Q3 2020 Earnings Call
This time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask the question. During this session. You want me to press Star one on your telephone. Please be advised that today's conference is being recorded if your require any further assistance. Please press star zero I would now like to hand, the conference over to your.
Speaker today Edelita Tichepco. Thank you. Please go ahead.
On this call, we will be making forward looking statements, including financial guidance and expectations for fourth quarter in fiscal year, 2020 anticipated future operating and financial performance strategies customer demand product and technology.
These statements reflect our best judgment based on factors currently known to US an actual events or results may differ materially.
Please refer to documents, we file with the FCC, including the form 8-K filed with today's press release those documents contain risks and other factors that may cause our actual results to differ from those contained forward looking statements.
These forward looking statements are being made as of today and we disclaim any obligation to update or revise these statements. If this call is reviewed after today. The information presented during this call may not be card or accurate.
We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.
Unless otherwise stated during the call all references to of course margins expenses and operating results on a non-GAAP basis.
Historical periods, a reconciliation of GAAP and non-GAAP result is provided in the press release, ending supplemental financial information on our website.
We're planning for today's call to lost approximately 45 minutes and we'll do our best accommodate your questions. Following our prepared remarks as time permits.
With that I'll now turn it over to Frank Calderoni.
Thanks, Edelita good morning, everyone I'd like to first start by congratulating, our employees partners and shareholders as we celebrated our one year IPO anniversary of the New York Stock Exchange. This quarter, we had an outstanding first year as a public company because of the enthusiasm and commitment from our customers.
It was also a historic year for Us where we established a leadership position in the connected planning category, which was demonstrated by our consistent top line growth.
We also received recognition from industry analyst and we continue to expand our customer base partner ecosystem.
Community overall.
In addition, we were able to attract impressive leaders.
Innovative talent, who will continue to elevate us further and finally, what I'm. Most excited about is that we're just getting started and we have a lot more momentum ahead of us.
When I look back at this past year as a public company I'm most proud of the accomplishments our teams have delivered and continuing this trend I'm pleased to report another strong quarter.
Total revenue was $89 million up 44% year over year and subscription revenue grew 47% year over year.
We continue to see impressive growth in the value of connected planning and it has become an imperative for companies who must meet the challenges of competing in todays digital economy.
In a world where the pace of change continues to further accelerate we are seeing a massive shift in the wake companies plan and make decisions across their enterprise.
The best companies know that in order to stay ahead of their comp the competition business leaders must be better connected to one another on one platform that can easily analyze data to make better decisions within a chaotic marketplace.
A recent Forbes research report highlighted that companies, who digitally transform realized that it's very tough at the report mentioned only about one in four Ceos in the global 2000, or leading successful digital transformation and those are succeeding at the digital.
Transformation journeys, we're able to capture over 70% of the positive and measurable changes in their sectors.
The research shows that the key successfactors, our agility and the ability for companies leadership to change their approach to manage their products people and customers in this digital age.
As we have experienced companies across a variety of industries must make the digital transformation shift we see this in the breadth of organizations continuing to increase their spend on these types of initiatives.
We continued our steady pace of new customer acquisition, ending this quarter with over 1300 total customers across a wide range of industries.
Our platform is unique as it provides a single centralized seamless environment in which all functions can carry out their day to day operational planning.
This differentiated aspect of our platform continues to drive a larger footprint and we are now serving 324 customers with over $250000, an annual recurring revenue growth of 42% year over year.
This was also a record quarter for the number of seven figure deals that were closed.
To demonstrate the broad relevance of our platform to many different industries one of our large deals. This quarter was with one of our most comprehensive drug development companies with over 50000 employees and over 60 countries.
This company has decades of scientific expertise delivering the largest volume of drug development data in the world.
With clinical research projects that can left up to 10 years span multiple countries and required input from hundreds of lab technicians.
This customer needed a more efficient way to manage key insights throughout the entire life for projects.
Our platform will enable over 3500, researchers to leverage and a plan for planning to gain better insight throughout the entire project cycle.
This is expected to drive consistency and accuracy and forecasting.
We do think project delays and cost inflation.
One of the key factors for the customer in choosing us what's the value of connected planning and the potential to bring other parts of their business onto the platform in the future.
In another example, one of the largest airline carries globally cios and a plan for workforce planning in their operations customer center, which runs around the clock 365 days a year.
