Q4 2019 Earnings Call
Greetings welcome.
Welcome to all tricks is fourth quarter and full year 2019 financial results.
This time, all participants are in listen only mode.
A question answer session will follow the fall presentation.
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Please note this conference is being recorded.
I will turn the conference over to Chris Loughlin Investor Relations. Please go ahead.
Thank you operator good afternoon. Thank you for joining us today to review all tricks is fourth quarter and full year 2019 financial result.
With me on the call today are deemed Stoker, chairman and Chief Executive Officer.
And Kevin Rubin, Chief Financial Officer.
During this call we may make statements related to our business that are forward looking statements under federal Securities laws.
These statements are not guarantees of future for poor performance, but rather are subject to a variety of risk and uncertainty our actual results could differ materially from expectations reflected it any forward looking statements.
For a discussion of material risks and other important factors that could affect our actual results. Please refer to our FTC filings available on the Fccs Edgar system and our best type.
As well as the risks and other important factors discussed in todays earnings release.
Additionally, non-GAAP financial measures will be discussed on this conference call. Please.
Please refer to the tables in our earnings release in the Investor section of our web site for a reconciliation of these measures to their most directly comparable GAAP financial measure.
With that I'd like to turn the call over to our Chief Executive Officer, Dean Stoker deep.
Thanks, Chris Albrecht delivered a strong finish to another year of a remarkable growth driven by both favorable market trends.
Excellent execution on today's call. It will give you an overview of these results and the key factors that drove them.
As well as provide additional color on major trends that we believe will benefit ultra and 2020 and beyond.
Kevin will then walk through our Q4 in 2019 financial performance and our outlook for the full year 2020.
We once again raised the bar is that many new records in 2019, we generated record Q4 revenue.
A couple hundred and 56, and a half million dollars up 75% year over year.
We booked approximately $290 million in total contract value.
81% year over year posted 33% operating margins and generated 21 million in positive operating cash flow.
Net expansion remains strong.
At 130%.
We added 474, net new customers, including 36 of the global 2000.
And now have approximately 6100 customers, including 36%.
Global 2000.
Some notable global 2000, Q Borderlands include Caesars Entertainment Canadian Pacific Railway.
Emerson Electric Halliburton, Komatsu and NASDAQ.
For the full year 2019, we saw revenue grow 65% year over year to $418 million and total contract value bookings growth of 70% to approximately $600 million.
Additionally, we added just under 1400, net new customers and posted positive operating margins of 18%.
Finally, we generated 34 million in positive cash flow from operations.
The strength in the quarter was driven by both strong global execution as well as continued favorable market trends.
Competing let alone winning in this data driven world requires global enterprises to either disrupt themselves or be disrupted by others.
Requires re imagining themselves where in data is valued as an asset and analytics as a problem.
This is not achieved by leveraging incumbent technologies and existing processes that meet them great in the first place and again not in argue you achieved by abdicating analytics to only the train statisticians working on edge cases, even with the best AI and ml capabilities.
It can only effectively be achieved by harnessing the networking effect of people data in technologies, which allow companies to build a culture of data science and analytics that drives value across all functional areas the organization.
We believe this is best achieved with a human centered platform that is code free encode friendly liberates thinking enables creativity and prosecutes analytics to address hundreds of use cases in every organization.
We believe that this next wave of digital transformation effort efforts by global organizations will help fuel our growth for years to come.
Last quarter, we discussed the convergence of analytic persona is that we believe represent a positive trend that favors all tricks.
We have long discuss the two main analytic persona, the 47 million citizen data scientist that live in the line of business with limited or no analytics training and the 2 million data scientists.
With deep quantitative and coating expertise.
The lines between these two categories continues to blur as a citizen data scientists are raising the bar in order to meet the business challenges of today by performing more sophisticated analyses and the data scientists are looking for more efficient ways built automated data pipelines to drive their models.
With our strong net expansion rate that Louis closer tie T. overtime. There was a third persona emerging is the data engineers typically doing a lot of data word for IP.
Overtime.
We see these three persona is morphing into a category of workers, who drive meaningful business change and unlock according to Pwc. His most recent global artificial intelligence study. The 15 trillion dollars of value currently locked up in the data throughout enterprises around the world.
With thoughtful leadership in large global organizations. We believe this convergence will continue to accelerate and benefit ultra rich for years to come.
We believe our platform as well suited to enable these antolik persona is to unlock tremendous business value.
As a reminder, you can discover the hundreds of use cases, where this value is discovered by visiting community Dot Ultra dot com.
You will find examples like British American tobacco, who expanded their footprint of all threats to include server last year and generated a 9 million dollar return in just one year by automating analytic processes.
We also believe there is another positive movement underway and that is the hyper focus and automated data pipelines smart algorithms and business processes.
