Earnings Call: Q2 2019

Jul 30, 2019

Good afternoon, ladies and gentlemen, and welcome to the MicroStrategy Q2 2018 Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Michael Saylor, Chairman, President and CEO. Sir, you may now begin your conference. Hello. This is Michael Saylor. I'm the Chairman, President and CEO of MicroStrategy. I'd like to welcome all of you today to today's conference call regarding our 2019 Q2 financial results. I'm here with our Chief Operating Officer and CFO, Phong Li. First, I'd like to pass the floor to Phong, who's going to read the Safe Harbor statement and make some comments on our results for the Q2. Thank you, Michael, and good evening, everyone. Various remarks that we may make about our future expectations, plans and prospects may constitute forward looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in our most recent quarterly report on Form 10 Q filed with the SEC. These statements reflect our views only as of today and should not be relied upon as representing our views as of any subsequent date. We anticipate that subsequent events and developments may cause the company's views to change, while the company may elect to update these forward looking statements at some point in the future. The company specifically disclaims any obligation to do so. Also during the course of today's call, we will refer to certain non GAAP financial measures. Reconciliation schedules showing GAAP versus non GAAP results are available in the Form 10 Q we filed with the SEC after the close of market today and in our press release that was also issued today, which is located on our website at www.microstrategy.com. We were generally pleased with our performance in the 2nd quarter, which demonstrated continued progress executing on our strategic objectives. MicroStrategy 2019 is driving demand for our software, our redesigned and repackaged MicroStrategy cloud enterprise product is showing initial signs and success, and our proactive enterprise support offering is increasing customer engagement. Internally, our executive team, employees and departments are as tightly aligned as we've ever been. The consolidation of our competitive environment means we'll be the largest independent business intelligence platform company in the world. We believe this is an advantage for customers who want open BI platforms that are not tied to a particular enterprise software stack. As a reminder, MicroStrategy 2019 is a modern open enterprise platform that provides customers who own the most powerful, flexible enterprise analytics and mobility platforms on the market. New innovations in MicroStrategy 2019 like Federated Analytics and HyperIntelligence address some of the most pressing analytics problems facing enterprises. For example, HyperIntelligence solves the key problem facing many enterprises, how to get actionable insights into the hands of knowledge workers with minimal friction with the productivity tools they already use to view their jobs. HyperIntelligence cards on the web, in mobile and on Microsoft Outlook provide real time answers with existing workflows. HyperIntelligence allows entire workforces to access curated, secure, governed data in seconds and make actionable trusted decisions with this statement. We saw strong demand for HyperIntelligence during the quarter, highlighted by 50 HyperIntelligence deals. As a reminder, purchasing HyperIntelligence in Federated Analytics requires upgrading to MicroStrategy 2019. Through the end of the Q2, more than 400 customers have already upgraded to MicroStrategy 2019, and we have a targeted program in place to upgrade most remaining detail, I'd like to provide some high level takeaways for investors. One, total revenues increased 0.4% year over year on a constant currency basis. This is our first constant currency total revenues increase in 9 quarters. 2, we delivered 7.5% year over year product license revenue growth on a constant currency basis against a challenging comp. This is a 3rd consecutive quarter of year over year constant currency product license growth. It reflects the momentum in our business and the positive impact in MicroStrategy 2019. We are pleased with 2019. We are pleased with our product license performance and believe that we are on track to achieve our goal of product license growth for the full year in 2019. Product support revenues increased 1.9% year over year on constant currency basis. We continue to have industry leading maintenance renewal rates and we're finding that our efforts to upgrade our customers and provide them proactive enterprise support are increasing customer engagement and satisfaction. Other services revenues declined 9.5 percent year over year on a constant currency basis. This is a less strategic lower margin business for us and it will typically lag product license revenue performance by several quarters. Looking ahead, we're optimistic that other services revenue performance will improve in the second half of the year. We're delivering on our target of leveraging our operating cost structure, which was essentially flat year over year. We're pleased with the cost discipline and productivity improvements we're driving across the business even as we continue to make targeted investments to drive future