This team controls flight operations globally with hundreds of staff dedicated to load planning and flight scheduling issues.
Being able to predict and accurately managed staffing was becoming increasingly complex with the different skill sets required to staff the center, while complying with ebay regulations.
This customer chose us to managed staffing plans and predictions for their operations customer center.
Finding a scalable solution for accurate workforce and staffing scheduling, what's key to delivering and meeting service levels as well as optimizing labor costs.
In the consumer goods industry, a key highlight this quarter is a seven figure expand deal with an existing global consumer goods company.
This customer has 60 subsidiary and over $50 billion in revenue today. They have deployed our platform in multiple supply chain in finance use cases across 18 different businesses in areas, such as production planning pricing and assortment planning.
They're connected planning journey has led this customer to standardize on Hana plan for all of their planning needs and this is a great example of the honeycomb effect.
An impressive seven figure expand deal for us this quarter was with a customer in the manufacturing industry. This customer initially deployed our platform and finance last year and was up and running in two months.
I mean, the transformational effect. This has had in one specific area in such a short time the customer implemented a company wide connected planning initiative.
What is really exciting to me is that this customer now hasn't Anaplan Council comprised a functional leaders across 17 department all with the single vision of driving value across the entire business through the prioritization of use cases across finance resource planning.
Inventory and logistics planning.
These customer highlights underscore that we're driving significant change across the enterprise to connected planning.
The business processes and analytics being placed on our platform our mission critical as evidenced by the number of customers. We now have with over $1 million in annual recurring revenue, which was up 57% year over year, we're focused on enabling our end users with the best.
And most intuitive technology.
Our platform serves a broad range of functional areas within an enterprise, we're continuing to see strong demand and self supply chain finance and workforce planning.
This past quarter, we participated in multiple supply chain events, including the Gartner supply chain summit held in Denver, where we met hundreds of current and potential customers.
Many of them, we're focused on how to better bridge between supply chain and other functions, which demonstrates the power and the interest in connected planning and the shifting effort to deliver clear commercial outcomes.
Our customers continue to ask about Anna plans capabilities to help supply chain leaders navigate commercial uncertainty, particularly due to impact like tariff or changing regulatory regimes.
From a product perspective, our new platform user experience and mobile App are now available to all customers. We released our new mobile app over the last month, which enables planning at the edge as businesses navigate real time changes and uncertainty Anaplan mobile is a secure in in two.
The tool.
Our mobile App with the new user interface allows decision makers to access intelligent planning capabilities on the go and increased productivity.
Within our Anaplan ecosystem, we continue to make great traction of customers employees in finance marketing sales operation supply chain HR are transitioning from working in silos with limited business impact to running dynamic analyses that allow them.
To move quicker more impactful decision, making.
These employees are developing the skill set their companies need in addition to feeling more empowered.
Our Anaplan Academy has been focused on creating and delivering more learning courses and as of this past quarter. We have had a few thousand early level certifications with over 100000 individual online courses that have been completed.
Within our partner ecosystem, they continue to provide capability capacity expertise and industry best practices, helping to deliver world class planning capabilities to our enterprise customers.
The percent of deals originated by partners is steadily increasing and the mix of partner business, we're doing with our Gs eyes and goal partners is also on the rise.
This past quarter, we're seeing an increase in the partner engagement as we held our inaugural partner Advisory Council meeting in New York, where their top 15 partner leaders.
At our user conferences in London in Paris, We had two times the partner attendance this year showing the growing maturity of our ecosystem and the commitment from our partners.
From a recognition standpoint, and a plan was ranked on Deloittes technology fast 500 in North America for the third consecutive year.
We're also continuing to gain strong industry recognition and this quarter. We were recognized in two separate I'd see vendor assessment reports.
We were named a major player in the worldwide supply chain sales and operations planning as well as in the worldwide supply chain demand planning reports.
This shows the unique breadth of our platform and the opportunities that exist in the planning ecosystem within our customers.
Our continued momentum remains consistent and prolific with the significant shifts in the digital economy, it's becoming more and more apparent that we are the platform choice for our customers. This is reinforced with the sustained market demand for connected planning.