These used to be discrete processes performed by multiple tools from multiple vendors with multiple people across multiple departments. We have long said that ultramax hasn't changed the analytic process, we simply unified the experience in one end to end easy to use platform.
As we entered the age of digital transformation to Dato the focus just from simply improving efficiency to improving outcomes.
Better outcomes happened when you combine the imagination and ingenuity of humans, the power of data and the speed of modern compute.
Everyday Ultramaxes amplifying human intelligence in enterprises around the world, which in turn is delivering better results for our customers.
For example, a large global bank established an ultra center of excellence as part of their digital transformation effort and as see any seeing meaningful ROI.
Each seat of designer saving 400 hours per worker each year, there optimizing millions of square feet of office space, enabling better cost controls and a and they are pushing forward with replacing expense of legacy analytic solutions enormous efficiency gains are being delivered at an overall lower cost.
Last quarter, we also discussed our expanding ecosystem. We are pleased to recognize pwc as our first global or lead partner and are committed and working closely with them to accelerate digital transformation across the global 2000.
Pwc will advise clients in establishing strategy and governance around their automation program building solutions on the ultra ex platform via hands on business focus training process assessment data design and a variety of other means.
By doing so pwc will help clients across industries gain an introduction to the practice of automation analytics and transformation.
And empower them to solve complex data processing challenges with the ultra ex platform.
We are excited about the strategic relationship with Pwc to accelerate digital transformation across the global 2000. The are uniquely equipped to health plans unleased. The full power of analytics data science and process automation with the ultra ex platform.
As a leading standalone end to end data science and analytics platform in the market today, we have it a unique value proposition for a variety of partners, including independent software vendors large systems integrators, and global advisory and analytic consultants.
Given the multiple avenues of growth available to us we plan to continue to invest in our platform and our go to market model in order to capitalize on the significant opportunity in front of US we have the right team and the right platform to continue to scale all tricks for many years to come.
And speaking of the rate team I'd like to thank the extended ultra community our customers our partners and all of our associates around the world for making 2019, a great success.
As we have long said analytics as a social experience that we are all better together.
With that let me turn the call over to Kevin to discuss our Q4 and full year 2019 financial performance and the outlook for 2020, Kevin.
Thank you deem as Dean mentioned at the beginning of the call Q4 was a strong finish to 2019.
Q4 revenue was $156.5 million, an increase of 75% year over year and net expansion remains strong at 130%.
Revenue upside in the fourth quarter was due to the following factors.
First we had another quarter of strong execution as previously mentioned, our Q4 bookings grew 81% year over year.
Second we closed a record number of large deals with a with an over 150% growth in deals over $1 billion and then over 80% increase in deals over 500000.
Third we did see a modest sequential increase in contract duration for the full year 2019, our average contract duration was exactly 2.0 years.
I'd like to once again remind investors of how our revenue is determined under HST six so six.
Revenue is determined based on the total amount of bookings in the period total contract value or TCB.
As a reminder, we typically enter into either one or three year agreements with our customers.
CB includes the full dollar value of multiyear agreements.
Of our TCV booked in the quarter, we recognize between 35 and 40% of that amount upfront.
The percentage recognized upfront is solely based on product mix.
Sales of our designer products skew toward the lower end of the range, while sales of server connect and promote skewed to the higher end.
Thus as we experienced more enterprise enterprise wide deployments that include servers connect and or promote our upfront percentage skews towards the higher end of the range.
We recognize revenue upon the later of contract signing or contracts start date.
As we've discussed on prior earnings calls this factor is important to keep in mind since we have a number of renewal contracts that expire on December 30, onest, but which renew on January onest.
This dynamic results in Q4, TCV bookings that will not translate into revenue until Q1 2020.
This impact was evident last year as well.
Finally revenue includes the recognition of the ratable portion of our bookings.
Q4 International revenue was $45.9 million up 84% year over year as we continue to benefit from the strong global demand for analytics.
Of our 719 global 2000 customers approximately half our non us based.
This validates our continued investment in our global go to market and support organization.
In Q4, we added 474 net new customers and now have 6087 total customers, including 719 or 36% of the global 2000.
No no notable customers that transacted with all three rigs during the fourth quarter included Chevron Corporation.
After all National Mortgage Association, Fannie Mae Salesforce Dot Com, Splunk, Inc., Ulta beauty and Xerox Corporation.
Before moving on I want to remind everyone that unless otherwise stated I will be discussing non-GAAP results. Please refer to our press release for a full reconciliation of GAAP to non-GAAP results.
Our Q4 gross margin was 93% consistent with Q4 2018.
Gross margin was positively impacted by our strong fourth quarter revenue performance.
Our Q4 operating expenses were $94.8 million compared to $56.7 million in the same period last year.
The year over year increase in operating expenses was primarily due to additional headcount and other investments in scaling our global operations.
