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

Michael Urlocker - GMP Securities Steven Li - Raymond James Paul Treiber - RBC Capital Markets Eyal Ofir - Dundee Capital Markets Robert Young - Canaccord Genuity Todd Coupland - CIBC

Great, thank you. Good morning, everyone and welcome to Redknee's fourth quarter and fiscal 2015 earnings conference call for the year ended September 30, 2015.

I'd like to draw your attention to Slide 2 of our presentation, where we have outlined the company's disclaimers and cautions regarding forward-looking statements. I am Lucas Skoczkowski, Redknee's Chief Executive Officer, and joining me on today's call is our Chief Financial Officer, David Charron.

This morning we will be discussing the results for our fourth quarter and full year fiscal 2015, which were issued after the close of markets 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 will return to give an operational update before we open up the call to your questions. To start off I would like to provide you with a brief overview of what we achieved this year.

Over the course of 2015 we accomplished a number of significant operational achievements some of which include: Added five new customers and announced numerous multimillion dollar customer orders in both our core telecom and emerging Internet of Things verticals utilizing the enhanced capabilities of our Redknee Unified platform; announced the strategic acquisition of Orga Systems enhancing our Redknee's best-of-suite customer focused solution and accelerating our expansion into new markets; finalized the agreement with Nokia Networks for all pending issues related to the BSS acquisition including the final completed earn out amount. And we have continued to be recognized by numerous experts as the leader in our space.

Over the course of fiscal 2015 we made good progress executing our operating plan in spite of the softer spending environment that we have seen in our global communication market and despite strong foreign exchange headwinds. We are pleased with the overall improvement we have seen in terms of our cost structure realignment, revenue mix enhancement, our spending margin and cash flow generation, especially in light of the challenging market conditions that can result in quarterly lumpiness.

In fourth quarter our revenue came in at $59.8 million on a constant dollar basis. Adjusting for the impact of foreign exchange rates $67.1 million.

On an annual basis full year 2015 revenue was $222.7 million or $246.3 million on a constant dollar basis. More importantly our loss margin in the fourth quarter was 58% while on an annual basis it was 59%.

This resulted in adjusted EBITDA of $7.7 million or 13% in the quarter and $34.4 million or 15% of revenue on an annual basis well within our long term plans. As I said on previous occasions our focus remains on revenue quality and we've made progress in continuing to drive towards a software with services model while continuing to minimize low or negative margin items from our top line.

Our order backlog currently sits at $158.5 million, on a constant dollar basis $166.6 million giving us strengthened revenue visibility. Recurring revenue in the quarter was 44% of total revenue or $26 million or more importantly for the full year was $102 million and on constant dollar basis $110.6 million.

Our cash balances at the end of the fiscal year was at $61 million. I will provide a more detailed operational update in a few minutes.

However, first I would like to ask 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 fourth quarter 2015 and to put this discussion in context I encourage you to review the company's financial statements, MD&A and our earnings release which are posted on SEDAR and 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.

For comparative purposes, our previous year's results are also shown under equivalent accounting standards and functional currency. I would also like to add that our fourth quarter results includes two month of contribution from Orga Systems following the close of the acquisition on July 31.

Now on to our results, total revenue for the quarter was $59.6 million down slightly from the $60.9 million in the same year ago quarter and as Lucas mentioned, if we were to isolate the impact of foreign exchange rates on our total revenue in the quarter it would have been $67.1 million. Overall for fiscal 2015 total revenue was $222.7 million down 14% compared to the $257.7 million we recorded one year ago.

However, on a constant currency basis total revenue for fiscal 2015 would have been $246.3 million down only about 4% compared to fiscal 2014. Recurring revenue which we define as revenue from support and maintenance agreements, term based product licenses and long term service agreements was $26 million or 44% of total revenue in the quarter as compared to $28.5 million or 47% of revenue in the same year ago quarter.