I feel confident that our customer Ferts approach is working with the way, we innovate and bring new features to the market I also feel excited about how we continue to capitalize on all the industry's trying to navigate the digital transformation journeys with one platform that can help them make better decisions.
Quicker.
Now, let me turn over the call to Dave who will discuss health third quarter financials and outlook for the fourth quarter and fiscal year 2020 days.
Thanks, Frank and good morning, everyone. Our Q3 results demonstrated continued momentum and demand for our platform, coupled with steady progress and growing our leadership position and connected planning.
Total revenue for the quarter was 89 million up 44% year over year.
Within this subscription revenues grew 47% and comprised 89% of total revenue.
Service revenues were 10 million a from 8 million in the third quarter last year and down sequentially 1.2 million as we continue to deemphasize generating revenue from professional services.
Calculated billings of 114 million grew 59% year over year.
Our remaining performance obligation or RPL balance as we exited the third quarter was 590 million up 55% over last year.
This is the third consecutive quarter RPL growth above 50%.
Our dollar base net expansion rate or enter our was 123% it continues to track above 120%.
Overall this was a very strong quarter for expands and as mentioned earlier, we had a record number of seven figure expand deals demonstrating the ongoing traction and success, we have with our existing customers.
Our top 25 customers have an average air our of over 3.5 million.
Approximately 40% year over year. We also continue to serve a growing base of customers with over 250000 annual recurring revenue, which this quarter was 324 customers up from 228 customers at this time last year.
Looking ahead, we have a significant and growing opportunity to expand the use of our platform within our customer base.
Our unique approach to enterprise wide planning and the capabilities of our platform encompasses frontline managers and professionals across a wide range of operational areas finance sales operations supply chain and marketing.
Turning to our profitability metrics for the third quarter total non-GAAP gross margin was 76% up 338 basis points year over year.
Within this subscription gross margins were 85% up 131 basis points year over year as services gross margins were approximately 9% of 912 basis points year over year.
Total non-GAAP operating expenses were 77 million up from 64 million in the prior year, primarily driven by go to market investments.
We continue to drive leverage and our financial model through productivity and the investments we've made over the past 18 month.
This is evident in our operating margins of negative 9.9% this quarter and improvement of approximately 20 percentage points compared to negative 29.5% in the same period last year.
We are demonstrating significant progress towards our financial objectives of productivity and profitability our business unit economics continue to be healthy as we specifically continue to focus on our cost of acquisition contribution margins and payback period.
Net loss per share in the third quarter was negative eight cents based on 132 million weighted average shares.
Free cash flow, which is cash flow from operations less capital expenditures for the third quarter was negative 19.9 million.
Primarily driven by timing of tax related stock payments negatively impacting our working capital.
We ended the third quarter with 311 million in cash and cash equivalents.
Turning to our outlook for the fourth quarter fiscal 2020, we expect total revenue to be in a range of 96.5 to 97.5 million and non-GAAP operating margin to be in the range of negative 14% to 15%.
Weighted average share count for the fourth quarter is expected to be approximately 135 million shares.
For the full fiscal 2020, we're raising our revenue and operating margin outlook driven by the third quarter performance and ongoing strength, we've seen our business.
For the full year, we expect total revenue to be in the range of 346 million to 347 million.
And as previously stated calculated billings can fluctuate from quarter to quarter impacted by timing of renewals and transactions. However, we believe billings to track in line with overall revenue growth rates and our net dollar expansion made to remain above 120%.
non-GAAP operating margin is now expected to be in the range of negative 17% to 18%.
Weighted average share count for the full year is expected to be approximately 130 million shares.
While we have yet to conclude our fiscal year 2021 planning cycle, we'd like to provide a preliminary and high level view as we continue to remain confident in our ability to capture the strong momentum from digital transformation and the value we bring to our customer base.
As such were currently planning for fiscal 21 revenue.
455 to 460 million, representing an approximate 30, 133% year over year increase.
In closing I want to thank the entire Anaplan team for their contributions we are well set up to close the year strong and head into next year with healthy momentum.
Thanks for joining us today, I'll now turn it over to the operator for questions.
Thank you as a reminder to ask the question you want me to press Star one on your telephone to withdraw your question press the pound or hash key please standby will be compiler culinary roster.
And our first question comes from the line of Kirk Matron from Evercore ISI. Your line is open.
