Q1 2020 Earnings Call
[music].
Greetings and welcome to the model and first quarter 2020 earnings Conference call.
This time, all participants are anyway.
Question answer session will follow the formal presentation, if anyone should require operators at the turn the conference. Please press star there on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host.
David Barden, Chief Financial Officer, Mr. border you may begin.
Good afternoon, welcome to the earnings call for model into first quarter fiscal year 2020.
Sure ended on December 30, Onest 29 team.
This is David Barden model into Chief Financial Officer, and with me on the call today is Jason blessing model into Chief Executive Officer.
Our earnings press release was issued after close of market and is posted on our website, where this call is being webcast. The primary purpose of today's call is to provide you information regarding our first quarter performance in our financial outlook for our second quarter and full year fiscal 2020.
Commentary made on this call may include forward looking statements.
These forward looking statements are based on management's current views.
In expectations as of today and should not be relied upon as representing our views as of any subsequent date, we disclaim any obligation to update any forward looking statements were outlook.
Actual results may differ materially.
Please refer to the risk factors in our most recent form 10-K filed with yes, you see.
In addition, during today's call we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to not as a substitute for we're in isolation from GAAP results reconciliations of the non-GAAP metrics to the nearest GAAP metric or included in the earnings release.
This issue today, which is available on our website.
I encourage you to visit our Investor Relations website at Investor Dot modeling dot com to access our first quarter fiscal year 2020 press release periodic FCC reports and the webcast replay of this call.
Finally, unless otherwise stated.
Financial comparisons in this call will be to our results in fiscal year 2019 with that let me turn the call over to Jason.
Thank you David.
Good afternoon, everyone and thank you for joining us today.
We began our fiscal year 2020 with momentum based on our strong execution over the past five quarters.
I'm pleased to report that our Q1 performance built on that momentum and we delivered results that exceeded guidance.
Total revenue for the quarter was 38.4 million an increase of 9% over last year.
And subscription revenue was $28.2 million, a 12% increase over last year.
Our results demonstrate the positive impact of our strategic focus and continuing evolution as a vertical SaaS company.
The results also highlight our commitment to delivering improving levels of growth and profitability something I committed to 18 months ago on my first earnings call as the CEO of model that.
We are proving that are more focused model N is a better modeling for customers employees and shareholders and I would like to thank each of these important constituents for their continued support.
As I look ahead I continue to feel that we have a tremendous opportunity in front of us.
In 2020, I expect to see continued improvement in our growth and profitability, particularly as our go to market strategy continues to mature.
My confidence reflects not only our past performance, but also the knowledge that entering the year, we haven't experienced leadership team in place sales momentum and mission critical products that help our customers drive topline growth profitability and compliance.
It is also important to note that our SaaS transition center of excellence is entering the year with proven delivery experience gained across a number of successful projects.
And finally, our professional services team, which is a well established strength of our company continues to deliver complex global projects on time and on budget.
Even though we are still in the early stages of scaling the company, we're starting to show the characteristics of a market leading vertical SaaS company.
Sales to new customers have consistently been a material part of total bookings over the last several quarters.
We also recently crossed the important milestone of having more than 70% of our customers in the cloud using an average of 2.4 cloud applications per customer.
This represents more than a three times increase over the last several years and it helps illustrate the rate of change at the company.
Equally interesting to note our customer mix is also nicely balanced between mid sized businesses and large global enterprises, which demonstrates that our cloud delivery model allows us to economically access abroad part of our total market.
This is another proof point that our strategy is taking root.
Selling into our customer base is a key element of our go to market strategy.
We serve to vibrant markets and the opportunity to expand usage of revenue cloud is significant given the breadth and complexity of our customers sales channels.
For example in the first quarter, we expanded our relationship with a leading generics and specialty branded pharmaceutical company that wanted to unify past acquisitions onto a single solution and standardize on model N's revenue club.
Similar to Gilead Sciences, and our other customers the transition to our cloud platform will provide the agility to adapt quickly to new government regulations.
The scalability and performance required to deliver growth across multiple channels, all while enjoying a lower total cost of ownership.
Now we would like to share some stories about customers that recently went live on revenue cloud as go lives were another highlight of the quarter.
The first is biogen.
Pioneer in neuroscience, they completed their transition from our on premise applications to our cloud platform.
This 13 billion dollar Global company wanted a modern revenue management platform with improved capabilities and performance.
They also wanted to solution that would lower their total cost of ownership yet still allow them to stay compliant in today's fluid regulatory environment.