Adjusted EBITDA was $7.7 million in the quarter or 13% of revenue compared to an adjusted EBITDA of $5.8 million or 10% of revenue in the same year ago quarter. Net loss was $4.4 million or $0.04 per share compared to a net loss of $34.7 million or $0.32 per share in the same year ago quarter.

And as presented in the reconciliation of net income and loss to adjusted EBITDA in our press release the Q4 2015 net loss includes $1 million of costs linked to the Orga acquisition, $2.6 million of depreciation and amortization, $3.1 million in costs due to the impact of foreign exchange rates, and $2.9 million income tax expense. Moving on to the next slide, looking a little more closely at the revenue for the quarter we saw software and services revenue increase by 22% to $32.1 million or 53% of total revenue in Q4 from $26.2 million or 43% of total revenue in the prior year quarter.

Breaking down the software and services revenue further on slide five we see that our estimated split for revenue in the quarter was $16.7 million for software licenses compared to $13.9 million in Q4 of fiscal 2014. Services revenue increased to $15.3 million or 25% of total revenue in the quarter up from $12.4 million or 20% of revenue in Q4 of fiscal 2014.

Support and subscription revenue declined to $23.7 million or 40% of total revenue compared to $27.45% of total revenue in the same period last year. The decline in revenue was in line with our expectations and primarily caused by lower support revenue in the EMEA region as a result of the nonrenewal of certain support contracts in addition to the impact of foreign exchange.

This was partially offset by the addition of revenues from the Orga acquisition in the quarter. Sales of third-party hardware and software components in the quarter declined to $4 million or 7% of total revenue from $7.3 million or about 12% of revenue one year ago.

Now isolating the impact of fluctuating foreign exchange rates on a constant currency basis, each of the revenue items would have been as follows: Software and services revenue $36.1 million, support subscription revenue $26.5 million and third-party hardware and software revenue at $4.4 million, and our recurring revenue would have been on a constant currency basis $28 million. Moving on to the next slide, gross margins remained strong at 58% of revenue relatively flat as compared to the 59% of revenue in the same year ago quarter.

On an annual basis gross margins have improved to 59% compared to the 51% we recorded last year which reflects the progress we've made in transitioning to the software business model. During the quarter total operating expenses adjusted to exclude amortization, stock compensation, acquisition and restructuring cost was $30 million or 50% of total revenue compared to $33 million or 54% of revenue a year ago.

In general OpEx reductions are a result of the impact of our restructuring efforts we announced one year ago as well as the impact of foreign exchange rates and costs offset of course by the addition of two months of the Orga operating expenses in the quarter. Next I'd like to discuss each of the OpEx lines separately.

Sales and marketing costs totaled $8.9 million, an 18% decrease over the same period last year. And as a percentage of total revenue sales and marketing expenses were 15% down from the 18% recorded one year ago.

The decline resulted from lower headcount and sales commissions as well as the impact of foreign exchange rates offset by the addition of two months of Orga OpEx costs in the quarter. General and administrative costs increased to $8 million or 13% in the quarter from $7.5 million in Q4 fiscal 2014.

As a percentage of revenue G&A expenses increased marginally to 13% from 12% of revenue. And excluding stock compensation and amortization G&A costs were $5.9 million or 10% of revenue.

R&D expenses decreased to $13.1 million in Q4 of 2015 compared to the $14.6 million for the same period last year. And as a percentage of revenue R&D expenses decreased to 22% compared to 24% in the same period last year.

The decline was largely a result of the impact of lower headcount costs and the benefit of moving costs from high-cost locations to lower cost locations per our restructuring plan offset by the addition of two months of Orga OpEx costs in the quarter. Total cash costs related to the acquisition in the quarter was $1 million compared to the $3.3 million in the same year ago period.

At this point I'd like to turn your attention towards some specific balance sheet items that we reported, first cash and equivalents totaled $61 million at year-end and cash generated from operations in the year was $13.7 million excluding the cash used to pay for the previously announced restructuring. As well our available liquidity is $101 million due to the additional $40 million of debt that we have available to us.

