Good day, ladies and gentlemen, and welcome to Pegasystems Inc. third quarter 2010 earnings call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions following at that time. (Operator Instructions). And as a reminder, this call is being recorded. And now your host for today’s conference, Craig Dynes, Chief Financial Officer. Please begin, sir.

Thank you. Good morning and welcome to Pegasystems 2010 Q3 earnings conference call. With me here in Cambridge is Alan Trefler, Pegasystems’ Chairman and CEO. Before introducing Alan, I will start with our Safe Harbor statement and then provide my financial commentary. Certain statements contained in this presentation may be construed as forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The words anticipates, projects, expects, plans, intends, believes, estimates, targets, forecasting, could, and other similar expressions identify forward-looking statements which speak only as of the date the statement is made. Because such statements deal with future events, they are subject to various risks and uncertainties. The actual results for fiscal year 2010 and beyond could differ materially from the company’s current expectations. Factors that could cause the company’s results to differ materially from those expressed in forward-looking statements are contained in the company’s press release announcing its Q3 2010 earnings and in the company’s filings with the SEC, including its reports on Form 10-K for the year ended December 31, 2009 and other recent filings with the SEC. The company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely. Q2 was another history-making quarter for Pegasystems. For the first time, the company exceeded $90 million in GAAP revenue in a single quarter. I say GAAP revenue, because due to the complications of purchase accounting, we provided non-GAAP financial information in our press release. Like other software companies, we’ve excluded acquisition charges, amortization of intangible assets created as a result of purchase accounting as well as equity compensation charges. This allows easier comparison to other software companies as well as to analyst models to use these non-GAAP business measures. GAAP…

Thank you, Craig. Good morning, everyone. The third quarter 2010 was remarkable for a number of reasons. We achieved our highest quarterly revenue in history. We posted our 13th consecutive quarter revenue growth and we climbed to number 8 on Fortunes 2010 List of Fastest Growing Companies. But what we’re most proud of is the successes with clients and the wins we’ve achieved as we expanded presence and brought on new customers. Since our last earnings release, Forrester has shown us as the leader in the BPM Wave report and Gartner has shown us the pretty clear leader in their BPMS magic quadrant. To actually see these beautiful pictures, come to our website and download the reports. Very exciting and I think reflects the strength and the investment that Pega has as we continue to push the envelope in this market. Before I go to some highlights of our wins in go live, I want to talk a little bit about BPM leadership, how it’s attained and recap a bit of our strategy for this year. As we’ve grown our company from the $100 million total revenue in 2005 to $95 million in non-GAAP for just this quarter, we’ve seen a lot of the things change including the definition of what BPM is and how the competitive situation of landscape evolves. Large stack vendors have in many cases latched on the BPM in some cases buying, and other smaller vendors have faded, frankly because I think that they have not had the right combination of innovation and customer success to really build a sustainable business, which has been our focus all along. What I’ll tell you is that even if you see the large stack vendors continue to push in this space, they’re sort of stack up middleware orientation is…

Thank you. (Operator Instructions). Our first question is from Richard Davis of Canaccord Genuity. Your line is open. Richard Davis – Canaccord Genuity: Thanks very much. So it sounds like Chordiant under your help and guidance has started to maybe not sprint but at least gallop or trot forward. Is that a fair assessment? And then the second more derivative question would be look, I mean they had a long standing customer base, but it seemed to me that you guys can up-sell and cross-sell additional either features or functionality and/or expand within their customer base that they have, because that’s why I’m just trying to – and I know what’s now part of the whole team but I’m just trying to kind of notionally think about the growth opportunities that you get out of that acquisition?

