Good afternoon and thank you for joining FICO's Q1 earnings call. I'm Steve Weber, Vice President of Investor Relations and I'm joined today by our CEO, Will Lansing and our CFO, Mike Peng. Today, we issued a press release that describes financial results compared to the prior year. On this call, management will also discuss results in comparison to the prior quarter in order to facilitate an understanding of the run rate of our business. Certain statements made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995.
Those statements involve many uncertainties that could cause actual results to differ materially. Information concerning these uncertainties is contained in the company's filings with the SEC, in particular in the Risk Factors and Forward Looking Statements portion of such filings. Copies are available from the SEC, from the FICO website or from our Investor Relations team. This call also include statements regarding certain non GAAP financial measures. Please refer to the company's earnings release and Regulation G schedule issued today for a reconciliation of each of these non GAAP financial measures to the most comparable GAAP measure.
The earnings release and the Regulation G schedule are available on the Investor Relations page of the company's website atfico.com or on the SEC's website atsec.gov. A replay of this webcast will be available through January 31, 2018. And with that, I'll turn the call over to Will Lansing.
Thank you, Steve, and thank you everyone for joining us for our Q1 earnings call. I'm pleased to say we're off to a good start delivering solid growth across our portfolio. In our Q1, we reported revenues of $220,000,000 an increase of 10% over the same period last year. We delivered $38,000,000 of GAAP net income and GAAP earnings of $1.16 per share. Our GAAP earnings and EPS were positively affected by the adoption of a new accounting standard, which Mike will detail.
Adjusting for that impact, GAAP net income and EPS were both up 7% from last year. We delivered $33,000,000 of non GAAP net income and non GAAP EPS of $1.03 per share, both up 4% from the same period last year. I'm pleased that we're delivering growth throughout our business. Both our Scores and Decision Management Software segments were up 6% over the same period last year, and our application segment was up 12% over the same period last year. We're continuing to see positive signs in our cloud business, where revenues were up 14% and bookings were up 48% versus last year.
In fact, it was the 2nd largest quarter ever for our cloud business and the pipeline for our solutions remains strong. As we sign more deals and grow our customer base, we are building a strong transactional revenue stream with recurring predictable revenues. We are seeing more evidence every quarter for increased market acceptance of our decision management software. Bookings this quarter were up 31% over last year and represented the largest quarter ever in that segment. The investments we've made in distribution over the last year are beginning to pay off and we expect solid growth in this space moving forward.
In the Scores business, we continue to make great strides towards maximizing the value of this cornerstone franchise. It's been 2 years since we announced the deal with Experian to add FICO scores to their premium consumer offerings. The 1st year of that partnership was dedicated to rolling out scores across the Experian platform. We continued last year to fine tune the program and pursue other opportunities with Experian. That led to an agreement we signed this month to further expand our relationship.
This new agreement broadens the content we provide to Experian's premium consumer offerings. It also includes licensing the FICO score as a key component in Experian's direct lead generation business. We believe in the value that this lead gen business can create for consumers and lenders by taking the friction out of the process. By including FICO scores, the scores that are used by lenders to originate new loans, this lead gen business can instantly match consumers with the best prequalified offers. Furthermore, offering FICO scores can produce higher response rates, better conversion rates and increased consumer satisfaction.
We're excited about the possibilities of this expanded partnership, and we are also pursuing several other meaningful opportunities in the SCORES space. In partnership with Experian, we are offering consumers world class financial products in both the lead gen channel and the premium channel. On the B2B side, we're continuing to see positive results. Originations continue to be strong, and we are seeing account growth in account management scores as well. In a rising rate environment, it's important to remember that our biggest point of leverage on the B2B side is in credit cards, which drives nearly twothree of our B2B Scores revenue.
Unlike other market participants, we price mortgage scores at the same rate as other credit card scores. Because of this, our exposure to mortgage is roughly only 10% of B2B Scores revenue. So we're less affected by mortgage market headwinds. With the current momentum as well as visibility to the new revenue sources, we expect Scores growth to accelerate in the second half of the year. I'll share some summary thoughts later, but now I'd like to turn the call back over to Mike for further financial details.
Thanks, Will. Good afternoon, everyone. Today, I'll emphasize 3 points in my comments. First, we delivered $220,000,000 of revenue, an increase of $20,000,000 or 10% year over year. Cloud revenue was $50,000,000 up 14% from last year.