We've made good progress managing our accounts receivables which declined 6% from $71.4 million in Q4 of last year to $67.4 million at year-end. And as a result our day sales outstanding decreased to 96 days compared to the 101 days we reported last year which is better than our target of between 100 to 110 days.

Unbilled revenue declined to $38.6 million at year-end from the $42.4 million as of September 30, 2014. And as well our deferred revenue decreased to $13.8 million from the $24.3 million one year ago due to the following three reasons: First, the impact of FX rates on our deferred revenues; second, the impact of lower support revenues from the expected nonrenewal of contracts which we've discussed previously; and third the recognition of revenue in the quarter from our backlog which was previously reported as deferred revenue in previous quarters.

Overall our working capital decreased 33% to $88.7 million from the $132.2 million last year. Also our order backlog was $158.5 million versus the $162.6 million in Q3 of fiscal 2015.

And of the $158.5 million backlog approximately 60% is expected to be recognized as revenue over the next twelve with the remaining 40% to be recognized afterwards. And finally, today we also announced the detail of the renewal of our normal course issuer bid under which we may purchase up to 9.4 million common shares with cancellation.

The program will commence on December 07, 2015 and will terminate December 06, 2016. This completes my financial summary.

And now let me turn the call back over to Lucas for his operational update.

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

Here, I would like to update you on three main areas; number one, update you on the progress of the integration of Orga Systems, then I would like to discuss our short term management priorities, and finally our long term growth strategy. With regards to the acquisition of Orga Systems, firstly we remain very encouraged by the feedback from employees, partners and key customers who have all been very supportive and receptive towards this acquisition.

We have been supporting Orga customers. We are engaging partners to expand our business opportunity.

We are making good progress in rebuilding the pipeline of opportunities with the acquired customers and the expanded product portfolio. The business integration has been proceeding well and in line with our plans and we feel that we will be completed on schedule by March 2016.

As previously mentioned we expect that this transaction will be accretive in fiscal 2016. With regards to our short term management priorities, as previously discussed we've seen opportunities continue to build value for our shareholders.

Our update priorities are number one, continue to drive software and services business model margins, number two continued disciplined cost management, and number continue to drive cash flow generation. Over the past year we have continued to progress steadily towards achieving them.

Number one on the software and services business model we have made progress by improving on a trailing 12-month basis our gross margins which is now at 59%. We look to continue to drive gross margin improvement while growing our recurring revenues to support our forward-looking visibility and to address the inherent revenue lumpiness associated with our software license revenues.

To support recurring revenues we have enabled our cloud service for two key Tier One customers in America, in Asia Pacific in the latter part of fiscal 2015 which should contribute to growing our recurring revenues moving forward, especially as we bring these offerings to our broader customer base. On the discipline cost management we have continued to execute on the program that we had announced last year.

With the recent acquisition, with the additional opportunity to build our cost structure and look to do so once we integrate and stabilize the acquired customers. So in addition to that we expect to realize opportunities to expand our annualized profitability even after accounting for the inherent lumpiness in our business and the continuing software spending outlook in our global communication markets which could result in a low to no growth scenario.

On cash generation, for fiscal year we have generated $14 million of cash from operations. We look to continue to improve here by focusing on working capital optimizations and disciplined collections.

Finally, I'd like to provide you with an update on our long term growth strategy. Our long term strategy is comprised of three main elements which build up on the short term objectives we described earlier.

Number one, continued evolution of our business critical software offering; number two, market share growth and leadership in our served addressable markets; and number three in increasing the portion of the [indiscernible] revenues. Expanding on these now, on the product offering front in fiscal year 2015 we've continued to announce secured contracts by our core telecom business as well as by our Redknee Connected Suite.