Yes, I think you are correct in both dimensions. In particularly decisioning products and decisioning expertise, has already complimented what Pega additionally offered, as I mentioned we’ve actually closed business in a whole new area of collections that brings together both process and decisioning in a really good way. I also will tell you having met now with several dozen of major Chordiant clients. There is a lot of energy and excitement about being able to use the Pega BPM technology to really help in everything from the call center to improving the way that marketing works, which is another area that Chordiant have a lot of expertise. So we had thought that they would be really, really good client related synergies that there’ll be a change to up-sell and we vitalized some of those relationships. And we’re seeing that that’s definitely going to be true. Richard Davis – Canaccord Genuity: Got it and then, I understand on a quarterly basis, services margins move around. But on a full-year basis, how do you think about that business, should that be a – is that 10% margin business, is it a 30%, is it somewhere between, how do you – everyone has their own opinion on how you should run those things. And so I was just curios what’s your thoughts are in terms of how you think about that side of the equation?

It’s definitely not a 30% business. We look at – the primarily function of professional services is to make customer implementations successful, because successful customer implementations lead to radiation in the account. Historically 75% of our revenue comes from the existing accounts. So we are willing to have a lower professional services margin in order to make customers successful, to enable customers and often times on engagements, we’re working with partners. And we take the time to enable the partners that they are better able to go often on their own and be successful as well. So worrying about whether professional services is 15% or 12% doesn’t mean a lot if you drive more license revenue which is essentially 100% margin and that’s really how we’re thinking about the business. Historically, it’s always been down in Q3, as I say in the summer, utilization rates go way down especially in Europe. So in 2008, 2009 and this year, revenue went down from Q2 to Q3, but you still got the same number of guys, a lot of them are on vacation in Europe. So that does hurt margins in Q3 and it’s always been the case. Richard Davis – Canaccord Genuity: Got it, that’s helpful. Thanks very much.

Thank you. Our next question is from Laura Lederman of William Blair. Your line is open. Laura Lederman – William Blair: Yes, good morning. Thank you for taking my questions. A few, one, can you talk about this year there have been no whales, which is interesting. Some thoughts as to, are there now ones in the pipeline for Q4 and also for next year and also separately competitive update obviously with Savvion being bought and Lombardi being bought and Oracle making noises in the market. Well, can you talk a little bit about any changes you’re seeing in the competitive environment, and then I have one final one. Thank you.

Sure. So there are actually a whole bunch of whales in the pipeline. I’ve got a mixed feeling about whales. I think as a business we don’t want to depend on them though, certainly we got some in 2009 and we’d love them dearly. I am actually quite happy to do smaller sales that preserve the value equation between us and the client, and make it so that we have the potential for more of a long-term. And clients are making sure that they get value from what they are buying. But the nature of this business and the nature of our size is a couple of whales can change the quarter which is frankly, why we don’t obsess that much about the quarter-to-quarter results, because it can be impacted either by a whale coming in or by decision with the client to do a term license as opposed to a perpetual license, and obviously we think the term model is just fine as well. So I think you need of think of this in terms of a sort of a more global contacts there. Laura Lederman – William Blair: And the second update was competition, and what changes you’ve seen since the acquisition of Lombardi and Savvion?

Yes, its actually pretty interesting, I don’t believe any of – or simply not very many of our large customers really believe that they’re going to get leading edge innovation and thought leadership out of what I sometimes refer to as the bone collectors, the companies that sort of scoop up damaged companies. And they have a lot of history of not really getting very innovative stuff. So if you actually take a look at some of the campaign, some of the campaigns to clients, take a look at some of what Oracle does, really base very much around fear. Be scared of buying things, if you buy them all for us. I actually believe that given that most customers think that the sector that we’re in is a sector that innovation still matters in, and is a sector that’s extremely important to their customers. It’s about how they actually serve their customers and how they differentiate in the market, that overtime we will see that the stack vendors though always being in the mix are going to be seen by the clients as not being able to provide adequate innovation. And we actually are and do see that. So I was actually thrilled and these companies got by. So the reality is that you see the stack vendors always – we’re just now not also seeing the sort of scrappy innovative vendors. We would have seen the stack vendors anyway, basically now, I think we’ve really consolidated in the market in the way that would be long-term favorable for us. Laura Lederman – William Blair: And one for you Craig, which is sales headcount either where we stand today and where we stood a year ago or to be a percentage increase so we could get a sense of standing year-to-date versus a year ago how much the sales headcount has increased which helps obviously understand revenue opportunity?