2nd, we delivered $38,000,000 of GAAP net income, which included the impact of adopting ASU 20 sixteen-nine, the new accounting standard related to share based compensation. Finally, we had $28,000,000 of free cash flow this quarter and we used $30,000,000 to repurchase shares. I'll begin by breaking the revenue down into our 3 reporting segments. Starting with applications, revenues were $135,000,000 up 12% versus the same period last year. We also had a strong quarter in fraud solutions, originations and our customer communication services product lines.
Our application bookings of $62,000,000 represented an increase of 11 percent from the prior year. In the Decision Management Software segment, revenues were $26,000,000 up 6% versus the prior year. The increase this quarter was driven by services revenues and express optimization. Bookings were again strong in this segment at $26,000,000 representing a 31% increase over the same period last year. As Will said, it was the largest bookings quarter ever in this segment.
Finally, in our Scores segment, revenues were 59,000,000 dollars up 6% from the same period last year. On the B2B side, we're up 8% versus the same period a year ago and are continuing to see some positive trends. The B2C revenues were up a modest 3% from the same quarter last year, but we expect that to accelerate in the back half of the year as the new opportunities we'll discuss go online. Looking at revenue by region, this quarter 77% of total revenues were derived from the Americas. Our EMEA region generated 16% and the remaining 7% was from Asia Pacific.
Recurring revenues derived from transactional and maintenance sources for the quarter represented 70% of total revenue. Consulting and implementation revenues were 20% of total and license revenues were 10% of total revenue. Bookings this quarter were $96,000,000 up 12% from the prior year quarter. We generated $21,000,000 of current period revenues on those bookings for a yield of about 21%. The weighted average term for our bookings was 27 months this quarter.
We continue to book more large deals. This quarter, we had 13 deals over $1,000,000 versus 10 in the same period last year, and we booked 7 deals over $3,000,000 compared to a total of 10 all of last year. We continue to drive strong bookings growth in our cloud based products and built more backlog this quarter as our transactional bookings were up 21% over last year. Operating expenses totaled $185,000,000 this quarter compared to $191,000,000 in the 4th quarter. The investments we are making in delivery, support and infrastructure are proceeding as we discussed on our last call.
As you can see in our Reg G schedule, our non GAAP operating margin was 24% for the Q1. We expect that operating margin to be between 26% to 28% for the full year. GAAP net income this quarter was $38,000,000 and included a reduction to income tax expense of $17,000,000 or $0.53 per share associated with the adoption of the accounting standard update 20 sixteen-nine. Non GAAP net income was $33,000,000 for the quarter, up 4% from the same quarter last year. Under the new accounting standard, excess tax benefits or deficiencies generated upon the settlement or exercise of stock awards are no longer recognized as additional paid in capital, but instead recognized as a reduction or increase to income tax expense.
Estimating this item is difficult because it's dependent upon our future stock price in relation to the fair value of our awards. However, the largest impact typically happens in our 1st fiscal quarter because our annual grant vests in December. We expect the quarterly impact going forward to be much smaller over the remainder of the year. As a result of this change, the effective tax rate was negative 32% this quarter. We expect the unaffected or normalized tax rate to be about 29% to 30% for the full year before any impact of the accounting standard.
The free cash flow for the quarter was $28,000,000 which included the impact of the new accounting standard. On a comparable basis, free cash flow was $46,000,000 in the prior year. For the trailing 12 months, reflecting this impact, free cash flow was $168,000,000 Turning to the balance sheet. We had $88,000,000 of cash on the balance sheet at the end of the quarter. Our total debt is $621,000,000 with a weighted average interest rate of 4.1 percent.
And our ratio of total net debt to adjusted EBITDA this quarter is 2.3x, well below the covenant level of 3x. During the quarter, we returned $30,000,000 in excess cash to our investors, repurchasing 258,000 shares at an average price of $117.91 We repurchased another 158,000 shares in January at an average price of $122.90 We have about $180,000,000 remaining on the latest Board authorization and continue to view share repurchases as an attractive use of our cash. We also continue to actively evaluate opportunities to acquire technologies and products that advance our strategy and strengthen our portfolio and competitive position. Finally, we are updating our previously provided guidance to adjust for the Q1 impact of this new accounting standard. We are not including any impact in the future quarters until they are known.