Furthermore, with Orga acquisition completed we are expanding our product portfolio suited for our catalog, order management system as well as expanding our non-telecom offerings, such as energy billing, water utility billing, automated connected car, et cetera. We are encouraged by the strategic progress we see here and expect to see progress in the case of our revenues beyond our core communication business.

On expanding our market share and leadership, with our most recent acquisition we are currently deploying approximately 250 service providers. We have added five new customers organically this fiscal year while adding approximately 45 customers with acquisitions.

Organically we have grown our core business after normalizing for the rolling of customers and foreign exchange impact, taking market share in our space and replacing our competitors. With the continued consolidation of both service providers and vendors we are emerging as the clear opportunity of the legacy solution providers for the real-time optimization and customer care system.

Despite longer customer decision cycles we expect that the current trends will create additional opportunities for us to acquire new significant customers over the coming 12 to 24 months. And finally on the sustainable recurring revenue front, our recurring revenues are primarily comprised of the term licenses, cloud services and support services that together in the fiscal 2015 comprised of $102.8 million and on a constant dollar basis $110.6 million or 46% of revenues.

As discussed the anticipated line in recurring revenues relate to the specific former Nokia customers that have made a decision to move off of the platform prior to Redknee's acquisition of Nokia Networks business assets. We have improved the margin of our recurring revenue in line with our plan and we expect these are building up recurring revenues organically as we enter fiscal 2016.

In summary, we have continued to execute on our plans. We are building strong quality revenue streams, improving margins and cash flows.

As well, we have made acquisitions to fruition in our software offering and have our franchise into the growing market of IOT monetization. Before opening the call to your questions, on behalf of the entire management team, I'd like to say thank you for your continued support from our employees, our partners, our customer base, as well as our shareholders.

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

It is still early days on Orga. What is it you are seeing that seems to be the key point that the customers want improved in terms of what they're getting from Orga or where there is an opportunity for you to fill a need that those customers have?

I think what they are looking from more Redknee than Orga [indiscernible] is they are looking for a roadmap, clarity on the roadmap and how we are going to support them with products and also they are looking for more products. I think Orga has begun a path on more product approach over probably last three to four years, but Redknee obviously has been I would say ahead of that and customers really are a lot excited, but also look for us to give them a path of how they can move towards more of a product approach that allows them to lower their total cost of ownership kind of a three and five-year periods because they need to be more responsive and then you could do it more cost effectively than maybe they have been able to do it in the past.

Thank you, and Lucas I know that you are a fan of Peter Drucker from some of the things you've posted online. If we think about the organization that was acquired, Orga, what would stand out as the thing that the organization is really good at, what's the real strength that you plan to build on and what might be the area that needs improvement so that it is not to the detriment?

Well, I think what Orga has been very good at is really customer service and I think we can learn as our customers are trying to themselves really restructure their business and rely more on vendors to provide our capability as a service, I think this coupled with Redknee strength by their products I think delivers a very potent mix that we can capture more business with. I think as I said we bring the strength of a product and more we also, in addition to that, I think geographically this has been very complementary as now we have presence in Latin America which we want to build especially as we have seen growing with customers like America Moviles has been very exciting for us.

Do you want to expand on the America Moviles, what is the state of that business right now?

So we had successfully deployed into several countries. We do have both on-premise as well as solution which is a cloud based solution and we look to do more, especially as we see opportunity to help them with our platform.

We have come from a not being a vendor to becoming a vendor now and doing very successfully. So I do see opportunity both in Latin America as well as globally.

As America Moviles continues to acquire assets around the world we look to be one of the providers of choice for them for their monetization platforms.

So how many countries are you in today with them?

We are right now in three, actually, no more, five countries right now globally.

Awesome, thank you.

Thank you.

Thank you. Lucas you met your 15% target margin this year and you talk about expanding margin in your prepared remarks so, is 20% a good target for next year?