The details on sales and marketing headcount is compared year-over-year in the Q, most of the increase throughout this year has been in the sales organization, as I said 11 addition heads came on board in Q3 and all of them were in the sales organization. Something I pointed out last quarter on the call was that the actual account execs and this was a June, June-over-June, we were up 58%. But a very small proportion had actually been on board for extended period of time where they could be expected to be fully productive. There is a long ramp time to bring somebody on board, get them sufficiently trained, assign them to their accounts and have them start building pipeline. Laura Lederman – William Blair: Thank you. I’ll follow-up later in the queue.

Thank you. Our next question is from Nathan Schneiderman of Roth Capital. Your line is open. Nathan Schneiderman – Roth Capital: Hi Alan and Craig. Thanks for taking my questions. I wanted to begin just on your guidance view for the year, last quarter your guidance was $360 million of revenue and $1.02 of pro forma diluted EPS. How comfortable – is that still your guidance, and how comfortable are you with that at this point?

Well it’s the company’s policy to issue annual guidance and not quarterly guidance and to not comment on it throughout the year. This year was a bit of an exception because the Chordiant acquisition. Last quarter we had to give updated guidance primarily to have the people understand that the GAAP guidance was really going to non-GAAP guidance. So our business as Alan said can be extreme – or maybe I said this time, can be extremely lumpy as clients make the decision to go from term to perpetual or perpetual to term, when they engage with us. So we tend not to give quarterly guidance, and we tend to take a much longer view of that. Nathan Schneiderman – Roth Capital: I guess, I didn’t understand your answer to my question. Are you still comfortable with the $360 million and $1.02 or not necessarily?

Well as I said we tend not to comment on guidance throughout the year. Nathan Schneiderman – Roth Capital: Okay, all right. Let me ask the question this way, is there anything one time in the expense structure for Q3 that will not recur in Q4 either in cost of revenues or in the operating expense, or would you expect all of those to have seasonal sequential increases?

No, the anomalies that we’re in the cost structure due to the Chordiant acquisition in terms of people in transitional roles, that has pretty much ended. So there shouldn’t be anything special in Q4, although Q4 is traditionally our highest bookings quarter in the year, and that therefore drives the highest commission expense in the quarter. Nathan Schneiderman – Roth Capital: Okay. The 10-Q referenced a big deal in the year ago period. Could you share with us the dollar value of that deal, and what was the dollar value of the biggest deal this Q3 2010?

Last year we had – trying to remember the exact timing of it, but we had, some businesses was materially over $10 million in size and the deals this year have been more modest.

There is nothing over $10 million so far this year.

Thank you. Our next question is from Brian Murphy of Sidoti & Company. Your line is open. Brian Murphy – Sidoti & Company: Hi, thanks for taking my question. Alan, you mentioned that the headcount in your partner ecosystem was in the vicinity of 3,500. Just curious where was that number last year?

So it’s interesting depending on how you’ve counted. So we’ve upped our expectations of our partners training etcetera. I would say that the overall partner ecosystem so far this year has grown very materially in our premier partners. It’s probably up good 30% I would say over the last year and is increasing its speed. Brian Murphy – Sidoti & Company: And you mentioned –

There is a lot of good indicators. If you went to PegaWORLD, you saw the level of participation by partners. If you look at our training revenue, lot of out-script and partners coming to training and as we said Accenture just bought a smaller partner who was a 100% focused on Pega. Brian Murphy – Sidoti & Company: And Alan, you mentioned that you had a go live with IBM Global Services. I’m curious to know if your relationship with the services group is changing at all or whether you were expected to change as the product group makes more of a push into BPM?

