Q2 2020 Earnings Call
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Ladies and gentlemen, thank you for saying Goodbye and welcome to the second quarter 2020, Aspen Technology earnings Conference call.
At this time all participant lines are not listen only mode. After the speakers presentation, there will be a question and answer session.
Question during the session you need to press Star then one of your telephone.
Please be advised of today's conference is being recorded if you apply any further assistance. Please press Star then zero I would now like the hand the conference over to your speaker today.
Paul Johnson Chief Financial Officer. Please go ahead.
Thank you.
Afternoon, everyone and thank you for joining us to review our second quarter fiscal 2020 result for the period ending December 31st 2019.
Carl Johnson CFO Baskin Tech with me on the call today is Antonio Pietri, President and CEO .
Before we begin I will make the safe Harbor statement. During the course of this call we may make projections or other forward looking statements about the financial performance of the company involve risks uncertainties.
Companies actual results may differ materially.
Projections statements.
Factors that might cause such differences include but are not limited to those discussed in today's call.
<unk> Form 10-Q for the second fiscal quarter of 2020, which is now on file with the FCC.
Also please note that the following information it's related to our current business conditions.
And our outlook as of today January 29 2020.
Consistent with our prior practice, we spread fleet disclaim any obligation to update this information.
The structure of today's call will be as follows.
And Tony will discuss business highlights from the second quarter, and then I'll review, our financial results and provide our guidance for fiscal year 2020.
With that let me turn the call over to Antonio Antonio.
Thanks Scott.
Thanks to everyone for joining us today.
That's been thick delivered solid second quarter results highlighted by double digit annual spend growth.
We believe our performance is further indication that customers recognize the significant value Aspentech solutions provide as a core part of their digitalization investments to achieve their long term operational and financial objectives.
We remain confident that we're on track to achieve our food your growth and profitability objectives.
I would like to be gave my remarks by looking at our financial highlights for the quarter.
For the second quarter.
Revenue was 100 on $24.7 million.
Yep U.P.S. was 56 cents, a non-GAAP EPS was 66 cents.
I know spend was $564 million up 3% sequentially and 10% year over year.
Free cash flow was $48.1 million.
And we've returned $50 million to shareholders by repurchasing approximately 400 on 18000 shares.
I would like to spend a few moments providing some context on the trend we're seeing in our core end markets.
Refiners remained a source of strength into quarter four aspentech as they continue to expand the adoption of our asset optimization solutions as part of their digitalization investment.
Operational excellence remains an imperative for refiners, particularly as they have experienced some margin compression in recent quarters.
Aspentech has demonstrated track record of delivering value across all aspects of their operations enabled refiners to run their assets safer greener longer faster.
As mentioned last quarter, the introduction of the new IMO 2020 requirements to reduce sulfur dioxide levels in bunker fuel for transportation shapes, which became effective January 1st it's a positive demand catalyst for certain refiners.
The need to meet increasingly stringent environmental regulations is a key priority for customers and an area, which has been thick and generate significant volume.
We believe refiners are still relatively early in their digitalization initiatives and will remain an important growth driver for aspentech for the foreseeable future.
Yes.
We had the strongest growth quarter with E N C cost immersed in over four years driven by improvements in Capex spending seen over the past couple of years and they continue and reduction in attrition from these vertical.
We have we have seen preliminary evidence that the level of capex spend in the upstream sector in calendar 2020 would be flat or in the low single digits. However.
We remain confident that we will have a stronger growth D or with the n. sees that in fiscal year 29 team supported by the nearing the end up their renewal cycle of our contracts and they continue to strength from incremental capex spend on LNG projects.
At least cost of recent there one is called the uncertainty caused by the global trade conflict and deceleration of global growth in calendar 2019, that's increasingly affected business conditions for many of our chemical customers.
Despite these factors were encouraged by the solid growth in I know spend achieved in this vertical.
We expect announcement of the phase one trade agreement between the U.S. in China, and a better economic outlook in calendar 2020 will improve the macro environment for these customers.
Throughout the quarter I spoke with a number of chemical executives and they continue to view investments in disease digitalization.
That's one of their most important long term priorities.
Turning to weigh P M.
At the midpoint of the here. He has contributed zero point 64.2, our year to date annual spend growth.