Hi, so we don’t give guidance, but I think our view is with the Orga acquisition we want to be able to create more opportunities and within the growth scenario I think we will be definitely moving up and even in a non-growth scenario I see as being able to advance our EBITDA margins into probably mid to high teens in - over the coming 12 to 18 months. I do believe that I think, as we said before over next 18 to 36 months our view is to how we are in a 20% to 25% EBITDA margin with strong cash flows that we can both use it for acquisitions as well as potentially share it with shareholders.

Okay, great and Lucas you, also added five new logos organically in 2015, was that unusual or can you see a similar number of new customers being added in ’16?

So, I think I mentioned we do see a bit longer decision making process. Customers are under pressure, especially as a lot of our customers have debt in U.S.

dollars, but their earnings have been in local currencies that have moved all against U.S. dollars so they’re all in a bit of pain.

So in that context it is taking a bit longer, but I expect that we - probably will get at least 3 to 5 logos and probably at least one meaningful new footprint that I think should advance our cause.

Okay, and then one last one for David. So, now that you've finalized your earn out with Nokia, do you still depend on them to bill some of your customers or that risk is gone now, David?

That is a good question Steven. That risk is mostly gone.

We’re still using Nokia as a sales channel for some accounts above and beyond the acquisition and the back-to-back arrangement that we had. So there is still a very good relationship we have with them, it’s much smaller than it was in the past but that is still ongoing to using them as a sales channel for certain accounts.

All right, great, thanks guys.

Thank you, Steven.

Thanks very much. Question for David, you provided some of the reasons for the decline in deferred revenue which is helpful, but can you quantify each one of those?

Paul, I think the largest is really the decline in revenues from the backlog that was previously recorded as deferred. So, I don’t have the exact numbers in front of me Paul, but if you look at the three components approximately half of that is due to reduced backlog with the two other factors being about 25% each being FX impact and the other [indiscernible].

And can you just elaborate on that decline, was that some large project where you were able to recognize the revenue on?

Yes, there were a couple of projects in there. So it wasn’t just one of them Paul.

The couple of projects were we have recorded the revenue and maybe I’ll take a step back here and just remind everyone, deferred revenue for us in our industry really comes under two categories, so first it’s support and term licenses that are built in advance, and second it’s projects that have advance payments. So it is when we get payment in advance that generates deferred revenue.

When we deliver that revenue it moves out of deferred which is also in our backlog into revenue in the quarter. So for this particular quarter, we’ve had a couple of large projects that moved from deferred into revenue in the quarter.

That is the biggest reason, Paul. Okay?

Okay, Great. Just thinking more at a high level just in regards to cash flow conversion over the next year, how do you think about cash flow conversion improving in 2016 and what are some of the headwinds and tailwinds to cash flow for the next year or so?

Well, I’ll take a stab at that, and Lucas if you want to add color or commentary by the way everyone Lucas and I are in different locations. We’re traveling so apologies for the sound quality and the phone just to let everybody know.

But on your question Paul, there is a great opportunity for us to improve our cash flow from operations in two main fronts; one, of course, just improving our EBITDA profitability which Lucas talked about and second is there is still cash tied up in our working capital, we know that, and we are focused on reducing our unbilled revenues and increasing our deferred revenues. So there is opportunity for us to do that and that will help generate some cash from working capital into operations.

Okay. And then just lastly one more from me, with Orga, there is a customer, several customers in Venezuela where you wrote out the [AR] [ph], any update there in working with those customers?

Lucas, are you online?

Yes, so I think we will continue to work with them, we have helped them replace existing platforms and we’ve made a bit of progress on getting paid and I think we expect to do more over next couple of quarters. But I think so far we’ve been in very good dialogue and we’ve seen some signs of support from the customer in being able to address the cash payment, but there is quite a bit of more work to do there.

Okay. I will pass the line.

Great, thank you.

Thanks. Just getting back to the Orga acquisition and your targets, you obviously said that you expect to have it fully integrated by Q1, how should we think about the EBITDA margin profile when you exit Q1 2016 and how should we think about, are you guys still kind of focused on the 20% fiscal 2017 target for Orga?