I think our relationship with IBM has always been a little skitsofrantic [ph] and I was expecting that to continue. We actually are big users of the IBM stack that we actually own a mainframe of those things, and have been for a long time. The software group there, again I think, sometimes do think that org [ph] actually in IBM’s long-term interest because when we actually sell a system, we often move a lot of IBM gear. The Global Services organization and individual sales people at IBM, we I think have overall a very good relationship with. But its episodic, it’s kind of sometimes its good and it’s sometimes its not. The reality is though that some of the IBM initiatives fit beautifully both in the area of process automation and in the area of decision management. And we are continuing to invest in that relationship and spend time and we’ve gotten pay back and I think we’ll get pay back going forward as well. Brian Murphy – Sidoti & Company: Thanks, I’ll get back in the queue.

Thank you. Our next question is from Raghavan Sarathy of Dougherty & Company. Your line is open. Raghavan Sarathy – Dougherty & Company: Good morning, thanks for taking my questions. First on the new sales guys that you hired, you’ve been ramping up your account execs starting late last year. I was wondering if you could share with us the progress these guys are making in terms of closing deals, I know it takes them six to nine months. Can you give us any color on how do you feel about the progress and the productivity from these guys if you look out to next year?

One measure Ragh, is the pipeline and the pipeline at the end of Q3 is – I’m looking at the pipeline at the end of every quarter going back in 2009, it is by far the highest that it’s been.

We just want them to cater that they’re generating pipeline. We’ve also had a couple of actually folks from business in some cases and some pretty significant business. So I am encouraged by the talent that we’ve brought on. And we’ve invested a lot of just energy and time training them and cross training, some of the Chordiant people that came on as well, our staff from some of that technology. But we’re feeling good about the sales force and working at. Raghavan Sarathy – Dougherty & Company: Okay, and then in terms of license signing, so it’s actually two questions. Craig, can you give us some color on the year-on-year growth on license signing? And also I noticed in your Q, when you discussed subscription revenue, it declined year-on-year due to change in customers selection of renewal option. And I was wondering, did the customer select perpetual or term, when it came for a renewal? Can you help us understand those?

Well I could actually, I think I can answer some of those as well. I think that this year suffered a bit from being a tough compare and the fact that if you go back and look at 2009, we really did increased the sales force very material in 2009. So that's something we took aggressive steps to remedy as we entered towards the very end of last year and as we entered into this year. That coupled with some of 2,000 whales leads to a tough compare but we’re still very optimistic about what we’re going to be able to get done when we announced the year as a whole even compared to 2009. Relative to customer renewals, we have lots of deals that go all sorts of ways. We have customers that sometimes will flip and have a new piece of business be a term deal instead of a perpetual, and we do have customers who come to the conclusion of a term arrangement and want to change it. And depending on the circumstances we’ll do what makes sense in general. So you’ll see those sorts of things happen, fairly routinely and I don’t actually think its very material on individual clients. Raghavan Sarathy – Dougherty & Company: All right, just one final question. There was $2.6 million adjustment to GAAP license revenues, I know this is related to the purchase accounting. Was it all applied to the perpetual license or split across the three license lines?

I believe it was perpetual. Chordiant didn’t do a lot in the way of term licenses. So I believe it was perpetual license that was in deferred revenue at the time of the acquisition. So the GAAP rules are we took a big hair cut on it. Raghavan Sarathy – Dougherty & Company: Okay, thank you. I’ll jump back in the queue.

Thank you. Our next question is from Steve Koenig of Longbow Research. Your line is open. Steve Koenig – Longbow Research: Hi Craig, hi Alan. Thanks for taking my questions. I’d like to just follow-up on the question about the licenses. I understand they do move around a lot by quarter-by-quarter as customers may select different renewal options. When I look at the subscription line though that the fall-off sequentially of about $3 million is the majority of your subscription revenue. On an annualizing basis that’s $12 million a year, and if for example that represented a customer moving to a perpetual license which was booked in the quarter that would be a very significant piece of revenue. So I am wondering if you can comment on specifically why subscriptions were down so hard sequentially and how should we expect subscriptions to trend going forward?