growth. Finally, the recently announced changes to our senior management team are designed to deliver even better performance over time. As you can see from our Q2 performance, the changes were not made in reaction to our financial results for the quarter, which were solid. Rather, we believe a flattened, more streamlined go to market leadership will enable us to be more responsive to market trends and drive further productivity improvements across our sales organization. I've been intimately involved in the day to day operations of the go to market team and COO over the past year. I'm looking forward to focusing on that role and bringing sales and services closer together full time going forward. We've begun a national search process for a new CFO. Our priority in a new CFO is one that has experience in a finance leadership role in a public B2B company, a proven track record of driving profitable growth and is a hands on business partner that is equally comfortable with employees, customers and investors. While that search is ongoing, I will continue to serve as CFO. Turning to our financial results in more detail. Total product licenses revenue were $20,100,000 in Q2 2019, a $800,000 or 4.3% increase year over year. Foreign currency effects negatively impacted product licenses revenue by $600,000 or 3.0 percent. Product support revenues were $73,000,000 in Q2 2019, a 0.9% decrease year over year with foreign currency effects negatively impacting such revenues by $2,100,000 or 2.8 percent. Overall, we continue to see strong customer renewal rates, which reflects the value customers generate from MicroStrategy products. We continue to anticipate product support revenues to generate growth for the full year on a constant currency basis. Deferred revenues at June 30, 2019 were $181,000,000 This is essentially flat year over year and is the best deferred revenue performance in 5 quarters. As expected, we have resolved the previously discussed issues related to the move to a new quoting system. Other services revenues were $17,500,000 in Q2 2019, a 12.5% decrease year over year with foreign currency effects negatively impacting such revenues by $600,000 or 3.3%. As mentioned earlier, we would expect improved performance from other services revenue over time due to consistent growth in product license revenues and focus on engaging our customers. Turning to costs, total operating expenses of $97,200,000 were essentially flat year over year and down 2.4% quarter over quarter. While we continue to make material investments in our product development efforts, we are driving meaningful efficiency improvements in our sales and marketing spend. We believe there are additional opportunities to drive further leverage, which will be a key focus in the second half of twenty nineteen. Our operating loss for Q2 2019 was $4,800,000 compared to $1,800,000 in the prior year period. We had net income of $20,400,000 in Q2 2019 and diluted income per share of 1.98 dollars with net interest income of $3,000,000 and other income net of 29,400,000 Net income was positively impacted by the sale of the voice.com domain name for $30,000,000 in cash, which resulted in a $21,800,000 gain net of tax and minor transaction costs. This was an opportunistic transaction to monetize a long held non core asset. We own more than a dozen evocative and powerful domain names and are open to leveraging these domain names in equity or other strategic transactions with well funded parties to generate value for shareholders. Excluding the impact from the gain on the voice.com domain name sale, non GAAP net loss was $1,400,000 or $0.14 per share. During the quarter, we did not repurchase any shares under our existing buyback authorization. In the prior two quarters, we repurchased $160,000,000 of stock. This is well in excess of what we had anticipated being able to repurchase in such a short period of time. We believe buybacks can be a useful way to opportunistically generate value for shareholders. However, it is just one component as we evaluate our broader long term capital allocation strategy. And we continue to believe keeping a substantial cash balance on a balance sheet as prudent. To be clear, it is our intention to consistently be profitable and generate cash flow on an annual basis. Before I turn the call back to Michael Sailor, I want to finish by reiterating that we're generally pleased with the performance of the business in the first half of twenty nineteen. Customer interest in MicroStrategy 2019 has been strong, and we're excited about our opportunity to continue driving product license revenue growth. With our increased focus in generating leverage from our cost structure, we're optimistic about our ability to deliver improved profitability and increased cash flow over time. Now I'd like to turn it back to Michael Taylor. Thank you, Phong. I'd like to touch on a few areas of interest. I'm incredibly excited about where we are as we move into the second half of twenty nineteen. On the marketing front, our HyperIntelligence and our Federated Analytics messaging and messages are resonating really well with customers and partners and prospects. I feel like they have repositioned the company from being a legacy enterprise platform vendor to