Biogen is also the first sales cycle that I engaged in after joining Madeleine. So it is particularly satisfying to see their project go lives.
I'm also pleased to announce that Novo Nordisk 17 billion dollar health care company in a recognized innovator has also successfully transitioned to our revenue club.
The successful completion of this project allows novo to stay compliant in their core markets and also provides a modern tool set that is now deployed globally across their organization.
Our products also provide novo the <unk> infrastructure to support their growth as they move into new markets.
This project is a great example of how our products supports compliance and the growth strategies of some of the largest health care companies in the world.
We also saw a number of successful go lives on our cloud products that are designed to support the unique requirements of markets outside the United States.
One example is survey a global pharmaceutical company headquartered in France that went live on our global price management solution, which replaced a legacy home grown application.
Derbio is 49 different therapies are administered to over 100 million patients each day and our products ensure that these therapies are dispensed at the proper price based on local agreements across 149 different countries.
This is our first deployment at survey and it is a great example of how we are able to land and quickly add value for a customer which opens the door to expand over time.
Finally, moduslink, a health care, a $1.6 billion Swedish medical solutions company recently rolled out contract lifecycle management and global tender management in the UK, Germany, and France as a part of a global deployment of our products.
They also began the second phase of their project in the United States to address their commercial business.
The model and project is replacing a patchwork of custom and point solutions and we'll provide more linco with a modern cloud platform that gives insight into all of their pricing in contract data.
The success, we're having in the field with customers is a reflection of the excellent delivery capabilities of our services team.
Our deep domain expertise in life Sciences and high Tech.
And the value our customers get from using our solutions.
These successful go lives will serve as important references in future sales opportunities.
I am excited as I look forward to the rest of the year.
As I said at the beginning of the call I believe we're still in the early stages of scaling and building a great vertical SaaS company.
Our strong results over the past six quarters now, including Q1 showed that we are well positioned to have a strong year.
I would now like to turn the call over to David to elaborate on our financial results and our guidance David.
Thank you Jason our results for the first quarter of fiscal year 2020 exceeded the financial outlook for all revenue and profitability measures. We shared with you last quarter and extended the strong performance we delivered throughout fiscal year 2019.
These results are further evidence, we're making progress growing and scaling is a vertical SaaS company, while also delivering improved profitability.
Total revenue for the first quarter grew 9% to $38.4 million. The outperformance reflects healthy subscription revenue of $28.2 million, an increase of 12% from a year ago. The growth as a direct result of our strong sales execution, which led to new subscription revenue of $17.5 million.
As highlighted on our last call. This growth was partially offset by a natural decline in our maintenance subscription contracts, which resulted in revenue of $10.7 million.
Special services revenue was $10.2 million for the quarter.
Now I'd like to turn to profitability.
Our team executed well in the quarter in our topline overperformance meaningfully impacted the bottom line, reflecting our commitment to and focus on generating profitable growth.
Non-GAAP gross profit for the first quarter was $23.5 million worth 61% of total revenue an increase of 400 basis points from last year.
Non-GAAP gross margin for subscription revenue was 72% non-GAAP gross margin for professional services revenue was 31 person.
Non-GAAP operating profit for the quarter was $4.6 million.
Non-GAAP net income in the first quarter was $4.1 million, we produced a non-GAAP net income per share of 12 cents, which was ahead of our guidance of five cents to seven cents.
Adjusted EBITDA for the first quarter was $4.8 million, representing a margin of 12.5%.
All in all we believe Q1 was a very well executed quarter with strong financial results.
Moving onto the balance sheet, we ended the first quarter with $55.8 million of cash and cash equivalents inline with our established cadence, we repaid $5 million of debt in early January.
With this payment we repaid fully the sellers note associated with rubber toss acquisition in only a portion of the term loan with Wells Fargo remains we remain focused on strengthening the balance sheet.
Turning to our financial outlook for the second quarter in full year, we remain confident our strategy is working well and we are in the early days in our evolution as a growing and profitable vertical SAS company.
Based on our first quarter Overperformance in arc continued confidence in the business, we're increasing our full your expectations for total revenue and raising the midpoint for profitability.
For the second quarter, we expect total revenue to be in the range of $38.8 million to $39.2 million, representing 12% growth at the midpoint.
We expect subscription revenue to be in the range of $28.4 million to $28.8 million representing growth of approximately 10% at the midpoint.
Non-GAAP income from operations is expected to be in the range of $1.4 million to $1.8 million and non-GAAP income per share in the range of one cents to three cents based on a fully diluted share count of approximately 34.9 million shares.
