Filed by Omniture, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Visual Sciences, Inc.
Commission File No.: 000-31613
The following is a transcript of a presentation by Omniture, Inc. Chief Executive Officer Josh
James at the JPMorgan Internet & Media CEO Conference Call Series held on December 7, 2007 at
approximately 11:00am Eastern time.
OMTR OMNITURE INC at JPMorgan Internet & Media CEO Conference
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Event Date/Time: Dec. 07. 2007 / 11:00AM ET
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2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
CORPORATE PARTICIPANTS
Josh James
Omniture CEO and Co-Founder
CONFERENCE CALL PARTICIPANTS
Imran Khan
JPMorgan Analyst
Steve Quinn
JPMorgan Analyst
PRESENTATION
Operator
Welcome, and thank you for standing by. All participants will be on listen only until the
question-and-answer session of todays conference. I would also to remind participants that the
conference is being recorded. If you have any objections, you may disconnect at this time. I would
now like to turn the call over to our first speaker, Mr. Imran Khan. Sir, you may begin.
Imran Khan
JPMorgan Analyst
Thank you, and good morning everybody for joining our CEO Conference Call Series. This morning I am
delighted to have Josh James, CEO and Co-Founder of Omniture, in our call.
Josh has been the CEO and Co-Founder of the Company since 1996. Prior to starting Omniture, Josh
co-founded and co-managed various entities that were predecessors to this Company. Mr. James spent
time on the Brigham Young University eBusiness Advisory Board, is a Silver Founder of the BYU
Center for Entrepreneurship, and served as the Chairman of former Utah State Governor Leavitts
campaign office, Utah Silicon Valley Alliance Entrepreneur Committee sorry. Josh also attended
Birmingham Young University. With that, Josh, welcome and thanks for joining our call.
Josh James
Omniture CEO and Co-Founder
Thanks, Imran. I have been looking forward to being on the [.com] for awhile. So glad to be here.
Imran Khan
JPMorgan Analyst
So, Josh, I think to start the call for people who might not be familiar with Omnitures story and
products, do you want to give us a quick overview of the Company?
Josh James
Omniture CEO and Co-Founder
Sure. For Omniture we provide an online business optimization platform, and it allows our customers
to measure and optimize and automate their online multi-channel business initiatives. We host and
deliver our solutions to customers via the on-demand model. And our product consists of
SiteCatalyst, which is our flagship product, and DataWarehouse, a product called Discover, Genesis,
SearchCenter and TouchClarity.
And as you mentioned, we founded the Company in 96 and began offering on-demand online business
optimization solutions in about 1997. And then it really has been focused on the enterprise market
since 2001. So we have been growing pretty rapidly
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
since then. We did $3.7 million in 02. Did about $80 million last year. And we just finished our
last quarter I think the third quarter this year with revenues of about $37.5 million, and a
customer base of approximately 2,700.
So the five things you should know about our business as an investor are, number one, it is a
multibillion dollar market opportunity that scales at the Internet. Number two, our platform
solution has multiple growth drivers via this on-demand delivery. Number three, we help our
customers increase their sales and profits, not decrease their costs. So were out there really
helping them with something that is always appealing to anyone in any market.
And then number four, because of the model we have it is a very scalable business, very
predictable, recurring revenues. And I think the most important question when you think about
recurring revenues is retention. And we have got north of 95% nominal retention, and north of 110%
revenue retention.
And then number five, we are the largest and the fastest-growing company in this space. And the
team that has gotten us to this point is the team that is still here, locked and loaded and ready
for the next phases of the organization.
Imran Khan
JPMorgan Analyst
With that, lets talk a little bit about the most recent strategic event. You recently announced
the acquisition of Visual Sciences. This week you got the DOJ (inaudible) clearance. First, do you
want to briefly talk about what you feel your strategic goals are thinking about the acquisition
and how Visual Sciences fits into that?
Josh James
Omniture CEO and Co-Founder
Sure. We have kind of always talked about the fact that weve got three prongs to our M&A strategy.
So we have got our international market expansion, and weve done an acquisition on that front.
Instadia is a company we bought in the Scandinavian region of Europe. We also have we are also
looking for new technologies that we can add to our platform. And that is the second area. And then
the third area is domestic consolidation.
One thing we have always said about domestic consolidation is anything we look at there is going to
be is going to have to be completely justified from a purely from a financial perspective.
And then if it meets the financial criteria that we have, and it is accretive, etc., then we can
look at other strategic reasons that would cause us then to do this, since it cleared the financial
hurdles that we have internally.