We are now guiding
for the full fiscal year
as follows. Revenues remain unchanged at approximately 925,000,000 dollars GAAP net income previously guided at $109,000,000 is now adjusted by this quarter's excess tax benefit of $17,000,000 to a new total of approximately 126,000,000 dollars GAAP earnings per share is now approximately $3.92 Non GAAP net income remains unchanged at $158,000,000 and non GAAP EPS is also unchanged at $4.92 per share. With that, I'll turn it back over to Will for a final comment.
Thanks, Mike. As I said in my opening remarks, I believe we are well positioned for success as we move into 2017 and beyond. Our Scores business has never been stronger and is now beginning to build market share on the consumer side to match the dominance we have had for decades among financial institutions. And now we're beginning to see the tangible impact of the investments we've made in our software business. We've developed products and we've invested in sales resources.
Now we're producing higher bookings and building a backlog of recurring transactional revenue. We're still working on getting our distribution up to speed as we train and deploy newly hired sales resources, But we're gaining momentum and we're confident we're on the right track. I'll turn the call back now to Steve for Q and A.
Thanks, Will. This concludes our prepared remarks and we're ready now to take your questions. Sarah, please open the line.
Your first question comes from the line of Manav Patnaik from Barclays. Your line is open.
Thank you. Good evening, gentlemen. The first question I had was in terms of your expanded agreement with Experian and your commentary on B2C growth should accelerate because of that. Could you help us maybe just understand the I guess the change in the scope of that agreement. I know you said I guess it was mainly lead gen.
And does that include the Discover, I guess, work that you're doing with those guys?
There's really 2 pieces to the expansion. One piece has to do with a broader use of FICO scores with Experian's paid products. And as you know, there's more than one FICO score and most of the Experian premium products were wrapped around using a single FICO score as opposed to a broader set of scores. And the new agreement contemplates the broader use of FICO scores so that consumers can get effectively a dashboard of multiple FICO scores and have a more comprehensive view of their credit position. So that's one part of it.
And we've given Experian a great deal of flexibility to construct the products in the way that they see is most valuable to consumers. And so that it's an expanded flexibility that we've tried to drive here, so that the consumer winds up with a better offering, Experian gets a better offering and we obviously benefit from that. The second part of it has to do with the lead gen piece and that's a business that we have contemplated for several years now as we've watched other players in the space build lead gen programs. We have always believed that FICO participation in a lead gen program would be more valuable to the lenders than the offerings by these other players because there's a lot less breakage and friction in going from a FICO score for a prospect to an offer of credit. And so working together with Experian, we're now prepared to offer a lead gen offering to the market that uses a FICO score as opposed to so called education scores.
So that's really the second part of it.
Okay. And does that include the Experian Discover partnership or is that separate?
That's separate.
Okay. So it's an expanded experience and then the Discover work you're doing. Okay. And then I don't know, maybe I'm reading too much, but your commentary on evaluating M and A options, the technology and so forth, standard commentary or is there something in the pipeline that we should be looking out for?
That is our standard commentary. So we continue to love buying back our own stock and we set a very high bar for M and A activity. And at the same time, we're always on the prowl, always looking for opportunities. But as you know and as we've said many times, the alternatives to investing in our own business are obviously being held to a pretty high standard because we're so happy with our own prospects.
Got it. And then just last question for me. Any initial read throughs or comments that are coming from your customers on the impact on the new administration that you would want to point out?
No, I think it's a little early to say, but the obvious elements have to do with, if there's a reform in regulation that eases the burden on our bank customers, they're likely to benefit from that. And if they do, we will.
Okay. All right. Thanks a lot, guys.
And your next question comes from the line of Bill Warmington from Wells Fargo. Your line is open.
Good evening, everyone.
Hi, Bill.
So congratulations on the strong quarter and especially on the strong bookings. So I wanted to start out by asking about the what's new on the Affinity side. That's an opportunity that you guys have talked about in the past and see if we can get an update there.
Yes. Bill, we're not we are obviously in discussions with others about doing additional affinity programs and work. Those discussions are underway. We're not in a position to announce anything yet, but I think that announcements are coming soon. We feel pretty good about our process in the affinity space.
And I guess connected with that a little bit different from affinity, but related is our activity in the paid education space where we have been exploring paid programs that go well beyond the free open access program. And some of those are imminent as well.
So this is I've heard this referred to as open access plus sort of a hybrid between the traditional credit monitoring and the open access program. Is that the way to think of that?
I think that's the way to think about it. I think we're careful to distinguish between the 2 only because open access is a completely free program designed to let the consumer benefit from a score that the bank is already purchasing. And so this program, it does go above and beyond open access, but it's we don't call it an open access program because it's not a free program, it's a paid program. It's paid by the bank, not by the consumer, but it's still a paid program.