Well they P.M. growth has always been expected to be back end loaded in fiscal year 20 were somewhat behind where we expected to be at the midpoint of the you.
During the second quarter, we had several transactions we expected to close in the quarter the pushed out to the second half of the fiscal year.
We remain confident in our ability to the LIBOR approximately three point of I know spend growth from our ATM business in fiscal 2020.
Our confidence is driven by the following factors, we expect to happen in the second half of the fiscal year.
First transactions that have slipped from the second quarter will close second increasing maturation of our ATM pipeline. That's more proof of concepts are concluded resulting in customers coming to buying decisions third enterprise or multi site size transactions that are larger than our average transaction our targeted.
For closure.
I'm fourth I'm, drawing G.I. business for a P.M. with a number of transactions targeted to close.
These factors.
Signing an enterprise or multi site opportunities will be the biggest driver of our second half performance and our ability to achieve our food you're a P.M. growth target.
We have a number of these opportunities in our pipeline and our forecast for fiscal 2020, that's always anticipated closing some of these transactions throughout the year.
Overall.
We're pleased with our business performance to the first couple of the year.
Our ability to deliver double digit growth in the quarter with heightened uncertainty and one of our core verticals is an important validation of the value I spent the leavers for customers and their mission critical nature of our solution.
I would now like to share a few examples of contracts, we close in the quarter.
First.
A European oil and chemicals company and long term user of our engineering on Missy suites selected Aspentechs supply chain management solution to be deployed across its chemical last it's an integrated with our existing planning solution in its refining business.
As part of its digital program. These customers chemicals business was looking for a global solution to maximize its business margin, what providing high customer service levels.
Aspentech solution was selected over that of three older established supply chain management software providers in the market.
Second.
One of our largest you don't see customers headquarter in Europe has committed to take our Aspen infill product to market with the objective of building a high margin revenue stream you need to operation a maintenance drew targeting the bromfield last it to of its customers.
This commitment to Aspen dental expansive relationship with this customer into a partnership where the customer will promote the use of the mtwo capabilities to our common customers and older and we'll pick on the implementation of supported the product once you still.
Third.
North America base chemicals customer selected our soon to be released latest generation blending and scaling. This solution. After a detailed evaluation of the capabilities of this new product and one of our competitors.
This customer plans to replace an in house developed excel based planning solution.
The Aspentech sales team identified predicted benefits in excess of $70 million at the customers three U.S. sites when the technology is fully rolled out.
Fourth.
Our U.S. base oil and gas upstream company selected I've been until after a detailed sole source evaluation of the product for deployment at two offshore oil production platforms in the U.S. and southeast Asia as part of an initial phase one deployment.
The customer is focused on increasing the productivity of their existing assets by generating more value from existing data.
This is one afford digital initiatives in place by the cost him.
And fifth and final.
North American based clinical producer formed a digital group in 2019 to evaluate the use of in house and new technologies throughout the business to increase value creation.
The digital group identified in excess of $100 million in value creation opportunities into operation space.
After a careful evaluation of internal capabilities and they ask them prime be proud of the customer decided to select aspen prime be for rollout across multiple sides due to superior analytical capabilities and its ease of use especially for online applications.
I do capture from other Aspentech Prada has already been identified I'm will become part of the digital group initiatives.
As we look to the second half of the year, we're confident about our I bought a stronger growth performance and continue to maintain our food your I know spend guidance.
Our confidence is driven by the volume and quality of the type of business into Q3 Q4 quarters.
The expectation of a more favorable environment for chemical customers.
I've continued improvement in the growth of the you'll see business as we get closer to the end of the contract renewal cycle. It continuation of the strength of our refining business and increasing contribution to growth by the G.I. verticals because of the applicability of they P.M. suites in that space.
We also expect attrition contract within that 3.52% to 4.5% range, we guided to at the beginning of the fiscal year.
From a product perspective.
We continued to make good progress on our investments in artificial intelligence and data driven applications.
Specifically, we're making good progress integrating the new boat technology stack into the architecture or future solutions to leverage cloud an edge computing capabilities.
For the enterprise deployment.
We believe there is a significant opportunity to bring to market a new generation of solutions that can substantially increase the value creation across customers assets, representing new value creation opportunities for us been thick.