So we have been we are really excited that Visual Sciences when they announced they were for
sale, and a lot of people were looking at them. And looking at other people in our space, and we
looked at everything that we could look at, and the Visual Sciences deal made absolutely the most
sense. And it was a situation where it was a nonemotional deal. It just is purely financially
driven. And we felt like the numbers made a lot of sense.
And the great thing on this deal it is going to provide a significantly larger base of customers.
We had over 4,000 customers that we will be able to cross-sell and upsell into now. And weve got a
much broader product offering to go after their customer base of about 1,500 customers.
Weve got a 12 to 18 month kind of acceleration in our investment timeline. That is one thing that
made this thing make strategic sense. After it passed the financial hurdles, weve got to have a
strategic region reason to do it. You just dont do it because it makes financial it just makes
financial sense. There has got to be some other reasons. The fact that this we can really
accelerate the things that we wanted to do, accelerate the investments that we want to make with
its internationally or in our engineering team, or domestically in our sales team. It just it
accelerated everything by 12 to 18 months, which is extremely interesting from a competitive
standpoint. And then number three, as I already mentioned, from a financial perspective it is
accretive immediately.
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
Imran Khan
JPMorgan Analyst
Great. You have had about a few months about a month actually now since the deal was announced.
From talking to your customers and Visual Sciences customers what kind of responses have you
gotten? Do you expect to see a significant amount of churn? Are any Visual Sciences customers
choosing to switch to the Omniture product ahead of
the deal?
Josh James
Omniture CEO and Co-Founder
Fortunately, we have been a little surprised on the positive side. We thought that people would be
a little more apprehensive. We thought that the employees would be a little bit more apprehensive,
just because [with an] unknown, not knowing what we were getting into exactly. Which was some of
the things that were driving the financial metrics around what we thought made sense didnt make
sense. We had to allocate for a brunch of risks associated with customers and employees being much
more conservative in their view of Omniture than they have been.
We have been really excited to see that customers are excited that they feel like, okay, weve got
a company that is very clear what their long-term strategic vision is. It is very clear how they
fit into the marketplace. It is clear that they are a leader and that gives us confidence that we
continue to invest in these solutions that Visual Sciences is offering. We are extremely excited
that Omniture is bringing together the solutions that they have with the Visual Sciences products,
so that they can grow and expand as their companies evolve these additional products and services
that we offer, that really completely sets us apart from anything else that is out there.
And to see that the customers respond that way, to see Visual Sciences sales performing as we were
hoping, and see some big deals that they have been able to procure on the Visual Sciences side, in
particular, and the retention that they have been able to have, it has been really positive.
We certainly expect to retain a lot of that business. And we think that weve got a lot of we
have acquired three companies like this before domestically. And that gives us a lot of confidence
because we have already made mistakes in those other ones that we have been able to rectify in the
latter ones of those. The first one we certainly made some mistakes that we were able to fix in the
second one and able to fix in the third one. And now that were doing this one we can take all that
weve learned and feel really confident.
I think one of the things, if I may add kind of an additional aside here, that we get a question
quite often talk to us about execution, execution risk associated with this deal. And the thing
that I would say on that front is we are actually more concerned about the integration of our
Offermatica transaction than we are of the Visual Sciences transaction. The Offermatica, that deal,
that is a different business. TouchClarity, that is a different business. It is not a business that
everyone in here has in their DNA that we know inside and out.
We certainly know it from a peripheral standpoint. We know it from a partnering standpoint. We have
customers that use our products to measure and optimize their business using those types of
products before we acquired those companies, but it is not something that we have been doing
forever. Whereas, Visual Sciences, we are extremely familiar with that way of doing business
because we do business the exact same way. We are in the exact same business. We sell some very
similar products.
And we feel like theres some things that we know how to do better frankly, which I dont think
comes as a surprise to anyone given our performance. And then we can also learn from things that
theyre doing better. It is a business that the thing that you have to focus on internally is
making sure that we have enough resources internally devoted to the integration.
It is not rocket science. We dont have to create a new way of doing business. We dont have to
create a new way of trying to figure out how to integrate these customers and go out and cross-sell
and upsell to these customers. We know how to do that.
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
So it is just a matter of making sure we have enough focus internally. And we have been building at
a fairly integration organization for that exact reason. So we feel pretty confident in our ability
to execute on that front.
Imran Khan
JPMorgan Analyst
Josh, at the beginning you talked about the addressable market being big. Could you give us some
color how did you define your addressable market? And you have 4,000 customers, how many customers
you can potentially acquire, what is your target customer list?