Okay. Thanks, very much and congrats on a really nice quarter. They wanted ask maybe about the bigger will expand you all have been seeing and maybe frankly are there any comment out leads across some of those deals just in terms of you how people are expanding their honeycomb, whether it's across functional units, maybe just a little bit more detail around some of those.
Bigger expands you had and then I have just one other follow up question. Thanks.
Sure. Thanks, Kurt So we're really pleased with the performance of connect the planning and I think the strong expands.
Start to highlight that the platform that we have is so pervasive across an enterprise whether it be in finance supply chain sales HR and if you look if you sound.
Go back to some examples I provided.
You'll see that we start in all different functions.
Regardless of where we start our companys customers start to see the value that comes from the platform and quickly go down and expansion move I wouldn't say there is a specific path what we do with customers.
As early on we stopped working with them.
To understand what their needs are especially if they're on a digital transformation journey or finance transformation journey or supply chain transformation journey, and we start early on to map out with them.
The path looks like and that's how the honeycomb is really formed and it continues to evolve one of the things that we're finding I mean, we mentioned this on the left call over the last couple of years.
It would take us probably a year to two years within that timeframe to do and expand now we're seeing the expands happened faster and we've seen expand larger.
But if you look at just the size of our deals we kind of talked about the top 25 customers, averaging a are being eyeq $3.5 million that shows the magnitude. If I also want to identify the top 10 customers. The average Jr. Is 5.3, so now.
Getting into.
Millions with these customers because they're looking at the product and the platform and leveraging it across multiple but at the same time I said this before.
We're in early stages, where I think we're early stages in the market and we're also in early stages with some of our top customers.
That's that's helpful. Maybe just one quick follow up for Dave Dave. Thanks, very much for the initial look out the fiscal 21 I know you all are investment mode and sort of your growing through normal seasonality trends, a little bit here, but but anything you would serve advise as we as we think about building or models I'd say, especially for the first quarter just in terms of maybe deferred.
Patterns or anything around that if you want to punish telmex core I understand but just just want to throw that out there to getting any quick thoughts on that thanks.
I think our initial thoughts.
Just being relatively prudent at this time and place.
We really haven't engaged.
Been overly thoughtful on you know any respect to seasonality so for us that continue to be in this growth mode.
I would tell you that we would continue on.
At the rate in pace as we kind of performance this year within the lines of the preliminary guidance. We gave for next fiscal year.
Thanks very much.
Our next question comes from the line of Heather Bellini from Goldman Sachs. Your line is open.
Great. Thank you Frank it. Thank you for the comments you gave us on the partner engagement and I wanted to focus a little bit on that meeting you said you had with that with the top 15 partners of late I'm. Just wondering if you could share with us kind of how large are those practices now and kind of just.
Proximate term and how quickly have those top 15 bend growing their base and I might've missed it but if you could share with us the percentage of business from from partners and.
Where that was maybe at the start of the year and then add a follow up.
No. So heather thank you the so I'll answer the last part first.
We mentioned that if you look at the partner business, it's over 50%.
And I think also said on the earlier that continues to increase.
And I think it's really showing that especially with the global.
Pardon is that we worked with us.
That they're seeing value within their practice to expanding the coverage and the consultants that they have within their firm.
And a plan.
Some of them are developing specific solutions.
Around anaplan as a platform and they are taking that to market.
They are also opening it up not only just to anaplan consultants, but to others, especially the large firms.
No I was in.
Asia, a couple of months ago during the quarter and we had we worked with a firm and we work with the consult specifically identified as Anaplan one of the things, which I found extremely exciting is that they wanted to open up what kind of plan was all about to the larger consultancy practice, so that others, even if there.
Selling other platforms are aware of Anaplan and connected planning.
And actually start to see the connecting points. So we're seeing more of that I mean, you can help you can also look out there the number of job openings within our partners continues to increase.
And we're working with our partners to find ways of helping to develop some of the talent that they need as well as our customers as this whole ecosystem expands.
Alright, and then the follow up would be on the quota carrying reps front I mean, I know you guys have been adding a bunch.
Pretty aggressively wondering if you could share with us kind of where that stands and if you can also give a little bit of color given the guidance that you gave for fiscal 21 your initial guidance.
Should we expect I mean, the growth in quota carrying reps I think it's been accelerating this year can we expect it to accelerate again the growth rate of the ads in fiscal 2001 as well.
