Q1 2020 Earnings Call
I'd now like to turn the conference over to your host Shannon Tats, Vice President of Investor Relations.
Thank you operator, good afternoon, everyone and thank you for joining US our earnings press release, SEC filings and a replay of today's call can be found on the Investor Relations section of our web site at pros dotcom.
With me on todays call as Andres Reiner, President and Chief Executive Officer, and Stephan Schultz Chief Financial Officer.
System with our global teams operating today, the three of US our hosting this call from our homes.
Please note that some of the commentary today will include forward looking statements, including without limitation, those about our strategy future business prospects and market opportunities and our financial projections.
Actual results could differ materially from such statements and our forecast.
In particular, theres significant uncertainty around the duration and impact of the Kobin 19 pandemic.
This means that results could change at any time and the contemplated impact of coven 19 on the company's business results and outlook is the best estimate based on the information available as of today.
For more information please refer to the risk factors described in our SEC filings.
Pros assumes no obligation to update any forward looking statements to reflect future events or circumstances.
As a reminder, during the call we will discuss non-GAAP metrics reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent to which available without unreasonable effort are available in our earnings press release with that I'll turn the call over to you Andres.
Thank you Shannon good afternoon, everyone and thank you for joining us on todays call on behalf of pros or hard to our resolve those impacted during this global health crisis I hope you're on your families are helping save.
In my prepared remarks, I'll focus on the four key aspects over Kobin 19 response, first ensuring the safety and well being over people.
Second driving strong business execution virtually third continuing to support our customers end markets in fourth accelerating strategic innovation to help companies shift to digital selling.
First and foremost our priorities the safety and well being of our people customers partners and communities in mid March we moved or global team to through to work environment in a matter of days.
In ahead of our local government mandates for business continuity team led the effort flawlessly in Stephane will share more on this later.
The down so thankful to share that are team is safe thriving and relentlessly committed to continuing to execute on our mission of helping people and companies outperformed even if they balance supporting their families and levels.
Second I'm proud to share the teams across our business are executing well in a virtual environment.
One of our strategic focus areas has been driving your more virtual sales motion. So our go to market team was well prepared to adapt to today's environment in continued to serve new companies in the first quarter, we welcome new customers across industries and kicked off many new projects virtually.
For example in Q1 Nestle selected our platform to modernize their go to market strategy and navigate hearing incredibly complex demand environment.
We also welcome Thyssen Krupp material services, and new customer after they selected or or full commerce platform to power their digitization strategy.
And one last example of how we're helping companies sell virtually is the digital payments in financial solution providers as like the pros in Q1 to help deliver a winning customer experience online.
Our smart CPQ ecommerce capabilities will empower them to personalize their offer assessor marketplace rapidly shifts online.
We're excited to partner with Nestle Thyssen Krupp in other new customers hundred digital selling journeys.
While we continue to welcome new customers and expand our relationships with existing customers. We've experienced some sales headwind as a result of the current pandemic.
As you'd expect we've seen our travel sales activity slowed significantly due to the unprecedented challenges facing the airline industry.
We also saw some lengthening of or beat of these sales cycles as prospects Pos to focus on their own co bid 19 response plants.
We're confident that will ultimately convert this opportunities since our team is continuing to do an excellent job of engaging with these companies in highlighting how our solutions help them sell in and digital first world.
Or customer facing teams are also doing a great job of engaging in supporting our existing customers were implementations training customer success and support teams are fully equipped to serve our customers remotely and they're doing so today.
For example, we just recently delivered a fully virtual go live within me Japan's largest airlines as they migrated to our next generation revenue management cloud solutions.
In a now has her most advanced forecasting capabilities. So that they can be at the forefront of adapting to the newly emerging traveler demand patterns.
Since were exceptionally well positioned to operate virtually across our business, we're able to leading into the third part of her Kobe 19 response strategy, which is helping our customers end markets. We have a deep bench of industry experts pricing in selling thought leaders and data scientists.
Yes, and Theyve come together to share their domain expertise over the past several weeks, we've launched free consulting services and hosted Webinars to help companies sell digitally in the marketplaces that look totally different than they did just a few weeks ago.
We've had a very positive response with over 8000 people participating and I'm, so proud to see or team truly leading the way to recovery for so many companies.
For some of our customers supporting them in being a good partner today requires more as many of you know gross has been delivery mission critical solutions to travel customers for more than 30 years.
We supported or customers through previous challenges like Sars in the horrible events of 911.
