Clovis Oncology Inc (CLVS) Q4 2018 Earnings Conference Call Transcript

Image source: The Motley Fool.

Clovis Oncology Inc  (NASDAQ:CLVS)Q4 2018 Earnings Conference CallFeb. 26, 2019, 4:30 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Good morning. My name is Mariama, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clovis Oncology Q4 Year End 2018 Financial Results Call. (Operator Instructions) Thank you. I would now like to turn the call over to Ann Bozeman. You may begin your conference.

Anna Sussman -- Senior Director, Investor Relations

Thanks, Mariama. Good morning, everyone, and welcome to the Clovis Oncology Fourth Quarter and Full Year 2018 Conference Call. You should have received the news release announcing our financial results. If not, it is available on our website. As a reminder, this conference call is being recorded, and webcast. Remarks maybe accessed live on our website during the call and will be available in our archive for the next several weeks.

The agenda for today's call is as follows: Patrick Mahaffy, Clovis' CEO and President, will discuss the key components of our corporate update provided in today's news release; then, Dan Muehl, our Executive Vice President of Finance and Principal, Financial and Accounting Officer, will cover the financial results for the quarter and full year in greater detail. Patrick will that make a few closing remarks, and then we'll open the call up for Q&A.

Before we begin, please note that during today's conference call, we may make forward-looking statements within the meaning of the federal securities laws, including statements concerning our financial outlook and expected business plans. All of these statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business. Forward-looking statements speak only as of the date on which they are made, and Clovis undertakes no obligation to update or revise any forward-looking statements.

Now I'll turn the call over to Patrick Mahaffy.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Thanks, Ann. Welcome, everybody. Thank you for joining us this morning. I'll begin with an update on the U.S. launch of Rubraca in the recurrent ovarian cancer maintenance treatment setting, following its Q2 2018 FDA approval. We had a strong fourth quarter reporting $30.4 million in U.S. Rubraca sales, compared to $17 million in Q4 2017. This does not include the $10.4 million in commercial value provided to eligible patients, primarily Medicare patients, as free drug supply through our patient assistance program.

For the full-year 2018, we reported $95.4 million in U.S. Rubraca sales, up from $55.5 million in 2017. This also does not include the $33.4 million in commercial value provided to eligible patients as free drug to our patient assistance program. The supply of free drug represents approximately 26% of overall commercial supply for both the fourth quarter and the full year.

We are optimistic about Rubraca's potential in the second line maintenance indication. As we have discussed, PARP inhibitor penetration, as a class still represents a minority of the patients eligible for second-line maintenance treatment. So in addition to competing for market share, we also continue to compete against the ingrained habit of watch and wait, as opposed to active maintenance treatment. To address this, we have a three-pronged strategy in place to continue to grow US sales of Rubraca in the maintenance setting.

One, differentiate Rubraca clinically based on the strong data from the ARIEL3 study; two, expand our use of current prescribers and add new prescribers; and three, and importantly, empower patients to ask for Rubraca and support them during their treatment. There are significant opportunity to grow Rubraca's U.S. share by reaching the large number of patients as clinicians continue to utilize and watch and wait approach as well as by addressing perceived lack of differentiation among the marketed PARP inhibitors. The watch and wait approach continues to be the most widely followed practice following the second line platinum therapy, despite numerous published data sets demonstrated the PARP inhibitors offer substantially better outcomes than placebo, the equivalent of watch and wait in the platinum sensitive second-line maintenance setting.

To provide additional support for active maintenance treatment therapy, we launched our (inaudible) enhanced messaging and direct promotional materials in the fourth quarter. This program highlights data from a pre-specified exploratory analysis from the ARIEL3 study, demonstrating that not only can Rubraca maintain PFS, progression-free survival, it may, in some patients, also further their response coming up platinum therapy, including converting some partial responses to complete responses.

This message is resonating with physicians who see the opportunity for additional tumor shrinkage, while in the maintenance setting as both the tangible and meaningful benefit for their patients. In fact, in some respects, tumor response can be a more powerful message than what can be the more abstract concept of progression-free survival. This message is further supported by a regional account team, which educates key accounts, about the significant gap in patient care and establishing the importance of second-line maintenance therapy, as well as our nurse education group, which counseled nurses and other practitioners on the importance of second-line maintenance and the management of patients on Rubraca.

We believe this two-part efficacy message maintaining progression-free survival and the potential for further tumor shrinkage will have a positive impact on our market share and on growing the market in general. We also recognize the importance of highlighting differentiation among the PARP inhibitors, especially at the time of players in the competitive landscape of change. We actually have a great opportunity to reach prescribers with these messages right now, and our team is motivated to do so.

We are continuing to provide them with the tools they need as well as to help ensure they are reaching the appropriate audiences. As I mentioned earlier, the launch of the maintenance program is directed at physicians and designed to establish the importance of second-line maintenance therapy, and to distinguish our unique objective response rate data.

To augment our physician-focused messaging, during the fourth quarter, we launched significant patient focus resources into the marketplace. This includes an increased focus on digital and Internet-based activities. During the first quarter, we extended this direct-to-consumer campaign to reach patients directly with the goal to drive awareness and ultimately utilization of Rubraca. This highly targeted program now includes both televisions and social media.

I'm not sure if any of you have seen this ad, but we've received good reviews from those who have. I'll turn out in discussing our recent EU approval for Rubraca in the maintenance setting at our upcoming (inaudible) launch. I'm pleased that the late January, the European Commission approved an expanded label for Rubraca which now includes a second line or later maintenance treatment indication based on the ARIEL3 data. This will make Rubraca available to eligible patients regardless of their BRCA status.

Rubraca was the first PARP inhibitor licensed for an ovarian cancer treatment indication in the EU, and is now the first to be available for both treatment and maintenance treatment among eligible patients. Our initial launch of Rubraca will take place this Friday, March 1st in Germany, while led by other EU countries during the rest of 2019 and in the 2020.

The majority of additional hires including sales reps in EU countries beyond Germany will coincide with reimbursement approval in the individual countries and will occur in 2019 and into 2020, as will any meaningful revenues. We do maintain an early access program in a limited number of EU countries for Rucaparib for treatment and as maintenance therapy in recurrent ovarian cancer to allow access to rucaparib for patients in need until the time the drug is commercially available.

Let me turn now to clinical development. I'll begin with an update on our supplemental NDA submission for Rubraca, as treatment for men with BRCA-mutated advanced prostate cancer. Plan filing will be based on data from the TRITON2 study. We were pleased to present the initial and encouraging data from the TRITON 2 study at ESMO and at the PCF Scientific retreat last October, we for the same date upon which breakthrough therapy designation was granted in early October.

I should note that the responses at shown at ESMO were based on assessments made by the enrolling physicians. We were pleased that following ESMO, the response rate from an independent assessment of the TRITON2 patients were shown to be completely consistent with the investigator-assessed data presented at ESMO. We are targeting late 2019, pending data maturity for our filing of the supplemental NDA for Rubraca for accelerated approval in men with BRCA mutant metastatic castration-resistant prostate cancer.

Filing is based on recessed responses, PSA responses will be included as supportive data. Following our meeting with the FDA at the end of January, we are encouraged that FDA has agreed to maintain an active dialog with us and we'll review data updates over the course of this year. This opportunity for a more informal and frequent interaction with the FDA is an advantage of breakthrough therapy designation. This could also facilitate a more rapid regulatory reviews since they be familiar with the data.

We expect that the next public data update will be the medical meeting in the fall, most likely the ESMO 2019 in Barcelona. It is important to note that the TRITON2 data we presented at ESMO 2018 still represent the largest reported population of advanced mutant BRCA metastatic castration-resistant prostate cancer patients using the endpoint of recessed response, obviously in patients with measurable disease. Based on recently reported data from a competitor, running a similar trial seeking a potential accelerated approval and on the stated filing or acceptance data of another competitor, we remain confident that the timing of our sNDA filing will be highly competitive.

Our second Clovis-sponsored prostate study is TRITON3, a randomized comparative Phase 3 study that includes patients who have a tumor germline or somatic BRCA or ATM mutation. We have progressed on AR targeted therapy and not yet received chemotherapy in the metastatic castration-resistant setting.

The study will compare Rubraca to physician's choice of AR-targeted therapy or chemotherapy. The planned primary endpoint is radiologic progression-free survival, and we anticipate the study would serve as a confirmatory study so the TRITON2 study data result in an accelerated approval. We continue to enroll patients in the both TRITON2 and TRITON3.

We're also very enthusiastic about our collaboration with Bristol-Myers Squibb with this study in prostate cancer as well as ovarian and bladder cancers. As part of that collaboration, a Phase 2 prostate cancer study initiated in late 2017 and is sponsored and conducted by BMS. The study will evaluate the safety and efficacy of Opdivo in combination with Rubraca, in patients with metastatic castration-resistant prostate cancer, and is being conducted as an arm in the BMS-sponsored CheckMate 9KD study.

Importantly, the prostate study is enrolling BRCA, HRD and biomarker negative patients and will generate preliminary data on the relative benefits of the combination in these distinct patient populations. Let me turn now to bladder cancer and other potential new indication for Rubraca. Our ATLAS study is a single-arm Phase 2 open label study of Rubraca as monotherapy in recurrent metastatic bladder cancer.