So we're pleased with the progress I mean, the key thing for us and we've been saying this now, especially the last I've been with Anaplan three years coming up in January .
Another key thing for US right now as I said before we're early in.
In this whole transformation of what's going on around connect planning.
So we have to continue to invest especially on the go to market and it's great. Our investment is in a couple of different areas.
First it's the investment as you say in the quota carrying reps. So we continue to invest in that and expand that as we think about going forward you know even with the we've provided some preliminary guidance for full year 21 that showing continued growth and so with that kind of growth we have to continue to invest and expand.
The second as I, just talked about has to do with a partner ecosystem right working with more and more partners, helping them expand their practice looking at various working with them on certain solution that they and we can bring together in the marketplace that get more specific around supply chain.
Our specific around certain verticals that are looking at.
Solutions around Anaplan, and so we're investing in that as well and I think all of that as we go into fiscal year, there's going to be important not only for 21 growth, but really to continue to lay the foundation as we think about the next several years.
Great. Thank you.
And our next question comes from the line Scott Berg from Needham Your line is open.
Hi, Thank you, Dave Congrats on great quarter, and thanks for taking my questions.
First turning I wanted to start off and review the last year since your IPO. The partner investments that you're making is are you seeing any shift in terms of the mix of the business that you are selling whether its into the office of the CFO or some of the supply chain APSR as that mix remained relatively steady even with all the growth.
Investments you've made recently.
So the.
The investment if I look at the mix of the business and as even looking at this again yesterday as we go back it's been about 60 40.
And stayed pretty much in that range, 60% and financed 40% outside the finance outside the financed primarily within sales and also supply chain.
And within that we're seeing an increase in the.
I guess the requirements around resource planning and I think resource planning kind of ties all three together right because it's applicable in finance sales as well as supply chain.
One of the things that going back in your point and that this is the strategy like we've had over last couple of years, it's important for us, especially working with our partners to think about where we make the most significant impact and really talking about connected planning and our strategy has been around the office of the CFO now.
To say that we just sell to the CFO , but the CFO in the role that he or she has has that broader per view across the organization and that's where I think there's a lot of power and the connected planning because when you think about supply chain a lot of the use cases that were seen connect back into finance as far as looking.
At the follow through demand and supply planning and the same is true with SPM within sales right sales forecasting territory quota different things like that have a connecting point back into finance. So we do sell and we kind of our strategy with our team and with our partners.
It's kind of office of the CFO , but we broaden that especially over the past two years to include the chief growth officer, or the Chief revenue officer, the head of supply chain, the CIO or in some cases individuals' executives on the seats, we set a working on digital transformation.
Got it quite helpful. On I guess side, Dave I'd be remiss to fed and continue the fiscal 21 theme somehow.
As you look at the revenues next year, obviously the percent of revenues choice services is starting to trend down with the with the Deemphasis there and pushed partners is there any reason to believe that that mix next year does not look similar to the third quarter here that we mentioned.
You're correct in your assumption and well continue to deemphasize that portion.
All within the framework that we laid out even a year ago going back to the theme of our IPO.
From a long term perspective, the less than 10% and we're on that cost.
So as you continue to model out 2021 and beyond.
I would continue to deemphasize that portion.
Great TIFIA. Thanks, Congrats again.
Our next question comes from the line of Brent Bracelin from Piper Jaffray. Your line is open.
Thank you and one of the one question here for from me and this is probably best geared for it for you Frank I want to go back to the record number of seven figure expands this quarter, you've been talking about disconnected planning vision for for well over a year as a public company now, but my question is why now.
What's resonating most with these large enterprise customers the external risk factors shuts kinda increased if you will.
Today than they were a year ago, but you know you're seeing really really strong kind of adoption of division. So for me why now what's resonating with these large enterprise customers.
Great question.
And I can talk from experience.
This question, having been over 30 years kind of working with planning and so many different roles in several different companies.
No I talked to a lot of our.
Executives in customers.
If you think back.
Spreadsheets have been around for about 40 years. This past June .
If you also look back over the last couple of decades, it really hasn't been much change when you think about and I'm not even talking about planning from a budging standpoint, I'm just talking about having information available to people in organizations that they can use to really make decisions and decisions that are appropriate.