Adjusted EBITDA is expected to be in the range of $1.8 million to $2.2 million.
Please keep in mind adjusted EBITDA tends to be seasonally lower in the second quarter due to the payroll tax reset our rainmaker users conference and the rollout of our new marketing programs.
For full fiscal year 2020, we expect total revenue in the range of $154 million to $156 million and subscription revenue in the range of 113 to 100 in $15 million.
Turning to profitability, we expect non-GAAP income from operations in the range of $12 million to $14 million and non-GAAP income per share in the range of 25 cents to 31 cents based on a fully diluted share count of approximately 35.2 million shares adjusted EBITDA is expected.
To be in the range of $13 million to $15 million.
We remain very excited about the opportunities ahead as we continue to scale as a vertical SaaS company. Our results indicate our strategy is working and we are executing well we are optimistic fiscal year 2020 will represent another successful year.
We believe we will continue to move toward our longer term objectives of profitable growth and market leadership.
Thank you for joining todays call now I'll turn the call over to the operator for questions.
At this time, we will be conducting a question answer session. If you would like to ask a question. Please press star one under telephone keypad, Hey, confirmation tone wouldn't get your line is in the question Q you May Press Star too if you would like to remove your question from the Q.
For participants using speaker equipment, it maybe necessary to pick up your handset before presence turkeys one another piece, while we pull for questions.
Our first question is from Bryan Mcdonald Needham and company. Please proceed with your question.
Yes, good afternoon, Jason and David Congrats on a great quarter.
Great to see that there is a word announcing yet another customer that signing up to migrate over to the cloud based solution believe that's now two large customers over the last two quarters here I guess is we think about for the remainder of year can you talk a bit about what the pipeline looks like for potentially additional Mike.
Gration Zahn and now that you have to large migrations that are that are going to the underway.
Will there be any required additional resources that you need to add in terms of headcount to be able to get those migrating a timely fashion. If we do see you know again increased demand.
And the pipeline for more migrations. Thanks.
Yeah. Good afternoon, Ryan Thanks for the question so.
Yes, SAS transitions was definitely one of the.
Starring roles in our story this quarter and as we've talked about over the last 18 months, we really put a lot of spadework into this effort last year to make sure customers understood.
Offering understood the pricing and even more importantly, understood the path to get from where they are.
To our cloud so as the last year year and a half has gone on we've continued to see momentum as you pointed out.
Two important go lives that we talked about in our prepared remarks that novo and Biogen.
I think one thing Thats also important to point out about one of those about those projects that we've mentioned in the past both on the been about 50% faster and and more cost effective versus projects that had come before them.
And then we do have a number of different projects underway right now that are in different stages or progression and you think you can expect that we'll continue to talk about those deals as they get closer to go live and and do actually go live and I would also say the final point is our pipeline around SaaS transitions as we enter this year.
Sure.
Is stronger and more clearer than it's ever been as we've really been covering off.
Call, our top 20 customers and working with them on a roadmap of how they're going to move to the cloud over the next next couple of years.
Excellent and just a quick follow up on on that on that point now that you have some some large names that are that have gone live like Gilliat Novo Biogen, how should we start to think about the expansion opportunity and how that becomes unlocks now that they are live in the cloud and their willingness or appetite you adopt more cloud.
Joel sign up at their life.
Yes, certainly it enables the large 400 million dollarss expansion opportunity that we've talked about over the last year or so many of the new products that were able to sell that go into the calculus behind that 400 million our products that we've built and deployed.
Only in the cloud so their cloud native architectures and on our cloud native architecture, and so as customers get their core products live.
Those add on sales it does it removes some of the friction from from the sales process.
Our next and then just one quick follow up for David.
Just a question around RPL I know, that's a metric that you've been giving more consistently what was that metric during the quarter and how should we think about start to think about that on a comparability from year over year growth perspective. Thanks.
Yes, what you'll see you a when we file the the Q, which will file Tonight, you'll see it tomorrow is that our PEO for Q1 was just over 142 million. So you know kind of up from Q4 about $15 million. So we're real pleased with.
One of the performance whether it was Jason as highlighted.
And this obviously.
As you've tractors, so well Ryan you know that this represents a mix of our standard three year contracts with some of our one year contracts and so I think we're real pleased with our execution this quarter.
Excellent. Thank you very much.
Absolutely. Thanks, so much thanks Ryan.
Our next question is from Koji Ikeda.
Oppenheimer. Please proceed with your question.