being a modern analytics and intelligence architecture. And so they're helping us a lot with new business development as well as recruiting morale. It's really been a big shot in the arm for our existing customers as they work to build excitement for MicroStrategy deployments within their enterprises. And they allow us to work really, really effectively with other tools like Power BI and Tableau and Excel and the like, as well as a lot of the data science platforms like Jupyter and SDKs like Xcode and Swift, etcetera. So activating the analyst community, the data scientist community and the software application developer community is a big part of MicroStrategy's enterprise platform strategy. And MicroStrategy 2019 really dramatically upgraded our ability to do this. We really started hammering on these messages at the beginning of the year. We've now got enough feedback from the market to have a high comfort level that they are working and they're the right decisions. Following the Tableau acquisition by Salesforce, there are now 5 major full stack vendors in the business intelligence space: SAP, IBM, Oracle, Salesforce and Microsoft. The market needs and it desires an independent intelligence platform vendor. MicroStrategy is now the leading independent platform in this space and we have good support from the analyst community and a strong set of assets all for the market. I think if you move around the industry, you see Oracle's got a commitment to their database and they've got a very hostile relationship with both Microsoft antagonistic relationship with Microsoft and with Amazon and with SAP and with Salesforce. So they're not terribly enthusiastic about supporting AWS or Azure or the SAP architecture, the Salesforce architecture. And that's been the case for a while. SAP, following their acquisition of Business Objects, has promoted their own database HANA, their own application architecture and they have consistently focused the investments of business objects toward the SAP architecture and it has weakened in the merchant business intelligence space as a result of that. IBM is probably even a bigger example. IBM, when they acquired Cognos, put it into a division and focused it on operating in a very narrow scope. And consequently, it's very difficult for someone in the Cognos BI division to support the Amazon Cloud, the Microsoft Cloud or the applications from SAP and Oracle. It's also been difficult for them to migrate into the AI space because that mission is claimed by Watson, which is a different part of IBM and it's difficult for them to migrate into the mobile space for similar reasons. So one of the dangers of being a division of a conglomerate is your capital budget and your aspirations are constrained by the strategic plan of a CEO that is juggling many, many other priorities. So although it might be a rational thing for Oracle to favor their own database over Hadoop or big data. And it might be rational for SAP to favor their own apps, their own database, and it might be rational for IBM to favor their own stacks of technology. It isn't in the best interest of the customer who would like choice. With Tableau was before this acquisition pretty strong competitor, but now that they're part of the sales force stack, it's going to change the dynamics and it's going to change the incentives. And clearly, what's in the best interest of sales force is not necessarily in the best interest of SAP and you can't imagine as much enthusiasm supporting SAP, Microsoft, Oracle and IBM coming out of the Tableau Technology organization following the acquisition and before the acquisition. That leaves Microsoft. And Microsoft itself is a full stack vendor. And Power BI, I suppose, is emerging as probably the more notable competitor for us. But even as Microsoft is probably the lowest cost and the most ubiquitous of the full stack vendors, they are still a full stack. And if you commit to Microsoft's Power BI, ironically, you're precluded from running on Windows in your own data center and you're precluded from running on Linux and you're going to be precluded from running on Amazon's AWS, which is the, of course, the leading public cloud provider. And so all of these things create an interesting vendor lock in dilemma. Now vendor lock in is something no CIO wants. And in a world where the largest vendors are selling you your application functionality, all your software components, all your hardware components, all your networking and literally the electricity to operate these things via a term license, big corporations are literally purchasing their oxygen from a single vendor if they lock into a big stack. And they don't unlike the world where you bought enterprise software deploying your data center on a perpetual license, they don't have the option to go off of maintenance switch vendors over a 3 year time period if they have a dispute with a vendor or they need to do something different or if they have a financial problem. A dispute with a major stock vendor in the cloud results in immediate bill with no negotiating leverage. And if you don't pay the bill, they can literally turn off your business. So that creates an interesting dynamic. Any reasonable IT executive would prefer to have more than one source for