Deutsche Bank Gives Color On RightNow Technologies Following Earnings Beat

RightNow Technologies RNOW reported 4Q EPS of $0.17 vs us/Street at $0.16 and revenue at $51.4m vs us/Street at $51m, both of which were slightly higher than the pre- announcement. The key metric, current portion of software backlog at $134m showed impressive acceleration for the last 2 quarters, indicating positive momentum. RightNow reported solid 4Q results, in-line with their pre-announcement. Though investors tend to focus on annual contract value it thinks this can be lumpy based on deal sizes, and views the current portion of software backlog as a better indicator of business momentum. 4Q seasonal strength was seen in greater portion of large deals. The company closed the Q-Go acqn a week back, and Deutsche Bank believes initial integration is progressing well, the company should integrate "natural linguistics" into their core offering in the next 6 months. The company sounded a bullish tone on 2011 and noted that they planned to increase quota reps by 20% - 30% in 2011. Deutsche Bank thinks initial guide of 20% revenue growth could be conservative given the company organically grew current backlog +28% in 4Q. Moreover, it expects higher productivity from reps in 2011 given the larger product set available. Deutsche Bank has a $30 PT and Hold rating on RNOW RNOW closed Wednesday at $27