Our Q4 operating income was $51 million or an operating margin of 33%.
Net income was $44.2 million or 64 cents per share based on 69 million non-GAAP fully diluted weighted average shares outstanding.
Our net income assumes a non-GAAP effective tax rate of 20%.
Briefly summarizing the results for the first for the full year revenue was $418 million, an increase of 65% year over year.
Gross margin for 2019 was 92% inline with 2018.
Operating expenses for the year were $309 million compared to $184 million in the same period last year.
Full year operating income was $75 million or an operating margin of 18%.
Net income was $65 million or 94 cents per share based on 68.7 million non-GAAP fully diluted weighted average shares outstanding.
Turning now to the GAAP balance sheet as of December 30, Onest, we had cash cash equivalents short term and long term investments of $975 million compared with $986 million as of the end of Q3 2019.
Cash as of December 30, Onest reflects the cash paid for the purchase of feature labs, which closed in October.
Finally, we ended the quarter with 1200 91 associates up from 1100 76 associates at the end of Q3, 2019, and 817 associates at the end of Q4 2018.
Our increase in head count is reflective of the pace of investments, we're making and ICSC and expect to continue to make to capture the meaningful opportunity we see globally.
Now turning to guidance.
As a reminder, please note that our guidance assumes the following.
The average duration of our subscription agreements will be two years consistence with the levels we saw in 2019.
Approximately 35% to 40% of our TCB booked in the quarter will be recognized upfront with the remainder recognized ratably over the life the contract.
Quarterly revenue seasonality will be consistent with what we experienced in 2019.
Capital expenditures of approximately $45 million, which includes the costs associated with the Buildout of our new headquarters and additional offices globally.
No material changes to the overall macroeconomic conditions.
For Q1, 2020, we expect GAAP revenue in the range of 105 million to $108 million representing year over year growth of approximately 38% to 42%.
We expect our non-GAAP operating loss to be in the range of 6 million to $9 million and non-GAAP net loss per share basic and diluted of seven to 11 cents.
This assumes $66 million non-GAAP weighted average shares outstanding basic and diluted.
For the full year 2020, we expect GAAP revenue in the range of 555 million to $565 million representing year over year growth of approximately 33% to 35%.
We expect our non-GAAP operating income to be in the range of 71 million to $81 million and non-GAAP net income per diluted share of 80 to 91 cents. This assumes 71.5 million non-GAAP fully diluted weighted average shares outstanding and an effective tax rate of 20%.
And with that we'll open up the call two questions operator.
Thank you.
At this time will be conducting a question and answer session.
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One moment, please so weve poll for questions.
Thank you our first question is from.
Brent Bracelin with Piper Sandler. Please proceed with your question.
Thank you and good afternoon, I'll start with Dean on at a follow up for Kevin Dede could you provide additional color on what's driving kind of broader ultra engagement at some of these larger global size I know you announced a strategic alliance with Pwc last week, but our checks all show pretty healthy engagement and essentially.
Deloitte.
So I guess the question here is why are you seeing these large global size engage more broadly what are the drivers and kind of why why now.
Well thanks for the question Brent I.
I think theres a couple of vectors that are occurring kind of simultaneously here first of all.
The quarter I think.
In the year were largely driven by just improve execution by the company.
We've been spending quite a bit of time in our top down selling motion and I think that's reflected.
In the strategic alliances that we've formed in the.
Execution and GE to case that we've established the second thing I think that's driving this is.
All the factors that are falling under the umbrella of what we've been referring to recently as digital transformation to Dato.
I think over the decade between 2010 to 2020.
There was a lot of money spent on digital transformation a lot of things Didnt go well most organizations did not see success or at least sustainable success.
And it's for a variety of reasons. Many organizations had sort of outward in approach was thinking naked digitally transform others before digitally transforming themselves.
A kind of a selling out of the human in the in the digital transformation effort.
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Probably an overreliance on on machines.
And I think thats completely changed we're seeing now an insight out approach, we're seeing the the requirements to upskill data workers, having the human.
In the mix, which means you've got to have a human centered platform available to them. We believe were that human centered platform and the the the emergence of Ceos are the proxies of Ceos that we've been talking about now for well over a year.
On these very calls and the these these folks in the organizations C.
And understand this networking effective people data technologies and processes in organizations and it turns out that.
The global analytic consulting firms in the big for all beginning to realize that digital transformation has to be inside out. So we're seeing these firms focus more on.
Automation lease we see them focusing more on the convergence between the persona is that matter in digital success.
Like.
The the convergence of the citizen data scientists the train statistician and this new profile of the data engineer that has always existed ratings sequel, mostly.
Closer to 80, and as we engage with with more companies in a net expansion model or net extent net expansion number of 130, we're starting to see the data engineers arrive more often we also have been talking about the other factor that is extraordinarily important that is.