But the current pandemic is having an unprecedented impact on the industry.
Therefore, we are providing temporary relief to some of our customers struggling the most through onetime payment deferrals or short term subscription price reductions, we're confident that helping these customers now when they need at the most will inspire their continued loyalty for decades to come.
Today's reality is creating an extraordinary challenges for companies across industries and I'm proud of the roll our solutions are playing in helping our customers adopt or solutions are now more important than ever as companies have to respond to environments that are dramatically different from just a few weeks ago.
For example, or pricing and guidance solutions are helping b to b companies dynamically react to extraordinary changes in their channel and product demand mix.
In our digital selling solutions are helping our customers across industries. So through typical go to market motions had been completely disrupted.
One such cases same cobain when is the largest class manufacturing in building companies globally before they onset of Kobin 19, Saint Gobain did about 10% of their orders online.
Now over 80% of their orders are done through their online platform powered by pro Smart CPQ.
The reality of today only highlights the mission critical need carrying value that are solutions provide.
Now more than ever our customers in the industries, we serve recognize that digital selling is essential or solutions are at the heart of powering digital selling transformations. In this fundamental driver helped us achieve for first quarter revenue growth targets. This is why the.
Last part of our strategy is focused on accelerating innovation.
Focusing on this area creates a strong opportunity for us to further advance or market adoption broaden our market reach in fuel or long term growth.
Thank you tour global team for your incredible passion towards or vision in inspirational support of your families or customers in each other's during this time.
Finally, thank you to our customers partners and shareholders for your ongoing supportive pros with that I'll turn the call over to Stephane to cover or financial performance.
Thank you Andreas.
I too would like to extend my best wishes to everyone on today's call into all of your families.
I'm proud of how the pros team around the World responded to the abrupt challenge caused by the Cobot 19 pandemic.
In mid March we shifted to a 100% virtual work environment.
Well, we never wanted to experience a situation like this pandemic our solutions have always been mission critical for our customers and we developed a formal plan for this type of event many years ago.
Our plan has been tested and improved overtime as we experienced a couple of Houston related natural disasters like Hurricane Harvey and.
And these events provided us with valuable insights about working in a virtual environment.
Our human resources team began regular communications preparing our employees for the changes to our work places and our travel expectations well in advance of our shift to a 100% virtual environment.
After shifting to a virtual environment, we adopted programs to help our people remain connected with employee town halls, and a virtual hub, where our global team members are contributing daily.
Our infrastructure teams, including IP security and office services also engage their components of the business continuity plan to support our now virtual workforce.
They have ensured our people have the technology tools and services needed to progress our business and support our customers globally.
At the same time, we've increased our focus on the integrity and security of data.
The combination of our infrastructure strong business continuity planning and global team collaboration has ensured the uninterrupted and secure service of our mission critical solutions for our customers.
Now for some comments on our first quarter results.
Our subscription revenue increased 40% year over year to $43.2 million, which was the main driver of our total revenue growth of 18% year over year.
Our recurring revenue as a percent of total revenue for the quarter was 84%.
Our maintenance revenue was $12.5 billion for the quarter down 18% year over year as we continue to drive migrations to our cloud products.
Our services revenue was $10.6 million for the quarter, which was up 7% year over year.
Recurring portion of our deferred revenue was $125 million up 13% year over year, and our trailing 12 month calculated billings were up 18% year over year.
Now moving onto the profitability metrics.
Our non-GAAP subscription gross margins were 72% in the quarter, which is up from 71% in the first quarter last year.
Our Q1 services margins were a negative 18%, which was inline with our expectations.
Our adjusted EBITDA loss was $11.4 million for the quarter exceeding our expectations.
We reported a free cash flow burn of $25.5 million in the first quarter.
At this burn was higher than anticipated as customer collections towards the end of the quarter slowed down considerably.
As a reminder, Q1 is our highest seasonal cash burn quarter due to the impact of annual incentive payments payroll taxes, and our company kickoff.
From a balance sheet perspective, we have over $250 million in cash on our balance sheet, and we're well positioned from a capital structure perspective at this time.
Overall, our first quarter was largely in line with the expectations, we set at the beginning of the quarter.
Which demonstrated our teams resiliency and moving to a virtual environment during the quarter.
Before I turn to our outlook I want to first comment on how this pandemic has impacted some of our customers and then what actions, we're taking as a company.
We can all see that coven night team has had a swift and unprecedented impact on travel businesses.