Hey, nice quarter guys. Thanks for taking my question I, just wanted to dig in a little bit more on that subscription line item and it sounds like what the commentary on the fast versus maintenance mix there that the fast growing fast revenues grew well above.
20% market that you have out there and also sounds like you had some pretty good Oh P.T. transitions in the quarter too. So I guess other than the Oh P.T. transitions could you talk a little bit more about the bookings mix between the new customers and the existing customers. I mean was it 50 50, 60 40 any sort of color there would be helpful.
Yes, Hi Koji.
I'll take that one so you know I would actually characterize this quarter as very similar to the last five quarters that have been similarly, well executed and the story behind each one of those quarters has been we've had really nice contribution from both verticals life Sciences and high Tech and a really nice.
Mix between new logo, and and customer sales and so yes that you know that mix is kind of been around bumping around 50 50, maybe it's 40 60 in any given quarter.
But yes. This was another quarter, where we saw nice contribution from new logos and then our speed work that I referenced really starting to pay off in the customer base.
With SaaS transit couples nice asked transition deals.
Got it thanks, Jason and then maybe a question follow up for David.
Nice result on that subscription line accelerate in a 12% here and the guide for the second quarter on the subscription revenue implies another double digit growth quarter.
But thinking about the second half what the guidance for the full year on subscription revenue I just being the same it implies a pretty big slowdown in the second half I mean is there anything to point out there, that's causing that to happen or is that an element of conservatism. I mean is there something else that we should be thinking about there in the second half. Thanks for taking my questions absolutely. Thanks Koji for the question that's a great.
No I think it you know we are we felt good about the execution this quarter, which is why we we did adjust the range you know just our financial outlook. When we think about subscription revenue, obviously were worth 13 weeks or a quarter into the game and so right now as I look at new logos and some of the you know the deals that are working their way through the pipeline as well some of our CFO.
Customer base expansions you know some of those deals ultimately do include ramps and they include some deal structures and so we're just getting ourselves plenty of room to work right now not knowing exactly how those deals will actually come together and so just to being sensitive to Rev. Rec.
You know that that's what I would want you to think about me guidance as of right now.
Great. Thanks for that thanks for taking my question guys.
Thanks.
Our next question is from Chad Bennett Craig Hallum. Please proceed with your question.
Great. Thanks for taking my questions Nice job also on the quarter guys.
Maybe just.
Kind of following up we're on top of the question before on subscription revenue.
I guess you if you look at whether its RPL or no billings are always tricky in a in a conversion model, but your billings number look after church. Good this quarter, but you know I ask imagine December the December quarter in the September quarter are a significant amount of year.
Sure no renewal business in a year.
And I see your subscription as a percentage of.
Her SAS as a percentage of subscription business went up four point sequentially.
He just you know in a roundabout way it seems like the SaaS business is accelerating and doing really well, especially in the last couple of orders is there anything we should infer by by any those metrics that I just rattled off David.
Well I think it you know I think Jason actually briley framed it up very nicely in his remarks around what we've done over the last six quarters.
Obviously, I think you're right that's percolating through a lot of metrics that were that you're you're highlighting whether its ARPO, where the calculated billings. Obviously there are variety of metrics beaten different people look too.
But we do feel like that the execution is coming together and again, you're seeing it in a minute broad spectrum of metrics.
I guess it maybe maybe.
More blunt way of asking there's really no reason why subscription revenue should decelerate from where we are today you know looking out as far as you see at this point.
Yeah, well you know in short answer that is no. We don't see any deceleration, but again I think Chad one of the things that I, probably learned and I've been reminded of by our customers. As you know we will they will take down deals and the deals will be kind of on their timing what their structure and so I continue to you don't feel really good about the deals were taking down and ultimately how they're going to play out from a.
Rev Rec standpoint, but we will give ourselves some room to work to make sure as we work our way through the second half for the year that they are great deals for the next three to five years not just a you know for the next couple of quarters.
Right so.
We're still committed to that kind of thoughtful profitable growth that has worked so well for us.
Got it and then maybe maybe last one for you David.
The service in subscription business did better than than anybody expected, but service I think at least in terms of how I was looking at it did did a fair amount better and it appears at least for the guide for the March quarter that you know this kind of 10 million plus run rate on the professional services side is going to can.
When you.
Is this a run rate that continues throughout the year can you can you give us any color for the back half for that line item.
The great question.
I think for if you look at the full year guidance.
The pace at which we operated in Q1, and what I projected for Q2, I'm kind of holding a constant at that level.