This is in an all comers population with no selection based on bracket or HRD status. Eligible patients are those who have failed one or two prior therapies. Study is currently enrolling patients and is designed to potentially support an accelerated approval. Given the bladder cancer is particularly responsive to platinum-based therapy and that we estimate approximately 60% of patients have tumors that are HRD, we are hopeful about the potential for Rubraca in this indication. The trial is enrolling quickly and we anticipate completing enrollment in this study by Q3 2019 and plan to present an initial look at data at a full 2019 medical meeting.

We have also initiated the ARIES study, a Phase 2, open-label, multi-cohort study evaluating the combination of Rubraca and Opdivo in patients with locally advanced or metastatic bladder carcinoma as well as separate cohorts of relapsed ovarian cancer patients. This is a Clovis-sponsored study and the most recent addition to our broad clinical collaboration with Bristol-Myers Squibb.

Since ARIES includes both bladder and ovarian coverts, it provides a good segue to back to our ongoing clinical efforts in ovarian cancer. We are aware of the desire to see robust combination results for PARP inhibitors and I-O agents broadly, and for Rubraca and Opdivo specifically. We are therefore pleased to get this study going and we'll look for an opportunity to provide initial data from ARIES during 2020.

The ATHENA study is also part of our clinical collaboration with Bristol-Myers Squibb. This Clovis-sponsored study is a Phase 3 trial of advanced ovarian cancer in the frontline maintenance treatment -- and is currently enrolling patients. ATHENA will evaluate Rubraca plus Opdivo, Rubraca, Opdivo and placebo in newly diagnosed patients with Stage 3, 4 high grade ovarian fallopian tube or primary peritoneal cancer who have completed platinum-based chemotherapy.

This study in approximately 8,000 patients include an comers population with a step down statistical plan similar to ARIEL3. Additionally, the Clovis-sponsored ARIEL4 our confirmatory study versus chemotherapy in the mutant BRCA ovarian cancer treatment setting continues to enroll. RUCA-J is our fully sponsored Phase 1 Japanese study now enrolling patients. The study with safety and PK as primary endpoints has identified the recommended 600 milligram BID dose of rucaparib in Japanese patients which will enable development of a bridging strategy and inclusion of Japanese sites in planned or ongoing global studies.

To wrap up our clinical development update for Rubraca, there are over 30 investigator-sponsored monotherapy or combination therapy studies in a variety of tumor types approved are under way. Let me spend just a few minutes describing lucitanib. Lucitanib is our oral, potent inhibitor of the tyrosine kinase activity of vascular endothelial growth

factor receptors 1 through 3, platelet-derived growth factor receptors alpha and beta and fibroblast growth factor receptors 1 through 3.

We hold global rights excluding China for lucitanib. Recently there have been very encouraging data in studies of a very similar drug to lucitanib that inhibits the same three VEGF PDGF and FGF receptor pathways called MVMA or imatinib in combination with the PD-1 inhibitor, in this case KEYTRUDA.

These data represent a validated and compelling hypothesis for the development of lucitanib in combination with the PD-1. We are pleased today to announce that we've agreed to furthering our clinical collaboration with Bristol-Myers Squibb this time combining Opdivo with lucitanib. The Clovis-sponsored study of lucitanib in combination with Opdivo is planned in gynecological cancers initially and will begin enrolling in the first half of this year. We also intend to initiate a study of lucitanib in combination with rucaparib in ovarian and other cancers based on encouraging data of VEGF inhibitors and PARP inhibitors in combination. This study is also expected to initiate in the first half of 2019.

For pre-clinical overview of lucitanib, please visit the events and presentations page on our website and with that, I'll turn the call over to Dan to discuss fourth quarter and full year 2018 financial results.

Daniel Muehl -- Senior Vice President of Finance, Principal Accounting Officer and Principal Financial Officer

Thanks, Patrick and good morning, everyone. Our fourth quarter and full year 2018 financial results are included in today's press release. I'll review the highlights of our financial results and provide some additional commentary. Product revenue was $30.4 million for Q4 2018 and 95.4 million for the year ended 2018. This compares to $17 million in Q4 2017 and $55.5 million for the year ended 2017.

This is a 78% quarterly increase year-over-year and a 72% annual increase for the year ended 2018. The number of weeks at -- of inventory at our distributors at the end of Q4 was flat to Q3. The supply of free drug provided through our patient assistance programs totaled 10.4 million in commercial value during the quarter and 33.4 million for the full year 2018.

This represents approximately 26% of overall commercial supply for the quarter and the year, this percentage appears to have stabilized. We ended the fourth quarter and year with $520.1 million in cash, cash equivalents and available for sale securities. Cash used in operating activities was $82.7 million for Q4 2018 compared with $65.6 million for Q4 2017. The $82.7 million in cash used in Q4 2018 is a sequential increase from the cash used in Q3 2018 of 72.5 million. This is due to higher drug purchase costs of 22.7 million in Q4 2018 versus no drug purchase costs in Q3 2018. We reported a net loss of $99.3 million or $1.88 per share for Q4 2018, compared with $51.9 million or $1.04 per share for Q4 2017. Our Q4 2018. R&D expenses totaled $71.2 million, compared to $38 million in Q4 2017.

We anticipate that R&D expenses will continue to increase in 2019 as our planned clinical studies and development activities progress. Selling, general and administrative expenses totaled $49.1 million for Q4 2018, compared to $38.5 million in Q4 2017. We expect that SG&A expenses will also continue to increase in 2019 in support of our commercial activities related to Rubraca in the United States and in the EU.

Now, I'll provide some color on Rubraca from a finance perspective. Revenue was recorded net of estimated rebates, chargebacks discounts and other deductions, as well as estimated product returns. These gross to net adjustments totaled approximately 10% of gross revenue for Q4 and the full year of 2018. Gross to net adjustments are expected to be in the low double digits as a percentage of gross revenue for 2019, assuming the distribution and payer mix remain consistent. And lastly, cost of product sales for the fourth quarter and the year was 23% of product revenue. Now I'll turn the call back over to Pat.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Very good. Thanks, Dan. To close, we are pleased with our progress having recently achieved several key milestones and with additional milestones anticipated in 2019. Our quarter-over-quarter sales growth was strong and we believe we are making inroads into both expanding the PARP market and increasing our share of the PARP inhibitor market through our marketing efforts and initiatives to date.

With our EU maintenance approval in hand that our European infrastructure established, we will launch in Germany, this framework first in other EU countries will be added over the rest of 2019 and 20-20 as we achieve reimbursement. Our robust prostate cancer development program continues to enroll patients in both TRITON2 and TRITON3, and based on the very encouraging initial data presented at ESMO and PCF for BRCA mutant patients with advanced metastatic castration-resistant prostate cancer from TRITON2. We are targeting late 2019 for potential supplemental NDA filing pending data maturity. We also plan to provide a data update from TRITON2 at a full 2019 medical meeting, hopefully at ESMO. Our ATLAS bladder cancer study is enrolling patients quickly we anticipate completion of enrollment by Q3 2019 with a first look at initial data at a full 2019 medical meeting. Our combination studies of Rubraca and Opdivo through our clinical collaboration with Bristol-Myers Squibb are initiating or under way, including the ATHENA Phase 3 study ovarian cancer, the CheckMate 9KD Phase 2 study in advanced prostate cancer and the ARIES Phase 2 in bladder and ovarian cancers.

I'm very pleased that we are furthering our clinical collaboration to include not only a combination of study of lucitanib and Opdivo, but that we're also in active discussion of other tumor types for Rubraca and Opdivo combination studies. We are also very enthusiastic about our clinical development program for Lucitanib that includes two combinations, one with Opdivo in gynecological cancers and one with Rubraca in ovarian cancer, both of which are expected to begin in the next several months.

With that, I'll be happy to answer any questions you may have.

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from Tazeen Ahmad with Bank of America Merrill Lynch. Your line is open.

Tazeen Ahmad -- Bank of America Merill Lynch -- Analyst

Hi guys, good morning and thanks for taking my question.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Good morning.

Tazeen Ahmad -- Bank of America Merill Lynch -- Analyst

I wanted to get some colors on your thoughts on the prostate cancer space in general. So all three companies that have perhaps in this space have advanced studies under way and, Pat, I'm just hoping to get some color on how you think, I guess, number one. How you thought of the GALAHAD data that was recently presented and how you're thinking about potentially what everyone's timelines to filing might be?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Well, there's going to be an element of conjecture here, but here's what I think. We know that FDA is still looking for around a 100 patients, and that drives our timeline. We also know FDA is going to treat all sponsors exactly the same in terms of their requirement. So when we saw the GALAHAD data, we saw the 37%, 38% response rate in mutant BRCA patients that compares to our 45%. So let's even just say they're kind of similar, certainly if not better. The side effect profile that was consistent with what we're used to seeing for niraparib, so a constant theme of slightly higher incidence of Grade 3 and Grade 4 hematological talks. So it's the same drug, it's niraparib. But I think what's most interesting is the data they've presented with the November 10th cut-off date included 16 patients, BRCA patients eligible for a recessed response.