We're strongly committed to supporting our travel customers today as we've done in the past.
So as Andres mentioned, we're offering financial assistance to some severely impacted customers. Despite having multiyear contracts in place that require full payment and service at full capacity.
In these cases, we're also limiting our service obligations indoor expanding services in future years.
We view this as an appropriate response that reflects our strong commitment to long term customer partnerships and customer success.
In addition, we have applied a revenue reserve for certain customers that had been the hardest hit from this pandemic.
We estimate a negative impact from the financial assistance in revenue reserve to be approximately $3.5 million in the second quarter.
With most of the impact affecting subscription revenue.
Turning to the impact on our sales, we now expect much lower new bookings from a travel customers in 2020 as the industry recovers.
In our B to B business, we've seen a few purchasing delays, but some of our b to b prospects as they way the impact of cobot 19 on their businesses.
We remain confident in our vision of providing our customers mission critical solutions necessary to sell and win in the digital economy and the long term market opportunity. This vision represents.
As undress noted we will continue to invest in programs and strategic innovations to capitalize on this opportunity, but we are being measured in.
And our investments.
We have identified cost savings of as much as $13 million for the last three quarters of 2020.
And the portion of applicable to the second quarter is included within our profitability guidance ranges.
These expense savings have largely come from programs and deferring lower priority initiatives.
Some of the cost reductions are natural byproduct of our virtual work environment like business travel expenses.
Also while we have slowed down hiring for new personnel we.
Our continuing due to higher key positions and have now.
Not reduced our staff positions.
At the macro environment is improving.
Now I'll move on to share how we're thinking about our outlook.
The global economy has been significantly impacted by Cobot 19, and as a result, establishing annual guidance is significantly more difficult in this environment.
We cannot predict how long this pandemic will affect our customers and we cannot predict how our customers and prospects will respond to this pandemic in the coming weeks and months.
Because of these uncertainties, we are withdrawing our annual guidance for 2020.
Now, while we're not providing annual guidance at this time, we are providing guidance for our second quarter.
For total revenue, we anticipate a range between 60 and $61 million in the second quarter.
We expect subscription revenue to be in the range of 39, and a half to 40 the half million dollar.
First up 14% year over year at the midpoint.
In addition to the approximately three and a half million dollar impact from the temporary relief and revenue reserves I mentioned earlier, we anticipate our Q2 revenues will be further negatively impacted by another $1 million due to the impact on our own business from Carbonite team.
Examples of this include delayed project implementations and lower passenger volumes driving lower revenues on a small portion of our travel products.
We expect our adjusted EBITDA loss for the second quarter to be in the range of tenant a half to $11.5 million.
And finally with an estimated non-GAAP tax rate of 22.
2% in the second quarter, we anticipate a non-GAAP loss per share between 20 and 22 cents per share.
This current environment and become even stronger in the future.
Thank you for your support of pros and we look forward to speaking with you at our upcoming events.
So with that let me turn the call back over to the operator for questions operator.
Thank you at this time of the conducting a question and answer session. If you'd like to ask a question. Please press star one Ayers telephone keypad, a confirmation time will indicate your line is in the question can you maybe first start to if you'd like to remove your question from the Q for participants using speaker equipment. It may be necessary to pick up your handset before press.
And the Starkey.
Our first question comes from the line of Scott Berg with Needham and company. Please proceed with.
Yes.
Hi, My sense is Stephen I, certainly understand the desire to.
Gibson forbearance and the short term some of your travel customers in Q.
25 million, probably makes sense I guess the question I have.
And there is with the expectation.
Isn't that travel.
Well returns in the second half how should we think about about on the snap back of those revenues in it and I assume there's a lot of variance and in that kind of question. There but is this assumption that we can see snap back to those same levels as passenger traffic gets that I don't know 25, 50, 75% or.
There's some other kind of way that you guys you're thinking about it.
Yes, Scott.
Good question, we what we've done over the last quarter is we spent a lot of time talking to all of our customers. Both in the travel and end the b to B space and what we did with the with the $3.5 million is we.
We made on assess that on one.
What customers around the world.
No our at risk of potentially being in a in a bankruptcy situation and that's a that's probably the biggest component of the brand a half million dollars to be totally honest is that element. There and then the secondary component gets to those to the question you're raising which is okay. We've offered some of these really to some of the most impacted customers.
And as you've probably seen in the news a lot of airlines.
I have been impacted to as much as 90%.