something so critical. And we've noticed that the public cloud migration and the public cloud business in general has accelerated for us when we delivered MicroStrategy on Azure along with MicroStrategy on AWS. Having parity between the 2 and having a choice between the 2 is a big deal. And I believe actually that the arrival of Azure as a credible alternative to AWS probably has accelerated the overall industry migration from data centers to the public cloud, perhaps to the benefit of Amazon as well as to the benefit of Microsoft. Because if there's only one supply, it's very difficult for a reasonable executive to put all their business eggs in that basket. Everyone's going to want to have more than one choice. One of our key value propositions to customers is that when you deploy MicroStrategy applications on AWS, if you were to deploy dozens of applications to 10,000 users in an AWS environment and if you decided or found out that you could purchase the same software and hardware services from Microsoft at half price, you could turn off the application on a Monday night at midnight and turn it on in Azure or switch from Amazon to Microsoft within minutes without a service loss. So the ability to move seamlessly between the environments is a big benefit that MicroStrategy offers. You won't see a similar benefit from the full stack vendors. They're not really in that situation. So, I think that we're well positioned as an independent platform. The world is not ready to trust all the mission critical operations to 1 cloud vendor. They're probably not ready to trust them all to 2 cloud vendors. But the world is interested in being able to integrate multiple data sources, multiple applications and multiple platform environments in order to deploy mission critical apps. And MicroStrategy is offering that. We've been delivering the MicroStrategy cloud platform on Azure and AWS in 2019. And as the market shifts toward these public cloud deployments at an increasing rate, our timing is good, Our messaging is resonating, and we're starting to see a deal activity pickup as a result of this. So I believe that these developments in the market are auspicious for us, and I believe that we will continue to build momentum based upon them. With regard to sales activity and sales execution, I'm excited about our management changes and the combination of our sales and our services leadership under Phong Li. It's always been our plan for him to take on increasing amounts of responsibility at the firm, And we're committed to precise, very hands on execution in order to serve our customers and grow our business. So a single leader of all the sales and the services operations is going to aid us in achieving that objective. To that effect, we pursued a number of business initiatives in the past quarter to improve our sales results. We have simplified and streamlined our licensing terms. We've introduced a new rationalized product catalog. We've implemented universal order forms. We've streamlined a set of international price books. We've streamlined and improved our education offerings. We have upgraded and streamlined our support offerings. We have created more competitive consulting pricing and easier to sell competitive software easier to sell consulting packages. We have improved the sales compensation schemes with regard to consulting in order to drive more sales focus on consulting. We have improved our services compensation schemes in order to better integrate our support initiatives and incentivize them in the right way. We've made some major systems upgrades to our sales organization and our sales systems in order to make things faster and quicker and more transparent and precise. And we've reorganized our sales operations teams in order to be more efficient and higher more rapid and increase the quality of the work we're doing. So they're very hands on things that are touching every person in sales and services and touching our corporate systems. But I have confidence that they're all going to result in improvements in our sales process as we move forward. In the area of services, our enterprise support program is beginning to take hold and impacting hundreds of accounts. We delivered on the order of 1,000 enterprise support projects in the past year that were proactive activities to improve the deployments of our customers and the environments our customers are working with. We expect to assist about 500 or more of our customers with platform upgrades this year via enterprise support program. So this is a broad based proactive engagement to elevate our level enterprise support to a place that is above and beyond what traditional vendors in our space would deliver. We're very proud of it. We think it's a great investment in the business and it will yield long term dividends for us. We're about through the 1st year or year and a quarter of this. It's a 3 year plan and I expect that we will continue to enhance our technique, our effectiveness and our coverage for the next 24 months as the organization grows and becomes more sophisticated. We upgraded and overhauled our 2019 education courses and certifications, and we're publishing them all online and using this to drive value and demand for our our education passes. We're