Good afternoon, ladies and gentlemen, and welcome to the Altair Engineering First Quarter 2019 Earnings Conference 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. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Howard Morof, Chief Financial Officer. Sir, you may begin.

Good afternoon, welcome and thank you for attending Altair's earnings conference call for the first quarter 2019. I'm Howard Morof, Chief Financial Officer of Altair, and with me on the call is Jim Scapa, our Founder, Chairman and CEO. After market close today we issued a press release with details regarding our first quarter performance which can be accessed on the Investor Relations section of our website at investor.altair.com. This call is being recorded and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. These risks are summarized in the press release that we issued today. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our quarterly and annual reports filed with the SEC, as well as other documents that we have filed or may file from time to time. During the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally, at times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to Jim for his prepared remarks. Jim?

Thank you, Howard, and thank you all for joining our call. We will discuss our first quarter results and our outlook for the rest of 2019. We will talk about the ongoing integration of SimSolid and Datawatch businesses into Altair, relate some customer momentum and success stories and provide more detail around our acquisition of Cambridge Collaborative SEAM software. Our first quarter revenue exceeded expectations. We had total revenue for the quarter of $127.9 million, an increase of 13% from a year ago, powered by software product growth of 15%. We produced modified adjusted EBITDA in the first quarter of $26.2 million. We beat all of our guidance metrics for the quarter. Billings, driven by software product momentum and adjusted for constant currency grew by almost 23% over the same period a year ago. The first quarter was strong with many wins in new and existing accounts across broad geographies and industries. APAC and Europe continue to achieve exceptional growth and we are seeing increasing momentum in the Americas from our focus on hiring, training and investing to further build out our direct and indirect sales and marketing operation in this region. We continue to garner a large percentage of our new revenue in our core business of computer-aided engineering software from existing customers. Six figure expansions in the quarter include a mass transit manufacturer, aerospace companies in both the US and Europe, several automotive manufacturers across multiple continents and major electronics industry customers. In Aerospace, our second largest industry sector, we continue to transition major accounts from competitor solutions to Altair's modeling and visualization offerings and we are seeing increasing success in our solver offerings as well. We continue to see strong interest from important OEM accounts in several verticals, including Automotive to use OptiStruct for nonlinear solutions where competitive products have historically led. We believe this is because we deliver high quality and high value solutions integrated with optimization and superior customer support. Last year we announced an agreement to develop and distribute GE's Flow Simulator software. This quarter saw very nice Flow Simulator sales in Southern Eastern Europe to the turbo machinery and oil and gas field services industries. SimSolid, our recently acquired products and technology for fast, accurate and robust structural simulations directly on CAD data is also seeing strong market traction and success across many regions. Several major automotive OEMs are enthusiastic about SimSolid and recommending it be adopted corporation-wide in their designer communities. We are ramping up marketing of SimSolid and will continue to offer attractive trials to broaden the exposure of this game-changing technology. We saw several wins in the Indian transportation sector, including commercial vehicles, automotive, motorcycles and heavy-duty engines. In Europe, new customers for SimSolid include engineering firms in Denmark, the Netherlands, Finland, along with one of the world's leading suppliers of agricultural machinery. The integration of Datawatch solutions and business into Altair, is going well, though not without some challenges. We continue to be excited about the quality of the products and the people who joined us from Datawatch. We are working hard to organize development, sales and marketing to continue their momentum at financial services accounts, mostly in the US and leverage Altair's global reach and manufacturing vertical -- and the manufacturing vertical we traditionally serve. We have worked with the people across all disciplines to analyze pricing and the competitive landscape and come up with new pricing which comports with Altair's units based subscription licensing model. Our data intelligence teams had an excellent first quarter in their historically strong FinTech markets. New six figure deals came in from a shoe retailer, a building equipment manufacturer, a media conglomerate and two major banks. A significant new Panopticon agreement is focused on trade cost analysis for equities and foreign exchange effects. There is strong interest from manufacturing customers to apply data intelligence to engineering applications where significant data is or can be available. We are exposing customers to new solutions and they are hungry to learn. We are even applying machine learning technology to improve our health and documentation. For example, a major European aerospace company became an exciting new data intelligence customer with a focus on three initial engineering use cases for machine learning. We feel this win is particularly noteworthy as it came shortly after the Datawatch acquisition and demonstrates the real customer pull we are feeling for the application of machine learning to speed product development and improve designs. It is great to see data intelligence solutions succeeding in existing, as well as new markets. And we are confident that continued cross-selling will lead to excellent long-term growth while delivering great technology to our customers. On April 1st, we announced the acquisition of Cambridge Collaborative's SEAM software for statistical energy analysis in high frequency sound prediction. This best-in-class technology expands our solver offerings to allow engineers and designers to predict noise problems early in the design cycle, saving critical time and money and improving user experience. Cambridge Collaborative has been a world leader for more than 45 years, as evidenced by their impressive client roster ranging from defense, automotive and aerospace OEMs and suppliers. This sophisticated software has helped launch submarines, space ships, cars and planes and is a strong strategic complement to Altair's portfolio where we are rapidly integrating it into several of our important solution offerings. We had a very strong first quarter. We remain optimistic about our outlook for profitable growth and we look forward to continued customer success with our products and solutions. Now, I will turn the call over to Howard, for details on our financial performance during the first quarter and guidance for the rest of 2019. Howard?