It at a point in time and that continue to evolve and the applications tools processes that have been around for last couple of decades archaic and they don't really provide every company that I walk in the door and talk to that is the challenge that they have people in their organizations working in silo.
Oh really having multiple sets of data not really being tied directly into what the business really needs and then not being able to provide the analyses.
Secondly get to a good decision point.
And so that's where I think anaplan resonate and this is that there is a great example, I was just looking at this yesterday the and it's out there. If you want to look at its I can actually quote the customer it's in an publication coal supply chain brain.
And it has to do with sleep number who has been our customer of ours over the past year. They have 600 retail stores.
Within the United States and their their businesses growing.
It's been very effective and if you if you go back and look at this article it talks about whats companies are really looked dealing with it saying that their forecast process is heavily manual they use a lot of spreadsheet and the needs that they have a very time sensitive and that they see a lot of earth and they're not able to really predict.
The right level of demand and therefore, not have the right amount of supply at the different retail outlets and the article goes into really talk about with quotes from leaders within the organization that with Anaplan. They were able to really streamline that process and really bring it down from what used to take eight hours to do a demand planning now they can do and they can for.
Yes in minutes and I think Thats a great example, kind of going back to your question everyone. Most companies today are trying to make real time decisions.
And that that's why connected planning is really so appropriate.
Helpful color Frank Thank you so much.
Our next question comes from the line of Raimo Lenschow from Barclays. Your line is open.
The congrats from me as well so two quick questions.
Can you talk to the importance of the new you why into mobile user interface and turn to afford to bringing on upon pervasively out into the organization, where you're basically are able to connect to more users.
And then kind of a much more.
Tool and then a question could be like last quarter you hold on currency can you kind of remind those once the impact was this quarter. Thank you.
So the back on the new you Exxonmobil.
And this goes back probably about two years ago, what I was hearing a lot from customers that they loved anaplan.
And as as you would want, especially when you have a philosophy around customer first.
And listening to what customers want and I would say each year, we get better and better at that because we opened a lot of our.
You know insights Saar is what we're doing on the product and engineering side to our customers that they can give us real feedback on what is most important to them. So we can make sure that we prioritize around their needs.
You X was one of the ones that came up about two years ago and they started to give us certain requirements. So that they can be much more flexible and doing some of the analyses with dashboard easy to pivot getting very things that they can then help collaborate faster within the organization. So we incorporate a lot of that feedback and we built it into the U.S.
The other great thing about our Uxc has also got us to kind of a state of the arts way of adapting a lot of the changes from customers. So that we can now continue to rollout enhancements on a more regular basis in real time.
And that's really effective so I think it's allowed US a couple of things for customers allows us lot of things to do from an efficiency perspective, and how we look at features that we want to enhance for our customers. The other thing I think and emphasize and ties back to the previous question that I answered, which is the importance of having information at your fingertips and being a.
Well to pivot in real time, and I think the new Uxc allows our customers more flexibility.
Capability and it also gives it Tim we like to phrase about planning on the go because whether you look at a you likes that allows you more creativity and flexibility where you look at a mobile application that you can actually deploy at the edge of you planning like in retail stores go back to my Sleep number example, where you can have.
Different retail outlets be able to have information that they can feedback to the headquarters to supply chain.
It's very impactful.
Great and pace of productivity as well, yes, some break that was out all the above.
And the Raimo good morning, and in regards to FX, Yes last quarter, we called that out more of a as an episodic event as housum impacting some of some of our brands our momentum our per se.
We're able to manage throughout the respective quarter on the true impact of any foreign currency, but if you look at it from year over year, there was still slight deterioration specifically the GBP to you estee, but we're really not get into conversation points of constant currency versus our financial show up here, So I want to.
Go back we'll evaluate just one more point I want to bring up about mobile you know initially when we roll out mobile people go that's nice Haven under mobile App and we question are they kind of question, whether or not they actually use it we've had a couple since we rolled it out over the past month 45 days, we've had a couple large customers.
Actually accelerate the deployment of mobile.
We just had one the other day, which I was really happy about a large customer as they were working through and expand take on not just what what they were doing with expand but decides they want to roll out mobile across their various use cases, which is great to see.
Well done congratulations.
Our next question comes from the line of Alex Zukin from RBC. Your line is open.