And you'll recall that our cut off for our ESMO presentation was in middle of April, so eight months, seven months whatever that is earlier with 25 patients eligible at that time. So it's clear we're ahead enrollment. And I think it's important to note that the entire enrollment of that population of 16 patients seems to have occurred from using the new diagnostic they have over the course of when they reinitiated their study GALAHAD in December of '17, they got to 16 eligible patients by November of '18. Now that's a look in the rear view mirror, I don't have any idea of how we -- you can use that to predict exactly where they're going to be, but I think that anybody would say that was 16 patients in February and a requirement of somewhere between 80 to 100 which they acknowledged in their presentation. They're not going to file in 2019 and at this present enrollment rate, it would be almost heroic for them to file in 2020. So I feel really optimistic about what we've learned over the course of the last couple of months about our time relative to theirs.

The second study that is profound which is the AstraZeneca comparative study to either enzalutamide or abiraterone, the one you haven't already failed. And it's an interesting study, they have announced that they will have data at the end of this year and that they will file or be accepted for filing in the first half of 2020. It's worth spending a minute on the design of the study because I think it probably isn't one that's well understood. So the study is designed with a 2:1 randomization to enroll 340 patients, 100 of those patients or what's called Cohort B, so this is neither ATM nor BRCA, but an exploratory cohort that is looking at other genes associated with DNA repair deficiency. So the primary Cohort A element of the study is the combination of ATM and BRCA patients with the 2:1 randomization, so that's a 160 patients now versus 80 patients.

We know now that ATM patients do poorly on PARP inhibitors, there was kind of a false signal from an early elaborate study, but not only did we fail to see a response in something like 30 patients, but at ASCO GU in February, a data was presented on olaparib BRCA and ATM patients. It was Johns Hopkins study, where again I figured the number I think was around 20 patients with ATM, they had no responses.

So right now, on clinicaltrials.gov that cohort is blended. And if you think of the hazard ratio for the GM population being probably something close to one, that blended cohort is going to struggle to be able to show a statistically significant outcome. If they have amended their trial to look only at the BRCA population, we know from our own enrollment patterns that were presented at ESMO that you get about a 1:1 ratio of ATM patients to BRCA patients. So now when we narrow that Phase 3 study down to just looking at the BRCA patients, you're looking at a population of 80 patients versus 40. And the 40 aren't placebo, these are all on active drug, it's not an approved drug in this indication, but it is an active drug. So, I think everyone should kind of contextualize that it could still obviously be a positive study and for sure ESMO (inaudible) are just going to be active in BRCA population as we are and as niraparib is. But it's not a sleep easy Phase 3 when you're looking for a statistically significant outcome to support a registration in 80 patients versus 40. So we look forward to seeing those data.

Tazeen Ahmad -- Bank of America Merill Lynch -- Analyst

Okay. Thanks for all of that color, Pat, and then wanted to get your thoughts. We've talked in the past about the importance of being first-to-market and it's -- you said it seems like you're still comfortable that, that based on what you know, you can't know everything about what everyone else's studies are. But based on what you know now, it seems like you still feel confident that, that would be a possibility here, is that right?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Yeah, well, the important caveat is based on what we know, but based on the public statements by AstraZeneca and based on the data we saw and the totality of the data in 16 patients, yes, I'm still optimistic that we'll be first to market.

Tazeen Ahmad -- Bank of America Merill Lynch -- Analyst

Okay, thank you.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Thank you.

Operator

Your next question comes from Gena Wang with Barclays. Your line is open.

Gena Wang -- Barclays -- Analyst

Thank you for taking my questions. The first one is regarding Rubraca revenue in the 4Q. Pat you also mentioned the strong quarter mainly driven by better adherence. So just wondering, what was the average time period patient on drug and how much improvement they had over time.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Yeah, it's a rolling number, and so we won't get to a mature number until we've had a year or more from the launch of the maintenance indication. But at this time last year, we were a little over five months average duration, so that was primarily of course with the treatment setting in marginally more advanced population. We're now a little over 6.5 months average duration. So I like the trend and I think our team is optimistic that we'll be at seven months or better by the end of the year.

Gena Wang -- Barclays -- Analyst

Okay. And then another question regarding the EU launch expectation. So how many EAP patients in the EU and how many in Germany? And how should we compare initial launch to ZEJULA European launch?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Well, I don't know if that can answer your question in terms of comparing our launch to the ZEJULA launch. ZEJULA did have a good launch in Germany. I think their last quarter where we saw their independent numbers, because now of course they're consumed by GSK. I think they did somewhere between $12 million and $15 million in Q3 in EU, in Germany, predominantly German sales. So that was a good launch for them. They did have a very active pre-launch program that enrolled about 200 some patients in a compassionate use program and in Germany, you can convert those patients to commercial patients once are approved. So they ceded that launch very effectively. It was all harder for us to do given that they had already done that in Germany.

Patient population in Germany, the incidence is about 6,000 to 8,000 patients every year. It's an important market, it's a market that is dominated by active intervention and it's somewhat guideline driven. But we're really enthusiastic about our potential in Germany. We have a good relationship now with the KOL community of over formally launching on March 1st, our launch symposium and a press conference was up to support that is on April 2nd and 3rd. And but I can't give a forecast for driven sales, but we certainly are bench marking ourselves against what was achieved by neratinib given of course that they had a first-in-the-market advantage.

Gena Wang -- Barclays -- Analyst

Great. And just wondering, so if you can share with us how many EAP patients in Germany, if you can share with us that number?

Patrick Mahaffy -- President and Chief Executive Officer; Director

We haven't disclosed that, if -- I will just say it's not close to 200, it's substantially less than that.

Gena Wang -- Barclays -- Analyst

Okay. And the last quick question. Will you give 2019 guidance at some point?

Patrick Mahaffy -- President and Chief Executive Officer; Director

There are lot of moving parts in 2019. With the European launch, the impact of SOLO-1, the transition from Tesaro to GSK. So we clearly are not giving it today, and we have not made a formal decision about whether we will or won't over the course of this year.

Gena Wang -- Barclays -- Analyst

Okay. Thank you very much.

Patrick Mahaffy -- President and Chief Executive Officer; Director

You bet.

Operator

Your next question comes from Kennen MacKay with RBC Capital Markets. Your line is open.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hi. Thanks for taking the question. I have a quick commercial question and then a couple of follow-ups on ATHENA and lucitanib. On the commercial perspective, I guess from a regulatory and sort of U.S. guideline perspective. I didn't see anything change in the ovarian cancer space as it relates to cost, as it relates to PARP inhibitors. So could you maybe help us understand a little bit more what happened commercially between Q2 and Q3, which was slightly down versus Q4, which saw really impressive growth. And then additionally, how much of the Q4 growth came from off label use in prostate cancer after that very impressive ESMO data?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Yeah. So a couple of things about Q2 to Q3, to remind everybody, our sales were flat marginally down actually in Q3 versus Q2. But about 2.5, 2 million of that was a drawdown of inventory, inventory levels have gone up in the launch quarter and there was kind of the drawdown from four weeks to three weeks from Q2 to Q3. That number was exactly flat three weeks in three weeks Q3 to Q4. So there was no inventory impact on Q4.

So I'll just say that the Q3 looked a little worse than it really was in terms of demand. So just to contextualize it a little bit. We do obviously are seeing some impact of our efforts to gain new patient starts and to gain share. And you saw some of that in Q4, for a lot of what you saw in Q4 was this improvement we have in duration. And I don't have anyway to completely benchmark our duration in the setting versus either olaparib or niraparib. But I will say we are seeing two things are really encouraging. We're seeing very little in the way of dose interruptions or dose reductions. So our average dose remains really close to the prescribed 600 milligrams, and so that's encouraging in the terms of keeping people on drug and managing them through any types they may have. And related to that, we're seeing good duration. And so I think that was the primary driver of our benefit in Q4, but it's encouraging in terms of the benefit physicians or patients are seeing -- end patients are seeing on this drug.

Kennen MacKay -- RBC Capital Markets -- Analyst

Got you. And then was there any off-label prostate use in Q4 after the ESMO trial. I would assume so, but just wondering if there's any color there that you can help us with?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Interestingly enough, I don't know what I should know, but I haven't asked. So we're going to have to figure out where you get back on that. But I don't have an actual number on prostate.

Kennen MacKay -- RBC Capital Markets -- Analyst

Got you. And maybe then just a follow-up on ATHENA. You'd mentioned this front-line maintenance trial has a statistical step down plan like ARIEL3. Can you maybe elaborate on that just a little bit to help us understand sort of the powering at each level there?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Man, I have answered this question a long time. Lindsey, if you want to bail me out, I'd be happy to have you bail me out.

Lindsey Rolfe -- Executive Vice President-Clinical and Pre-Clinical Development and Pharmacovigilance and Chief Med

Sure. Hi Kennen, I'll give you a top-level overview. So basically, ATHENA is designed to answer two sets of questions. First, set is around rucaparib, compared with placebo in front-line switch maintenance. And the second set is around rucaparib plus nivo versus rucaparib in front-line switch maintenance. And those two concepts are tested separately and independently. So the output split between the two.

In terms of the powering, clearly the rucaparib versus placebo is loosely base and extrapolated from what we've seen in the recurrent part versus placebo comparison. And then the doublet versus rucaparib is a bit different because there is an act comparator, another placebo comparator and we have really high expectations regarding the performance of the doublet. So broadly. That's how it's set up. Does that answer your question?