Subscriptions are hard to predict because people get confused, they think subscription is Software-as-a-Service. Its not, its just an accounting methodology. And one of the aspects of that methodology is that you take subscription revenue up until the customer payment. And if there is staggered customer payment, often times what happens is that in a quarter your subscription revenue dries up on an account until they have a big schedule payment next quarter and it jumps back up. So they do bounce round a little bit its not a case that somebody switched from a subscription to a perpetual, and actual fact the subscription revenue is a perpetual license. Its just a methodology in terms of revenue recognition, its not Software-as-a-Service. Steve Koenig – Longbow Research: Okay, so in this case, it wasn’t a case about subscription customer, you haven't booked that revenue as a one-time due to some kind of switch.

No. Steve Koenig – Longbow Research: And accounting as more of a cash payment issue?

Yes, because you take subscription – you may have a customer that pays you make up some numbers $5 million every other quarter or something towards perpetual and that also in one quarter you can't take more subscription that what they paid. So it could run into a little dry fill for a couple of months and then a payment is due and then you have a catch-up. Steve Koenig – Longbow Research: Okay so in that case Craig, how should we think on a normalized basis about kind of the level of subscription revenue or the mix of subscription revenue for Pega on a more normalized basis?

It’s actually pretty minimal. We don’t enter into those agreements very often. They’re fairly unique, and its not – we prefer to keep people on a straight perpetual or straight term license. Its very rare that we get into the subscription accounting. Steve Koenig – Longbow Research: Okay, and then lastly just probably another one of you Craig. We had modeled and help perhaps DSOs would be down little bit more following, after a quarter of Chordiant being in there. And I remember you mentioned you had some good collections in the start of Q4 here. How should we think about DSOs trending and then more generally, how should we think about operating cash flow – when should it turn positive? Should it be positive in Q4, should it be positive for the year? Any thoughts on how we can think about cash flow, it would be helpful too?

Sure. So first of all DSOs were up because we had quite a few very strong bookings at the very end of the quarter, so they go directly into accounts receivable. And a lot of times that would rise up the number. It just seemed and I don’t know why, that we had a lot of payments just missed the quarter and fall into October, as I pointed out, in the first few weeks of October, we collected $40 million which is a vast majority of the receivable balance. So to take a snapshot of anyone time is a little big misleading. With regard to cash flow, the cash flow from operations this quarter was hurt because we booked a lot of deals and they’re sitting in receivables. You can see that on statements of changes. During the first half of the year of course cash flow [inaudible].

Thank you. Our next question comes from Arnold Schultz [ph] of [inaudible]. Your line is open. Martin – HIIG: Well this is Martin [ph] with HIIG [ph]. Prior to its acquisition Chordiant about $40 million of contractual backlog, how much of that is factored into the aggregate term license value that you reported, I know you said not much of their business is termed but how much of that is in your off balance sheet numbers? Thank you.

Most of their backlog was maintenance agreements that they held kind of practice defining multiyear maintenance agreements which is something that we don’t do and that caused to do to lot of their backlog. When you do purchase accounting of course, you take a hair cut on that and that’s what you’ll see in the GAAP to non-GAAP reconciliation. Martin – HIIG: Okay.

But I don’t think any – I don’t think there were any Chordiant term deal. I used to see – if the question is specifically about term that wasn’t a model that they?

No, they didn’t do many term deals at all. Martin – HIIG: Okay. So the acquired contractual backlog doesn’t roll into your reported metrics essentially in anyway?

No. Martin – HIIG: Okay.

No, those are all our deals. Martin – HIIG: Thank you.

Thank you. Our next question is from Edward Hemmelgarn of Shaker Investments. Your line is open. Edward Hemmelgarn – Shaker Investments: Questions, you had the one Chordiant software deal that you had $2.6 million, that if you – under normal circumstances your revenue would have been higher by that amount. How much of that was in, was actually recognized and was in deferred revenues as license revenues because of the acquisition purchase price allocation?