really excited about that initiative as well. We're going to be focused upon delivering more and better support and by providing more competitive and more comprehensive consulting offerings, you can see that we're really committed to improving the services that we're bringing to the market. I'm really enthusiastic about an emerging version of emerging area of services, which is our cloud environment business. We have streamlined and overhauled our cloud offering. So now that we're offering cloud environments and production and nonproduction nodes throughout our customer base, and we're offering tailored cloud support packages, and we're doing this on both Azure and AWS. This allows our customers to ask for a very particular cloud environment that meets their needs. We're offering them with a standardized set of administration and maintenance and optimization services for the cloud environment, but we're also offering them a package of customization and integration services so that they can implement a hybrid cloud if they like or they can integrate into their other databases. We've really seen a dramatic increase the interest and the demand for us to begin to host and manage cloud environments for customers. I think it's a great underappreciated story at MicroStrategy. As we move forward, I think the combination of a stronger MicroStrategy cloud platform combined with stronger sort of cloud environment offerings and more effective sales and marketing in the cloud is going to help us to grow that business. And so that's another exciting area for the firm. Shifting to technology, a few tech notes. I think we're making great progress improving our federated analytics connectors and our HyperIntelligence apps. These are really opening up a lot of new opportunities with our customers and partners. As I said, they're really repositioning us in a good light. And they converted a lot of discussions from a head to head competition to a coopetition embrace and extend dynamic. I think that will continue. I mean, we seem to be taking a leadership position in the industry with regard to supporting all of the tools on the front end, all of the databases on the back end, all of the platforms that you might want to deploy on in the middle of an architecture. Our overall tech strategy is to focus upon AWS and Azure parity with regard to the cloud. We focus upon iOS and Android parity with regard to our mobile features. We work hard to develop Mac and Windows parity with regard to desktop and workstation features and to focus upon Chromium HTML support for the Chrome and Edge browser family. To be able to offer support for all of these various interfaces and platforms gives us, I think, a leg up and it's exactly what large enterprises are looking for. We will deliver some notable improvements in stability, scalability, portability and usability for coming few quarters. We're really focused on getting the basics right and delivering solid value for our customers. So we've been doing some exciting things like integrating SSO directly into various parts of our apps and working hard to eliminate clicks, unnecessary friction and then find ways to put more fault tolerance right into the platform so as to make the administration and the deployment of our product that much easier. A final note on the voice.com sale, I think there's an emerging awareness that crypto assets or digital assets are real. There's never going to be more than $21,000,000 Bitcoin in the world. And as people start to think about that and the fact that they can't be inflated and that's a limit, it gives value to that cryptocurrency argument. I think if we consider the domain as an asset class, once upon a time people thought that voice. Tv or voice. Buorvoice.somethingelsewouldmatter. And it turns out it doesn't.voice.commatters. And we have pretty good evidence here that the difference between voice.comandvoice. Ioorvoice.it orvoice.net was $30,000,000 That's the difference because that's what we sold it for. If it had been an open auction with multiple various bidders, it might have been more. So when you go on Google and you Google something like voice, you get 2,400,000,000 hits. If you Google Nike, you get 2,000,000,000 hits. The value of a great name, especially a dotcom name is amazing because it catapults you above 2,000,000,000 other pages. Anybody that ever saw an ad that said voice.com on it would remember immediately how to find that brand. And so these things are great. They're great assets for branding a network or branding a mobile app or branding a consumer application. And we own we literally own Hope in the English language. I mean, how would you like to own Hope? We own hope.com, HOPE. It's a noun. It's a verb. It's a name. You could use it to brand all sorts of things. We own Emma and Asher and Strategy and Speaker. We own Michael. We own William. Most of these generate multiple 1,000,000,000 hits if you type them into the Google search machine. And a strategy will get you billions of hits. So I have a belief that at some point, sometime in the future, we'll find well endowed, well capitalized companies that wish to rebrand them self or wish to rebrand a product or a service with a really compelling name. And when they do, then we'll monetize some