Kennen MacKay -- RBC Capital Markets -- Analyst

Yes, it does that. That's really helpful. And maybe just one final question if I may again back to Todd. Since you're not issuing guidance at this time, maybe can I just ask sort of your level of comfort around current consensus estimates for Rubraca in 2019 which are around 140 to 150 depending on which which source you got from?

Patrick Mahaffy -- President and Chief Executive Officer; Director

Well, I'm not going to answer that directly, because we haven't given guidance. I would say that anybody who felt that they had no prayer of achieving a consensus would have to issue guidance to recognize that.

Kennen MacKay -- RBC Capital Markets -- Analyst

Fair enough. All right. I'll hop back in the queue with a final question on the VEGF base, but I'm going to let ask their questions first. Thank you.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Thank you.

Operator

Your next question comes from Cory Kasimov with JPMorgan. Your line is open.

Cory Kasimov -- JPMorgan -- Analyst

Hey, good morning, Pat thanks for taking the questions. I wanted to go back to the front-line maintenance setting in ovarian. I know we've discussed this before, but can you talk about kind of your latest thoughts on how you see the recent approval of Lynparza there potentially impacting the downstream market? You alluded this is one of the obvious moving parts for 2019? And then as a continuation of that and I recognize this is probably a bit early, but do you have any sense of timelines yet for ATHENA? And then I have one follow-up?

Patrick Mahaffy -- President and Chief Executive Officer; Director

I'll do SOLO-1 second. On ATHENA we're tightening our timelines right now based on enrollment patterns and our analysis plan and we'll intend to provide an update on the Q1 earnings call. So stay tuned for a verification of the timeline for that. With regard to SOLO-1, we obviously -- it's been well received by the KOL in prescribing community and it should be well received. In terms of its impact, a couple of things to remember. One is it's directed at somewhere between 15% and 24% of the patients depending on physicians who will only use in germline, also we use it as it's indicated in germline and somatic.

So the impact, does not carry over at all into the HRD or biomarker negative population. Two, the downstream effects of that I think will one be primarily to delay the initiation of second-line maintenance in patients who have benefited from a olaparib in the frontline maintenance setting. But I don't think it will prevent second line maintenance and I don't think it's going to have a near-term effect because a woman who's already been through chemo it's three, four, five, six, seven months, whatever the timeline is into her remission period is not likely to initiate therapy on olaparib in the maintenance setting. I think the large number of women who are presently getting platinum-based chemo and our mutant bracket will get olaparib in the frontline maintenance setting. But the downstream flow the kind of patient flow won't be very impactful for somewhere between 18 and 24 months.

So I don't think it's going to have a meaningful impact, but I want to validate that over the course of this year one of the reasons I don't want to give guidance.

Cory Kasimov -- JPMorgan -- Analyst

Okay.

Patrick Mahaffy -- President and Chief Executive Officer; Director

But I think the general sense I get from all of -- some of the market research we've done with (inaudible) interactions with KOLs is that you're going to see a paradigm shift over time, which I think is actually really good in the second-line maintenance market too as people begin to adopt PARP inhibitor maintenance more broadly is treatment with the platinum-based therapy, they part maintenance, then if you do recur platinum again and then second-line maintenance. The enthusiasm and the willingness to us PARP inhibitor sequentially is very high in this community, and I think it draws a little bit on their experience of using platinum-based therapy sequentially.

Cory Kasimov -- JPMorgan -- Analyst

Okay, that's helpful. And then my, the follow-up question I had is on the financial side of things. I just wanted to ask about the expected burn in 2019. It's obviously going to be highly dependent on Rubraca sales levels, but with both R&D and SG&A expected to continue to rise. Any color you can provide on kind of thoughts around the company's cash runway?

Daniel Muehl -- Senior Vice President of Finance, Principal Accounting Officer and Principal Financial Officer

Yeah, Cory. So similar to what we talked about last quarter where we guided that we had approximately two years worth of cash. So we, again, depending on what revenues are over the next year or so, we do think that we have adequate cash get into the second half of 2020. And again depending on revenue, whether that's how far through 2020 I guess will depend on the revenue ramp.

Cory Kasimov -- JPMorgan -- Analyst

Okay, thanks guys.

Operator

Your next question comes from Ashtiga Gunordin (ph) with Bloomberg Intelligence. Your line is open.

Ashtiga Gunordin -- Bloomberg Intelligence -- Analyst

Hi, good morning, guys and thanks for taking my questions. I wanted to dig in a little bit on to lucitanib please. So given the similarities in targets, that it has with lenvatinib, I wanted to just get your idea as to how you plan differentiating this asset versus that, which is also being pursued in PD-1 combo studies. Specifically what gynecological cancers are you targeting noting that Merck already has a basket study under way, which includes ovarian cancer as well as a Phase 3 endometrial. And then related what's the patent life on this asset? Thanks.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Yeah, I'll do the patent life really quickly first. So, the patent expires in the United States in 2030, and with Hatch-Waxman, extensions will go to 2033 or 2034. So it has a good healthy life ahead of it and that's the composition of matter. It has a similar -- the patent expires a little bit earlier in Europe, but it has a longer extension period. So we think that the timeline for patent protection will be similar in Europe 2033 and 2034. We're still finalizing our longer-term development plan, maybe I'll turn it over to Lindsey for a kind of a quick overview of initial thoughts and I may follow-up a little bit too. But Lindsey if you want to address the first approaches?

Lindsey Rolfe -- Executive Vice President-Clinical and Pre-Clinical Development and Pharmacovigilance and Chief Med

So, Ashtiga (ph) as you highlighted this, this is molecule and a program worth a lot of potential. Of course, we are working hard to have a differentiated strategy, but it's worth noting historically with TKIs that -- and they all can so differentiate based on -- on and off-target inhibition profiles. Our first trial indeed will focus on gynecological cancers. The first hurdle is to get a good dose of lucitanib plus nivo combined. I wouldn't anticipate as that will be too difficult, but we need to test that first to establish a dose. And then we'll be doing some single on expansion cohort and in the spectrum of gynecological cancers, including endometrial and ovarian, but also adding cervical cancer and clear cell ovarian cancer. But that's just the beginning. As Pat highlighted, we're in a dynamic situation here. We are absolutely focused on differentiating the molecule and we will move -- we will plan to move beyond the gynecological setting into other cancer types where there's a good scientific rationale and where we believe we can offer clearly differentiated product.

Ashtiga Gunordin -- Bloomberg Intelligence -- Analyst

Thanks, guys. You bet.

Operator

Your next question comes from Michael Schmidt with Guggenheim Partners. Your line is open.

Igi -- Guggenheim Partners -- Analyst

Hi good morning, this is Igi (ph) on for Michael. Thanks for taking our questions. We have two questions on bladder cancer. The first one is according to the ESMO poster last year, ATLAS study has two interim analysis planned after 60 and 120 patients. So should we assume data to be presented this year to include 60 patients and are these patients previously treated with platinum -- are all the patients previously treated with platinum or some of them are platinum nice order ineligible? And I have a follow-up question after this.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Lindsey.

Lindsey Rolfe -- Executive Vice President-Clinical and Pre-Clinical Development and Pharmacovigilance and Chief Med

Well I can't give you a breakdown of actual baseline data. But according to the protocol, patients have to have the current disease and they have to have had one or two previous lines of therapy. And so there certainly will be some checkpoint inhibitor naive patients in there. And I can't remember and right now we can pull off from there if we mandate at least one line is of patent. And so definitely it will be checkpoint 9, checkpoint (inaudible) and we'll follow-up on the platinum point.

Igi -- Guggenheim Partners -- Analyst

Got you. Thank you. And I have a follow-up question on this. We have seen great efficacy of rucaparib in ovarian cancer patient were sensitive to platinum irrespective BRCA or HRD mutation. However, in the second, third line urothelial cancer patients, many of them progressed after platinum treatment. So that is to say they are resistant or refractory to platinum. And in ovarian cancer, PARP haven't shown connectivity in the platinum resistant setting. So, maybe it's not a fair to comparison where we're missing something here. But can you maybe help us understand the rationale of keeping these European patients urothelial patients with rucaparib?

Lindsey Rolfe -- Executive Vice President-Clinical and Pre-Clinical Development and Pharmacovigilance and Chief Med

Well, as far as I know, this is the for study of new decent size, indeed the first study that's fully devoted to bladder cancer and monotherapy PARP inhibition. So in that respect, it's a proof-of-concept. So it's a quite large study with 200 patients. And once we get the proof-of-concept data, and we fully to intend to mine it to really understand which is the patient and the according the molecular characteristics of the tumor. And that response to previous therapy might benefit most from PARP inhibitor therapy. So I don't have going into the study because of the novel nature of the trial and target I have sort of fixed set of assumptions, but we're sure the study is robust enough and large enough to help us onto those important questions and once we get the data.

Igi -- Guggenheim Partners -- Analyst

Great. That's very helpful. Thank you.

Anna Sussman -- Senior Director, Investor Relations

Operator, we have time for more question.

Operator

Thank you. Your next question comes from Kennen MacKay with RBC Capital Markets. Your line is open.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hey, thanks for taking the follow up here. This is just a quick one for Dan, actually. The 23% COGS that you mentioned, this is a little bit high for small molecule. Can you just remind us on the split between the royalty paid that's baked into the COGS and the actual cost of Rubraca manufacturing and production?