The fact that that analytics as a social experience and thats at the heart of digital transformation. So.
Communities extraordinarily important and that's what's driving this ecosystem buildout is that we've executed and the time is now we're seeing did digital transformation to the auto arrive in.
Extraordinary fashion.
Helpful color there it sounds like.
One more time understanding what's happening there, but certainly interesting Kevin just for you here on RPL, we have the first year over year growth metric now that came in at over 80%, which is a little higher than fell quite a bit higher than I anticipated help us understand the puts and takes as you think about that really strong rps number versus duration.
Or other kind of factors that maybe are driving that above.
Call It true cut a ratable growth rate of the business.
Yes, Thanks Brent.
So a couple things.
I think if you look at the growth rate in our IPO. It was obviously very consistent with the growth rate in bookings you would expect those two to be somewhat similar.
As I mentioned in our prepared remarks, we did see a modest increase in duration in the quarter.
And I shared a similar set of colors in Q3 as well so duration generally has been a favourable component to our bookings.
Then I guess lastly, I did provide clarity in terms of 420 19 average duration was exactly 2.0.
Great. Thank you so much.
Right.
Our next questions from the line of Frat sales of B of a securities. Please proceed with your question.
Great. Thanks, guys wanted to ask about.
The net dollar base expansion. The 130 number it's been holding on very nicely here and that 130.
130 plus range.
How much disconnect and promote now contributing to that metric has it become is becoming an increasingly I guess any color on just how those to cross sell.
Motion has been going there with connected promote.
There to date.
Brad There is still very little impact from connect and promote I think we.
At the time of acquisitions in the product launches.
We indicated it would be quite some time before we begin to see impact on these.
I would imagine that as we continue to get the global advisory firms pitching digital transformation efforts that that might pick up in the future still still kind of unknown a lot of the expand is still with designers.
We're beginning to see the focus on automation drive more servers as we become part of the analytic fabric of large scope global enterprises, I will say that the conversations about connect and promote is the end caps for the platform continue to elevate they happen sooner.
Digital journeys.
That organizations are going down those tend to start with.
The same as we've always at its couple of seats a designer, it's 10 or 12 Grand at 45 days.
And.
You get 20 designers you'd get a server and at some point in time, Theres, an inflection point where people decide that.
They don't want to lose sight of.
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The assets that are being created by this new classes of scientist citizens scientists.
So connect.
It comes into the picture and then of course.
If our.
Thesis way back when we bought.
Why hat is true than eventually all of these citizen scientists are going to be creating machine learning algorithms and deployment is going to be critical.
That's great. Thank you. Thank you for that very helpful. And then I wanted to ask one one last one on this new persona. The data engineer, if you could elaborate a little bit on on what's driving that why now.
What's different in their needs versus the data scientist and.
Citizen data scientists.
Well I think that debt.
If you think back to systems of record deepen IP.
The scientists typically need access to data datasets to drive.
Algorithmic processes and they typically relied on data engineers to go do that work.
Usually right, it's equal or using ESI us.
Other other kinds of of capabilities that required coating.
And I.
Think work organizations are beginning to realize that these data engineers I think morphing into Dev ops people are beginning to to become a really critical component to get to digital transformation success faster rather than the convergence between the citizen in the train statistician I think is going to accelerate with the emergence.
The the data engineers.
That's great.
Yes, let's not forget that that.
Digital.
Core component of of digital transformation is.
The necessity of organizations to see data as an asset and analytics as a prowess.
And those data engineers typically are the ones, who understand data as an asset first and so they're going to be able to help the the phds get more productive and they're going to help.
Get the citizen data science is more literate round date as an asset.
Very helpful. Thank you so much.
Thank you our next questions from the line of Tyler Radke with Citi. Please proceed with your question.
Hey, good afternoon, guys. Thanks for taking my question.
I apologize if I may have missed some commentary on this earlier, but I wanted to touch on a couple of things first maybe deeni it seems like in.
The past call and recent investor confidence you've been talking a lot more about digital transformation and automation rather than data and analytics Im curious if thats a function of change in in terms of use cases that you're seeing with your customer and then I'd be curious obviously the change in begins.
The year to increase the price on all trick server.
Curious if that was a reflection of some of the more.
Sharing of the use case, you saw or maybe just help us understand the puts and takes to that and then.
Maybe Kevin if you if you want to jump in and just help us understand the the financial framework in terms of the impact on 2020.
The price increase may have thank you.
Great question I truly believe that that the focus on automation.
Has everything to do with the success in data science and analytics I think what organizations are beginning to realize theres. So much value that can be had by automating processes that are now easily being treated by more people across all functional areas of organizations that.
Rather than waiting for analysts to push the go button every morning at eight am or 10, P.M. or whatever it is to get there their reports and analytics in CPI is in dashboards and models built that automation is critical so it's the if the affirmation that that we haven't fact amplified human intelligence and had put.