And so it was something that we collectively the management team decided to do based on what we see today so to your point.
Assuming things do come back yeah, we could certainly see.
These types of things.
We believe be relief and not fee that same kind of impact in the future quarters.
I will also indicate that these these these theres really programs that we're talking about its not a I used the word program with not a program, it's something that we work with each individual customer.
Based on their unique set of circumstances and we also as I made a comment in my prepared remarks, we were also.
Adjusting for some levels as well as a result of that so.
Yes, so I think because of that nature of your questions. This could be more short term or call have a temporary type with situation.
Got it helpful. And then as you look at your conversion business today.
Your legacy product customers move into the cloud do you see any change to those projects, whether theres a difference on b to b customers or travel customers and not the desire, but their ability in the short term to complete transactions that were signed or the.
Prior several quarters.
Yes got this Andres now, let's say that from Maine migrations, we don't see a major said if anything we see an opportunity.
For for companies use this opportunity to move to the crowd specially if they think of on the b to b side to power more of a digital selling motion.
Those are opportunities obviously on the travel I think it's where you would see more of a pause short term just because a lot of baby bond a customer side or not there to support a migration. So there I would expect sound, but on the b to B side I wouldn't expect any slowdown.
Got it helpful. I have several more but all outdoor back to Q. Thanks for taking my questions. Thank you Scott.
Thank you. Our next question comes from the line of Tom Roderick with Stifel. Please proceed with your question.
Hi, Andrew type stuff on first and foremost glad to hear that you both healthy in the team is healthy and you're seeing a productive as can be enough in this environment, so well done on that.
Maybe I'll just build off of Scott's question, just relative to the airline exposure and perhaps you could kind of take a quick step back and remind us what that exposure looks like today I think historically, it's been in the 35% to 40% of revenue ballpark, but perhaps an update on that would be great, but as you kind of stress test that and play with the numbers and talk to your customers.
Take us through just a little bit and how the different levers move in the model in particular, you know the transactional element or the components of it that are tied to.
Passenger levels would love to hear how much variability there is and the revenue stream there and then Stefan and good one for you as a follow up to that is just as we think about this three and a half million dollar reserve then.
So on a downtick related to potential bankruptcies and things that you're being cautious on should we think about the weight.
Okay, and the cadence slates through the revenue stream as being you know second quarter is the low watermark.
Yeah, no so lot of a lot in that Tom but thank you for the comments and we feel the same back to you.
In terms of your health and and.
And related to this exposure, but I think the first question you asked was.
They have percentage of roughly our travel versus our b to B and I think the most recent time, we've disclosed that it was roughly about 45%, but one of the things that we've been talking about historically is that are viewed to be businesses has been a higher growth component to our business and so over time that percentage has been shifting.
Where its little less travel.
And a little more on the B to B side. So.
That's the that's been relative simply the mix and then I think.
That was going to be trending more and more could be to be.
Less and less travel more and more to be to be.
And then I think your question around the the the three and a half million dollars and whether we see that as a kind of representing a low watermark or not it's it's honestly it's difficult to tell.
Based on what we see today.
We feel very good about the you know about the.
The reserve that we put in place and it's based on like.
Like I said earlier, our observations of not only talking to our customers, but reading what's going on in the press and what's happening in the industry and we feel very good about where we are today.
And then to Scott's point could it be less in the future things start to come back in the second half the year that the answer is absolutely yes.
But it's hard to say whether it this is absolutely the low water or the low watermark from from an impact perspective or not and.
Yeah, it's difficult to me that call right now.
Yeah, I understand a couple of things that then I would add its not to your question on how much is variable very little of the impact is due to favorable I would say, it's less than a million.
So it's very very late on most.
Airlines really don't like a variable model.
In tend to prefer our type of model, obviously, when there's a downside we have in light of protection in this model for them when there's an upside theres not a significant costs increase.
And Thats why the model has worked for us long term and I would say.
And we think like travel while there is a passenger demand issue now have traveled will come.
Back in our technologies as important as ever because with our technology. They can start to monitor long term forecasts and start.
The plan they recovery, we also think that our innovation around digital selling in digital retail.
In the traveling industry and offer optimization are going to be areas that they continue to push forward as they come back on site. We believe that there's opportunities and we talked to many of these airlines on about the continued innovation in their desire to rethink of wet.
That recovery like sites so.
While short term.
They are seeing a big on demand change, we think there you said it very strong opportunity long term.