Josh James
Omniture CEO and Co-Founder
The way that we think about the addressable market is we look at the top 200,000 sites based on
their Alexa ranking. If we look at the top 10,000 sites has always been what we consider to be
the enterprise space. And then the top 200,000 sites is the addressable market. From number 10,000
to 200,000 that is our midmarket opportunity. And if you look across the top 200,000 sites and kind
of map out every single one of our customers, the 2,700 that we had before the Visual Sciences
transaction, and you kind of map them out by rank, and the actual dollar amount that they pay us
annually, assuming just 50% market penetration within the top 200,000 sites, we are able to
identify a $3 billion to $4 billion market opportunity for analytics alone.
So the point of this calculation is to show it is a multibillion dollar market opportunity, because
when you start layering in things like Offermatica and TouchClarity via an optimizations suite, and
you start to layer in things like SearchCenter, and then later in some of the more advanced
analytics like Discover and the Visual Sciences product, which were going to combine those two
over time, it is really easy to see how this is really is a gigantic opportunity.
Imran Khan
JPMorgan Analyst
Talk about your customer base. I think together with Visual Sciences you have 4,000 customers. Can
you talk a little bit about the breakdown between enterprise and SMB customers into that 4,000
customers? And also could you please give us some color about the average selling price between
those customer base?
Josh James
Omniture CEO and Co-Founder
Sure. To think about the way to think about the enterprise and the SMB is, so weve got on
the enterprise side we probably have about 8 or 9% penetration. This is all prior to the Visual
Sciences deal. And 8 or 9% penetration through those top 10,000 sites. So the ASPs there are 120ish
per year. And so these are all annual deals. That is generally the way that we talk about revenue
from customers. We get multi-year deals all the time, but the way that we always think about our
business is what is the annual incremental contribution to our revenue base with each additional
customer.
So that is just with analytics, because we have really only been selling additional products for
the last year, and have been adding these things over the last year. So dont have enough data yet
to give you an average an NASP over what it is going to look like over time.
With the midmarket customers, the average ASP is more like $20,000 per year. And when you want to
think about what can these numbers look like over time, when you layer in things like Discover,
Discover is about a 50% increase, generally speaking, that we see on average across our customer
base. Things like SearchCenter are 25 to 50% increase. Offermatica and TouchClarity are anywhere
between 100 and 200% increase when combined. Each of them is about 100% increase to the base price
that we are seeing. And TouchClarity by itself can be 1X to 2X. So there is a pretty substantial
opportunity there to go back into those customer bases.
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
And this is just the beginning. There are so many additional things that our customers are asking
us for. They are coming to us and saying, will you guys please do this? And the nice thing is that
we have Genesis that allows us to help our customers leverage the data that we have, because
everything that were doing, we are trying to make sure that were leveraging that data that we are
managing for our customers via SiteCatalyst.
Imran Khan
JPMorgan Analyst
Talk a little bit about your customer retention program. You have a very high customer retention
program. Can you please give us some sense what is driving this such a higher customer retention
program, and do you expect it to sustain?
Josh James
Omniture CEO and Co-Founder
Sure. The focus at Omniture since day one has been about our customers, for a couple of different
reasons. We started off as a Company out here in Utah, and we were 25, 26 years old when we were
really getting things rolling. And in order to win deals, in order to retain deals by necessity we
had to completely focus on customers. And we have always had great a product. And so once we have
been able to get the customers involved with our products, they had been really pleased, as long as
were providing the right kind of support.
And we have constantly said that. We are the only company that has always been focused on big
enterprise deals with not only an enterprise focus from the sale standpoint and from a marketing
standpoint, but a big enterprise focus from a service standpoint in the way that we deal with these
customers and help these customers with their business.
And the nice thing is that once you have these customers in your customer base every time you get a
smart customer, it makes the whole customer base smarter. Because the on-demand model, one thing I
have said a lot is, I love this business. I love this model so much more than any model I have ever
managed before, because it makes sure that your interest are aligned with your customers.
The one thing that we say to customer sometimes is, someone that is already customer is much more
valuable to me next year than a new customer is going to be me to me next year. Because I am going
to have $1 of revenue this year from the customer, and next year I am going to have $1.10 to $1.25
to $1.50 plus. And they are already installed, they already know us, they already have bought off
on Omniture. And so that is really the way that we think about our business is our customers are
more important than our prospects. I think that is the right way to think about them.
You still do everything you can to win, and were still a sales oriented Company, but once you get
them in, you really have to prove to them all the things that you promised. And that is something
that were very, very careful about. And we have built out our services team. It is a best-in-class
services team. We have some competitors out there that sometimes say, weve got all these
consultants and you get all this free consulting associated. Well, that is because number one your
product doesnt work. And if your product doesnt work, then of course you have to promise all
kinds of consulting to make up for the deficiencies in your product. But then you are not really
promising consulting, you are just filling it with bodies, warm bodies, that can go in and do the
things to the product that you cant allow your customers to do.