Hey, guys. Thanks for taking my question Congrats on a really strong quarters. So maybe just to start to seven figure deal growth again pretty extraordinary and I wanted to ask you just given the kind of continuing.
Leveling up of the go to market motion towards this kind of enterprise operational planning platform.
What.
So the sales organization and kind of how will we see it reflected in the numbers are on sales productivity in dollar base net expansion as we continue to go longer and got a quick follow up.
Yes, well so.
I think we've talked about this over the past year because.
You get productivity by getting much more leverage.
In the investment that you're making so let's talk about the customer if you look at where our lands were a couple of years ago versus where they are right now.
I've seen a significant increase and it continues to increase and then as I mentioned a few minutes ago. We're also seeing the expands happened sooner and the expands be larger.
I think that goes into kind of the strategy that working with which is we basically are deploying and apply enterprise sales men and women that work with our customers that are concentrated on a few accounts. We encouraged them to work closely with partners partners allow us to get higher in the organ.
The station enterprises as well as connect to certain transformation projects that are underway.
And when you start to make all those connecting points and you start to see that flywheel as far as larger lands and faster and larger expands.
As we start to drive the productivity and that's that's that's where that's what we've been focused on.
This year has been better than last year next year, it will be better than this year and that's kind of the multiyear plan that were on and one of the thing it's great to have Mark join this is now has four month in Anaplan. He comes Mark Anderson. He comes with a tremendous amount of experience having gone through two previous companies.
Going through the rapid growth and Mark is even helping US now kind of go to that next level, which is how do we can continue this process.
Continue the productivity continue the connection with some of these large experienced apartments that we have and I think we'll continue to see benefit as we continue down that path and Dave you want to talk about some of the metrics that we've discussed around productivity exactly and so from the productivity will continue to refer.
To our cost of acquisition, our lifetime value, our payback respective to that as well as just the.
The overarching success from from our team altogether, not only our direct salesforce our partner economy, but then also the rest of the entertainers worldwide that really enable this past quarter and it's just not a one quarter March it's more about the infrastructure buildout as we think about not only through 2021, but beyond that.
And we all know I mean, it's a process is not an easy process is one that you continue to work through I think we've got the right formula and strategy.
Think we've been also been able to demonstrate continued progress and that's the objective going forward and I can't emphasize enough.
The importance for us around the partners and that's why we do give we do provide some of these metrics around how many partners attend would events. They go too I mean, we do think this week Dreamforce is underway and we've got several initiatives underway I got the meetings later today with some of our partners along with some customers and prospects. So we look for all opportunities.
Is that we can leverage and they due to.
The connection of partners with customers.
Perfect and then just a quick follow up Dave on the numbers if I look at some of the year to date billings and subscription billings growth.
Year over year, and then I look at the ARPU growth during the mid Fiftys type level I'm curious how long should it take that kind of growth trajectory to waterfall into subscription revenue and what are some of the puts and takes there as we think about those numbers.
I think you'll see thought waterfalls, we continue to gain scale clearly the RPL something I continue to Orient folks around because it is less.
I'll call it seasonal if it that's a proper word even because you don't get into the in quarter out a quarter and so even their appropriate wording year to date, you know clearly above 50% and so that performance does yield and waterfall and as you know our standard contracts are approximately three years, so you'll you'll see.
Near term as well as longer term sustainability and continued rate a pace of subscription revenues as you've seen thus far.
Perfect. Thank you guys.
Our next question comes from the line of Richard Davis from Canaccord. Your line is open.
Hey, thanks.
Thank you mentioned salesforce.
There may be on that topic. That's why you guys partnered with Salesforce Einstein and maybe more broadly.
Could you talk about particulars of that relationship that also just kind of your view on.
The notion that machine learning and.
Robert Good robotic process automation revolving quick follow up thanks.
Yes, so if you think about.
We've been working closely with Salesforce for a while I think we talked about some things last year at Dreamforce and it's great that we're able to talk more publicly about the engagement on site I mean, it honestly it a couple of different ways first I would say if you think about a lot of their customers, especially when it comes to.
CRM and you kind of think about the sales organization and the plan is a great extension and we have a lot of salesforce customers that leverage anaplan and so there are for customers does a tight connection and therefore, there there's a tight connection between Salesforce and anaplan.
The other thing that I would say.