We continue to make progress in department or say area with meaningful new and existing relationships coming together.
This includes the integration work happening between Hexagons ppm solutions, and Aspentech solutions with significant customer interest in involvement in the process.
We're also engage informal joint go to market activities with a global consulting firm actively promoting our Aspen infill and that's been GTAT products to the sea level suite of our customers a more recently, we signed a relationship agreement with one of the global implementation services firms to waxes its vast network of implement.
They should resources for our products and solutions.
We continue to successfully balance investing in our product portfolio as well as our sales capacity, while maintaining our strong levels of profitability.
The Regal with which we have already investment opportunities and our willingness to reallocate actually seen investment dollars before coming to an incremental capital to new projects allows us to effectively the LIBOR both the strong gross margins.
Carl will provide more detail in a few minutes, but we're increasing our free cash flow guidance for fiscal 2020 to reflect lower than expected tax payments.
Before I wrap up.
I want to provide an update on our senior management team on board of directors.
I'm excited to announce that John Hey, who has been leading our ATM business unit. That's we promoted to executive Vice President of operations. In this role John is responsible for the global tilt customer success product marketing and partners are gonna sessions as well as continuing to lead our ATM business unit.
John has been a valued member of the I spent the team for more than 25 years in a variety of leadership positions, including head up North America, and Latin American sales and ahead of our operations in the Middle Eastern North Africa based in Bahrain for five years.
We also recently I didnt exciting edge computing and I hope he domain expertise with the appointment of Dr.. Tom brought age two Aspentechs Board of directors currently he's a vice President Hewlett Packard Fellow and global head of age on iOS, The Labs and center of excellence for Hewlett Packard Enterprise I was watching.
Mental in establishing H.B. I would pick up abilities.
I'm happy to welcome Tom to Aspentech and believe it will complement and enhance the strategic value of our board of directors.
Finally earlier today, we published our 2020, environmental social and governance report I look at Aspentechs continued commitment to deliver an exceptional value to all our stakeholders you can download the report from our website at Www Dot Aspentech dotcom.
To wrap up.
I spent take the LIBOR solid second quarter, we sold we believe we're well positioned to achieve our full year I know spend growth and profitability out of.
Were successfully executing against any boldly macro environment and have continued to generate double digit annual spend growth.
We believe we're in the early stage. This was a significant investment cycle around digital efficient technology, using our core markets and geographies. We're confident that aspentech is well positioned to benefit from these strengthen our focus on executing on the growth opportunities ahead of us.
With that let me turn the call overcapacity Carl.
Thanks, John here.
I will now review our financial results from second quarter fiscal 2020.
As a reminder, these results are being reported on a topic fix so sick, which has a material impact on both the timing and method of our revenue recognition for our term license contracts.
Our license revenue is heavily impacted by the timing of booking and more specifically renewal bookings.
The decrease or increasing bookings between fiscal period, resulting from a change in the amount of term license contracts up for renewal is not an indicator of the health a growth of our business.
Let me renewals is not linear between quarters for fiscal year, and this nonlinearity well have a significant impact on the timing of our revenue.
As a result, we believe our income statement will provide an inconsistent view into our financial performance, especially when comparing between fiscal periods.
In our view annual spend will continue to be the most important metric in assessing the growth of our business and annual free cash flow. The most important metric for assessing the overall value our business generates.
Annual spend which represents the accumulated value of all the current invoices for a term license agreements at the end of each period was approximately $564 million at the end of the second quarter.
Represented an increase of approximately 10% on a year over year basis, and 3% sequentially.
Total bookings, which we define as the total value of customer term license contracts signed in the current period less the value of term license contracts signed in the current period, but where the initial licenses are not yet team delivered under topic so sick.
That's a term license contracts signed in a previous period for which the initial licenses are deemed delivered in the current period was $112.3 million, a 27% decrease year over year.
The year over year decrease in bookings reflect a decrease in the amount of term license contracts up for renewal as compared to the year ago period.
Total revenue was $124.7 million for the second quarter, and 11% decline and the pier prior year period.
Every year decrease in revenue was the result of the decrease in total bookings discussed previously.
Turning to profitability beginning on a GAAP basis.
Operating expenses for the quarter were $67.5 million, which was up from $61.9 million in a year ago period.