We have allowed our customers to use the product anyway that they want. We allow the flexibility
in our product allows our customers to get the data out in any form that they want. And so they
really use our team as high-level consultants. And we have taken that team because were the
largest company in this space we have been able to take that and to verticalize that team.
When you want to talk to an expert in retail, we have a whole group of folks that that is all they
do is live and breathe retail. When you want to talk to someone in finance, that is all they do is
live and breathe finance. And the list goes on and on from the vertical standpoint.
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
So those types of things, in addition to the training that we do, there is just a long laundry list
of things that we do to make sure that we retain these customers and keep them happy. And it is not
about the product and it is not just about the service, it is about every facet of the organization
that we interact with these customers. That is why we have seen dozens and dozens of customers move
over from our competitors over time. And we think that is not that is not where our growth comes
from, but it is a pretty good indication of we are the best product and the best services for
these enterprise organizations.
Imran Khan
JPMorgan Analyst
If you look at some of the large Internet companies and software companies like Google and
Microsoft, they have a free analytic product. Discuss if you have any impact from those products in
your SMB marketplace. Also, once the Visual Sciences deal is completed, how do you see the
competitive landscape change?
Josh James
Omniture CEO and Co-Founder
I think theres a couple of things. From the free product standpoint, I think SMB is a little bit
maybe misleading of the way to talk about the market, because I think sometimes you think about SMB
a lot of companies think about the long end of the tail, if you will, that Google likes to talk
about.
For us it is really about our midmarket space. These are big companies that are doing for the most
part $100 million plus in revenue. And they are not going to any company that is doing $100
million in revenue for the most part is not going to go out and want to use a free product, unless
they are brand-new to the space. So Google has been really good at seeding the marketplace. Yahoo
and Microsoft have these free product also. And they are out there and they are seeding the
marketplace, and that has been great for the space.
We rarely hear about customers that are moving over from our products to free products. When I say
rarely, I mean one, two or three, and I dont even know the names of them. It just doesnt happen
that often.
And the thing that we do see though is sometimes we will get a customer the doesnt have anything
in analytics. Because we have talked about the greenfield opportunity here. If we only have 8 or 9%
penetration in an enterprise, and overall in the top 200,000 sites youre looking at 4 or 5%
penetration, and weve got the most from a paid perspective, it is tells you how broad the
opportunity is and how new and nascent this opportunity is.
So there is a lot of companies out there that havent done anything, and they go in and they throw
Google up. And they like, okay, well that is interesting. Now heres all the requirements that we
have. And for the most part though most of the large organizations that are really serious about
their Web businesses say, we cant be giving Google our data, number one. That doesnt make any
sense for us to give Google information that they can then turnaround and use to increase the
prices of the keywords that were making a lot of money off of. Because once you do that, Google
knows that information.
Number two, especially as this space evolves, our customers arent interested in just in how their
Google spend is doing. They are interested in how their Google spend is doing relative to their
Yahoo spend, relative to their MSN spend, relative to their spend on Gannett and the other
newspaper organizations out there, relative to their streaming media commercials that theyre
running. And in order to understand that, you need to be able to get data coming in from all of
these different places where you can publish your ads. Theres one thing that is never going to
happen. Yahoo is never going to send a data feed to Google. We all know that.
Even if you were getting this information, and your Google analytics product told you that Google
analytics suggest that you should spend more money with Google. Even if it says that and even if it
is purportedly transparent, youre just not going to believe that information as a marketer. Then
when you combine that with the fact that they can leverage that data to increase the prices of that
advertising to you, it is just something that most serious businesses arent never going to do. And
that is what
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
we consistently hear from our customers time and time again, and it has been consistent since that
product came out a few years ago.
Imran Khan
JPMorgan Analyst
Got it. It seems to us that the three key drivers of your story, adding more customers, increase
average selling price, and improving margins. So we talked about adding more customers and customer
opportunity, opportunity to increase average selling price. Could you give us some color how should
we think about improving margins for the Company?
Josh James
Omniture CEO and Co-Founder
Sure. I think were constantly finding efficiencies in our business. From a cost control
perspective over the last several quarters we have had you have seen a lot of improvement in
gross margin. And I think well continue to tweak that. Weve got Moores Law in our favor also. We
go out and we price something, and then over time the price of delivering the services on a
steady-state continues to decline. So that is good. At the same time we are in there adding
features and functionality, so that offsets that somewhat.