Daniel Muehl -- Senior Vice President of Finance, Principal Accounting Officer and Principal Financial Officer

Yeah, royalty is 15%.

Kennen MacKay -- RBC Capital Markets -- Analyst

Got you. Okay, thank you. And then the quick follow-up for Pat on lucitanib. When you had talked about sort of reviving this molecule, you right there had been a little bit of sort of a renaissance within the VEGF space and you're comparing this quite a bit to Lenvima, but we've also seen some setbacks like with tivozanib and some of the challenges that that molecule is seeing and the FDA recently advising them not to submit an NDA there. Can you maybe sort of talk about how this lucitanib is going to be sort of differentiated versus, for example, what happened with tivozanib?

Patrick Mahaffy -- President and Chief Executive Officer; Director

I'll give a quick answer and then Lindsey should add or subtract from what I say. What I think is unique about lucitanib and related to lenvatinib is that it's, I'm the only one that calls it this, but it's a Pangaea organic inhibitor, no one here likes that phrase, but I -- because if it's inhibition of VEGF, PDGF, and FGF. And I don't know the details of the drug you've described. But what's further unique about the Lenvima dataset is just how well it appears to deliver synergy in combination with the PD-1. So we don't have any plans to develop lucitanib as a single agent.

We're developing it solely in combination with either Opdivo now, but we're pleased to have extended our relationship with Bristol-Myers or with Rubraca given the activity seen in the earlier trial with olaparib and a drug called cediranib, but where cediranib has a number of off-target effects as Lindsey was kind of alluding to that make it very difficult to take. So I think we can use precedent combination studies and examples to guide us and hopefully avoid some of the pitfalls that may have faced VEGF inhibitors. Lindsey anything you say beyond that?

Lindsey Rolfe -- Executive Vice President-Clinical and Pre-Clinical Development and Pharmacovigilance and Chief Med

No, I -- obviously I agree with you and I think the key points are that this is a combination strategy. But as TKIs go, lucitanib has a relatively clean profile with relatively limited off target effects. And we anticipate that, that set us up very well for a differentiated well tolerated active regimen once we get the clinical program under way.

Gena Wang -- Barclays -- Analyst

Got you. Thanks for taking the additional questions and congrats on the quarter.

Patrick Mahaffy -- President and Chief Executive Officer; Director

Thanks, Kennen.

Operator

There are no further questions at this time, I will now turn the call back over to Anna for closing remarks.

Anna Sussman -- Senior Director, Investor Relations

Thanks, Mariama. We thank you everyone today for your interest in Clovis. If you have any follow-up questions, please call me at 303-625-5022 or Breanna at 303-625-5023. Our call can be accessed via replay of our webcast at our website beginning in about an hour, and it will be available for 30 days. Again, we appreciate your interest and time. Thank you and have a good day.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 51 minutes

Call participants:

Anna Sussman -- Senior Director, Investor Relations

Patrick Mahaffy -- President and Chief Executive Officer; Director

Daniel Muehl -- Senior Vice President of Finance, Principal Accounting Officer and Principal Financial Officer

Tazeen Ahmad -- Bank of America Merill Lynch -- Analyst

Gena Wang -- Barclays -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Lindsey Rolfe -- Executive Vice President-Clinical and Pre-Clinical Development and Pharmacovigilance and Chief Med

Cory Kasimov -- JPMorgan -- Analyst

Ashtiga Gunordin -- Bloomberg Intelligence -- Analyst

Igi -- Guggenheim Partners -- Analyst

More CLVS analysis

Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

RealPage Inc (RP) Q4 2018 Earnings Conference Call Transcript

Image source: The Motley Fool.

RealPage Inc  (NASDAQ:RP)Q4 2018 Earnings Conference CallFeb. 25, 2019, 5:00 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Greetings and welcome to the RealPage Inc., Fourth Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I'd like to turn the conference over to Rhett Butler, Vice President of Investor Relations. Thank you. Please begin.

Rhett Butler -- Vice President: Investor Relations

Thank you, Operator. Good afternoon, everyone, and welcome to the RealPage financial results conference call for the fourth quarter and year-ended December 31, 2018. With me on the call today is Steve Winn, our Chairman and Chief Executive Officer; and Tom Ernst, our Chief Financial Officer and Treasurer.

In our remarks today, we will include statements that are considered forward-looking within the meaning of the federal securities laws. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today, February 25, 2019, and are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties is contained in our quarterly report on Form 10-Q previously filed with the SEC on November 6, 2018, and our earnings release and materials distributed today. RealPage undertakes no obligation to update any forward-looking statement, except as required by law.

Finally, please note that on today's call, we may use or discuss non-GAAP financial measures as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in today's earnings press release. In addition, please reference the explanation of non-GAAP financial measures section of today's earnings press release for more information.

With that, I will hand the call over to Steve.

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

Thanks, Rhett. Good afternoon, everyone, and thank you for joining our fourth quarter and year-end 2018 conference call. We entered 2019 and in position to create significant incremental value for our customers and drive continued organic growth for RealPage. This is because we've created a widening position as a strategic platform partner to our clients with capabilities that manage the most important drivers of performers -- of performance that our clients need to succeed. We are differentiated, because we have the most accurate and comprehensive data repository of real-time client data and data science in our industry.

The linchpin for driving innovation and empowering our clients transformation. While, we continue to have a healthy acquisition pipeline to expand our positioning and open up new TAM, I've never been as excited about our opportunities and capabilities to innovate organically as I am now. We'd like to set ambitious goals, but we are confident in our 2022 goal of $1.5 billion in revenue and $500 million in adjusted EBITDA.

Tom will be providing more detail on our financial results. But you can't do that if we don't at least give them a proper introduction, so I'm proud to say, as many of you saw from our press release in January, that Tom Ernst, has joined the RealPage team as CFO & Treasurer. Tom has already hit the ground running, and I believe this is primarily due to the fact that Tom and I share the same long-term vision for RealPage and have joined -- have enjoyed a multifaceted working relationship for many years.

Our booking performance and backlog levels are at historic highs and we believe our market positioning has never been stronger. In a moment, I'll speak to a number of successes that we have achieved in 2018. However, I'd like to first discuss in some depth the biggest thing we're focused on in improving in 2019. Last year, we did not achieve our internal goal to reduce backlog through more efficient implementations. Our process inefficiencies in overall implementations and particularly with implementing larger platform sales impacted us during the fourth quarter and full year, improving the quickness by which we turn sales into revenue during 2019, is one of our top priorities and is getting a significant level of attention.

How will we achieve this improvement? We're focused on improving the platform for more streamlined and unified configuration. We need to better define and refine our processes and platform bundles to utilize standard implementation, best practices and make clients change management experience more seamless. While we already employed broad and useful KPIs in managing the business. We are working to deploy a more rigorous scientific approach to executing the entire sales to success cycle to drive continuous improvement. We're focused on optimizing this process to achieve both fast gains and long term excellence.

Our North Star mission for the company encompasses both innovation and simplification. Importantly, innovation is not just about product development, which I'll speak about more shortly; and simplification is not just about margin expansion. I'm challenging the organization as a whole to look deeply into our infrastructure processes and orchestration everything we do to unlock improvements that will make us better at serving our clients.

So let's discuss some of the highlights of our successes over the past year. In 2018, we brought multiple product innovations to market, for example, we delivered to market the initial functionality for our long-term Unity initiative with great fanfare and encouraging response from our customers, asset optimization gained more traction with the release of expense bench marking as part of our business intelligence platforms. New features and functionality in our spend management platform including online vendor payments helped drive that revenue stream to the largest in our property management category. All of these areas also contained components that were part of a larger suite sale both for new clients as well as existing clients.

We expect to accelerate our ability to innovate this year. In January, we completed an organizational initiative that centralized product development. This structure enables us to apply to innovation projects, the right talent from across our organization, rather than being constrained to reply -- to relying upon the talent that exists only within a particular product team or business unit. This approach also enable us the flexibility to rapidly an efficiency scale up and scale down project resources. This is a big deal, 2019 will leverage this new organizational vision combined with projects already in motions that are designed to drive disruptive innovation around the front end of our platform, around Unity and other innovations. So I'm quite excited about what we've been working on, so stay tuned for more on that later.

We began to simplify the service experience for our customers during 2018 by unifying our support teams into a single organization transitioning away from point products support to a platform-based experience and it's paying-off. 2018 notched another increase in our customer net performer -- performer score satisfaction driven primarily by faster resolution of inbound client issues and reduced escalations. Next, employee engagement around our North Star mission continues to improve from already high levels. We've been tracking our progress here for the last few years in a rigorous manner and working carefully to galvanize our culture around innovation and simplification and the RealPage promise.

RealPage are the heart of our organization and our success is driven by their support and dedication. Clients are recognizing the value of the Real -- of RealPage as a strategic platform partner in lieu of their current disparate point solutions. I hear existing and prospective clients increasingly say that RealPage is innovating, is an easier company to do business with and is an a central platform for their operations. Now, this is a journey folks, but this feedback is encouraging and I'm confident that we have the right strategy. We are becoming more and more, the strategic vendor they need us to be. This is paying off in our strong sales momentum and particularly in our ability to sell large bundles and suites.