Thanks, Jim. We are very pleased with the performance of our business in the first quarter of 2019. As a reminder, our reporting and guidance for 2019 is under ASC 606, as our other comparative numbers from 2018. Note that our seasonal billings patterns coupled with ASC 606 results in revenue being recorded to a greater degree in our first and fourth quarters, causing our results of operations to be more seasonally weighted to Q1 and Q4 of any given year. When we released our 10-K for 2018, we included a table of results for 2018 reflecting summarized results for all four quarters on an ASC 606 basis. Also under ASC 606, the timing of recognition of revenue becomes more dependent upon the fulfillment of performance obligations and other criteria than under prior GAAP for Altair. We appreciate that shifting from ASC 605 to ASC 606 may make our quarterly results more challenging to predict. However, as a reminder, our annual recurring revenue units model does drive a high degree of predictability over annual cycles. This will also be our first period of reporting with the implementation of ASC 842 for lease accounting, effective January 1st, 2019, which only impacted the balance sheet presentation for operating lease right to use assets and related current and non-current lease commitments. In prior conference calls, we have mentioned that changes in certain currencies can have an impact on both our revenues and expenses, especially when those changes occur over relatively shorter time periods or when currency changes are more pronounced over time. When this occurs as it has for Q1 '19 compared to Q1 '18 it is meaningful to measure aspects of our performance on a constant currency basis. Our first quarter results demonstrated strong software revenue growth, driving a healthy start to this fiscal year. For the quarter, software product revenue reached $103.3 million, an increase of 15% from a year ago, while total revenue equaled $127.9 million, representing growth of 13% from the first quarter of 2018. Both results are above our guidance for the period. When adjusting for the adverse impact of currency fluctuations, software product revenue grew by an impressive 19% and total revenue grew by 16% on a constant currency basis compared to last year. While the Datawatch transaction contributed to our software revenue growth rate, acquisition accounting requirements mandate an adjustment to historical deferred revenue as of the date of acquisition. In our case, December 13, 2018. Upon acquisition, we adjusted deferred revenue down by $9 million, which essentially would have been recognized by Datawatch during the 2019 year. Our guidance for 2019 included this acquisition adjustment for non-GAAP revenue and adjusted EBITDA, which we are specifically referring to as modified adjusted EBITDA going forward for this specific purpose. We have not made such adjustments for past acquisitions, have they -- as they have not been as meaningful as the Datawatch transaction. Including the impact of the acquisition adjustment for acquired Datawatch deferred revenue, our constant currency software product revenue growth equaled 21% in this quarter. Two final revenue specific points. In the current quarter, software product revenue increased to 81% of total revenue, up by 200 basis points from last year without any adjustment for currency or acquisition-related data points. Our recurring software license rate that is the percentage of software revenue that is recurring continues to be strong and consistent with our past performance at 92% for the quarter. Our positive software momentum contributed to strong profitability in the quarter with modified adjusted EBITDA of $26.2 million, nicely above our guidance which as noted included the deferred revenue adjustment mentioned a bit ago. The net impact from shift in foreign currency imposed an $800,000 negative impact on our results for the quarter. First quarter calculated billings were $133.9 million, an increase of 18% from a year ago, indicative of the growth in our business. Currency shifts also impacted current period billings negatively by $5.1 million. And on a constant currency basis would have increased by almost 23%, driven by software product momentum. We tend to view calculated billings over longer time periods due to the impact variations in timing of renewals, expansions and new customer arrangements can have quarter-to-quarter. I would like to turn to the balance of the P&L results, some of which are on a non-GAAP basis. A reconciliation of GAAP to non-GAAP measures has been provided in the earnings release we issued earlier today. Gross margin in the first quarter was 74.3%, consistent with a year ago results. For the quarter, non-GAAP operating expenses, which exclude stock-based compensation, amortization