of these other assets. Until then, we're very patient with regard to these investments. And just like with the other things we're doing on our business, we take the long view and we just focus upon making sure that we provide value to the customer. So with that, I want to thank everybody for your support, and I think we'll go ahead and open the floor for questions from the Your first question comes from the line of Hamed Khorsand from BWS Financial. Your line is now open. Could you first off talk about the headcount reduction in sales and marketing and how that actually does not impact any kind of future revenue growth potential? Hi, Hamed, it's Phong. It's a good question. As you probably noted over the last couple of years, we added quite a few headcount to sales and marketing. In some cases, these were overlay folks in the sales team. In some cases, these are adding to regions that were sort of growth regions in 2nd and third world countries. And in some cases, these were marketing heads to further some of our digital marketing work and some of our business development. And I think what we observed over the last year or so is that they were not adding the level of revenue or productivity that we expected or needed. And so we're able to reduce them while still increasing revenue and overall productivity. And we looked at each of those very closely and worked very closely with our field teams to make sure we're making the right decisions. But ultimately, for the kind of growth we need, there's still a lot of room in the headcount we have. And so I don't think headcount is really the lever to grow. I think it's more productivity out of our existing high performance reps. Okay. And then could you just talk about this HyperIntelligence? I mean, last quarter, you were talking about having dozens, now you're talking about 50. How fast can you get these customers upgraded this year as far as those 500 that you're targeting? Yes. So there's a couple of sort of things in that question there. First, just in terms of our upgrade activity, we've had pretty good traction. We had entered the year knowing that we wanted to upgrade the vast majority of our enterprise customers by the middle of 2020 and we're on pace for that. Upgrading the customers then results in potential upsell. And as you mentioned, we did about 30 revenue generating HyperIntelligence deals in Q1 and we saw about 50 this quarter and we expect to continue to accelerate that. And the nice thing is as customers take 2019, they tend to get a demo or proof of concept of HyperIntelligence and we find everyone that does that demo and proof of concept is instantly enamored with the product. And then it's a matter of them figuring out what are the right use cases for HyperIntelligence. And so there's a bit of a snowball effect as we see certain customers have certain use cases, we're able to share it with other prospects and customers and we continue to see a lot of good traction. The other nice thing about HyperIntelligence that Mike talked about a little bit is it's really a new product wedge and it positions us as an innovative BI company again. So our sales people get excited about it, our customers get excited about it. It creates this aura of innovation in the company and then our marketing folks get excited about it and our prospects get excited about it. So it still continues to go really well and we add product features every quarter, right. We launched HyperIntelligence in Q4 as a web based product. In Q1, we added a mobile capability and now in Q2, we've added an outlook based capability. So we're able to continue to add feature functionality every quarter. Okay. And then as far as the customers that have upgraded so far this year, what are you seeing as far as incremental revenue coming from them? Are they broadening the usage within the workforce? Yes. I think when we see customers upgrade, they tend do so with the expectation that they're either going to increase their footprint of MicroStrategy at the current enterprise that they're in or they increase the usage of additional tools like our mobility tools, library and dossier or HyperIntelligence or our federated analytics. We haven't published and we're not going to report on sort of the incremental revenue that comes from customers upgrading, but we're seeing a positive trend there. And of course, you can imagine it's not immediate revenue, right, like a customer may upgrade to MicroStrategy 2019 in Q1, which then initiates the sales cycle, which our typical sales cycle is 6 to 12 months. Okay. Thank you. Your second question comes from the line of Tyler Radke. Your line is now open. Thank you. Good afternoon. Could you talk about the contribution from Hybrid Intelligence in the quarter? I know you talked about 50 deals that included that, but just give us a sense on the magnitude of the revenue contribution? Yes, Tyler, it's a good question. We're not yet prepared to break out revenue associated with HyperIntelligence. I would say it's not a significantly material amount of our product license revenue yet. It's a noticeable contribution and more so than just a specific set of revenue coming from HyperIntelligence is the fact that a customer is interested in buying more overall licenses of