Ladies into more People's hands.
And the second part of your question.
His then why the the price increase I think.
By illustration, if you go through community that ultra Ics dotcom, you'll see tons or use cases and customers writing about the value that they've they've received much like the BHP example.
Driving $9 million in automating, even routine kinds of processes and.
Not really sure what the impact will be on this what we do see is that we're creating real value for customers with our server product and that price implementation actually occurred here in Q1.
Great and maybe if I could ask a follow up for Kevin So.
You talked about the very strong bookings growth.
No that in Q4 here, we obviously have revenue growth.
35% and I appreciate the granularity on the duration of 2.0 that maybe could you could you help us understand what.
Duration has been at a granular low granular level, maybe a year ago and you have just there is a way to think about.
In a duration adjusted or annualized bookings growth for the full year EPS of 29 team just so we can kind of help.
I understand the impact of duration on overall bookings growth. Thank you.
Yes, Thanks Tyler.
So we've been talking even as we were kind of preparing for the IPO and going through conversations that.
The average contract duration has has been two years.
Obviously, thats an average and so we thought it would be helpful to provide a little bit more precision for 2019, but I think the point is that going back.
As early as 2016, our average duration has still been in that range now we have seen some improvement in the back half of 2019.
But not to the extent that it actually affected.
The averages so.
In any event I think that at least illustrates the stability.
In the customer decision around duration that we've seen over three or four years.
Let me also add that that.
It's an expected effect of becoming a critical component of their analytic framework in organizations you'd expect them as they see more and more value to to want to sign up for longer term deals.
Again affirmation that the strategy, we've put together for many many years now is paying off in spades.
And Kevin So I just did jump in real quick so the two point is that a kind of total contract duration of everything on the books or was that is that a bookings duration for the renewals and new deals signed in Q4. Thanks. So that's that's an average for the whole business.
Okay I appreciate the color. Thanks.
Yes.
Our next questions from the line of Derrick Wood with Cowen and company. Please proceed with your questions.
Great. Thanks, I guess I'll pick up on that.
Topic.
So the spread.
Kevin between reported revenue growth and reported billings growth.
As it really expanded and Q3, and then and more in Q4 sounds like it's mostly due to duration and product mix, but you did make a comment that you have more bookings that that have invoices and on January 1st So I guess.
Is there kind of an unusual mix that caused.
A higher percentage of bookings that Didnt get Invoiced until January one and how we should see that.
And deferred revenue in Q1 anyway to provide some more color on that.
Yes, thanks, Derek so as we've mentioned before.
The calculated billings number that I think you're referring to.
It has noise in it.
One of the dynamics that you described is in fact correct.
We have contracts that their billing schedule.
Our different if you will or fall over into the next into the next quarter. So it does provide a difference.
In between the billings growth count that you're looking at and the actual revenue growth.
We have co terminus contracts, where customers are adding on mid cycle that often will drive a less than an annual billing 'cause your billing them just through the next period. So theres a number of reasons why those numbers.
You know maybe different there wasn't anything per se in Q4 that was unique other than as we've called out both last quarter in this quarter just the dynamic that we do have a large number of year end deals that ultimately trigger in January.
And just to clarify the 35% to 40% recognized upfront. It was again at the high end of that ranch.
I Didnt actually provide any color on that in the prepared remarks, but it did skew to the high end of the range.
Okay, and the D. and one for one for you how should we think about how you guys you're going to rollout assisted modeling this year and what kind of monetization monetization strategy that could come with that.
Those plans are all in the works today, we're in a final beta assisted modeling.
We are we're confident in the value that it will drive for our customers, particularly the citizen data scientists who need to understand in a transparent way.
What modeling is all about how to prepare data and had a decision off of it.
It's it would be premature for me to to tell you how we're going to do it on this call we haven't.
Notified customers of what we're going to do but.
In the next couple of months, you'll you'll see some materials that that described.
One the value that we're going to provide and how we're going to packages modeling we see it as a.
A much better approach to amplifying the skills of the non.
Train statistician.
And it will give us a springboard into an auto modeling capability at some point in future.
Okay, all right. Thanks, guys.
Thank you.
Your next question is from the line of Chris Merwin with Goldman Sachs. Please proceed with your question.
Hi, This is Kevin on for Chris Thanks for taking my question.
International saw strong growth this quarter, what was the performance broad based and can you talk a bit about adoption trends that you're seeing across different regions.
Well the adoption trends are pretty consistent I think the alif factor.
That changes any of it is the duration of our time and market.
But it's clear that the global 2000 in particular have the same challenges worldwide whether youre.
On Elfa team in Dubai or are you were.
In a in Tokyo really doesn't matter it one's got the same issues around.
He can out the.
Estimated 10 to 15 trillion dollars of value that's locked up and data. So our teams are executing.