Tom will discuss the details in a moment, but let me highlight a few specific examples. We secured a seven figure deal in the fourth quarter with a leading regional property manager that operates 30 -- 4,000 units in the 14 states. This New York based client implemented a competitor's core accounting system just three years ago, but also continued to rely upon several third party point solutions. This client has chosen to fully convert to the RealPage platform and take advantage of our solutions across every product family, outside of product for platform traction, I'm particularly pleased that our strong accounting offering help drive the pull-through of this larger suite. We've invested significantly in our accounting product over the last couple of years and clients are broadly realizing that RealPage accounting Enable's their property accountants and payables personnel to manage more properties with the same number of people.

This client is certainly excited to transform their user experience, improved processes and integrate across systems with the simplicity of a single sign-on. Our sales team cultivated a relationship with this client over many years and I'm particularly proud of this win. Another example is a seven-figure enterprise deal close -- closed in the fourth quarter, in which our North Star mission and commitment to innovation again played a pivotal role. The client owns approximately 20,000 residential units and 2.5 million square feet of commercial space across 31 cities, as the client prepares for its next phase of growth. They knew they needed to embark on a major platform change with the partner, focused on the future that could support their mixed use needs in accounting and commercial property management, as well as multifamily.

Our commercial property management solution, which has evolved materially in recent years. Outperformed our competitors in their evaluation. They had already been a YieldStar, and On-Site client for many years, and finally made the push to adopt the core RealPage suite, along with solutions such as renter's, insurance, to take advantage of integration across the platform. We're winning the strategic platform deals across the entire client spectrum as well, at the enterprise level with owners managing 20,000 or more units at the corporate level with owners and operators managing 5,000 units to 20,000 units, as well as our SMB market which is owners with less than 5,000 units.

For example, Lexington Partners, who is a fast-growing property management and construction company in New England in the SMB space. With a strong appetite for expansion through internal development and acquisition, Lexicon soug -- sought out a strategic partner that could scale alongside their operations. In RealPage, they found best in class property management platform, but critical to this deal was our data analytics tools, which provide the business intelligence they need to manage price, improve profit and fuel expansion.

Our sales team had the vision to capture the loyalty of Lexington Partners well before they matured into a large enterprise. I absolutely love this example because it highlights how quickly we can get a client on our platform. What we are doing right as well as the opportunity that exists, if we can get even more efficient across all of our implementations is a core priority in 2019.

In summary, 2018 was a great year. You'll hear even more from us around deepening our position as a strategic platform during our RealWorld User Conference in July. In addition, you will also hear about many major new product innovations that are being released throughout 2019, that are intended to drive accelerated organic revenue growth toward our objective of becoming a $1.5 billion business by 2022. This is an exciting time for RealPage and I appreciate the support we've received from our teammates, clients and shareholders.

With that, I'll turn the call over to Tom.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you, Steve, and good afternoon, everyone. Today, I will review operational highlights for the year. Our financial strategy going forward and our financial outlook for 2019.

First off, I'm thrilled to be at RealPage and excited by the depth of talent across the organization. I would also like to extend a thank you to Bryan Hill and to the outstanding finance organization here for the support on my transition into the company over the last month, and more importantly for building such a solid foundation that we can expand upon to support our long-term strategy. I believe we are at a pivotal moment where we have tremendous opportunity to leverage the scale and breadth of our organization to become a more strategic platform vendor to our clients. That is the core of our vision and it complements our North Star focus on innovation and simplification.

From a philosophical perspective, I commit to continuing our proud track record of transparency and alignment with shareholders as we execute against this vision. Proactively working to communicate effectively will be a priority for us. As we look forward and as our strategic platform vision continues to unfold, we will look to support you with metrics and analysis that help you understand this journey better. This vision is the key to opening up new value creation and accelerating growth opportunities. Accordingly, the vision cuts across everything we do. We will share more information as the year progresses, that will help translate our executional success. You should expect to hear us talk about all areas including product development, sales and marketing, implementations and support.

Now, let's discuss some of our successes and challenges from 2018. Financial performance was strong, reflecting solid execution on the expectations we communicated. Total non-GAAP revenue grew 29% year-on-year and adjusted EBITDA grew 41% representing margin expansion of nearly 230 basis points. Highlighting our successes as a strategic platform, the revenue per unit of our Top 50 RPU clients averaged almost 20% expansion in 2018.

Our reported ACV grew 17% compared to 2017 and exhibited some contraction sequentially as the fourth quarter contains the most seasonality, which in turn affects our transactional ACV in revenue. I will note this metric is not optimal on the way that was calculated, as it magnifies fourth quarter seasonality by a factor of four because mathematically the formula annualizes quarterly revenue to calculate ACV. We will look ways to create a better measurement for you in 2019. Our bookings beat our internal expectations growing 28% compared to 2017 and our churn metrics are consistent with our historical average.

Cash flow from operations was also impressive growing 34% to nearly $188 million, excluding the impact resulting from changes in restricted cash relating to accounting treatment changes. As we look at the business momentum to the product family lends, we are seeing consistent contribution from property management and resident services at approximately 10%, and mid-teens respectively on an organic basis. The implementation process inefficiencies that Steve mentioned are impacting us across the platform. We are seeing the phenomenon where some of our products are commonly slated for implementation later and faced rollouts of strategic platform deals, and when implementations take longer those products received more of the revenue delay impact.

One area in particular we're seeing some organic growth pressure is asset optimization, where organic revenue growth is trending more in line with our corporate average versus the mid-teens we have been discussing prior in 2018. This is despite seen yet another significant acceleration in new sales bookings in this product family. While the effects of these process and efficiencies are disappointing to us, I would be more deeply concerned if they were driven by demand issues, which they are not. The challenge has arisen because of our success in driving -- in driving greater proportions of platform sales and I'm excited to tackle these growing payments and processing efficiencies, and confident that we can drive both quick and long-term improvements here.

We have completed our integration efforts for the 2017 acquisition cohort and we're encouraged so far by the pace of integration of our 2018 acquisitions. We plan to complete the system integration work fully with the 2018 cohort this year. However, we are -- our planning is somewhat more aggressive investment posture, particularly in the first half of 2019 given the strong revenue synergy opportunities that we aim to drive. One of the biggest benefits from the 2018 acquisition cohort is that they further bolstered RealPage's ability to integrate with third-party property management systems, as these assets all had made significant inroads with property management systems outside of the RealPage platform. We are excited about the opportunity to more materially unlock the benefits of platform sales into the portion of the market that doesn't use RealPage for its core property management system.

During the quarter, we also executed $30 million of our $100 million repurchase authorization, resulting in the repurchase of 600,000 shares at an average purchase price of $46.83. We do continue to -- we expect to continue to be opportunistic here. So stepping back, we had a solid 2018 and fourth quarter, and we also have a couple of focus areas for opportunity for improvement. As Steve mentioned, we believe we are doing a fantastic job driving new sales bookings and this has resulted in elevated backlog levels. However, we did not meet our internal goal for driving process efficiencies to reduce implementation times in the fourth quarter. Instead, we actually saw a small decrease in efficiency. We have made tackling this challenge as top priority in 2019. This did adversely impact our revenue in the quarter and without the drag, we would have been at the high-end of our revenue range and surpass the high-end of our adjusted EBITDA range.

Our goal going forward is to drive market improvement in 2019, but until we get a deep -- until we get deeper in executing against that goal, I will make prudent assumptions in our outlook and guidance that do not include these gains until we actually see and sustain them. Moving on to our financial outlook. We believe the future has never been brighter for RealPage and we are confident in our 2022 goal of $1.5 billion in revenue and $500 million of adjusted EBITDA.

For 2019, we expect non-GAAP revenue of $980 million to $1 billion. Adjusted EBITDA is expected to be between $275 million to $285 million. Non-GAAP diluted earnings per share is expected to be $1.70 to $1.79. This assumes organic growth of over 10% at the midpoint of the range and assumes a continuation of 150 basis points to 200 basis points of margin expansion per year. Since, we updated you last, our outlook for the year and first quarter has been impacted by our revised assumptions on implementation efficiencies. For the first quarter, we expect non-GAAP revenue of $233 million to $235 million.

Adjusted EBITDA is expected to be $64 million to $66 million and non-GAAP diluted earnings per share is expected to be $0.39 to $0.41. This assumes organic growth in the 9% to 10% range and adjusted EBITDA expansion that ramps as the year progresses due to investment in the 2018 acquisition cohort, which is expected to be more front-end loaded.

I'd like to also highlight two priorities the finance team will be focused on in 2019. First, leveraging our scale and scope to embed finance as more of a strategic partner throughout all levels of the organization; and second, refining our processes to cultivate in innovation from idea to maturity. Toward the first priority as Steve mentioned, we intend to play a more rigorous scientific approach to measuring the platform throughout the sales to success cycle. Finance, we'll be partnering more deeply across the organization to enhance our culture, processes and technology infrastructure to enable more data driven decisions.

For the second priority, finance will also be partnering throughout the organization to help create (ph) the innovation lifecycle, that enabling us to rapidly incubate growth opportunities or leverage quick learnings to reallocate resources to their highest and best use. As Steve mentioned, organic innovation will be a primary focus area and is key to our long-term success. We want to leverage the scale and scope of our organization to institutionalize learnings and drawn cross-functional resources to bring our innovation, vision to reality. We also expect to enhance coordination across initiatives focusing on the best growth prospects and scaling them the right way to optimize investments that support the achievement of our long-term goals.