I’m sorry Edward, could you repeat the question? Edward Hemmelgarn – Shaker Investments: Well in other words I mean, is if you – you had a deal that was in deferred revenue, okay, in effect, I mean that’s when you bought Chordiant, I mean it was under ordinary circumstances it was – which is kind to be recognized this quarter but when you calculate – or when you accounted for it in the purchase price allocation, it took a hair cut of $2.6 million. Obviously some of it was still in license revenue or deferred license revenue, I mean to account for some of that I’m assuming and of the $17 million plus that you – of the purchase price allocation that you put into deferred revenue, how much of that was deferred license revenues as opposed to deferred maintenance or deferred service?

Most of it was deferred maintenance. There was a couple of license deals and you’re right, you’re picking up the $2.6 million on the GAAP to non-GAAP adjustment. So there was a perpetual license deal in there. There was little deferred service, I think it was probably only about couple of million dollars and as you can look on the GAAP to non-GAAP, you see there is a very little add back there. Edward Hemmelgarn – Shaker Investments: But I think the majority of that was maintenance, right?

Yes, most of – Edward Hemmelgarn – Shaker Investments: Well I understand – I’m just trying to get an idea, was it a million dollars in deferred license revenue or was it $500,000, or was it $2.5 million, I mean what are we talking about?

You could probably think but I don’t know the exact details of that deal because you had value each deal. But generally you take a hair cut of almost 50% on some of these things. Edward Hemmelgarn – Shaker Investments: Okay, then can Alan, can you talk a little bit about new customers in terms of you’ve got, you’ve added dramatically the sales force obviously. What percentage of orders that you’re getting in now are coming from new customers relative to existing customers, not in terms of dollar route but just in terms of new customers. Can you talk a little bit more about that?

Yes, trying to see if I can find the actual numbers here but this really I would say that it’s gone up which is unsurprising and it’s definitely well over a third of the bookings I would say are related within – the relationships are related to new clients this year. It’s up quite significantly from last year.

Yes, the number of accounts is up almost five fold. Typically though with new accounts, and I say typically because there are exceptions. Lot of times with new accounts, the deals are smaller to start with people, we tend to try and sell them the smaller something that could be delivered quickly and successfully and that gets fee-to-value on that initial transaction which helps us establish ourselves with that account. But that’s – the number of new customers is a function of a – a lot of it is a function of new sales people covering new accounts and new geographies and new partners as well. Partners tend to bring us new customers. Edward Hemmelgarn – Shaker Investments: Well, I guess I’m just trying to get at somewhat obviously with the new customers, but in terms of all these new sales people you’ve added, is it your – if there is always a lag and someone just getting the first order but as you’ve described it, they tend to be at least your experience says they tend to be smaller at first. So when you would really expect to see impact of the new sales force hires in 2011, 2012 as opposed to this year?

Well, we knew we were going to see it primarily in 2011. If the sales guys that we’re hiring in 2010 aren’t nicely productive in 2011, shame on us. I think that should be more than adequate time I would say. So I’m actually just looking at some things that, Craig has pulled up. And in fact the new customer deals are very meaningful percentage here of what we’re signing up, and we think that’s exactly as it should be, we’ve actually been very excited by being able to put these new names on, and given that we don’t sell out customers, but we have long-term mutually beneficial relationships with them. Getting into a new customer and doing good job for them is money in the bank and good service for them.

Thank you. (Operator Instructions) Our next question is from Brees Sparker [ph] of 451 Group. Your line is open. Brees Sparker – 451 Group: Hi guys, good morning. So in this record setting pipeline you have, can you tell us, is it trending to license or term or can you give us some feelings there?

I think – I don’t think the proportions are particularly changing. Sometimes those decisions are not made actually into quite late in the decision process. It’ll go back and forth with the client. But this really – so when we put it in, we don’t obsess when we label the opportunity about where this is going to end up being a term or end up being a perpetual because as I said they’ll often slip back and forth. Sometimes our clients find that there capital budget approvals are much harder to achieve, then just ongoing operating expense, so that’s kind of a tradeoff between license and term. But I haven't sensed any particular change over the last 12 months. Brees Sparker – 451 Group: So there is no theme among all these new customers you’re signing, they don’t tend to be a one way or the other for whatever the trend or a new thought might be?