Almost identical playbook, there our cultural differences.
Both bottoms up selling and top down selling the engagement models with the global advisory firms is pretty consistent.
Internationally.
And we continue to see good traction pretty much everywhere we go.
Great and can you talk about hiring trends as you enter 2020 sales capacity, where you would like it to be and.
How are you thinking about incremental go to market investments this year.
Yes, so I mean, as we've talked about in the past we do tend to.
Front load our hiring as we enter into a new calendar year.
So we are expecting.
So to see that dynamic again continue here in Q1.
We.
We have.
Continued to focus our investments as I think is evident through.
Of our guidance.
On continuing to invest in go to market as our kind of primary focus.
Theres still a tremendous opportunity within the global 2000 around the world, we only have 36% of them today, so being able to continue to build out that global global infrastructure.
And then we'll continue to also invest in other areas of business imputed, including specifically product and engineering.
Great. Thank you.
Thanks.
Thank you.
In the interest just timing last many possible last question to ask you. Please limit yourself to one question.
Your next question comes from the line of Steve Tony with Wedbush Securities.
Hi, Thanks.
I have here, but I'll save one for the call back.
So I guess I'll ask you I'm intrigued by the comments about the data engineer persona and I'm wondering.
Well, what extent could be increasing visibility of that persona to ultra.
Be a function of you guys really breaching the IP fortress and taking over from LTL from other multicenter tools from customer cutting programming and and how big could that opportunity for you guys.
Well, we're actually going through the process now sort of sizing that that aspect of the market, we don't really have.
Tons of detail, we do we do see the persona emerging more and more often.
I think it's a critical element of they are using other tools I don't think you're going to see a sea change.
Our approach you're not going to see we're not in the wake up one day and see.
Gigantic shift in their adoption.
I think it's for the firms that are in the digital transformation effort I think it will happen a bit faster as Ceos are proxies begin to really understand the importance of data engineers I don't think it necessarily increases the Tam I think it actually allows the Tam to two.
Occur in a more seamless fashion, we've always talked about the $47 million disenfranchised analyst in the line of business in the $25 billion. It's it's over in in that.
The winner of the Hearts and minds at a line of business would be the natural beneficiary of the share shift I think they aid in that share shift.
And perhaps we'll see it sooner.
Got it Greg Thanks very much.
Okay.
Your next question comes from the line of Ittai Kidron with Oppenheimer. Please proceed with your question.
Thanks.
Kevin I wanted to dig into the expansion rate still holding up quite nicely, but maybe can you give us at least qualitatively some color on.
How much of the movement, there is tied into design or seat expansion versus new new product sales like.
You know server or promote compose.
Well connect them so yes.
Thanks Ittai.
So continue on some of the comments at the Dean had made we still can continue to see the lions share of expansion through seat expansion. So thats.
It is a combination of designers and servers.
But it is fundamentally more use cases more users.
Greater use of automation with within accounts.
Connect and promote on their own are still contributors, but the success that we're continuing to see with with the designer server products is certainly driving the lions share of expansion.
Hi, good.
Thank you.
Our next question is from the line of Michael Turits with Raymond James. Please proceed with your question.
Hey, good evening, guys I'm, Dan could you talk about competition among other data science platforms.
Oracle made an announcement today data Brexit has been.
More visible companies like data robot are out there so much a private companies maybe you could just scheme and tell us what the key components. You think are in that platform Weathers auto Anil prep.
Putting production tools and where do you think you stand up against some of those competitors.
Yes, it's a great question I think what what we're beginning to to see.
It is a rapid consolidation in this space.
And it's because of the need of organizations to have a platform. So everyone wants to be a platform and everyone wants to be a platform today in what I think isn't in arguably the largest sector that.
Of the tech sector that we've ever seen data science and analytics. So we've long said that analytics is a continuum.
The the.
Foundation of.
The continuum is built around expert data prep and and blending capabilities something we we did extraordinarily well and continue to do very well, but it is the on ramp for everything else and so.
There are players out there that when a call themselves platforms and theyre vis vendors at the lowest value chain in the continuum descriptive and diagnostic analytics theres those that are involved and predictive modeling theres those that are providing AI and ml capabilities.
Almost in all cases, requiring train statisticians.
So we see everyone kind of jumping in to the space. Its affirmation that what we've built is in fact, what people need.
And I believe that when we don't really do bake offs.
We don't really compete other than with soft and it's kind of an incumbent compete more than anything.
But it's clear to us that everyone wants to be a platform and it they have to have the entire continual they've got to have data prep and blending they've got to be able to touch any database living anywhere.
In any container that to be able to clean it organize it standardized to prosecute the entire spectrum of predictive to machine learning processes, and then you'd be able to play their algorithms.
And if they have that we haven't seen it.