Yeah, and Andres that kind of get so my second question just on the B to B side, as you're having conversations with with senior executives of fee to be based companies.
I understand there's a pause near term as they just sort of assessment their balance sheets look like what they can expand but are you having conversations that lead you to believe that there will be an acceleration in this theme of digital transformation and then how does that informed where your staffing heads.
As you look to add sales heads on the on on the go forward here.
Yes, that's a great question like my believe its while there was a small Pos any margin we did see that and frankly I think a lot of companies.
For us to move to virtual and I would say I commend my whole team because it was pretty spectacular the move we didn't see any impact whatsoever, I think for our customers say what sense NDC moves.
And I don't believe there were asked prepared in that slowed things down we did see some of the deals that push side of March closed in early April on the pensions, we do believe that in eight of being a lot of companies really warm prepared for a virtual world I am we think that.
That a lot more companies are going to want inaction plan around this I talked about seeing domain in they were one of the fortune at ones that had implemented a digital strategy, while only 10% of their business was then online during coded 80% of their business has been done online and we have many so.
No worries of customers that frankly, adding Thats then on ahead of the curve that our topline thing.
But we think it's time being when the mix.
In the channel shift is happening greed dramatic across food industries across really all of our target industries, we think our technologies, even more important and I would say the activity from me sales perspective, B to B is very high.
So definitely I would say look a lot of companies are trying to understand what it means to them.
But we haven't seen any impact in terms of the activity in Dean trades, and if anything I do believe that more and more companies are going any need to digital transformations around sales.
Because is asking for now are more than ever.
Yes outstanding that's really good color. Thank you appreciate I'll jump back in the Q.
Thank you.
Thank you. Our next question comes from the line of Jason Celina with Keybanc capital markets. Please proceed with your question.
Following I think hey, guys.
Thanks for taking management's good.
Good to hear from everyone.
But as I think about the B to B business building off Tom's question.
Can you maybe talk about different segments within it specifically one industries.
Did you see where you saw our impact and maybe what industries may have seen some positive trends.
Yes, I would say look out on the BDC segment, obviously, you've seen some impact in industry thought automotive.
But overall I would tell you look at Krotz B to B the interest on moving forward in initiatives around digital transformation remains strong I think in lot of companies were facing kind of.
They're crisis of of moving everyone virtual and addressing their business operations, but.
Overall, we see good demand some areas of uptake have been around that at either cargo for example, logistics that's been an area that we see.
More demand in back to one of the questions on allocating sales resources, we have put some aboard travel sales resources seem to be to be opportunities as well.
In areas like cargo and logistics, where reselling or or B to b platform in see potential of opportunities given that a lot of.
Passenger airlines that we're carrying cargo our north.
No longer carrying cargo on there.
No.
Police, which is giving an opportunity for pure air cargo players in the market.
Okay, great and.
I appreciate your comments around M&A deal.
Can you maybe talk about how if maybe that was implemented earlier in the quarter or or was it.
And any color on when that was completed.
Yes, no, which it was completed mid to late quarter in Donna.
And it's continuing so overall, we feel like they are a flagship carrier Morrison and long term relationship in this next generation cloud solution was very strategic for them.
And they are ongoing and moving forward I continue to innovate on that platform.
Great I'll I'll get back in queue. Thanks, Thanks, a lot. Thank you.
Thank you. Our next question comes from the line of makes money on T. with Craig Hallum Capital Group. Please proceed with your question.
Hi, This is Nick on for Chad Bennett said, one question on the subscription gross margin.
Tick down a little bit sequentially from Q4, Q1, any commentary on that and how we should think about subscription goes gross margin throughout the rest of the year.
Yes no.
The subscription gross margin did have ticked down to your point.
Sequentially from Q4, although up year over year.
Mainly because we did make an investment on a new data center and in the middle East actually and so.
Thats the reason we made.
A good portion of the investment to build that out in the first quarter and definitely impacted us, but I think to your point going forward as we look into the second quarter and maybe even beyond.
The impact of the three and a half million dollars that we've talked about will have an impact on our on our margins a bit and so I do think that they will be slightly down.
From where they were say a year ago, and so I think thats a as leases. During this temporary period of time, where we're dealing with the you know the full effects of Copel 19, I think you can expect to see our margins come down.
[music].
Hundred 200 basis points or so.
Thank you. Our next question comes from the line of Robert Simmons with RBC Capital markets. Please proceed with your question.
Hi, Thanks for taking the questions.