No, it’s very much the same sort of mix that we’ve seen with the traditional customer.

And it’s extremely unpredictable. Last year when the economy was bad everybody was predicting we would swing towards more terms and it just didn’t happen. So I’ve given up trying to predict. Brees Sparker – 451 Group: Okay, and my other question is related around call centers. What percentage of your newer bookings in pipeline are around either replacing old call center systems or augmenting or decisioning or that type of deal?

Yes, so it’s actually that’s way up. Brees Sparker – 451 Group: Okay.

And we’re doing both a lot more call center work and a lot more what I will call multi-channel work where the customer actually uses us not just in the call center, but to be able to handle service in, for example the web or in the voice response unit or in a branch facility as well. So things that I would describe is being part of front office customer service, is very, very significantly up. I would say that at this point, a good 50% or more of our business is either a call center replacement in some cases but much more often a place where we’ve been woven into an existing call center system to make it better, and by the way many of those that need to replacements down the road. It was going to hollow out their existing environments. So call centers are going to be very significant for us I think going into next year. Brees Sparker – 451 Group: Okay, perfect. Thank you.

Thank you. Our next question is from Raghavan Sarathy of Dougherty & Company. Your line is open. Raghavan Sarathy – Dougherty & Company: Already answered. Thank you.

Thank you. Our next question is from Brian Murphy of Sidoti & Company. Your line is open. Brian Murphy – Sidoti & Company: Hi, just had one quick follow-up. Alan, you mentioned the tough comps, the tough lessons booking comps in 2009 and sort of they out-performance that you guys had in 2009. Just looking back now at that bookings environment in 2009, I mean was there anything unusual about that environment or do you think that you can get back to that level of sales force productivity?

So with a little bit of high insight, the thing that I think was unusual was despite the fact that our license revenue increased about 50% in 2008. We chocked back on hiring in the first half of 2009, which I think had a pretty direct impact on our 2010 performance. That coupled with the couple of whales is the thing that’s unusual, as I said when went into this year, we decided we’ve going to work to rectify that and that’s been the basis for the – I think you said the 58% number of growth in terms of sales and marketing headcount. So the thing that was perhaps unusual, the rational was we read the papers and decided that we’d slow the hiring down in the first half. With the full benefit of high insight, I wish we hadn’t done that, it would have actually made this year easier. And we are going to be very thoughtful as we go in – we’re right now in the middle of our 2011 planning. We’re going fairly thoughtful about thinking what we want 2011 rollouts to be, but I believe if we continue to see really strong pipeline, if we’re able to show that the new sales people are coming online and being successful, then I do think we want to continue to grow sales and marketing because there are lot of really, really great uncovered accounts that could really profit from our stuff. Brian Murphy – Sidoti & Company: Got it. That makes sense. So it sounds like there was a period where there was sort of a depletion in their early stages of the pipeline and maybe that manifested in the first half of the year here. Do you think we’ve lapped that sort of hiccup in the pipeline and we should get back to sort of robust license bookings growth?

Yes, certainly the pipeline from a year ago has grown in a way that’s consistent with the sort of sales and marketing growth that we’ve seen. We’ve seen a very significant increase in the pipeline in the year-to-year basis. And if you would go back a year before, obviously we worked on sales people at the same rate in the first half of 2009. So we haven't seen that. It was much flatter. So the numbers don’t lie, I think you look at sales and marketing expense over a couple of years. Take a look at license revenue and actually I think the story is pretty clear. Brian Murphy – Sidoti & Company: Thanks very much.

Thank you. I’m showing no further questions or comments at this time. I would like to turn the conference over to the Chief Financial Officer, Mr. Craig Dynes, for any closing remarks.

Thank you very much everyone for attending our call. We’ll look forward to talking to you again at the, our end of year call which will probably be scheduled for February. And I will be out on the road and we’ll be talking to some of you very shortly. Thank you very much.

Thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect and have a wonderful day.