MicroStrategy of which they attach HyperIntelligence. So HyperIntelligence is creating, like as I mentioned, sort of an aura of innovation and confidence in MicroStrategy to product overall. Also, I'm not sure we'll ever really be able to break out product specific revenue on things like HyperIntelligence or Federated Analytics. As you probably know, we tend to sell the products together and then discount them together. So it's hard to break out product revenue contribution from any particular product. And then maybe a question for Michael. You talked about how the acquisition of Tableau by Salesforce is kind of creating an opportunity. Have you seen any signs thus far, either changes in win rates or just anything competitively that gives you that confidence or any other color that you've seen along the competitive front that gives you more confidence here would be great. Well, recently as recently as about a year and a half ago, the usual suspects were Tableau and Click. And they were the hot, cool newcomers, spending huge amounts of money with new technology. And as soon as click got taken private, we noticed that they lost a step. And a year after that privatization, the consensus across our entire sales organization is click as not nearly so competitive or aggressive anymore, nor are they being taken seriously. They've had an enormous brain drain of sales, marketing and technology talent and kind of the energy has bled out of it. Tableau's acquisition with Salesforce now is a newer thing and it won't it's not even yet closed, I assume. So if we look out a year from now, I think that we'll be in a position to give you some concrete takeaways from that. But it's already having an impact on analyst perceptions and customer perceptions. Everybody's got to just go through the calculation of what does this mean for support for the Salesforce cloud versus the AWS cloud versus the Azure cloud. And there are different very different cultures. Salesforce, of course, famous has been very successful with a very famous slogan that they ran for 20 years in advertising and it was no software. Like they don't ship it, you can't buy it, you can't download it, there is none. And Tableau is almost diametrically opposed success, which is they created a very nice piece of software running on a PC workstation for an analyst who was fatigued from Excel and wanted to download something, pay for it with a credit card and build something cooler. So there's 2 different technical strategies there. And then how is that going to morph into the future? Nobody knows, but a lot of uncertainty. We don't have so much uncertainty about what generally happens with acquisitions because I've now seen about 100 of them and I've seen what happened to Essbase and Brio and Information Advantage and STG and Cognos and Excelsior and Crystal Reports and Business Objects. And the general thing that happens is that the very, very passionate, committed founding executive team typically goes off somewhere else to do the next thing, whatever that next thing might be. And the organization starts getting run in a more corporate fashion. And that there are some examples where that works well, but in the event where there are conflicting tools that do the same thing, and Oracle ended up buying 9 conflicting BI tools and IBM had a host of conflicting BI tools, etcetera. When that happens, they have to pick who they're going to invest in, who they're not going to invest in, and then they start to emphasize fusion type projects and integration projects. And all of that complete creates a lot of uncertainty for the customer and a lot of conflicts across the sales organization. And the result is that normally, the momentum of the particular platform slows down and they get more drag and turbulence. So I think after seeing the entire story play out about 100 times, you can reasonably predict how this one will play out. By the way, one could argue, SAP made some money off of business objects by merchandising business objects through their installed base and then IBM for a while, merchandised Cognos and Oracle for a while, merchandised OBIE. And so for a while, there's a good financial impact. But then once you get past that initial push, which is good for financially for the organization, you tend to have a lot of drag. And then a lot of the innovation leaves the platform. The one thing that's essential, I think, to stay viable and vital in this business is you have to be able to shed your skin every 5 to 7 years and re architect and rebuild. And for a while, it was you have to support 3 tier windows and then it was you have to rebuild for Linux. And then it was you have to throw away the desktop and support the web. And then it was you have to throw you have to build a new skin for mobile. And after that, it was now you have to rebuild the platform for AWS and then it became you have to rebuild the platform for AWS and Azure. And next, it Azure. And next, it will be Docker, right? And these things go on. If you have the ability to direct a huge amount of capital into your R and D function And if you don't have any religious constraints that prevent you from pursuing a certain idea. A religious constraint, for example, is IBM is in no way, shape or form interested in supporting