So Discover had made some interesting comments on their call last week. It sounded like they're planning to increase their marketing investment to support an acceleration in the credit card loan growth from looks like they did about 4.7% growth in 2016 and they're talking about taking it up 5.5% to 7.5% in 2017. And the other comment they made was that about 75% of that loan growth is coming from newer card members. So I wanted to ask how that was going insofar as you could talk about it and then also ask whether you're in active dialogue with other issuers to replicate that type of an offering?
So we can't really comment on Discover except to say that we are we have a program with them today that we're very happy with and we continue to work on expanding it. Don't have anything to announce today, but we're obviously always looking to expand and broaden our partnership with them. And do we have similar kinds of things in discussion with other players? Yes, we do.
Yes. And then separately with experience write offer, you'd mentioned that goal of better matching consumers with a prequalified credit offer with the thought that that will produce a better response rate and better conversion rate for the lenders. I guess my question is, how is that going? Is that actually is the goal of the program actually being met? Is it actually resulting in better conversion?
And then, how many lenders are working with it? And, what kind of a revenue model is it using? Because it sounds like it's a different model than the traditional per subscriber per month basis.
Okay. So it's early days to provide data. So our views about the lower breakage for lenders and the higher utility for consumers that comes out using a FICO score versus a non FICO score, We don't have data to present. It's more kind of a logic thing where we just believe that if you give a consumer a real FICO score and that's the basis for making the decision on which the credit offer is made, there's going to be less breakage. That seems like kind of a basic.
But we don't have data to share there yet. And then with respect to the revenue model, it is a rev share kind of an arrangement. I can't go into a lot of detail on it. But basically, we have completely aligned interest with Experian on this and it's a rev share model.
Got it. And then a question on the DMS telco deal that you guys had announced this past May. I think that was that had planned to go live in November. And I wanted to ask how that had performed during the peak holiday season. And then also ask about the next piece of that implementation on the marketing piece, how that was looking?
And how and then ultimately how it how we should think about modeling the revenue for that?
Well, so just to take those questions in order, we have gone live. We've gone live without a hitch. We ran smoothly right through the holidays without any kind of outages or failures, although I will say that we were tested. We I mean, that's natural and this represents a pretty a big volume and a big infrastructure play for us. And so we had a lot of work to do to make sure that we were up to snuff.
But we sailed through it and we're happy with the results. Too early to talk about the marketing, but we're feeling pretty good about the way that entire operation has gone.
Got it. And then one housekeeping question. Just on the B2C growth, how much how was the growth within the MyFICO piece of
that? So this quarter, Bill, year over year, we had 3% growth across all of B2C. And myFICO was about mid single digits and all the rest collectively was a little bit shy of that.
Got it. Thank you very much.
Your next question comes from the line of Matthew Galinko from Sidoti. Your line is open.
Hey, good afternoon, guys. You called out strength in customer communications. Curious, was there just a single large deal that was pushing on that? Or did you have a number of deals? And just generally, what's your, I guess, outlook for that product?
It's across the board. It's not a single deal. That's ratable revenue and so it kind of marches upward smoothly, at least we hope it does and it is now. That's been a multiyear journey for us getting all of the offering onto a single code base, getting the infrastructure in place globally so that we can support customers around the globe, leveraging AWS to get to places that we don't have operations. So it's been a journey.
Right now, we feel like we're just hitting our stride. We think we have the best offering in the market by a fairly wide margin. Customers seem to believe that too. And so it's gone very smoothly. But it's not one single thing.
It's kind of everything working together, good execution across the board.
Got it. And if I'm not mistaken, did you acquire that asset and
We did. I'm sorry, go ahead.
I was going to say, I think you had when you made the acquisition, it was somewhere around the low double digit growth rate, maybe around 15% to 20%. And you talked a little bit about the size of the market for you there. But can you talk a little bit about I know you said you're hitting your stride. Is there a substantial addressable market ahead of you on that? And do you see that as being a product that can drive your software business over the next couple of years?
Yes, good question. Okay, so just a bit of history. The company was called Adeptra. We bought it a bit over 4 years ago. It was a good growing company when we bought it.
It had reached some scale limits on the infrastructure on which it was operated. I would say that we spent several years in a retrenchment mode. And I don't think it's just kind of post merger integration blues. I think we really had a lot of rework to do on the code base and on the infrastructure. And so we really didn't have tremendous growth for several years in the middle.