So I think, the couple of things, I think as we finished the integration, we will be probably in the better position to discuss how we can improve our cost structure in driving improved margins. I will probably deferred debt, our objective is to continue to increase and expand our EBITDA margins both in grow which is obviously probably a bit easier, but also we are not just relying on growing our top line by the way there are also have a plan on how to do so in more of a stock based scenario in case the market softness continues to prevail.

Our view is the integration is going well. There are opportunities and I think as we address customers needs first, we will be in position to be able to make sure we have the right resources and no overarching resources in our global structure.

Okay. And the top three 10% customers of Orga are they still kind of onboard with you guys and obviously with the bar report show that the license number declined substantially in the first half, it sounds you are working towards getting that pipeline built up again and get see that recoveries, how long do you think it will take for you guys to see that recovery coming through that license number?

I think so in terms of we had no licenses just to give you kind of some color, no license revenue from Orga side from acquisition in the period, which is obviously reflective of the stage of what happens out there and business goes through fairly difficult period of bankruptcy, we expect that over next probably two quarters we will start getting some license revenue in the meantime we see a support and service revenue continue to play. I think the majority of it was we are relying on is support revenue and then obviously adding to that aspects of service revenue and I think it will take two to three quarters to get solid software revenue, software license revenue.

I think our view has been that in context of that we have a plan of how to make sure that their contribution is accretive and we are happy both of contracts and customer interaction, some of the customers are still evaluating what they want to do with the opportunity that Orga has created bankruptcy to evaluate more options. Majority of customers have been content with Redknee providing them with the path forward on our platform.

So I think one thing I would say is, there has been no surprises to us somehow after our due diligence we’ve seen nothing new that would change our view on how to approach Orga integration.

Okay, it sounds great. And David maybe can you guys – can you give us a split out of the $7 million contribution between the two lines that you guys reported in hardware?

Yes so just generally speaking of the $7 million of Orga revenue about half of that was support and half of that is services approximately. We don’t have an exact numbers in front of me here.

Okay. That’s fine.

And then Lucas back to you just on the base business obviously it’s been about two and half years since the transaction, it sounds like last client Boris [indiscernible] is leaving finally this quarter, what are your thoughts on growth going forward, what is your pipeline look like and what regions gets you excited here?

We have couple of things, I think so we’re excited, we have been able to take market share on order basis at this past 12 months. The market I would say is overall under pressure being our customers, some mobile and multiplayer service providers are in the world.

Overall their revenue has not grown as much as they would like and they have pressure in their business as is mentioned a lot has to do with capital being in U.S. dollars and the earnings being in the local currencies which have moved all against U.S.

dollars. But where we see opportunities, we see a sufficient very good coverage of feel and we see all of them emanating from both, Asia Pacific, Latin America, and parts of Europe.

We do see opportunities here in North America we're engaged right now and we got some more work to capture some of the business in Middle East and Africa although the pipeline is strong, I want to make sure we are converting there more meaningfully. But I guess, I have been hampered in my optimism and enthusiasm because as I spoke to quite a few CEOs in summer a lot of them have expressed to me they are concerned about both foreign exchange and their CapEx cycle and as I spoke to some of our peers in the industry, they have showed similar view.

So I will remain conservative in our approach well we will continue to push to take market share and continue to scale up our ranking in the industry.

Okay and then going forward should we think of you guys doing more stuff in the IoT markets and is there potentially more M&A coming out as well. Thanks.

I will pass the line.

Yes, I think that is very good question, I think we've got the ball. So we are internally driving two different efforts with respect to the non-telecom Enterprise IoT monetization, we expect also that we're encouraged by what we see and it is opportunity in multiples allow for we will look for additional inorganic moves to help us solidify our trust in this side of the business.

Okay great. Thanks.

I will pass the line.

Thank you.

