Q4 2003 MatrixOne Inc. Earnings Conference Call - Part 2.

(From Fair Disclosure Wire)

MAURICE CASTONGUAY: Well, let's talk about the expenses overall. Again, what I indicated in the guidance was that seasonally, we have, this being the first quarter, we have the typical kickoff programs and training programs for both employees and partners, so there are incremental costs associated with programs such as matrix University where we bring in employees and partners from literally around the globe and go through some extensive training. That's followed up by specific partner training and additional groups break off and do more training. There's a lot -- it's a big investment, and one that is obviously critical in getting off to the right start. So, you do have that issue. As I said, we are providing guidance for our first quarter, and you know, our perspective at this point is, as I said, while we saw the business stabilized in our fourth quarter, obviously there's still-there's 60 days to go in the quarter, and, you know we think that there's still a wide range in terms of the revenue. Obviously, we're hopeful for the quarter, but we think it's Peru dent given that it is in fact the summer quarter, and you know the schedules primarily in the Americas and Europe that we say that revenues could be 25 to 27%. Obviously 27 would imply growth. 25 would imply a slight decline. Obviously, as you know, that has a significant impact on our net result. With respect to expenses going forward, you know, what we have said throughout last quarter is we were -- we were speaking to the investment community but that this is primarily a revenue opportunity. We believe that it's an exciting market, and that you know, our return to profitability is highly dependent on revenue growth as opposed to saving our way to prosperity. The last thing we want to do is to take actions which could --would impact our ability to benefit from this market as the market starts to improve. We do believe with the great products that we have and our -- increasing number of sales alliances that those will have positive impacts on us in the future, and as a result, you know, we're not prepared to say that, you know, we'll end the next quarter, IQ1 with lower head count at this point. We're hopeful that the revenues do very well, and that results in even more sales commission expense, and I think everybody would be happy if that were the case. PHILLIP ALLING: Okay. With respect to sales alliances that you mentioned in the quarter, you had 13% of your software license sales from indirect sales channels. That was actually a low over the last eight quarters. Given the emphasis that you guys have made on alliances, what is the expectation going forward as far as the contribution from your partners with respect to software license sales. MARK O'CONNELL: We're going to answer that two different ways. First is what we typically record is revenue that comes through the indirect channel. These are resellers that actually distribute the software. Yes, that was 13% this past quarter. You will notice that Asia Pacific was lower than what it has been. That is 100% distribution model for us. Going forward, we would expect that it would be back to more --say traditional rates in the mid to higher teens, but we're faced with a summer quarter which is somewhat unpredictable in Japan and Asia, so we're not forecasting big growth in those two regions in the September quarter. But in general, we feel it's good about the (inaudible)…