I feel like we're back on to a double digit growing kind of trajectory. Where is the growth coming from? It's multiple areas. There's the growth that comes out of pending customer communication services to our existing franchises. So that takes primarily 2 forms.
1 is fraud, where we have a very strong franchise and now we have an opportunity to talk directly to our customers' customers about fraud alerts and is that really you and did you make this transaction and those kinds of things. And then, a second franchise where we have natural extension and have a lot of volume is in collections and recovery, where our debt manager 9 product offering is naturally complemented by an ability to talk directly to our customers' customers. And of course, there's a feedback loop there that improves the efficacy of the improves the outcomes. So those are the kind of the more natural things for us where we just build and extend from businesses we're already in. It does have the potential to open up doors in new areas like marketing and particularly since we now have this DMS platform that allows our customers to use the same data for multiple data feeds with the same data to inform different kinds of activities, whether it's originations or line management or marketing solutions or customer communications.
We now can append this customer communications service to many other things. So we anticipate the demand will just grow beyond even the 2 franchises where it's strong right now.
Got it. And maybe a left field kind of question here. But insofar as you have a lot of products that you're I think to some degree experimenting with or testing that aren't necessarily core at this point. But if you find kind of a non core product that you think you could better monetize through divesting the product line. I mean, do you think about that at all?
Or do you still feel that everything you have today is better taken to market under the FICO umbrella?
Well, that's a great question, Matthew. I mean, we have a fairly disciplined process here. We've adopted GE's S1, S2 strategy process where we review all of our businesses twice a year, kind of mid year with a look to what the 3 year outlook looks like. And we look at the competitive environment in the market and the total addressable market and what the headwinds are and how strong our product is and what its prospects look like. And then we come back towards the end of the year, where we tighten down and lock up the budget for the subsequent year.
And that's the S2 part of the S1, S2 process. And in that, we kind of have the buttoned up tactical next year plan. In the course of that strategy work, we always evaluate whether it makes sense for us to continue to be in the business, whether the business would be more valuable in someone else's hands and whether we're adequately resourcing some of our young, not yet big and wildly profitable businesses. And of course, that's a challenge for a company like ours because we have prospects that are really tremendous, far more than we can effectively resource. I think we recognize that we're we have this kind of feast of riches in analytics and we can't participate in all the great opportunities we have around us.
I would say that the businesses that we're in, we have the half dozen or so core franchises where we're typically number 1 or number 2 in the business. And if we're not number 1 or number 2, we believe we have the industry leading product. And there's only a couple of exceptions to that in our portfolio. And where there's an exception, we're usually in it for a different reason or because we believe that there's an pretty happy with the portfolio. There's nothing in the portfolio today that we're prepared to divest or that we're seriously contemplating divesting.
There are some growth opportunities that have to be managed carefully because we can't do everything we'd like to do, and so we have to pick our winners. For example, we're putting a lot of investment into cyber right now. That's a money losing business for FICO because we're pouring in resources and the revenue is not there yet. We have every expectation that that's going to be a great business in several years. And so we are resourcing it appropriately.
But of course, that's going to crowd out some other opportunities, and that's what it is doing. And that those are the hard decisions we have to make.
Got it. I appreciate that color and congrats on the quarter.
Thank you.
Your next question comes from the line of Brett Huff from Stephens. Your line is open.
Hey, guys. Congrats on a nice quarter. This is Blake Anderson on for Brett. In applications, I know you briefly touched on your customer communications, but can you size the license sales and fraud management solutions? Was there anything any outsized deals in fraud for you to call out?
Just one. We had a scheduled license renewal in fraud that hit this quarter. The scheduled renewal was quarter 2 and it got signed by end of December at the request of the customer. Beyond that, it was kind of routine business in the numbers.
Okay. And then your gross margins were down just a little bit year over year. Anything to call out there that was driving that?
Not really. The mix of the margin is often dependent upon the mix of how much ratable and services business we have in comparison to license revenue and scores revenue, the latter being higher margin, the former being lower margin. And we had a higher mix of services revenue because of some of the deals we booked last year. Beyond that, nothing.
Okay. And then for the margin guidance for the year, are you still attributing that range primarily to your investments in delivery and cloud infrastructure? Or is there anything that's kind of popped up in the 1Q that might be driving that, that we should pay attention to more throughout the rest of the year?
