it is just we want to validate obviously engaging this opportunity over the coming three years, but obviously most of our resources are still focused on our core business. I just want to temper that up the enthusiasm but I think for us the competition varies, the UC tend to be larger both complex companies that deliver hardware, software and services and we’ll probably name the companies like I’d think Siemens company like GE companies like large providers of infrastructure, but we see them both to-date some of the operations as competitors, but we are a dialog with a handful of companies that we went up against and now that we are working with them to see how we can potentially partner with them and some of those already are being integrated as partners.

So this actually should help us protecting the market, we have a very good competitive advantage with respect to us probably being that one of the most capable platforms in the world having strong intellectual property base and having strong expertise in highly scalable virtualized systems where if I look at -- we deploy – we can very easily deploy bringing system online for 5 million to 10 million subscribers with complexity that is probably not as easily implemented in a regular enterprise IT environment and so we win hands down on the product side, we need to partner to have their vertical expertise. So I see that opportunity over next three years as we clarifying things zooming our lens, the opportunity will be more about working with some of the big partners where our software platform and possibly our cloud offering gets embedded into their service/product offering that they bring to market.

Is that helpful?

Thanks, just, Lucas, first question was just on the maintenance side as those two remaining customers roll off, is the balance of the support phase at in an acceptable margin or is there, let’s say another shoot or drop as some of those lower margin customers are moved up in price.

Yeah, so I think there is no shoot or drop, I think this particular two contacts were known for last three years for us, because we needed back in the negotiations when we were looking to acquire the business. We see ongoing work to drive improvements in support.

There is obviously, that’s nicely I think match with attention that our customers want to drive their cost down. But I think we have opportunity – we still have opportunity to price and scope of what we do for customers while we’re making sure that we’re disciplined on cost, so we do see an opportunity for us to increase value.

We see slightly some more subsidies customers that relevant figures also improve, so I would say what we want to bring clarity of what we see today is the opportunity for us to build on the recurring revenue so we can be in kind of a nice quarterly run and this evolves our share with the market, but I don’t expect any other, we’ve done quite a bit of work over the last few quarters to make sure that we are I’d say removing some of the unprofitable aspects and everything else seems to be right now on the right trajectory, is that helpful, Scott?

Yeah, that is helpful. Are you – could you give us what the sort of what the support gross margin let’s say is right now and what may be, where it’s come from and where it’s – where you are targeting.

I’m not sure yet, as of – we have rolled that business trying to provide clarity on, I would say that probably moving the needle, we probably are half way to where we want to be. But we have come a long way from where we – took on the business and where we took it on direct sales, that the module contribution was maybe breakeven on the support, where we see obviously sort of increase of value that’s generated to the business considerably and a team has done an awesome job, we’ve done that while we have improved all the metrics for customer service, so that doing those two things – as that to a condition that we stock to ourselves, I think the comments that we received from different stakeholders were different in possible task.

The team has done an awesome job, I see opportunity for us to make more money on that, because what we do remember we are sticky for our customers, we take two to three years to come up on top. Number two, our customers log the support we provide them, we are there when they need us.

Number three, for us is we really drive the value to be a more predictable business. You see our software licenses are still lumpy, but as we bring on more – virtualize in term licenses and you have seen all the contacts we had signed for the non-telecom or enterprise license driven, or term licenses even rather we see one of the more of that and then I think this will drive the long-term EBITDA margins which we want to be account on 20% to 25% EBITDA margin so.

And do you guys still see the EBITDA margin for – let’s say exiting this year or this year as a whole in the mid toward the mid-teens rate despite what’s going on with the FX?

Yeah, I think so – I – we cannot, FX is getting so fast, it’s always for I think for all the operators in the business but we do have a quite a bit of natural hedges built into our business and I believe that I have nothing to tell me that we want to be close to the mid-teen EBITDA margin, at the same time, we are watching it very carefully, making sure we are conservative in how we approach the execution of the business. But that’s what we are targeted to drive the – the key metrics for us are EBITDA and cash flow, which is what I think we measure internally overall performance of the business so.

Okay.

Great, thank you for participating on today’s call. We really do appreciate your questions as well as your ongoing interest and support of Redknee.

I look forward to reporting back to you in a few months of time on the results of the second quarter of fiscal 2015. As well as I’d like to hope to see many of you at our annual general meeting, which will be conducted in March.

Thank you, take care.