This goes back to even one of the things that we closed. This this this quarter as far as men to go we're seeing more and more.
Interest from customers, especially as they are further along in their connected planning journey, where they're trying to get more intelligence.
My example, sleep number but I can come up with so many other examples especially in supply chain.
Where customers want to leverage not only data that they have within their organization, but also data outside the organization that's why.
We looked at the team for us with meant to go and bringing some of that.
Tech that technical capability within Anaplan, but also we're not looking too.
Do it all ourselves we also want to work with partners like Salesforce with Einstein to see with his way things that they've been able to develop now for a number of years and see on behalf of our customers. How they can leverage both and so that is an example, not the only example, but I think it's a great example, one that we're very pleased about and one that will continue to focus on.
Going forward.
Robotics, and then just that.
Yes robotics.
Yes.
A nation automation I mean, clearly just a great area.
Not only that we will utilize here, but then also some up how we think about things on the connectivity and open npis within our platform and so being a core operator of hub. This platform itself you can see.
A lot of complementary skill sets going back and forth and how the data is packaged in utilized and so there's just a vast amount of opportunity is as everyone tries to take more and more friction out of that that middle office that we continue to talk about.
And then I think you guys are doing a good job looked on your job board about so you're hiring customer success people can I think a lot of companies don't do that middle realized that that's having a good way to drive margin and make your customers happy is there. The quick question Tactical question on that is there a mix like.
People column hunters and farmers, but whatever is there a REIT mixes that two thirds hundreds one third farmers and how does that evolve over time as it gets a 50 50 or how does how does it look inside of your company and then what do you think thanks.
I wish there was a specific formula, but there's not I think we're getting better at trying to figure out what the right you know it all depends on the.
Where the customers and that journey the complexity of what they're trying to accomplish of course, we're going to provide more of those skills.
Where we are seeing rapid expands and much more.
Members of use cases, and so forth, but you bring up customer success, and we call them business partners. They are critical to that success not only in the first land, but also in this continue to expand and they were closely between.
What we call the business partners and also our account executives.
As to working with our customers on planning out their journey and then also on how best to implement so it's a tight alignment.
In some cases.
We want to give ratios because there's really no specific we do have most customers if not all customers have been identified we have somebody identified on the CMS cuts Mrs. Aside that works with them on their journey and we tell customers that were here to make sure that they get value from the platform and the customer success team along with the accounting.
Thank you just have to make sure that the customers from the beginning and throughout our getting the value that they're signing up for.
Well not super important thank you very much.
Our final question today will come from the line Stan Zlotsky from Morgan Stanley . Your line is open.
Perfect. Thank you so much guys.
And congrats on a very strong quarter.
From one and just a couple of very quick.
While the questions you one is.
Macro just a sanity check certainly from the trends in the quarter doesn't sound like there is when you're going to macro concerns or anything that you saw in the quarter and especially the guidance. You gave for next year should maybe just if you have any commentary on that and then also as far as.
Your your sales organization.
How are you guys thinking about the your sales organization with Mark Anderson being onboard now for a little bit.
As you are heading into fiscal 2001, any any changes do you think into making or any any tweaks. That's it. Thank you.
So stand thanks first on the macro without seeing any changes in the macro environmental affiliate deal cycles or anything like that so I'd say you know nothing that we've observed.
Recently.
As far as Mark as I mentioned before it's great to have Mark on board with the expertise that he bring.
With this is where we're in a fortune situation, where we're early in the market as I said before we've got a long road ahead of us.
And we're making investments significant investment because we see the opportunity there.
Mark has been focused in the first couple of months fully on ensuring that we continue to have the right skills and the talent and also to continue to work with our partners as they talked about before to expand because hit.
The great thing about having Mark on board is he has the view of as we continue to look out what is necessary as we continue to scale. If we want to think about getting to a billion or even beyond that.
You've been there before he's done it and so thats, great insight to half and he's helping the team that we've developed of lift couple of years.
Move up to that next level as we get ready for 21.
Perfect. Thank you so much.
I'll now turn back to the presenters for closing remarks.
I want to thank everyone for joining us today. We appreciate the continued support first of all from our customers.
And our partners and of course, our employees and we also think investors for their continued support is anaplan.
Thank you all for joining us today, and we look forward to meeting with you again on the next quarter as we close up the fiscal year 2020. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.