In summary, we had a great year and we have tremendous opportunity ahead of us. I believe strongly in the mission and direction of RealPage and I'm excited and grateful to work with you as we execute on our vision.

This concludes our prepared comments. Operator, we'd like to open the call for questions, please.

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions). Thank you. Our first question comes from the line of John Campbell with Stephens. Please proceed.

John Campbell -- Stephens Inc -- Analyst

(Technical Difficulty) And then Tom, I think you made it pretty clear that you factor that into the full-year guidance. Just curious, I mean, I think you said 10.5% organic growth is kind of the assumption, if you're getting your implementation timelines, its kind of where you expected -- would that, is it safe to say that would probably be more like the high-end of that organic growth rate, 12% or so.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

So, John, I think we missed the first part of your question.

John Campbell -- Stephens Inc -- Analyst

Just around the implementation timelines. I mean, I think it held you guys back in the quarter. It sounds like by $1 million or $2 million and then you talked to it, basically impacting the full-year guidance. So just trying to kind of get a better, can we get my arms wrapped around just organic growth rate. I think you said maybe 10.5% is what you're factoring in right now, but if you had the implementation timelines or you maybe -- we're expecting, is that closer or -- maybe a 12% or so, organic growth rate?

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Sure, thanks for the question, John. So the implementation in efficiencies did impact us on Q4, and I think as I mentioned on the call, we would have been in the high-end or exceeded the high end of our range if we had not have them. That being said, we think it's prudent to -- to not assume that we're going to gain those efficiencies back as we look into the year until we see them. So our outlook for the full year is 9% to 12%. I'm making -- making what I think are prudent assumptions in our ability to drive efficiency from this point and in particular, you can see in Q1 that we're actually looking toward the lower end of that 9% to 12% range, so --.

John Campbell -- Stephens Inc -- Analyst

Okay, got it. And then on the units managed, you guys are having some really good kind of underlying organic growth, I'm getting about 5% or so this quarter, I think you guys have held at mid single-digit range for several quarters now. So just -- just curious two things there. How much of that is driven by just kind of the broader industry lift versus share gains and then any kind of commentary -- kind of what you expect to see for the remainder of this year.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Yeah, addressing the numbers first, we are seeing healthy growth both in units but also in revenue per unit. I highlighted in my prepared remarks that we have seen a uplift our top 50 revenue per unit customers and growing almost 20%, this is happening as you look down the basis as well, we're in our -- our top 100 ACV customers. It's over 10% growth as well we're seeing healthy lift.

And yeah, market share, you want to -- I'll take that as well. I think Steve highlighted a couple of examples, in his prepared remarks where the RealPage -- RealPage vision is really exciting customers to think about us as a platform and to consider replacing competitive solutions with us, we're definitely seeing benefit.

John Campbell -- Stephens Inc -- Analyst

And as far as the end market tailwind, -- is that a 50 bps, 100 bps or so of incremental lift you guys have seen?

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

What do you mean by end market tailwind, John?

John Campbell -- Stephens Inc -- Analyst

Just the general build outs in industry just from -- or the units managed standpoint?

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Overall unit growth in the industry.

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

The overall unit growth is in the 400,000 range, we're going to lose 100,000 that are demolished every year relative to the overall 20 million or 19 million multifamily units that we have. It's not a significant percentage, but we are enjoying this building cycle because they are the largest and most lucrative segment of the market for us. So I hope the new construction boom continues because we are beneficiary of it, but I wouldn't over emphasize it, I mean we are not getting like 5% lift out of those units because they're just not building that many.

John Campbell -- Stephens Inc -- Analyst

Right, makes sense, thanks guys.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you.

Operator

Thank you. Our next question comes from the line of Monika Garg with KeyBanc. Please proceed.

Monika Garg -- KeyBanc Capital Markets -- Analyst

Hi, thanks for taking my question. I'm just trying to understand more about this process and -- in efficiency, if you talked about, which is leading to more implementation times. Could you talk about when did you find these issues. How long do you think before these are behind us?

Rhett Butler -- Vice President: Investor Relations

We were disappointed that we didn't improve what we call mean time to implement in the fourth quarter, it's actually got a little longer. What's happening to us is, we're having great success with what we call suite sales or bundled sales or this were about the entire strategic platform is licensed at one time and that has impacted the time to deploy the suite. We are optimistic, we're going to get this improved and substantially improved over the mid to long-term, and of course the way to do that is through the Unity process that we've discussed in previous calls, where we are creating a very consistent set -- standards for all of our products, and of course, my ultimate goal is to be able to implement all products, the first first time we touch a customer.

There is a lot of room for improvement here and in its the -- I don't want to say it's the number one focus of RealPage in 2019, but it is the close to the number one focus. We have to get this MTTI reduced. The good news is, we seem to be selling more than we planned. So part of it is you plan for a certain amount of deployment and then you sell more than you expected. So you don't, -- it's hard to gear up the resources, you need to address your success. So it's a good news, bad news story, I'm candidly, the demand is -- the hardest thing to generate, if we can generate more demand, I feel real good about the business, because I know we can get more efficient.

Monika Garg -- KeyBanc Capital Markets -- Analyst

Thanks, Steve. And then, Steve, you had talked about that, in case when we see softness in rent growth, that could have a positive impact on the demand for the data solutions. Could you talk about, if you us -- what you are seeing in the market, are you seeing increased demand given that rent growth seems to be somewhat flattening in some markets?

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

This market has been amazingly resilient, to be honest with you. We're still seeing rent growth in many, many markets, but there are pockets of slowness that are starting to appear around the country. And whenever we see demand softened the need for our products becomes more acute because customers need to better manage their pricing and they need to generate or stimulate more demand. They need to capture more of that demand and those are -- these are all things that RealPage provides the tools that allow you to do.

So, yes, we're -- I think part of the reason we're seeing bookings accelerate the way they have in 2018, is there's just a general need for more and more RealPage products. And the fact that we've become more of a platform, than a single property or for single product company. People now don't buy RealPage because of one specific product, they're buying the entire platform and that's a strategic position that we want to nurture and expand.

Monika Garg -- KeyBanc Capital Markets -- Analyst

Thank you so much.

Operator

Thank you. Our next question comes from the line of Sterling Auty with JPMorgan. Please proceed.

Sterling Auty -- JPMorgan -- Analyst

Yeah, thanks. Hi guys. First of all, Tom, congratulations. And welcome to the CFO seat, how does it feel being on that end of the line for one of these calls for a change.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Yeah, it feels great. Thank you, Sterling. Hope you're well? I couldn't be more excited to be here.

Sterling Auty -- JPMorgan -- Analyst

That's great. So, I wasn't sure if you answered it with one of the earlier questions -- to one of the earlier analyst. But, so in terms of the ACV and the sequential drop. You mentioned just -- the calculation of it and how it kind of magnitude the seasonality, but I believe this is the first ACV drop we've seen in at least the last three or four years. Can you just kind of walk us through why is it different this year?

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Yes, absolutely, Sterling. So, last year it was masked by acquisition add that came in the Q4 that provided some significant ACV step-up quarter-on-quarter that didn't show the normal seasonality in our business. And in addition, we do have some more seasonality within our subscription business that's natural with the business that relates to the leasing cycle. So I think, if you'd see -- if we could see through what happened last year, we would have a little bit more seasonality this year as well.

Sterling Auty -- JPMorgan -- Analyst

Okay. And then one follow-up question. In terms of the implementation efficiencies, is it data migration, API coding. What are some of the things that you think you can actually dial-in to drive those improvements and efficiencies?

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

Well, Unity is probably top of my list. This is a enormous initially focused on implementing consistent ways of implementing all products at one time. I think we need to manage the customers change management better than we have. If our products are much easier to implement, ideally self provisioned, then change management becomes a much less problematic for our customers. In many cases, we can't implement because the customer has guided our implementation process because they can't digest as much change as we would like to impose.

And then I think we just have a number of fairly basic improvements that I think can be made by the centralization of our implementation, account management and support organizations, we've in the past, manage these in silos. And I think the consolidation of the implementation process of the entire platform into somewhat of a factory is the way to think about it, that we will drive measurable improvement in this area.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

I'll add one thing to that as well. To run the factory, we are already a data-driven business and we measure and monitor that business on KPIs, but we think that there is some rich opportunity to be much more sophisticated with how we measure monitor and adjust, and ensure that we're just a rigorous data driven company that gets more real-time and more focused on process improvement.

Sterling Auty -- JPMorgan -- Analyst

That makes sense. Thank you, guys.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you.

Operator

Thank you. Our next question comes from the line of Stephen Sheldon with William Blair. Please proceed.

Stephen Sheldon -- William Blair -- Analyst

Hi, thanks. So I guess just first year, it sounds like bookings trends in asset optimization was -- were pretty strong, but it was impacted by the implementation challenges. So can you maybe just help us frame the trend in booking the activity in asset optimization throughout the year. And then your level of confidence about seeing organic growth there accelerate over the next -- the course of the next year or so?

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

Yes, absolutely Stephen, happy to help with that. So I think we probably have two drivers going on in the asset optimization, product family. First, the one that we've highlighted a lot tonight, where this product family in particular, it can be slated in some of these strategic bundles as the third or fourth product to implement. And if things -- reach any level of slowing, that's something they can get pushed out on the margin. So we've seen some of that.