But real opportunity in improving margins is just the speed at which were growing our business. We
invest ahead of the revenue. Because the way the model works, when we go out and we sign up a
customer, lets say we sign up a $120,000 a year customer, $10,000 a month. The day that we sign up
that customer we are out there spending $20,000 or $30,000 in hardware. So weve got cash flow that
goes out. Weve got depreciation that starts on machines. Weve got implementation costs associated
with getting that customer up and running.
And then two to three months later the customer is able to finally turn is able to finally turn
everything on because they are able to get through the implementation process on their side and on
our side. And weve got from that point in time then we start recognizing that $10,000 a month.
So even though we had this $120,000 deal in hand, even though we know it is going to be very
profitable over the course of the first year, most of our expenses start in advance. So it is an
interesting it is really interesting, the faster you grow, the more margin progression that you
have there. So it is this inverse relationship of what looks like success in the financials versus
what is really taking place on the sales front.
Frankly, I would love to see that margin expansion continue at the pace that it has been expanding,
because that means we are continuing to have outsize success in the market relative to the
competition. And we hope that that continues. As that slows down, as that growth slows down, we are
certainly going to see more and more leverage.
Weve got a couple of points in margin just sitting there in the backlog of customers that havent
been installed because were signing up new customers so fast. Then the other thing is just as the
size of the business increases, we get more leverage, and that is certainly something to the second
half of your question. That is certainly something that is going to were going to continue to
see take place, especially with the Visual Sciences transaction where there is more and more
leverage opportunities that we have as the revenue base continues to increase.
It makes the percentage that were investing when we go to open up a new country, for instance
overseas, it is a smaller percentage of our revenue. And so there is just a lot of leverage that we
get out of the management team, out of G&A, out of the market even that were doing. And certainly
because it is an on-demand business, every time we add $1 of revenue were getting more leverage
out of our R&D department. It is you really see leverage across the board as it scales in size.
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
Imran Khan
JPMorgan Analyst
Let me dig in deeper into that question. I think you talked in the past about improving your
non-GAAP operating margins by about 1% per quarter, starting with 4Q. Are you still sticking with
that? And also what do you think is your long-term profitability?
Josh James
Omniture CEO and Co-Founder
Sure. Over time we see ourselves from an operating margin perspective getting to north of 25% from
a non-GAAP perspective. And as our revenue slows down then that number can even improve off of the
25%. The way that were going to get there it is kind of what you alluded to. We see ourselves
exiting 2008, in Q4, 10% operating margins. And we are excited about that.
We told everyone we were going to get to 6% operating margins in Q4 of 2007 over a year ago, and
achieved that goal a year early. Im sorry, a quarter early. Because of that, we think that we have
been able to demonstrate that leverage is really not difficult.
Frankly it is more difficult to make sure that you dont drop too much to the bottom line, because
we have consistently heard from investors also that as long as the market opportunity is as right
and as good as we have been describing, they want to see us continue invest that incremental
dollars that could drop to the bottom line. They want to see us invest that into the future. They
want to see us invest that in 09 and 10, and continue the topline growth as quickly as possible
within the constraints of adding approximately 1% per quarter. The way that were talking about
that now is making sure that we get to 10% operating margins by the end of 2008.
Unidentified Participant
SearchCenter penetration was up roughly one-fifth of your customer base in less than two years. How
do you see the growth curves for TouchClarity and Offermatica comparing to that?
Josh James
Omniture CEO and Co-Founder
I think one of the things that were going to do, and one thing that is important to understand
with TouchClarity and Offermatica, we knew at the beginning before we made the TouchClarity
acquisition that we needed to go out and make an acquisition in both of those spaces, because they
are both kind of subsets of the overall optimizations space. So when you think about and really
optimization I should say optimization of your site. Once people have clicked through the
advertising, once they are to your site, they are both kind of subsets of that. Those two spaces
being testing, so multivariant testing and A/B testing. And that is what Offermatica provides. And
then with TouchClarity you really have the behavioral targeting and the beginnings of
personalization.
Youll see a combination of those products over time into really one optimization suite. Customers
think about those when you go and have conversations with your customers, they are thinking
about optimizing their site. They dont necessarily know how to do that. They know that they want
to do that. They know that they want to invest in it. Theyve got the resources internally, not
just from a cash perspective, but from a time and management perspective. And they frankly dont
care whether it comes through MVT or behavioral targeting, they just want the improvements.
Some of them are ready for both. Some of them are interested in only one. But what we have seen is
all of them are interested in Offermatica initially. And we think that and some of them are
interested in both. And so by combining them were really going to have an opportunity to sell, I
think, a lot of product there. We are extremely excited about the opportunity there, and certainly
have really high expectations for that combined offering out in our customer base.