of intangible assets and other operating income were $73.1 million compared to $58.1 million a year ago. Operating expenses in the quarter now include the operations of Datawatch for the entire reporting period. The composition of which are slightly more heavily skewed to sales and marketing compared to R&D with some incremental G&A expenses. Note that we have quickly achieved the expected cost synergies, shortly after the acquisition. Our increased level of G&A expenses are attributable to incremental nonrecurring Datawatch transaction audit and SOX implementation-related costs coupled with an overlap of facility costs associated with additional facilities in India. As highlighted before, modified adjusted EBITDA for the quarter was $26.2 million, exceeding our guidance compared to $29.6 million a year ago. Modified adjusted EBITDA margin in the first quarter was 20.2% compared to 26.1% a year ago. We continue to be focused on driving growth in software product revenue as the key to improving our operating margins, while simultaneously investing prudently into those areas and opportunities that we believe will be beneficial to our long-term growth prospects. On a GAAP basis, first quarter net income was $13 million or $0.17 per diluted share, based upon 76.7 million diluted weighted average common shares outstanding. Turning to our balance sheet, we ended the first quarter with $39.8 million in cash and cash equivalents. We had approximately $135.2 million undrawn and available on our US line of credit as of March 31st, 2019. Moving to our cash flows, cash flow from operations in the first quarter was an inflow of $25.3 million compared to an inflow of $26.7 million for the first quarter of 2018. Free cash flow, which consists of cash flow from operations less cash capital expenditures was an inflow of $20.7 million for the first quarter, consistent with our business cycle. During the first quarter, we incurred higher capital expenditures, primarily for technology infrastructure. These elevated types of expenditures are infrequent in nature. Further working capital levels can fluctuate from period to period and thereby impact free cash flow. During our second quarter, we compressed the time period for which we end our pay periods in the United States and remit payroll to our employees. This accelerates the payment of payroll and has a negative impact on our free cash flow for 2019. We are modifying our free cash flow guidance for 2019, primarily as a result of the change in the timing of funding our US payroll. Note that our seasonal patterns allow us to realize a substantial portion of free cash flow in our first and second quarters of each year. I would caution against extrapolating free cash flow results on a quarter-to-quarter basis. Our initial guidance for 2019 was impacted by fluctuations in currencies such as the euro and pound. Given the movements in these and other currencies compared to 2018, our guidance remains anticipatory of the negative impact on annual revenues of approximately $7 million to $10 million with a $2 million to $3 million headwind to modified adjusted EBITDA for 2019. Notwithstanding these headwinds, we are increasing our guidance for modified adjusted EBITDA to now equal $62 million to $66 million, an increase of $1 million at the low and top end of the range, while maintaining our guidance for total revenue and software product revenue. We continue to refine our expectations related to our effective tax rate for 2019 and are now assuming an ETR of 35%, down from 40% due primarily to updated expectations for the geographic location of our income before tax, coupled with the impact of new regulations tied to US tax reform changes. As a reminder for the full year 2019 our expectations are as follows; software product revenue to be between $373 million and $377 million, representing growth of 23% to 24% from 2018; total revenue to be between $470 million and $474 million, representing growth of 19% to 20% from 2018; modified adjusted EBITDA updated to between $62 million and $66 million; free cash flow updated to be between $27 million and $29 million. For Q2 2019, our expectations are as follows; software product revenue to be between $83 million and $85 million, representing growth of 18% to 20% from 2018; total revenue to be between $106 million and $108 million, representing growth of 14% to 16% from 2018; modified adjusted EBITDA of between $6 million and $8 million. To summarize, we continue to be very pleased with the performance of the business for the first quarter of 2019. We are executing well on our strategic priorities and are optimistic about our ability to drive revenue growth in 2019 with solid profitability and cash flow. With that operator, can we now open up the call to questions?