No. Nothing's changed from what we said in November when we set the guidance. It really is tied to 2 things. It's tied to the additional investments we built into our budget that we're making with respect to our infrastructure and our cloud. That's number 1.
And number 2, it's tied to the ultimate mix of business we have between the lower margin ratable and services business compared to the higher margin license and scores and thus the 300 basis point range. But nothing has changed from November.
All right. And then lastly, how does paying down debt kind of stack up in your uses of cash priorities? I know you said share repos, you're number 1. And then you mentioned comments on M and A, but how do you guys think about paying down debt?
Well, so the current debt we have, the blend is at about 4.1%. So it's pretty cheap debt. More than half of it is in a revolver, which is under 200 basis points. And I guess we could pay that down, but we think we have a better use of cash than paying down 2% debt. On the other hand, the rest of it is in term notes that have scheduled maturities.
And if we pay those off early, we have a penalty, a make whole penalty. And as a result, we have just simply let the maturities happen and we roll them into the revolver. So at least under the current kind of regulatory environment and tax environment, what we have been doing is what we will continue to do until we reach a point where we think it's sensible to refinance the entire debt structure. And we're a little ways
away from that, probably a year away from that. We don't really think about it as paying off debt. I mean, we like our leverage where it is in this 2 to 2.5 times area. And so to the extent that we have maturities, we replace it with lower cost revolving debt. But and at some point, we could reevaluate that equation.
But I wouldn't expect a very big difference in our leverage position going forward.
Thanks a lot.
Your next question comes from the line of Adam Klauber from William Blair. Your line is open.
Hi, good afternoon and thanks. When we look at the bookings, could you give us a rough idea on the decision management? How many of those came from sort of the existing core of financials versus newer verticals?
Yes. It's probably I don't have the exact numbers, Adam. It's probably give me a second. It's probably this quarter more slightly weighed towards Financial Services than it is outside of Financial Services. So of our total bookings, I can tell you 60%, 68%, 69% were with our kind of core Financial Services business.
The remainder was outside. As it relates to DMS, I just don't know that level of detail offhand.
Sure. But
it's probably similar.
Okay. That's helpful. Then just following up on the margin, just on an absolute basis, as you mentioned, you've been investing in sales and delivery and expenses are up compared to a year ago, but it looks like they're flattening out. So is that a way for us to think about it? Are they at a better run rate today compared to a year ago, but you won't see big jumps up over the rest of the year?
Yes. I mean our current run rate is around $185,000,000 plus or minus. You often see a little bit of you usually see a little bit of uptick in our Q2, the one we're in right now, simply because our annual salary increase happens in December. And so you see the first full impact of a 2% to 3% salary increase in our fiscal second quarter. And then oddly enough, you see a payroll tax reset.
Most people have hit their payroll tax maximum by the end of the year and it gets reset January 1. And so we see actually $2,000,000 $3,000,000 of an increase in that. And so that kind of will put the number up a little bit higher than $185,000,000 But we're kind of locked in, in this range and are kind of managing our business at that level as we pursue more top line growth.
Great. So I mean that sounds like more normalized growth going forward then sort of jumps we've seen over the last couple of quarters then?
Yes.
Okay. Okay. Then as far as the Experian, obviously great sign. Is that a couple of quarters till we'll see some of the impact from those new agreements? Or can we see that more near term?
I think a couple of quarters is pretty near term, but I think you'll see it grow throughout the year. It's going to start smaller and ramp up.
And remember, it's kind of tied to experience marketing budgets and marketing plans, which are outside of our area of control. And so it can vary the speed and pace at which basically tied to their new fiscal year coming up here in April.
Right, right. Okay. And then as far as cyber, you mentioned and obviously that's a long term effort and it's still very, very early. Any chance we'll see even a little revenue this year or is that probably more of an 2018 type occurrence?
It's really more of an 2018 occurrence, although little bits of revenue are trickling in. There's a lot of interest. There's a lot of interest. We have a lot of conversations going on. We've got little bit of business going.
We've got business going with our I BOSS partnership. So things are coming along, but I it's way premature to expect any kind of revenue in 2017. Could it be meaningful in 2018? It will be visible. It will be visible in 2018, meaningful in 2019.
Okay, great. That's great to hear. Thanks, guys.
Thanks, Alan.
And there are no further questions in the queue at this time. I will now turn the call back over to the presenters.
Thank you. This concludes today's call. Thank you all for joining.
This concludes today's conference call. You may now disconnect.