But you'll you'll im sure you are a lot more noise from all kinds of vendors about having a platform we welcome them to the mix.
Thank you.
The next question is from the line of David Christian with William Blair. Please proceed with your question.
Hey, good afternoon, Thanks for squeezing me in.
I wanted to quickly touch on the product roadmap. So you've recently started to talk more about the opportunity to introduce new vertical solutions, which I think makes a lot of sense, but it also looks like there's still some work to be done in the near term around integrating some of the recently acquired technologies and bringing some of the recently announced capabilities from beta too.
Kind of GA so.
It'd be great. If you could just talk a little bit about the innovation roadmap here and whether we could potentially see any of the new vertical solutions rolled out this year or.
Is that something Thats, a little bit further down the road.
Sure. So when we talked about vertical solutions over the past few quarters we.
We addressed the first.
I guess first wave of Verticalization and that was a go to market motion that was us selling and marketing. So we've stood up teams for.
Seat CPG slash retail we've done it for public sector, we've done it for health care.
[music].
The verticalization beyond that has been things like what we call kits. These are starter kits that allow and analyst in healthcare to be able to.
C 456.
Use cases within healthcare that are pretty typical across.
The provider community within healthcare.
The next wave, though of vertical solutions is not just us building.
Sure vertical solutions as SaaS services, but when I guess I guess the ultimate value in the platform is when other people innovate on it so the innovation.
Isn't necessarily restricted to us and we're beginning to see that around the world where customers are standing up solutions have their own whether they're in the advisory business or there.
In a vertical that just needs to have a a tailored best practice for themselves. Many of them are doing this on server. So remember server doesn't allow you just to how to scheduler server allows you to deployed.
Apps and.
Hi, guys.
That can be controlled through.
You why into another app or via mobile device or a browser and we're beginning to see a lot of these start to appear.
All tricks will begin to produce more of these vertical apps going forward. Some of the Verticalization is just repackaging our existing offerings.
That are going to be a little bit more tailored at two vertical spaces and again later this year, you'll you'll begin to see.
Early days of of that next wave of Verticalization.
Thank you.
Your next question is from the line of Pat Walravens with JMP Securities. Please proceed with your question.
Hi, This is Joe on for Pat. Thank you for taking my question, how should we think about your strategy for M&A moving forward. Thank you.
Great question.
As you know, we we did our convertible.
Back in I think it was August of this last year and we saw the.
Dynamics in the space and we recognize that a lot of really great technologies and teams are going to make it or are going to be.
The point of view wanting to be part of a.
Broader platform like ours.
Our.
Pillars for M&A are pretty consistent with what we said when we did our first convertible year and a half ago and that that is.
IP first if we can find IP that.
Written in an environment that makes it easier to integrate into both current and future technologies that we have.
And it it and it fills out where we believe this market is going around data science and machine learning and we'll we'll we'll look at those companies second in in a full employment economy, especially in the data science World, We're always looking for acquirers.
Sometimes you get both acquires and.
IP, we believe that most of our acquisitions have.
Those two dimensions for sure and then the third is.
The the.
Acquisition of revenue and customers that we can put into it that expansion number of 130.
We haven't found those yet those would likely be considerably more money.
But we're seeing lots of activity where people want to be part of the Ultramax platform again affirmation that.
What we set out to create many years ago is in fact.
Being embraced by the broader market.
Our next questions from the line of Freesheet General area West K Davidson. Please proceed with your question.
Hey, guys. Thanks for taking my question to deemed just wanted to ask if you could maybe expand a little bit on the Pwc partnership.
With with them.
The widening relationship with what do you expect maybe incremental out of that partnership that that.
Thats been there before thanks.
Well first of all I don't know if I would classify it as a partnership.
I would classify it as a strategic alliance.
They obviously signed up as our first global lead partner.
That that may not adequately described the the.
Opportunity for either either Pwc ultra rigs or customers and so this alliance will allow pwc to go to market.
And really take digital transformation to what we would refer to a suit auto.
To the road the broader global 2000 community.
We don't know exactly what we will expect I think we're working hard to align ourselves and in the two teams to make sure that first and foremost we.
Provide offerings to customers that provide tremendous value as they try to understand the data landscape that they haven't trend of skill.
The capabilities of organizations, who actually do need to digitally transform or get disrupted by by other people is a new program, we put it together.
Last fall, it's part of a broader alliance.
Program that we.
We've always had a great channel program, 20% of our revenues coming from resellers.
[music].
More of our revenue is from influence revenue coming from the the advisory firms and we just never formalized it and this last fall.
We put together a team that that created a war.
Programmatic approach for alliances that we've got a global elite program and.
It's it's anticipated to generate billion dollars and in bookings to us over a five year period.
An elite Alliance program that is expected deliver $300 million.
In bookings to us over three year period in the principal program, that's expected to deliver $100 million.