Total expenses, including cost of revenue.
$83.1 million, which was up from $76.7 million in a year ago period and down from $86.8 million last quarter.
Year over year expense increase reflects the impact of the organic investments, we've been making in the business as well as the impact of the new boat and so these two acquisitions.
Operating income was $41.7 million and net income for the quarter was $38.3 million or 56 cents per share.
Turning to non-GAAP results.
Excluding the impact of stock based compensation expense amortization of intangibles associated with acquisitions and acquisition related fees.
<unk>, we reported non-GAAP operating income of $50.9 million, representing a 40.8% non-GAAP operating margin compared to non-GAAP operating income in margin of $71.2 million and 50.7% percent respectively.
A year ago period.
As a reminder, Martin's will fluctuate period to period due to the timing of customer renewals and therefore license revenue recognized during the quarter.
non-GAAP net income was $45.5 million or 66 cents per share based on 68.8 million shares outstanding.
Turning to cash flow, we generated $46.9 million of cash from operations and $48.1 million a free cash flow after taking into consideration the net impact of capital expenditures capitalized software and acquisition related payments.
A reconciliation of GAAP to non-GAAP results is provided in the tables within our press release, which is also available on our website.
I would now like to close with guidance. Please note that we are reiterating our guidance for all metrics, except for net income free cash flow GAAP bps and non-GAAP bps.
All that we only provide guidance on annual basis to provide directional commentary on the timing of annual spend in bookings during the year.
Oh guidance for our income statement metrics can be found in our earnings press release.
With respect to annual spend as Antonio mentioned, we continue to forecast, 10% to 12% annual spend growth fiscal 2020.
That 7% to 9% is expected to come from our engineering and M. A C suite and approximately 3% from eight yeah.
We continue to expect bookings to be in the range of 600 $650 million, which includes $317 million of contracts that are up for renewal in fiscal 2020.
As a reminder, under Tropic fix so six our license revenue recognition is tied to when we recognize the booking.
As such our license revenue in the arity, well generally tracking to the booking linear narrative.
From an expense perspective, we continue to expect total GAAP expenses of 369 million to $374 million and non-GAAP expenses of $303 million to $308 million.
From a free cash flow perspective, we're updating our free cash flow guidance to $260 million to $270 million.
Compared to a prior outlook of 250 $260 million.
Our updated free cash flow guidance reflects lower anticipated cash tax payments of $45 million to $50 million as compared to our prior view, a $55 million to $60 million.
The lower cash tax payments are a function of a change in when we are required to make cash tax payments related to the implementation of topics on sex.
Originally we were required to pay the cash taxes associated with the adoption of topics fix so sick in fiscal year 2019 in fiscal year 2020.
New guidance was it was issued by the Iraq in the second quarter fiscal year 2020. It allows for cash tax payments associated with our adoption of topic fix insects.
We paid equally in fiscal years 2019 through 2022.
From a timing perspective, we anticipate free cash flow in fiscal year 2020 to follow a season seasonal pattern similar to fiscal year 2019.
We're updating our GAAP and non-GAAP EPS guidance to reflect the impact of an increase to our estimated full year tax rate, which we now expect to be approximately 19% as well as the impact of the shares repurchased in the second quarter.
We expect GAAP net income per share to be in the range of $2.68 to $3.09 and non-GAAP net income per share to be in the range of $3.43 to $3.84.
In summary, we delivered solid second quarter results. We believe we are on track to achieve our full year financial targets and we are well positioned to continue delivering an attractive combination of growth and profitability. They can generate sustained value for shareholders overtime.
With that we would now like to began to QNX.
Operator.
Thank you as a reminder to ask a question you need to press Star then one of your telephone to withdraw your question. Please press the pound Keith please standby, while we compile the culinary roster.
Our first question comes from the line of Rob Oliver with Baird. Your line is now open.
Hi, Rob Great Great Hey, good evening gentlemen, thank you very much for taking my question. So I had one and one follow up Antonio I'll start with you. So just on the commentary around transactions in a P.M. that were pushed out into the second half I know you you stated that you guys remain confident that.
They can add that.
Three points of annual spend.
You mentioned the comp and it's running large enterprises and.