a competing company's AI platform. They want to support Watson or Oracle doesn't want to support Amazon's AWS. So when you have those kind of constraints religiously and then or dogmatically and then you have capital constraints, you tend to not want to re architect the product, you tend to get run as a cash cow. And if you get run as a cash cow, then whatever you evolve to be at the point of the acquisition is pretty much what you're locked into for the next 20 years. If you're lucky enough to be a perfect complete product at the point of acquisition, then maybe you're okay. But if the market is evolving dynamically, then the success rate of those things is less. I think it's quite possible and likely that Salesforce will turn this into a success for Salesforce, while at the same time, it won't be an ideal situation for a customer of Tableau that wanted an independent enterprise intelligence tool. So that's what I think about this in particular. And my forecast is really based upon observing how all of the similar companies in the space performed in the years following the acquisitions. Great. Appreciate the perspective. And if I could just ask one more for Fang. Maybe talk a little bit more about your expectations for the back half of this year. I think, obviously, nice to see kind of the Q1 of growth on growth in a while here. Comps are easier in the second half of this year. What are you thinking in terms of overall license revenue or license revenue growth and overall revenue growth as we get to the second half? Thank you. Yes. Thanks, Tyler. As I mentioned in my prepared remarks, I think we saw reasonably good product license revenue growth on a constant currency basis in the first half of the year, and we'd like to see that continued trend in the second half of the year. I think our support business has been chugging along and it's been consistently growing in that 1% to 2% range on a constant currency basis. And I think that's a good run rate for that business given our product license revenue growth. I think on a services basis, that's been an area of decline as we refocus that business. And I think with some of the actions that Mike had mentioned around around more competitive rates and some consolidating and rebranding and repackaging of our services business, we should start to see that business turn around. And our goal, as I mentioned before, is to continue to streamline the business and cut some cost and generate some positive operating margin. So my expectation is the second half of the year is more the same or the first half, if not better. Thank you. We have a follow-up question from Hamed Khorsand. Your line is now open. Hey, just want to understand as far as your confidence here in the business, what are you seeing in the pipeline bookings that's giving you this kind of confidence? And you're talking about Click and Tableau, but are you picking any of the people from there? Or are you taking advantage of the sales slip up? And could you just provide a little bit more granular color towards that commentary you're making on the call? Yes, Hamed. I mean, first of all, just from a pure pipeline perspective, I think Marge has been here for about a year now, half of which she's been able to leverage the success of the 2019 platform and a lot of the operational changes she's put in place to the marketing team the business development team. And so we are seeing a material increase in our pipeline and further increase in quality of the pipeline, our ability of the sales team to convert the pipeline. As far as our observations vis a vis competitors like Click, I think it's less so that we're seeing more and more wins against some of our competitors, but we are seeing fewer of those competitors in the marketplace. And so that gives us some more strength. That said, Power BI and Tableau continue to be very strong competitors and we go against them more and more. So the competitive environment, I wouldn't say is getting stronger or weaker, it's about the same. And as far as Mike's comments about the consolidation in the market place, I think those are more longer term views into where this business may go over time. Okay. My last question is, this voice.com sale, was this just a one time event? Are you looking to liquidate your entire portfolio now? Or is it just purely from a solicitation standpoint of someone coming to you? We're opportunistic on these sort of transactions. We certainly would never be in a rush. We've held some of these domains for 20 years, and we're prepared to hold them for many more years until we find someone that values them more than we value them. So I think we're willing to enter into strategic transactions if we find the right partner and if we think it's a worthwhile endeavor. But we're in no hurry. All right. Thank you. Ladies and gentlemen, I'm showing no further questions at this time. I would now like to turn the conference back to Mr. Michael Taylor. Sir, you may proceed. Well, I'd like to thank everybody for their support. We appreciate it. We're looking forward to the Q3, and we'll speak to you all again in 12 weeks. Enjoy the rest of your summer. This concludes today's conference. Thank you for your participation and have a wonderful day. You may now all disconnect.