To us over a three year program.
It's early days for the program, we're super excited that that Pwc stepped up to our global elite and.
We're engaged with them now and we're very excited about prospects of helping customers around the world see success in digital transformation.
Thank you. Our next question comes from the line as Mark Murphy with JP Morgan. Please proceed with your question.
Okay. Thanks to its pendulum sitting in for Mark.
Deane.
Two part question for you I think you have disclosed before.
That 60% of customers I've been involved in advance analytics kind of use cases.
Does that kind of ticked up at the end of the year and is it possible to understand.
Excluding.
As spatial analytics.
What is that number.
Well, we've we've not.
Divulge that before.
Without my head I Couldnt tell you what it is I'm not sure.
I'm not sure if it's necessarily appropriate to separate one form of advanced analytics from another form of advanced analytics.
We do have telemetry so we do do no.
For a large part of the user base, what what they do engage in.
We are beginning to see we've had our pipeline tools out there for about a year now and we're beginning to see more and more people leveraged Python for.
Much more complex use cases.
I still think it's pretty early in that transition what we do know for certain is that we are amplifying the skills of our our customers and we're seeing it in the way they react that we're seeing in the and motive.
Feedback that we get.
And we see these these use cases being far more strategic.
Particularly in the GE GE two k. so.
It might be presumptions for us to define what.
Managed analytics are.
What we do know is that we become.
Much more critical fabric to the analytic framework of organizations.
In using any of the advanced analytic capabilities and platform.
Let's not forget that Theres 270, some odd tools within the path.
With Python you have the ability for an infinite number of new tools and for those tools, we actually don't have visibility into telemetry, we know that they use the tool we don't know the extent.
Of the advanced.
Notion.
Thats created in those tools.
Right understood. It just just a follow up with that in that vein how.
Should we think our how do you think about all tricks versus some of the cloud providers that are providing something like a siege maker or.
Measure amounts to you is that more of a very complementary.
Product in your opinion to Opex.
Well we've.
Always has seen the ecosystem as complementary it would be.
Somewhat silly to think that everyone's going to use only our product and so we have partnerships.
With the folks like data robot or in each too low we're on Azure ml.
Well, we don't have a formal relationship with.
With.
Sage maker the folks over there.
The U.S., we see the.
The benefits of all tricks in that rarely do our customers have all their data in one place in fact, I think the motivations of the cloud vendors.
He has to get your data into their place in the reality is most customers aren't going to do that they're going to be multi cloud.
Forever.
They are going to be on premise for a very very long time in fact, I think lot of the narrative that we see out there now is that the data hasn't moved nearly as fast as people once thought it would.
So having up.
Set of partners.
In this ecosystem of data science and analytics, we find very very helpful. In fact, one of the things that you might have seen just recently.
Dave is.
The renaming of our conference call you used to be called inspire it's now called analytic on our global conference.
And the whole purpose of analytic on is to invite in this diverse and inclusive community of not just users users of ultra Ericsson users of other capabilities from other vendors, but to bring in those other vendors because I think one of the challenges that businesses phase is that the market for data science and analytics is so fragmented people get so confused.
Okay. So much time and money trying to get to meaningful outcomes. We were trying to bring that all back together in a cohesive.
Environment, and I think you'll find that if you.
Come to join us at analytic on in June.
In New Orleans, you'll see the the camaraderie, even amongst the vendors who on surface might look like they compete we actually are far more friendly.
Thank you.
Our final questions from the line of test, causing with Guggenheim Partners. Please proceed with your question.
Hey, guys potential squeezing the end can you guys give some more color on the price increase I believe there was a question. Please on the several product or their price increases and other products and if you guys can give some more details on how much lift.
Well that give in fiscal 2000.
How will that that price increase went into effect this quarter.
So we don't know the the full impact.
I think the price increase was truly a reflection of the value that we are driving for customers more than anything else that you might you might think.
I'll, let Kevin address the impact on the model that we've presented to you for 2020, but.
The reality is we become.
An integral part of the strategic.
Analytic framework for organizations and we believe that there's value in the in the server.
Product that we have.
Yes, just to touch on the model for a moment so to Dan's point I mean as end as as we've mentioned as you know the deeper that we penetrate organizations.
And the more that they're leveraging alter Ics for.
For automating their their analytic pipelines that is all being done on server and so.
However, as a key piece of.
Of that expansion cycle, and it's an incredibly valuable fusen. So.
I would just say that we expect to continue to see server as a meaningful.
Piece of expansion and overall revenue.
And any impact of price changes would obviously be included in the guidance we provided.
Thank you.
At this time I'll turn regenerate question answer session I'll turn the call back to Dean sector for closing remarks.
Hey.
Thank you operator, thanks, everyone for joining us today, we look forward to updating you on our continued success throughout 2020.
Thanks for your time.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.