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
I dont know how quickly it is going to go, Imran, to give you an exact answer. Weve got to get
those things combined and be selling those for a few quarters. Were hoping that or we have an
expectation that Offermatica is going to close in this quarter still. And then over the course of a
quarter or two after that we can start giving some insight into how quickly that is going. But we
are already seeing signs of pretty rapid expansion, not unlike that weve seen before for
SearchCenter. We just need to get a few quarters into it before we can really describe what we
think is going to happen.
Imran Khan
JPMorgan Analyst
Fair enough. In the past when you and I talked, you talked about then how some of your acquisitions
were driven by
customers needs, customers wants. They told you that they are looking for some kind of services
and then you found the company. Can you give us some color like what kind of like product that
customers are asking to you the most frequently these days?
Josh James
Omniture CEO and Co-Founder
I think the best way to think about that is because of Genesis, we have this unique conversation
with our customers where they are helping us understand. They are coming to us and saying, here are
the other things that were trying to do online. Omniture, you guys turned the lights on for us.
You helped us understand what the data how the data is flowing through our organization. You
helped us understand how our business is performing. Were able to measure and then affect, and
then measure again. And now that weve done that we want to go and optimize. We want to optimize
our ad spend. We want to optimize our conversion, once people get to our site. And then we want to
optimize our interaction with these customers over the lifetime of their relationship with our
company.
In both of those areas, the pre-click and the post-click, there are several opportunities that we
see. And then the third area is just the analytics. Because there are these two areas, the
pre-click, the post-click, and then analytics kind of watches the whole thing. That is what enables
the relationship.
In all three of those areas there is interesting products that our customers are asking us to
interact with. And the nice thing is we have this unique birds eye view of seeing what is
happening in the marketplace before really anyone else recognizes it. And it is not because were
smart, it is because our customers are smart. We have the unique opportunity to be able to combine
the data points that we are seeing from who we know in our customer base are the early adopters,
and who we know are the trendsetters, and the folks that are making the smartest decisions. And
when we see a good chunk of those early adopters making the same decision and starting to center in
a certain company, in some cases even before that company recognizes how successful they are going
to be, we have a pretty interesting opportunity to understand how things are going to transition in
the market and then able to take advantage of that. So that is going to be the way that were going
to continue to evolve just by paying as much attention as possible to these customers.
Imran Khan
JPMorgan Analyst
You talked a little bit about the international market. Can you give us some color, like when you
look at outside U.S., what kind of opportunities and what kind of growth you are seeing in the
European market, and maybe touch a little bit about what youre seeing in the Asian market?
Josh James
Omniture CEO and Co-Founder
The opportunity internationally for us has been something that we have been very interested for a
long time actually. It has been something we have been focused on for a long time. We have been
over in Asia and Europe for over four years. And our business there, it went from third quarter
last year 17% of our revenues was international. Third quarter this year it was up to 27%. That is
the overall business, growing it at I dont know the exact number from Q3 to Q3, but I know it
is north of 70%
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
certainly. And so all the while our overall business is growing that fast, our international
business was growing almost twice as fast.
It is definitely a big opportunity, definitely a place where we continue to place outsize
investments relative to our current business. Just because we think there is an unique opportunity
there from a competitive standpoint. We think there is it is also something the way we
watched our business grow in the U.S., it is important to be in these places. It is important to
leverage the fact be in these places early, because once you are there early, then you build
these relationships. Because it takes a few years for these markets to develop. And then once you
have a good handle on the top customers in a particular country or in a particular region, then it
really helps the whole business move along relative to anybody else that is out there competing
with you. Were going to continue to invest that way, and continue to have really high expectations
for international business and our international growth.
Imran Khan
JPMorgan Analyst
In terms of the competitive landscape, is it different do you see different competitors in the
international market or are the competition pretty much the same, both the U.S. international
market?
Josh James
Omniture CEO and Co-Founder
No, there is a combination of both. It really depends on the region, Imran. There will be some
regions where we wont have where we wont see the folks that we compete with traditionally in
the U.S. The nice thing about this is, because it is an on-demand business, and because our
on-demand competitors are much smaller than us, and their businesses are faltering. And as
management teams they have been making some poor decisions. It has been really enabling us and
giving us an opportunity that we wouldnt have had otherwise.
A lot of it is some of these guys are good competitors, but they have just kind of been they
have painted themselves into a corner, or they have had the wrong capital structure, or they have
systems that are really that are not very flexible and dont scale really well. It has made it
really difficult for them to scale.
But because of that, it makes it also difficult for them to place the right amount of resources
internationally. Because if they do that then they are going to really be hurting here more than
they are at home. So it puts us at an advantage. The scale is something that is definitely
important.