Thank you. [Operator Instructions] Our first question comes from the line of Sterling Auty with JPMorgan.

This is Jackson Ader on for Sterling tonight. First question, Jim, the OEM, the automotive OEM that you mentioned that could possibly or I guess, are recommending that SimSolid be rolled out to the entire company or to other engineers. Have they already run their trials and how long do you get to be, I guess, a pilot customer or a trial customer before you're going to ask them to make a decision?

So some of the companies had been evaluating SimSolid before the acquisition and were very, very excited about it. But these companies move rather slowly first of all, and then beyond that they -- they were looking at SimSolid as a very tiny company frankly. So with Altair coming in, I think there's a lot -- much greater comfort around it. Most of those companies have done pretty extensive evaluations, the one that it started before. And I mean, they are all extremely impressed; the technology is really impressive actually. And so in terms of how long are we going to let them evaluate, we are relatively patient with the large automotive OEMs, to be perfectly honest with you. And we have often very large agreements with them. So we don't see huge revenue. Even though you might see it rolling out, I'm not expecting this huge, massive increase in revenue coming right away. That's going to happen over a period of years, while we let them sort of roll this out, settle in with it. And this is kind of what we've done with all the products that we have in Altair. This is how we got to the level we're at. So I don't expect it to impact things this year, which is kind of what I've been saying all the way through. We are just seeing usage climbing and that's most important to us. For us, it's market share and then revenue follows.

That makes sense. And then quick follow-up, do you have any, I guess high level thoughts on the new competitive entrants into the electromagnetics software market?

Are we talking about cadence?

We are indeed.

Okay. To be very honest with you, we haven't evaluated extensively but from what we see, we don't think that there's an actual overlap with what we do. They are focused on a slightly different space than we're covering right now. And so we don't anticipate that's going to affect us very much. They are certainly very focused on, particularly one of our competitors. But even there I am not sure how much impact that, that will really have.

Okay, thank you.

And our next question comes from the line of Matt Hedberg with RBC Capital Markets. Your line is open.

Thanks for taking my question. Well done on the quarter. Jim, in your prepared remarks, you called out success selling solvers into the Aerospace vertical and obviously, you guys are expanding your solver portfolio with Cambridge Collaborative. Can you just talk maybe just more generally speaking on the how you feel about the overall momentum of selling solvers back into your base and maybe touch on just kind of the broader competitive landscape there?

Yes, solver stuff is going really well. In my prepared remarks I talked about OptiStruct, which is our Structural Analysis tool and we've been adding a lot of nonlinear capabilities to it over the last probably 10 years, it's really accelerated and we are seeing a lot of traction around that really among all of our customers. There's just tremendous interest for that technology. We think about the rest of your question there, what was the other part question there?

Well, I mean, I just, I mean, obviously it's a huge opportunity just -- to have just more broad-based success selling solvers back into the base and maybe just a little bit on the competitive landscape there.

Yes, it's generally going well. The other part I was going to address that I missed there is the aero market in particular. So aerospace, we are less penetrated so far with solvers than we are in some of the other markets. But we're beginning to see that catching some wind, if you will. Where we're having a lot of success in Aero is on the Mod-Vis side. So we -- our Mod-Vis solution is really essentially being rolled out across the board in many of these key, key accounts now.

That's great. And then I guess, either for you Jim or Howard. The software success, the acceleration there in the mix shift is certainly impressive, so well done there. I guess when you guys think about capacity versus process or productivity, I think last call you called out a little bit more focused on the process side. How do you kind of think about balancing this -- because the acceleration there has been impressive, just sort of maintain this momentum of software growth with also an eye towards profitability, what's the right balance between adding additional capacity and then focusing on process here? How do you kind of evaluate that decision?