Hi good morning. I was hoping to maybe perhaps summarize some of the outlook here for 2016, it looks like you’re heading into the year with a weaker backlog and you just said that there is low to no growth scenario risk here which could persist for the next 12 months after which you are expecting that the outlook could get better, now is that a conservative view or is that what you expect in 2015?

I think, I know I will as you’d seen we've continued to be conservative and make moves before we are required to make them. Our view is, there are some cycles within our industry which I think currently put our customers under pressure and that would led me to believe that some of the initiatives that five customers putting effort to them they will may be delays by either board or the executive management team when it comes down to actual making decision on the CapEx.

We had found that service side of the equation continues to be robust, but major swaps and replacements of our competitors I think will take longer than even customers tell us is my expectation. If I’m proven wrong, I think our profitability will be accelerated and if I’m brings to be correct, then we will still be able to scale our profitability year-over-year and continue to advance our position into business.

So I think either way our views remain cautious in this environment and making sure that we continue to win business.

Okay and so, it sounds though is like the, the area that’s the most that risk here is the licenses I think last quarter you said that $16 million to $18 million in quarterly license is kind of the target and should we be thinking of that as a lower number going forward? And then I think you’d also said services $10 million to $12 million if I understand what you just said that then piece of the business is a little more defensible and then I assume the recurring support piece of the business should bottom out here this quarter as this last customer churns off by the end of the year, is that a good way to think about it?

So I think it’s far may be in the reverse orders, so I think support, I think we’ll remain at the bottom will become in the range of 24 to 25 recurring revenue also a bit higher than that. We see services continue to be encouraging and robust and I think our license business continues to be lumpy.

Obviously I want to continue to emphasize that so that but we are having our plans to make sure that we are putting more - we continue to focused on recurring revenue, so how to drive recurring revenue either through more service, long term service engagement or through more term licenses. In both scenarios this is all an effort to lower the lumpiness.

One large customer can create significant growth of 5%, 10% year-over-year, but I would say from my perspective is, we’ve got good coverage on the pipeline there, but my view of that timeliness on how they make a decision it’s probably not as confident as I would like to make further commitments on this call. Is that fair?

Yes, that makes, that’s great, what you’re saying about the large opportunities in the pipeline, are those required for that $16 million to $18 million type of license quarterly run rate are those, are there items in the funnel that could drive upside above that?

I think that the – the larger deals would probably help us improve that – but that would add to lumpiness as well. So that’s kind of depends how you - on an annualized basis it would drive improvement, on quarterly it would drive lumpiness.

I think we have a broad customer base where we continue to drive both upgrade, up sells and license expansions which will build the bulk of our quarter.

Okay and then specifically on the Orga business which I am thinking of separately from that low to no growth scenario that is some period of $7 million should we’ll be thinking of that as sort of a $9 million run rate or is there some churn that you would expect you’ll pull that support piece down before it stabilizes?

I think from my perspective is probably $9 million a quarter probably is a bit on the high side as I see it right now. I think there is upside there, but we are more conservative right now in our outlook.

I see services business, I see, I think ability to have the kind of the around between $4 million to $5 million a quarter in support business and I see additional upside obviously on software licenses, but I see those probably being pushed out a bit given to the customers. This quarter for example it is a short quarter where more supporting customers to the period and then we will see how we can help them with adverse cycle as we enter the New Year.

Okay, so the growth from licenses on the Orga side is likely to come at the very end of the may be in even 2017?

Correct, yes.

Okay and then may be as one last question and then I’ll let it go. You've said that you are using Nokia as a sales channel and of course there are going to a large M&A cycle.

They are buying Alcatel. Can you give us a sense of how risky that relationship is and what I'm not aware that you might be at risk if they decide to move away from Redknee?

And then I'll pass the mic.