And that is one of the reasons that we did the Visual Sciences deal. As I mentioned, it allows us
to fast forward our investment opportunity by 12 to 18 months. That is something that is important
when you think about how this business evolves over time, because it is not going to be us versus
some of the smaller competitors that had been faltering, that we compete with and have competed
with. It is going to be about us versus new competitors. And we want to make sure that were ready
for that. We want to make sure that were upholding our obligations to our customers. Because they
are making the choice. They are choosing a long-term partner here. They are not just choosing
well, here is the vendor for the next 12 months. They are choosing a long-term partner. We actually
help them run their online business. And we take that obligation very seriously. That was just kind
of another reason to go through the Visual Sciences acquisition.
Imran Khan
JPMorgan Analyst
Maybe we should stop for a second here and see if theres any questions from the audience.
Operator, could you please remind the audience how to ask a question?
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11
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
QUESTIONS AND ANSWERS
Operator
(OPERATOR INSTRUCTIONS). [Steve Quinn]. Thanks for taking my question.
Steve Quinn
JPMorgan Analyst
Could you maybe talk a little bit about DSOs seem a bit high, and maybe what steps are taking to
bring those down? Thanks.
Josh James
Omniture CEO and Co-Founder
From a DSO perspective, it is something we certainly watch and pay attention to and how we want to
focus internally. We continue to step up our efforts there. We dont feel like it is looking at the
details and going through the details. We dont feel like that it is in any kind of situation where
it is a negative. It is just something that people ask questions about. But we actually feel pretty
good about our ability to collect from customers.
We have these really big customers that sometimes they tell us when they are going to pay, and they
consistently pay that way. But there is not a lot we can do to change that. And given that our
business with all of these customers has been growing quarter over quarter or year over year, it is
a healthy situation from a customer by customer standpoint. So were just working to see if we can
continue to improve our processes to try to improve those numbers.
I think youll see that improvement over time. But it is not something that were worried about,
but it is something that were paying attention to, and that we think there is some opportunity for
improvement. But certainly not a trend or indicative of anything negative that is going on
holistically in our business.
Imran Khan
JPMorgan Analyst
Any other questions, Operator?
Operator
There are no further questions.
Imran Khan
JPMorgan Analyst
Maybe I will ask the last question. What keeps you up at night? Your business was up 78% on a
year-over-year basis in Q3. As you said, international grew faster quite faster than the U.S.
What keeps you up at night?
Josh James
Omniture CEO and Co-Founder
It is funny you ask this question, because I was thinking about this this morning. I wonder if
Imran is going to ask me that question? Because I was sitting there after a night of not a lot
asleep, realizing that something that keeps me up pretty much every night, and that is just kind of
in my DNA, and that is in the DNA of everyone here. We are a highly competitive company. We feel
like weve got the tiger by the tail. We feel like we have been dealt an amazing hand and we just
have to play it right.
So just making sure that we are alert and we dont make any stupid moves. As long as that is not
the case, then were feeling extremely interested extremely excited about our opportunity. And
we have to do our best to make sure that were
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12
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
communicating to all of our constituents about the opportunity. We have to make sure that were
communicating to our consistent about our ability to execute. We think we have a really strong
history of execution. And I think that is something we take a lot of pride in. Every time it gets
questioned, it makes us unfortunately all the more motivated to make sure that we continue to
execute.
I think we have a long history of proving that everyone that sets against us has been wrong. We
want to make sure that stays the same. Because we have definitely been in this situation in our
lifecycle. We have been doing this for a long time. We have had times where things werent great.
We have had times when the competitive situation wasnt great. We have had times where our products
werent exactly what we needed them to be. And we have learned a lot of those lessons, and
hopefully we have been humbled by all those situations and all those things that have taken place.
And now that we are in a great opportunity, weve got to make sure that we continue to execute.
And hopefully continue to have the confidence of investors. And as we always have one competitor at
one point in time, and it is always a different one, saying things that are irresponsible and using
rhetoric that is inappropriate. And we think the best way to respond is just by continuing to
perform and by continuing to play the game on the field, and letting that speak. And were pretty
confident that we know what the score is going to be at the end of the day.
But from what keeps us up at night, it is just really making sure were playing the hand the right
way. And making sure that were looking trying to look in the right field and see what is coming
next. Seeing what maybe we because Im sure there are some things that are going to take place
that were not anticipating, because that is the way it is in high-tech, and that is the way it is
in a space that is evolving as quickly as it is.