Just wanted to kind of double down on that point, a little bit you know it's been over years. Since you guys have made that shift from one off equipment licenses to site licenses and I'm. Just wondering what gives you the confidence that that would start to kick in in the second half one it hasn't.
Kick in really to date, and then I just had a follow up thanks.
Yeah, well I mean, Rob just as a reminder in.
Q3 of the point 19, we close to a large enterprise deal with that would they be and.
That customer at lead the proof of concept on extend the proof of concept on when the straight into a full enterprise steel.
So in a way has no follow the pattern that we're seeing with all of our cost of messaging.
By the licenses for one or two sides and eventually.
After a year or two they start thinking about increasing two more sites or an enterprise deal.
If you look at the trajectory of the ATM business is doing a heavier sold now says we formally launched it in July of 2000.
18, and and the fact is that now these these customers that are ready to.
Hey, expand the scope of the deployment of US financial are now look in a multi side or enterprise styles type deals. So so so the expectation is that.
We would ill see if we had him in the five love we've been working them and we know there in Q3 Q4.
One of the deals that pushed out from Q2.
Was a customer that was expand into more side from from on the originally two sites. So so choice I think I think as time has passed a now the opportunity exist to start closing some of these deals.
Great. Thanks, Antonio then called just a quick one for you just on the annual spend guide I know.
You guys.
I've said, you you mentioned last quarter as well that said it would be.
More backend loaded so till you guys have been clear on that.
Having said that you look at the last couple of years and you guys did see some sequential improvement in Q2. So just wondering is you know if you look at in the context of.
Refineries being strong you'd see strongest quarter four years cabins solid is it fair to say that P. M is is the delta there on Hawaii and you'll spend is kind of flat sequentially. Thank you guys very much.
Yeah, I think Rob that that's a big piece of it but again the here is playing out very much like we thought it would where it's going to be a little bit have you will heavily weighted toward the back half Pmiers and Tony you mentioned, a little bit behind what we wanted it to be disappointed the year upset the piece of it but I'd say the engineering and the M. A C b.
Businesses were strong and came in generally in line with what we thought they would.
Thanks, guys.
Thank you.
Thank you. Our next question comes on the line of Steve Koenig with Wedbush. Your line is now open.
Hi, guys. Thanks for taking my question.
Maybe one so I wasn't one follow up.
On the left deals those were so for those were primarily or all pretty much Stacy Adams.
What what.
Any color on what verticals they were and any commonality you why they were slipping and and any cancellations.
Well I mean look probably at some point of Ah the slipping a pattern I think it's consistent with.
What we've seen in the past on we've talked about it.
These were larger deals as they were coming to final approvals.
More questions Oh came off.
From the tickets, we shifted a lot officers and therefore, a greater inspection of those deals.
Verticals.
Primarily upstream a were we are getting traction.
Now with a P M.
Some of it in chemicals as well.
Okay.
Got it okay. Thanks, Carl and then Antonio just Ah.
Tony I'm sorry, Thank you for that Karl and then just.
Were you win when I'd car, south resolved and when you're looking at the results in the quarter.
Where where you where did bookings come in with your expectations.
And what what drove any variation in bookings relative to what you expected was that mostly ATM as well.
So I think bookings, we said about 40% to 45% would come in in the first half of the year and were right around 40%. If you would it take the I'm kind of the midpoint of our guidance for bookings so right about where we thought but with the you know kind of annual spend being a little bit behind where we thought it would be it's really the grow.
Bookings the renewals came in pretty much like we thought they were a would come in so that that that came in pretty much in line. It was more along the lines of some of the growth.
They are talking mentioned slipping into the second half of the year.
Got it okay I'll stop there thanks for your answers guys.
Thank you.
Thank you. My next question comes on the line of Matt Pfau with William Blair. Your line is now open.
Hi, Matt.
Yes, thanks for taking my questions.
Wanted to ask on the on the chemicals business.
And have you already started to see some improvements there or is this something you're expecting to see over over the coming months.
Well, let me look.
The fact is that despite our concerns with with the sort of the deteriorating microenvironment for chemical cost summers in the second half of last year, especially in the Q4 quarter.
We had a solid.
Quarter for four or chemicals a business.
And our expectation on expectation of our customers as we've talked to them is a especially with the with the uncertainty around trade diminishing.