I'm trying to parse through what you're asking -- I'd be sure I understand the question. Are you asking me with the mix shift and with the continued strong growth of software, whether we see ourselves moving to increasing profitability. I'm not sure I followed your question.

Well, yes, I know you're having a lot of success selling software, and I think last quarter you'd mentioned rather than focused on adding additional capacity to maybe keep that momentum up, you'd focus a little bit more on the process side of your sales force. How do you kind of think about the balance there?

We are very much focused on that. So we've been rolling out, I'm going to be a little honest, I think we've been a great technology and product company. But our sales process been -- I'll say a little more adhoc . It's not that bad, but a little bit more adhoc that it needs to be at our level and to get to that next level. And so we, we have been rolling out and training initially the sales management and then we're moving to all the sales account managers some process tools basically and strategies to just be much more organized and focused. It's also relevant to how we are looking at our sales force data and doing our predictions because we want to be much more accurate with how we're predicting and how are determining which accounts to focus on, which accounts not to focus on. So just increasing the efficiency of how we do our targeting and that is happening very much. So, over the first quarter, we did a lot of that particularly in the Americas, but it's beginning to go beyond the Americas now.

Great, thanks a lot. It seems like you're having a lot of success on a global basis. So, well done, guys.

Our next question comes from the line of Bhavan Suri with William Blair. Your line is open.

Thanks for taking my question. This is actually Arjun [ph] on for Bhavan. Jim, you mentioned some of the success you're seeing from existing customers in your opening remarks as they are expanding. Can you just maybe help us triangulate where that's coming from. Is it unit increases for more customers or higher value products or customers deploying HyperWorks or other Altair products across more use cases?

I mean, it's a combination, right. For us it's primarily unit increases. Right I mean, that's how we sell our products. So customers buy more units and they're able to do more. But we are penetrating with more and more of our products for sure, and we're beginning to see traction obviously around solvers. But we're also seeing traction and obviously around SimSolid. But we have some newer technologies and model-based design space that are beginning to get some very, very interesting traction in certain accounts. So there's just a lot of nice things happening. We have a really broad and deep portfolio of technology and the model is very high value for customers.

And then I wanted to touch on SimSolid and maybe even solidThinking broadly speaking, it's obviously really unique solution. But curious how you see the competitive dynamics there, is it a different set of competitors playing in that market and going forward, how do you think the greenfield versus replacement dynamic works out in that segment of the market? Thanks.

Yes, we're seeing a lot more greenfield in that mid-market than what we historically see. As a percentage of our revenues, it's not yet enough to move the needle that much, but we're seeing a lot more new accounts that we really get to in the middle-market and the price points in the middle-market, there is a variance, right. You have very, very low price points, but that's not really where we play. We play I'll say more to the mid to the mid high of the mid-market where prices are lower, but not dramatically low I'd say. Hope I answered your question.

Yes that was helpful, thanks for taking my questions.

Our next question comes from the line of Richard Davis with Canaccord. Your line is open.

Canaccord is appropriate for baseball games. Hey, couple quick things. Some of your competitors offer kind of workflow and things like that. [Indiscernible] and stuff like that. Is that something that makes sense for you guys to offer in the future kind of almost, project management stuff or is that just feel like it's kind of far field?

So to me, it's a little bit far field. We do a lot of work in the data management area for simulation data management, but we don't see ourselves as like an ERP player let's say. It's just not the right place for us to focus. We're about algorithms and math and simulation and how the algorithm is associated with machine learning. But what we are able to do process, automate processes typically around those sorts of things. And so those, those things we do when we do more and more of that and that does makes sense.