As you know from tracking of so Welsh Chad you know, we're very committed to tightening up with a template sized implementations and phasing in more partners and so we kind of continue to factor that in.
Equally we're we're very focused on customer success. So we have to step up a little bit we will but you know that playbook again that has helped us so well over the last 18 months, we're going to continue to to use it.
And maybe one quick.
So it's kind of stay at the current volume and then we'll update you if we end up having to step up and play slightly larger role.
Perfect then maybe a quick last one for Jason Jason from a go to market or kind of sales capacity standpoint.
How do you feel in terms of where are you at where you're at here.
In the new year again, you know I think your SaaS businesses.
At least under the Hood, and maybe even showing up in the revenue number accelerating quite nicely you comfortable that you have what you you need right now or or do we need to.
And they expand the capacity a little bit more aggressively throughout the year. Thanks.
Yes, thanks for that Chad. So you know as you know.
We did a lot of work on our sales team over last the course of the last year and as we come into this fiscal I'm very happy with how Chris Lion and the team are progressing.
We entered this year 2020, with a very strong leadership team and probably the cleanest pipeline that we've had in our company history.
And then you know we continue to fine tune the Hunter farmer model that we've talked about over the last year year and a half I think our conviction.
Based on the different selling motions for us our conviction as that is absolutely the right way.
To handle our go to market and we continue to invest opportunistically in sales capacity with an eye towards 2021, and 2022 and the nice thing about our customer base in our prospect base is there really focused in three areas, California. The mid mid part of the U.S. and the northeast.
And so we've been opportunistically feathering in sales capacity in those areas, where we see we have warm territories and opportunity.
Great Nice work Thats.
Thanks, Jeff Thanks, so much.
Our next question from Jackson Ader.
Hey, P. Morgan. Please proceed with your question.
Great. Thanks, Thanks for taking my questions guys.
First one is for you Jason the those those cloud.
Penetration or cloud adoption metrics right. The 70% of your customers are using a cloud product and the 2.4 being the average number.
Which of those metrics do you think will you pick up more significantly here in the next 12 to 24 months and then do you have a preference for which of those really moves up.
Yes, I mean, I think the cloud penetration as a percent of our total customer base is probably going to move quicker for two reasons. One as we've talked about new logos are picking up momentum and we're only selling cloud products today, we don't sell any on premise offerings anymore and then.
And as also talked about the momentum in the customer base.
For customers, who are converting from on premise to cloud is also picking up so I think that percent penetration kind of has a double whammy from new logos and customer base and then I think the the penetration in terms of total portfolio of products in each customer.
Drops nicely behind that.
Okay and that makes a lot of sun.
The follow up for you David.
The.
The SaaS transition that that was announced in the quarter not to go like that the new agreement yet is that a ramp deal.
Our ramp deal structure still kind of the preferred contract here.
They are in this one to this one dose of around the the customer does have to deprecate, a an on premise investment and as part of their shift.
Okay, and then a real quick follow up then under and just remind us under six of six.
Do you have to straight line, even these ramp deal structures, where are you able to actually get somebody growth in the ramp deal.
Hi.
Yes, that's a great question under under six so six this particular transaction will be smooth given the nature of how the customer wanted to deploy.
Other transactions will will tend to start smaller and they will get bigger so we were pretty closer with the customer to figure out what they want and ultimately that dictates. The the final deal in the revenue accounting.
Okay, Alright awesome. Thank you.
Thanks Jackson Thank you.
Our next question is from Pat Walravens.
JMP Securities. Please.
Please proceed with your question.
Hi, guys as Joe on for Pat. Thanks, So much to your question just on on the SaaS transition the times, obviously improved as well as the.
Cost efficiency, there how should we think about this going forward.
A lot of room for improvement there and any color on that.
Yes in terms of.
Of the efficiencies you know, there's probably another 10 or 20% that we can ring out.
In terms of of time and cost, but I don't know that its a.
Material amount.
At this point beyond that that range.
I'm I'm actually very happy with the progress we've made over the first.
Dozen or so that we work done.
Got it. Thank you then just a quick follow up.
Can you provide us any update or commentary around the potential regulatory.
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Yes so.
In that question I assume you're referring to the elections and the.
The cost of health care, that's been such an important part of both parties.
Platform. So what I would say is like most Americans were watching this very closely and I think for me the importance and the discussion around this in the term in terms of the election has been very positive because it really shows how strategic our products are and how important this spaces.