And then improve in sort of a global economic growth outlook.
They will start seeing better demand and the fact is that.
If you look at the announcement the their earnings announcement from Dow chemicals. They all the days they talked in that announcement already about seeing better than mine in the January .
Month.
But as you listen to disease. The earnings results certainly score for the last quarter on the full year that have reported that they had very poor results well. There now is starting to see improvement in demand floor for their products. So so I think this will happen over time here as the year program.
This is a but he's done a sufficient.
Okay got it and and then wanted to ask her an update on the partnership so over the past year, you announced quite a few new partnerships hexagon and nothing you can see customer and sort of global aside this this quarter.
What percentage of your business now is driven by partners and where do you think that could go over time.
Well, let me look at the partnership.
We announced Iranian sees a they get reflected on on on that business relationship that we have with that customer a they buy a P M.
Entitlement to waxes that products to deploy them us as some of these products are are getting sold on and then they have to be deployed they aspect of that those relationships with the US yes. It is that role in yes, promoting this technology, but more importantly, the implementation because they want to be able to rollout these technologies.
Some of these new relationships that are that are more recent with with a global consulting firm on on the global implementation services from it's only the last six months with the former though we've been going to mark it on.
With the implementation from it really in the last couple of months only so it was cool. So hopefully we'll start seeing the impact of those over the next six to 12 months.
<unk>, that's all I had things like that.
<unk>.
Hi next question I'm from the line of Jackson <unk>.
Morgan.
Oh, great. Thanks, Hey, good evening.
First question is on beat the larger A.P.M. deals do they actually attract more competition. Since there are higher dollar value or is it. The fact that they're larger deals more products, maybe multi site does that already winnowed down the number of competitors thinking even show up a bit.
Yeah, well I mean look the fact is that those and multi side oriented <unk> all of a selection of technologies that <unk> has already happened six months 12 months 18 months ago, we've been working with the cost them or to provide the technology and then the the customer is working with us and.
<unk> said about sole source negotiation, we normally don't see don't see competition and those type of deals.
Again, because she is new technology is GNU compatibility is getting the floating to areas, where these customers would have to change their business processes are practices and sawn it requires greater preparation forth by these customers to absorb the technology.
But they they type of deal to themselves a attract more attention as a result of being you expanding new technology and and we discuss the silver to allow us to 12 months. It is up and I'm in now that we continue to see.
Okay that makes sense and then Mike follow up really is you.
You know was was there any impact at all from kind of that.
<unk> disruption or unrest that we saw it the the very beginning <unk> in the Middle East did you see any impact there.
Yeah.
No I don't think so <unk> in the middle East performed well in a in the last quarter and.
And you know we have sorted out look for a this quarter as well.
Alright.
Thank you.
Yeah.
<unk>.
My next question comes on the line of chasing.
With key bank.
Yeah, I think hey, guys. Thanks for taking my question Hi, as we kind of think about global cap X. Karate mentioned again flat <unk> single digits, Yeah, that's pretty consistent Oh, we've been hearing over the last year, but you also again saw another strong in C. corridor can you just kinda reconcile the strength.
You're saying.
Yeah, Yeah, well I mean look I think certainly.
I think the last couple of years.
Half expanding upset me instead of me single digits or at least you're lucky might be glad to go single digits.
So there's a benefit from that.
Certainly there <unk> with R.E.N.C.S. is is coming down as to what complete into every new all of all those contract on board nearing the end of the renewal cycle.
And and then I believe me and these are benefiting from.
Increase in type expand to field LNG facilities, not only the in the United States put up on the World then you suspected.
You know between 20 920 25 there'll be another 200 billion dollar thing Cup, expanding l. and G. see that's flowing through the E.N.C. companies at the moment.
Okay, Great and then one kind of clarifying question for Carl No. Two Q. AAPEX was a little bit lighter then I think one I'd expected you know specifically on the sales and marketing side. You know is it just a matter of specific timing of investments are hiring.
Yeah, no. It was it's a little bit of seasonality in sales and marketing <unk>. We have our sales kick off meeting you typically see that drop off a little bit and then a little bit of.
Thing of our marketing events.
Okay, great. Thank you.
Okay. Good.
[noise]. Thank you.