I don’t see it being risky number one. We probably have about 10%, 15% of our revenue, but decision of customers I think big portion of it were embedded into Nokia system, so I think it’s a long term, its long term visibility for us and for some of those its well I think about one particular customer, that customer really want our technology but wanted Nokia’s local president.

So I think the combination is very powerful and I think is independent of what Nokia decides to do in their combination we’ve got to loosen. I would say that our relation with Nokia continues to be very good.

We have a dedicated team to support Nokia’s initiative and I also see as being able to contribute to Nokia’s competitiveness in some of the scenarios where operator wants both of some network capability, but they also want a way to monetize it. I think we can bring that as a value-add to the Nokia’s bid when and if required.

Okay, thanks a lot for taking all my questions.

Yes, thank you.

Good morning everyone. My wish is to hoping to get a fully loaded cash OpEx number if we would have included Orga for the entire quarter?

That’s a tall order Todd, maybe I’ll take that offline, I guess have some time to think about that.

Okay. Second question, seasonality for the fourth quarter, fourth calendar quarter of 2016 could you just gives us a little commentary on what that should look like?

Is it safe for 2016?

Sorry 15, excuse me. My - I miss spoke.

So that basically with the quarter we're in, calendar quarter we're in, any seasonality in this quarters?

It continues to be a short quarter for us because implementation wise they’re fully our customers are freezing most of their networks from being able to implement additional activity really that – mid November for really conservative customers and some of them will go to next week so we’re losing probably three quarters of month to a month all of implementation opportunity. But it does - that is offset slightly by opportunity around our ability to provide additional emergency support to, I guess complement their staff over their important high volume period between the holiday period and the New Year, but I would say this is historically probably not necessary the highest growth quarter for us.

Okay. Does that - you talked about risk of lumpiness on a few of the questions, are you making a point on this quarter as well given its two months of selling versus three?

Yes, I think it is two months of selling and two months of implementation. So I think this is more lumpiness inherent and I think we see a lot of increases in usually mid-year in our cycle as the customers go through it.

We see some opportunities this quarter from Orga’s perspective which some of them will translate into revenue. But I think it probably tends to be not the highest quarter for our business, if you look over the last three years.

Right?

Okay. But you were specifically making a lumpy point beyond normal seasonality for this quarter, it was just the nature of the delays that you potentially some customers over the course of the next year?

Yes, I was not trying to tell you - speak specifically to a quarter, I was more looking over next 12 months. I think our view is that, I think we need to remain in position to be able to grow our earnings in both high growth environment as well as in flatish environment.

We'd see a path for growth, but at the same time, I want to make sure that as we talked to broader communication service provider businesses their CapEx cycle probably is not as robust as might have been maybe two years ago. Right?

So I express a conservatism, but nevertheless we do see opportunities and we continue to pursue them.

Okay, my last question. So on Orga integration, I mean you’re certainly characterizing it as going as planned, how much of a factor is you experience the up and downs with Nokia helping you here in terms of knowing what to do with the Orga integration?

I think that I would say the overall NSN BSS integration is probably out there in a highest percentile of difficulty. So a lot of things with respect to both process and how we approach the decision making is well worn through as a methodology that we have developed within Redknee and I feel that it makes it much easier.

So, Chris McGrady, who heads our Integration, HR, IT and Security, he has a plan, a very detailed plan that we’ve been able to put in place from day one and there has been - as I mentioned there has been no surprises which leads, which has other combination allowed us to make very quick and straightforward decisions around what needs to be done as we go to integration. Probably the only thing that is we will spend time next quarter on is some of the systems that we may want to incorporate into broader Redknee ability is improvement to our infrastructure, but overall it has been I would say great relief in comparison to previous integrations.

Is that helpful?

Yes, yes, it’s helpful. It is good to hear.

Thanks a lot.

Yes, thank you.

Excellent. Well, thank you for your participation on today’s call.

We 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 on the results of our first quarter of fiscal 2016.

In the meantime, I would like to wish you happy holidays and Happy New Year. Thanks everyone.