In addition, we've talked about it on past -- on prior calls as well. In our revenue management products, we have -- we talked about how we saw some hold up, while we are acquiring the LRO business and bringing that on board. We have begun to see the bookings acceleration come out of that. The revenue impact is imminent and lifting but really hasn't lifted out of that bookings acceleration. So both of those factors are driving what we're seeing is a very strong acceleration through four quarters and the business that has not translated into revenue uptick yet.

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

Yeah, there is one more acquisition that falls into the same category. We acquired a company called Rentlytics, which was one of our larger competitors in the business intelligence and performance analytics area. And I think there was a pause in the market where prospects that we are considering these products from either company said, let me freeze, let me understand what RealPage's intentions are with respect to future direction and if it's candidly is tracking exactly the same thing that happened when we acquired LRO. So, I'm quite bullish on the uptick that we should see in the overall asset optimization category supported by the fact that we have above average bookings. They are at the higher end of the bookings spectrum for the last quarter or two. So they all should do fine.

Stephen Sheldon -- William Blair -- Analyst

Got it. That's helpful. And then I guess, just second I guess within that business still, I wanted to ask about database integration. I think you had been maintaining some databases separately including, I believe the underlying databases for YieldStar and LRO. So I guess, first, where are you now in terms of database integration and two, how you're thinking about your ability to extract more data out of the 16 million unit ecosystem you built to feed into your analytical solutions?

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

That's a very good question. Axiometrics and MPF was the first database integration that we had to contend with and that is complete. The LRO, YieldStar, database integration is partially complete. We have populated both databases with the overlap or the missing data that was in each of the individual databases, but they're still separate. They will remain separate until we deploy the next generation of our revenue management which should be next year sometime.

The last integration is BI, Performance Analytics and we are in the middle of combining the Rentlytics database to the business intelligence, performance analytics databases that RealPage operates. I'm very excited about this integration because it vastly expands the amount of data that we can use for bench-marking which directly correlates to the precision of our bench-marking and forecasting engine. So long answer is, we are not complete yet, but we are, this is high priority for us.

Stephen Sheldon -- William Blair -- Analyst

Great, thank you.

Operator

Thank you. Our next question comes from the line of Matt Hedberg with RBC Capital Markets. Please proceed.

Matthew Hedberg -- RBC Capital Markets -- Analyst

Thanks guys for taking my questions. Tom, I'll offer congrats as well. Steve, when you think about increasing rents -- resident services as a percentage of overall revenue. What are some of the -- some of them are more creative or non-traditional ways that resident services can be better monetize?

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

Well, the key to significant growth here is monetization of amenities offered to the residents. So to the extent we can start to broker -- parking passes and yoga classes and virtually any transaction that occurs at the point-of-living resident services will benefit. We will monetize these opportunities through payments in most cases, so you should see the payments revenue stream, continue to grow substantially as part of our resident service offering.

Matthew Hedberg -- RBC Capital Markets -- Analyst

Got it. And then maybe one for Tom, difficult compare for the transactional business this year. But any sort of guidance on how we should think about the growth of transactional revenue this year.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

So our transactional revenue is actually consistent as a percentage of our total revenue with what you've seen historically. That being said, what we are seeing an increase in is our seasonal revenue. So we have a number of products within our product families that have seasonal components to them. These are subscriptional businesses that are tied to underlying cycles such as the leasing cycle and -- obviously larger one is the ClickPay acquisition, which brings in a number of -- a significant number of product that that drives this transaction business.

So that's more meaningful. I think, we will -- we will look to take that as homework to help you understand a little bit more about our seasonal factors as we talk about 2019. And I don't have new metrics for you today, but just to highlight what we saw in Q4, the -- that the metrics a little bit misleading and I think the seasonally one metric, I can't share the seasonal factor for some of those seasonal businesses would show a sequential decline in the order of 20%-ish quarter-on-quarter.

Matthew Hedberg -- RBC Capital Markets -- Analyst

Got it. Thanks guys.

Operator

Thank you. Our next question comes from the line of Mark Schappel with Benchmark Company. Please proceed.

Mark Schappel -- Benchmark Company -- Analyst

Hi, thank you for taking my question. And Tom welcome to board. Steve, with respect to the implementation time is getting longer. How much of this matter in your view is a capacity issue and how much of it is more of a process issue?

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

I think it's a process problem. The capacity is -- it was part of the issue in Q4 because our bookings was successful, it was little bit higher than we had forecasted but I would say that is really pales in comparison to the gains we can get simply by improving the process and the systems that we use to drive the factory. The whole mindset has to be moved away from this notion that you implement one product at a time to more of an assembly line where you are implementing the suite and customizing the suite. To me individual customer needs with configurations, that can be set literally at the click of a button. I -- we were disappointed in the results here, but on the other hand, I don't see anything -- any obstacle here too -- our ability to address this. I certainly don't need more capital or any of those types of constraints that you think about, when you think about factories.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

I'll add to that Mark. I think we agree that it's not a level of capacity that we have in our implementation. That being said, we are definitely investing our talent and on the margin to make sure that we attack product processes and systems to make this better. Right and on -- and so there is a level of investments as I look toward 2019. We're going to -- I would expect that you'll see less gross margin expansion, for example as we invest to really tackle this problem in the scale to make sure we have an impact.

I think, I'll take the opportunity as well to highlight a marginal shift that we have, as we look toward 2019 where we're at, and one of the things that I found most remarkable while coming in at this juncture for the company is, the company has really shifted over the last two years to invest in a remarkable way in product development.

Our product development spend is up 63% as we have gone on to tackle a bunch of great innovation -- innovation vision and as we look toward 2019 with that healthy spend level in the innovation projects we have, I think you'll see us look to invest in as we've highlighted on this call. The implementations, but I think even from a from a bigger standpoint, this is about investing and taking it to market, you're going to see us some pivot -- a little bit toward sales and marketing investment. So we've got to scale product development and where we can begin to drive leverage there, and obviously we will continue to drive leverage in our G&A. And 2019 is going be about investing and getting them to market.

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

I had a little heart attack here, when Tom said 63%, that's over two years.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

That is over two years.

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

It is still a very significant investment and we've never had as large a -- backlog of new innovations that will hit the market in 2019 than we have today and I would encourage as many of you as possible to attend RealWorld 2019, in July and -- because you'll see most of this innovation announced either before at that conference.

Mark Schappel -- Benchmark Company -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Brian Essex with Morgan Stanley. Please proceed.

Jonathan -- Morgan Stanley -- Analyst

Thanks for taking my question. Jonathan (ph) on for Brian. You mentioned some pretty aggressive acquisition plan in the first of '19. What types of profiles are you looking forward to do these acquisitions?

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

Well, we -- any time we can find a product that we currently don't offer that we can extend into our channel. That is a candidate for RealPage to acquire. A competitor that generally is willing to sell on an opportunistic level would be considered. We do have a sizable pipeline of acquisition opportunities. Most of them fall into either of those two categories. I will say the competition for acquisitions has gotten a little more rigorous over the last year since we've seen a lot more private equity interest in the space, but the advantage that RealPage has when we have an acquisition that makes sense as we can generally extract synergies that a PE firm is not able to obtain. So I think we have an advantage here.

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

And Jonathan, just to clarify as well. I think, Steve, I think your question asked on -- if we are being more aggressive, I don't think that was what was Steve was trying to message and we do have a healthy acquisition pipeline and so I would expect that you will see us continue to look at innovation that's away from us and opportunities. However, the central message is that we're actually incrementally more excited about our organic growth opportunity. So over time, I would think you'll see the mix shift on the margin to organic innovation.

Jonathan -- Morgan Stanley -- Analyst

Got it. That's Helpful. And Tom, you mentioned changes in the finance department, and you alluded to them helping to support achieving the long-term goals. Are these changes necessary to achieve fiscal '22 targets and if so why now as opposed to earlier or later?

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

It's a great question. I'm sure, they're going to be grateful you asked that as well, because we really do have an outstanding finance organization, so it's not about changes that are necessary. I view it more as about leveraging the scale and scope we now have at this organization, to really get in and be a champion for driving cross-functional innovation. And that's an opportunity that's on the table for us to just be more sophisticated.

Jonathan -- Morgan Stanley -- Analyst

Got it. Thank you.

Operator

Thank you. We have reached the end of our Q&A session. I'd like to hand the floor back over to management for closing remarks.

Rhett Butler -- Vice President: Investor Relations

Thank you very much everyone. And we look forward to communicating with you again as the quarter progresses.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.

Duration: 55 minutes

Call participants:

Rhett Butler -- Vice President: Investor Relations

Stephen T. Winn -- Chairman of the Board, Chief Executive Officer

Thomas C. Ernst -- Executive Vice President, Chief Financial Officer and Treasurer

John Campbell -- Stephens Inc -- Analyst

Monika Garg -- KeyBanc Capital Markets -- Analyst

Sterling Auty -- JPMorgan -- Analyst

Stephen Sheldon -- William Blair -- Analyst

Matthew Hedberg -- RBC Capital Markets -- Analyst

Mark Schappel -- Benchmark Company -- Analyst

Jonathan -- Morgan Stanley -- Analyst

More RP analysis

Transcript powered by AlphaStreet

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.