The next question I'm found the line of <unk> <unk> <unk> <unk>, yeah minus now.
Andrew Thanks, Hi, Thanks for taking my question, maybe first can you maybe talk about your pricing model on eight P.M.
Are generally in your products I mean, given that you're saving customers. So much money I was just wondering you see any potential price electricity in your products going forward.
Oh Boy, let me look I I do think there's a stupid in our pricing, we certainly create a lot of I live for our customers and and you figure that for that value there'd be a greater upside well. The fact is that there's some position in the market and and that sort of tends to create.
Sort of optimum pricing for for our product.
You know us as we stated in the past, we we do see ourselves as sort of the the the premium prize software supplier to to in this market.
It's something that we continuously money starts to make sure the where aligned with our customers on and.
The market.
Okay P.M. their pricing for I.P.M.
We've learned a lot over two years now two and a half years. We believe we we have the right pricing for for our products, especially if he's W.W. They create both we are also monitoring some of those compared to those that we've seen the space because in a way where there's learning that is happening.
There's new compared to those that show off older that we're incumbents and and and so so so we we we were very much aware oh that pricing that is what happened in the market on we were satisfied with with where we are with our price.
Got it and just one last question I have to fill up your previous one I I just curious in terms of that cute you push out on D.A.P.M.
I'm sorry, <unk> did you say this was did what some kind of inspection being done by the sea Sweet and that's why the timing was pushed out.
Yeah, and <unk> in the past what we've said is that because these deals <unk> generally. These these these new technology into a new area. So disgusted <unk> instead of the maintenance area, where there are buying technology of these stocks well the first time so it's.
Just like in all of these new spend and and and the size of these needles tends to be such that then they they could be civility or they see sweet I'm. What we found in the past any we sewing could do I suppose there's more questions that come about out of the C. Suede, we've tried to address that in the past, but certainly moving.
Engagement and making sure we have a sponsorship of the C. Sweet note always possible.
So so we ended up again in a situation where there were a few more questions being asked a a these deals got to the final approval. So you just we're working to with a customer to provide the information that they need.
Great. Thank you I'm Tania.
Yeah. Thank you.
Thank you on next question I'm from them line of Mark shopping with benchmark.
Okay.
I'm Mark.
Hi, Hi, Thanks for picking my question Antonio just building on earlier question on any P.M. in the past you've talked about a a fair amount of noise.
<unk>, especially around questionable competitors and I was wondering if any of those.
Kind of noises are contributed to the longer though cycles.
No not really like I said already these were before transactions that we were in discussions with a customer on a sole source basis, we'd been discussed them as I've already being I'm in one of them has already been using our technology for a over a year.
The other one is certainly a a new customer about we've we've already being passed the the process with a competition.
We we were in the middle of negotiating on find a lesson bill sealed for signature.
<unk>. Thank you and then <unk>.
You know the little the noise around it P.M. is kind of our credit or two doctors quarter and that you. Don is it was supposed to be important important go driver for the business was one if you just give a little bit of an update on whether you're still see how much performing for you.
No no lived there's high aspirations for a g. dog, we signed our first.
G Dodd license agreement with chemicals customer in North America, we we do not have Ah chemicals references for the technology.
Rudy anywhere and and and in North America, we found that surf license.
We expect a cute three on coupons to have a large a sample of g. those transactions getting sign.
Mm.
Great. Thank you.
Thank you.
Thank you.
I have a follow up questions on the line of Jackson.
J.P. Morgan.
Thanks.
Yeah, just a quick on the jumped back in the customer turn partner on M.L. no. It isn't it or do you plan on doing more of this I mean is this a one off it just I don't want it sounds like a completely different type of channel for you guys. Just curious what how you looked at it.
Yeah, no as a matter of fact that this is just check and type of these customers that have to turn a par nervously if you will.
The the first one was a a north America based E.M.C. company also one of the largest ones in the world.
This is the second one European based on one of the largest fiancee companies.
Our expectation is we will be signing a few more of those in the future yes.
Okay interesting. Thank you.
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Thank you discusses today's question and answer session I went down like this on the call back Tony Antonio Pantry are closing remarks.
Okay, well. Thank you everyone for a junior that called today, and that's always cars and I look forward to me did you when we go visit the the different cities. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating.
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