Got it. And then you outlined Aerospace wins and you and I both know that there is a company that was acquired in that space and I mean, its technology let's just say, well established for a long time. Is it -- to convince someone to switch to you guys, is it -- does your software has to be -- I'm just trying to get a sense of what the tipping point is? Is it am I fed up with the old system, am I getting the wrong answers. It's not per se pricing as best I can tell, I mean, you might be a little bit better pricing, but what's the -- is there a tipping point or is it just kind of incremental the way we need to think about your guys ability to gain share from let's just say more stodgy competitors? Right. So that particular stodgy competitor who shall remain nameless. We basically push them out or took over the marketing in automotive at least 20 years ago from them. And the product that we replaced or displaced for the most part in the automotive market 20 plus years ago is still a product that was being used in the aerospace market today. I know that seems shocking, but it's true, and it's not because aerospace companies are not smarter or whatever, but because there were, there's always some very specialized things that they can do and even if the performance is not -- not up to snuff or whatever there's a lot of legacy stuff there. So, it's taken us a long time, but now we're completely -- I mean, we are selected and waiving over and the transition is happening, it's more than halfway done right now, and should be completed within another year. And that puts us in a really nice position for the rest of our portfolio as you probably realize.

That's very helpful, thank you very much.

Our next question is from the line of Rich Valera with Needham & Company. Your line is open.

Thank you, Jim, you mentioned there were some challenges on Datawatch, and I'm wondering if you could expand on what those were and how you're addressing them and relatedly has that resulted any change to your revenue expectations for the Datawatch business for this year? And then just one more on Datawatch, you had a really interesting use case demonstration for the Datawatch software in an industrial such manufacturing application at your Analyst Day. I'm wondering if there, if you had any more of those use cases created by your team and how you're doing sort of penetrating that industrial and manufacturing vertical with the Datawatch products? Thank you.

So, yes, so the challenges are sort of two-fold as I would describe them. One is how we expand the footprint and there is a lot of interest actually in our traditional market. It's the kind of thing we have to manage that because you don't want to chase every -- everybody is interest in applying machine learning to everything. So you really have to manage the process a bit, I guess. And then we have to train a lot of people on the software. We have to bring up technical support globally and amongst our traditional teams, hiring some people and just training people and then the implementation teams because the newest generation of the -- what we call knowledge hub and knowledge studio products are enterprise level products, they're cloud-based products, and so they require some implementation and so getting the implementation teams in place and capable of doing these implementations and learning how to do it requires work. So that's sort of the one element, so just expanding that footprint and taking advantage of our global footprint is just plain work to do and we're doing it, but there is tremendous excitement. We had one of our calls where we have all of our regional country managers whatever on just this week and they're all really juiced about data intelligence and the opportunities in the way customers are responding. The other is around culture to be perfectly honest with you. There is -- there is some cultural alignment that we're doing. We're a bunch engineers that are used to selling software in certain ways. We have our own sales approaches, licensing whatever and the FinTech or data analytics world, software world we'll say is different, right, and they think about things differently and they price differently and concurrency, which is very normal for us is not typical there, all of that. To be honest, I think we're getting through it and we're coming out the other end now of that and it's like anything else. This was a fairly sizable acquisition for us and many people noted that this will be challenging and there is challenge there. Is it going to affect -- is it affecting our numbers. Not from what we see right now. And so that's why we did what we did with our guidance. We're engineers and -- but we right now feel like things are basically on track.

And then one more I had on that front was just around the use cases. I think you partially answered to say you have to be careful not to maybe chase too many, but how are you sort of then adopting the AI machine learning technologies you have there, two more of your manufacturing-oriented use cases like the one you showed at the Analyst Day?

Yes, there's actually a lot of very interesting use -- the customers are bringing them. The aerospace guys have been praying, they have a lot of, they have a lot of data. If you think about the amount of flight data, for example, if they have, there's just a lot of data in lot of these companies that's been sitting around unused and so there's tremendous interest in seeing how they can harvest that and do interesting things with that. And we're all learning together, we're just trying to focus on the things that are going to turn out to be meaningful and, replicable. So that we're creating real business, so that's part of managing the whole integration I would say.

Got it. And one more for Howard if I could. Is there any material contribution from Cambridge Collaborative in the numbers?

There is no material contribution from Cambridge Collaborative.

Got it. Thank you, gentlemen.

Cambridge is a very small…

It's…

Important technology but quite small.

But it's very tiny.

Got it. Thank you, gentlemen.

Our next question comes from the line of Gal Munda with Berenberg. Your line is open.