And it's also a great reminder, for us and our customers how important it is for them to stay current.
Which is where we would implement any regulatory changes that are.
Acquired as a result legislation in Washington.
You know I did so beyond that I think where we certainly have you know another nine months or so.
Where we're going to have to figure out what happens with the election and then.
Depending on who wins that may or may not bring regulatory change, but what I've I've told everyone who's trying to develop a strong bowler bear thesis on this topic.
We got a ways to go to get to the election, and then there would be.
Further multiple here's to to drive any meaningful change through the legislature. So yes, I think again in the short term. This is a good thing for us because it heightens the importance of how strategic are.
Our products are but ultimately the system in Washington is designed to work slowly.
Great. Thanks, so much.
Our next question is from Brian Peterson Raymond James.
Please proceed with your question.
Hi, gentlemen, congrats on the strong quarter. So we've had a few high profile migrations on the fast side. It seems like the sales cycles. There have really improved we're supposed to you at the helm just all high level are you expecting sales cycles for these transitions.
Shortened going forward or their proof points related to implementations, where customer references that you think some of that customers will need to see.
I think the body of evidence that customers need to see we now have that and if you think think back to March of last year. We we didnt have any large go lives and we've now talked about multiple large go lives on global companies, we have a number of projects in flight and so I think the proof points.
Around can model in handle large global customers the roadmap on how to go from on premise to the cloud.
We've really made a lot of of headway there and I do view that is something that's going to accelerate sales cycles and decision making over the next few years and certainly in my my discussions with our largest 20 customers all of them view moving their model end products to the cloud as an inevitability and.
And I I still continue to see it as being an important tailwind for us over the next couple of years.
Got it it may be one for David just just a follow up I know you we had the guidance for fiscal year 20, but as I think about the philosophy in terms of investing in growth in into potential leverage of a vertical software model Directionally, how should we think about margin leverage versus investing in growth kind of beyond the fiscal year 2000.
Thanks, guys.
Oh, Thanks for your question.
I think the the way we were thinking about it and I guess, though the way we've approached it consistently as we still feel like our target model is the right framework to have in mind.
I think as Jason highlighted earlier I think one of the benefits of the vertical model is the density of the sales quarters that we have between the northeast the west coast and even in the Heartland as you kind of work from Chicago, All the way through Minneapolis, and those are the areas, where we will continue to get scale and so we'll have we'll continue to add resources in a thoughtful way, but you know the great part about this is these.
Resources become very very productive in very accretive to the company. So we'll continue to operate within the bounds of the target model and a continued to continue to kind of cultivate the plan.
Good here Thanks, David.
Hey, thanks, so much thanks Frank.
Our next question is from gene Mannheimer Tower D and company.
Please proceed with your question.
Thanks, guys congrats on all the progress as well.
Just two questions from me your gross margin was exceptional this quarter.
And you talked about the revenue over attain then the large go lives I'm. Just wondering it was there anything else that may have been one time this quarter because the your guidance implies that.
The remaining quarters won't be as strong from a from a margin perspective and I recognize also the seasonality you called out in the second quarter. Thanks.
Oh, Thanks gene well I think going into the year, we felt like if you thought about gross margin last year at about 58, we thought it would be up about two points.
Obviously this quarter a you know it at 61, it was a little bit better I think we will will continue to operate the business sufficiently.
I think as I highlighted in the in the previous call. We did have some customers from older infrastructure that we'd be moving over to the modern modern infrastructure and so some of that headwind will hit us a little bit later in the year, but right now I think we're actually operating pretty close to the plan you know called the you know up a little bit.
Gotcha. Thank you thanks, Dave.
And with respect to the sales organization, Jason I appreciate the color you offered before.
About how you're hiring opportunistically there, we know that a year ago. In Q1, you stepped up your hiring of reps focused on net new business and that appears to be paying off very well and I'm just wondering how you're hiring.
This year compares to.
Last year's adds as it is it moderated or about the same level. Thank you.
It's about the same and I would also say it's been fairly evenly distributed.
Between life Sciences, and high Tech and then further evenly distributed between.
New logo acquisition and customer sales and customer success.
All of those different growth levers, we have our meaningful and I think we've done a really nice job of thoughtfully feathering in capacity to take advantage of each one of those opportunities, but it has been across the board.
Great. Thank you.
Thanks, Jim.
We have reached the end of the question answer session and I will now turn the call back over to David BARDA for closing remarks.
Thank you so much we really appreciate everyone joining today's call and we look forward to seeing everyone at upcoming conferences.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.