But the most important thing for us is to focus on our customers and to attract and retain and
focus on our people. And that has been what we have been doing since we started this Company. And
it has proved to be a really healthy model and formula for success. And so we have been humbled
along the way, and were going to continue to try to remember what has gotten us here and stay
focused on those customers. And we think if we do that we will be in a position to continue to have
outsize success for quite some time.
Imran Khan
JPMorgan Analyst
Great. With that, I would like to thank Josh James for joining our call, [Mike Luke] and Mike
Beckstead who organized this call, and everybody who participated in this call. Thank you and have
a good day.
Josh James
Omniture CEO and Co-Founder
Thanks for having us on the (inaudible).
Imran Khan
JPMorgan Analyst
Thanks.
Operator
Thank you. That concludes todays call. All lines may disconnect. (OPERATOR INSTRUCTIONS).
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13
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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FINAL TRANSCRIPT
Dec. 07. 2007 / 11:00AM, OMTR OMNITURE INC at JPMorgan Internet & Media CEO
Conference Call Series
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©
2007 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial.
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Additional Information and Where You Can Find It
Omniture intends to file with the SEC a Registration Statement on Form S-4, which will include
a joint proxy statement/prospectus of Omniture and Visual Sciences and other relevant materials in
connection with the proposed transaction. The joint proxy statement/prospectus will be mailed to
the stockholders of Omniture and Visual Sciences. Investors and security holders of Omniture and
Visual Sciences are urged to read the joint proxy statement/prospectus and the other relevant
materials when they become available because they will contain important information about
Omniture, Visual Sciences and the proposed transaction. The joint proxy statement/prospectus and
other relevant materials (when they become available), and any other documents filed by Omniture or
Visual Sciences with the SEC, may be obtained free of charge at the SECs web site at www.sec.gov.
In addition, investors and security holders may obtain free copies of the documents filed with the
SEC by Omniture by contacting Omnitures Investor Relations at ir@omniture.com or via telephone at
(801) 722-7037. Investors and security holders may obtain free copies of the documents filed with
the SEC by Visual Sciences at
vscn@marketstreetpartners.com
or via telephone at (858) 546-0040.
Investors and security holders are urged to read the joint proxy statement/prospectus and the other
relevant materials when they become available before making any voting or investment decision with
respect to the proposed transaction.
Omniture and its respective directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of Omniture and Visual Sciences in favor of
the proposed transaction. Information about the directors and executive officers of Omniture and
their respective interests in the proposed transaction will be available in the joint proxy
statement/prospectus.
Visual Sciences and its respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Visual Sciences and Omniture
in favor of the proposed transaction. Information about the directors and executive officers of
Visual Sciences and their respective interests in the proposed transaction will be available in the
joint proxy statement/prospectus.
Cautionary Statement Regarding Forward-Looking Statements
This document contains forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on
managements current expectations and beliefs and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those described in the
forward-looking statements. The forward-looking statements contained in this document include, but
are not limited to, statements regarding Omnitures strategic goals with regard to its
acquisitions, managements expectations to retain Visual Sciences customers, Omnitures business
strategy, leadership in the market for Omnitures services, the strength of its business in 2007
and expectations regarding GAAP and non-GAAP revenue, GAAP and non-GAAP net income and loss, the
anticipated benefits and execution risk of its pending acquisitions and Omnitures ability to
consummate them, expectations regarding improving margins, expectations regarding the market,
competitive landscape and expansion of Omnitures customer base, expansion in international
markets, improvement of sales cycle times, and the anticipated success and results of Omnitures
integration efforts relating to
the acquisitions completed in 2007. These statements are not guarantees of future performance,
involve certain risks, uncertainties and assumptions that are difficult to predict, and are based
upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and
results may differ materially from what is expressed herein. For example, if either of the
companies does not receive required stockholder approvals or fails to satisfy other conditions to
closing, the transaction will not be consummated. In any forward-looking statement in which
Omniture expresses an expectation or belief as to future results, such expectation or belief is
expressed in good faith and believed to have a reasonable basis, but there can be no assurance that
the statement or expectation or belief will result or be achieved or accomplished. The following
factors, among others, could cause actual results to differ materially from those described in the
forward-looking statements: failure of either the Omniture or Visual Sciences stockholders to
approve the proposed merger, and other economic, business, competitive, and/or regulatory factors
affecting Omnitures business generally, including those set forth in Omnitures most recent Annual
Report on Form 10-K and Quarterly Report on Form 10-Q, especially in the Risk Factors and
Managements Discussion and Analysis of Financial Condition and Results of Operations sections,
and its Current Reports on Form 8-K and other SEC filings. Omniture is under no obligation to (and
expressly disclaims any such obligation to) update or alter its forward-looking statements whether
as a result of new information, future events, or otherwise.
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