Hi, this is actually [indiscernible] for Gall. A lot of my questions has already been answered. But just a follow-up on Datawatch a little bit. It's almost been five months into the year, could you give us any updates on the new model adoption, what can you say about customer feedback so far?

You mean around licensing model. We haven't launched the units-based licensing, that's part of the work we've been doing is really understanding the installed base. How the usage patterns are, certain other products are heavily used certain other products are more lightly used and we think we've figured it all out now, by the way, and so we're anticipating launching the units very soon. But we haven't actually rolled it out yet, and so we haven't really talked with customers too much about , and that's all -- part of the other different sales approaches, the sales guys in that space are extremely conservative I would say in general and want to be really careful with what they say to customers, which is a good thing. I mean we're learning too.

Okay, thank you. And just one more on your guidance. You think that the this quarter what was the reasoning for not increasing your full-year guidance on the top line. Is it just conservatism built into it or early deal closure, could you provide some commentary around that?

So it's, we'd like to be conservative. That's first and foremost. We've commented about obviously the FX headwind, so we're at EUR112 or EUR113 where last year you were well above that and euro is important to us among other currencies. So at the same time, we're continuing to feel very good about the year, hence the bump up in modified adjusted EBITDA guidance notwithstanding holding on the top line.

Okay, very helpful. Thank you.

Just to comment on top of that. We are, we are very, very international in terms of our revenues as compared to some of the other software companies in our space. And just in general, who have much closer to 50% of revenues in the US.

Okay. Thank you very much.

Thank you.

And our last question comes from the line of Ken Wong with Guggenheim. Your line is open.

Great, thanks for taking my question guys. Jim, so, you mentioned you guys have now figured out the pricing around Datawatch and obviously the unit licensing is that's going to push that out at some point, but how are you progressing in terms of training the sales force on that pricing both the Datawatch side and your current sales force. And I guess when in terms of when we think of that rollout should take place any rough sense on timing and potential ramp of sales under a unit based licensing model?

So first of all, we're going to maintain the current pricing and the units based pricing. So sales guys have the option of either that's part of the ballots that we are finding, we expect to roll it out basically, at the end of Q2, towards the end of Q2 when we see it coming out. Our sales force will instantly understand it. So the knowledge products will be available under units to most of our existing customers and so that will suddenly make that opportunity for usage available. For the traditional Datawatch sales team, we've been explaining it to the management -- sales management, but we haven't really gotten deeply into it or train them and I think the best way to do that is take to kind of partner some of our sales managers with some of the account managers on deals and sort of work some deals together, so they understand how we're thinking about things. It's not just the pricing, but even the way that we think about putting deals together and we also have to work on -- and we actually have done this now on compensating sales guys because we want to let them sell all of the products in the portfolio, which historically has not been the case. Different sales guys within these companies are able to sell only certain products. So they're not interested in selling this other product over here because they don't get comped on it. So our focus is on all the products are available under the units model and even if it's not under the units model, we want our sales guys able to sell all products to their accounts. It's a much more positive situation from our point of view.

Got it. And then a question for Howard, you mentioned 606 would have kind of bigger -- I don't want say [indiscernible] tailwinds in Q1 and Q4. I'm just wondering if there was any kind of benefit in Q1 that was maybe more magnified than you guys might have expected when you provided initial guidance?

No, this is what we're really going to look like, under 606 on a go-forward basis. It's, we'll have two significant quarters, Q1 and Q4 which really match our two big billings quarters and the quarters in between Q2 and Q3 are going to look relatively modest comparatively speaking. Across the -- course of the year, the year is the year and as a reminder, with an annual recurring revenue model the HyperWorks units model. I mean, that's we -- while we give the quarterly information. It's really annual recurring billing perspective weighted Q1 and Q4.

Got it. Okay, perfect. Thanks a lot guys.

Thank you. And I'm not showing any further questions, I'll now turn the call back over to Mr. Scapa for closing remarks.

Thank you. I just want to say thank you to everyone for their attention and for their interest in our company. Thank you very much.

Ladies and gentlemen, this does conclude the program you may now disconnect. Everyone have a great day.