How is churn dependent so far this year at a lower level.
And last year is a little bit challenged on you're talking about trying to get back up to any more historical range.
Hi, I'm wondering if you buy cloud versus maintenance or by geography by vertical.
I will look so far.
Yes overall, our yeah go ahead.
No overall return rate continues to improve we saw.
An improvement slight improvement over last year, but still within our that's in class better than 93%.
In didn't see any any risk on that perspective.
Okay and can you give any color on like on a different segments or I give any areas have gotten better in areas gotten worse overall is small and.
I think it's pretty broad across and I would say look a lot right now or customers would need us now more than ever if you think about if your whether you're in b to b, our travel understanding what's happening to your demand pattern. If that's critical as however.
In winders.
Changes, whether it be your product mix your channel mix, having the ability to make real time prices I would say if anything our support of our customers has increased pretty dramatically.
In a lot of were efforts has been on how do we help our customers with back what actions they should take now.
To mitigate risk score to bring opportunities to them.
So you know I would say look or customer success continues to be best in class.
We're even closer to our customers I talked about that being one of our strategic focus areas was getting closer to our customers firsts indeed, there for them to support them. So.
Hi, given that the mission critical need of war or technology, and how we mean units in organization to support them.
Attrition is not an area that we're concerned.
At this point.
Yes and to add to address this comment.
Anything related to a temporary relief is not viewed as a as the chart right. This is something that we're doing from a temporary or perspective.
And thats not something we consider churn given that we'll be back to the contract norms in awhile.
Got it that makes sense.
Can you talk soon what is the average length of your contracts.
In cloud and maybe you've annual correct.
Well, yes first half Yeah go ahead seven.
Historically, sorry, we're we're not in the same places you can.
[laughter], so our coordination we'll work on that.
But historically, we've seen on average deals between two and three years will be to be in as much as three to five years for travel and that was certainly the case when we started selling cloud solutions I'd say here recently, we've seen no. Some more in the one to do your range still see three or deals is.
Well and then a live on the travel side, we still see.
Little longer terms as they like the lock in terms for a longer period of time, but the reason our our contract terms have come down a bit is as we've gotten better and quicker there implementations.
It's allowed us to be more flexible in terms of of the contract duration in length. So yes, I'd say you know do deals now or.
Is there can be anywhere from one to three years, but I'd still say there somewhere between two and three years.
Okay, great. Thanks.
Mhm.
Thank you. Our next question comes from the line of tenant with Northland Securities. Please proceed with your question.
Hi, Thanks for taking my question I think the Pat you talked about the mix of new business being kind of like 60 40 between existing and new customers.
The new operating environment that we're seeing could you talk about where you see that shaking out short term and then if you see any potential for that mix kind of shift longer term. Thank you.
No Thats a great question right now, where we're seeing is about 70% new 30 existing and in part of that why it's more net new it's because typically as we've talked in the past travel has been predominantly existing oriented and thats, we shift to sell more.
B to B.
It tends to be more net new if there's a lot of great opportunities to expand but theres had lot of new.
Market opportunity for us and I would say.
Capex this year to stay in that 70 30 range net new.
On.
Being 70% an existing 30.
All right. Thanks, that's all for me.
Thank you. Our next question comes from the line Stan Zlotsky with Morgan Stanley. Please proceed with your question.
Perfect. Thank you so much guys.
And glide everybody's okay on your end.
Maybe a couple of from my end just following up on the question second thing on new versus existing.
When you mentioned that you're seeing kind of like the push out something longer sales cycles are you seeing that both across new and existing or is it.
On more skewed to one or the other and then.
As far as just overall activity, you're seeing globally are there certain geographies, where you're seeing more of an impact.
Than others and they have a quick follow up.
Yes, that's a great question. So first on the push out frankly look we had deals seen in March that push to April and in some that were new and some that were existing look I think some of that pushes in March were a lot of companies just were scrambling.
And I don't think that new versus existing really.
What's what tilted one to move forward or not I think it was more than.
You now.
Just not getting on being able to push it through in time.
General obviously existing opportunities tend to be more timely nine as.
Most of that time, they've already selected you they're moving forward on on another phase of implementation. So there sometimes more predictable, but I would say at this point that whats in it.
A big change that we saw between new and existing.
Got it and now and as far as like the geographic impact than anybody in then geographic I would say look EMEA did very well on in in that first quarter and we saw.
A lot of activity out of EMEA, I would say North America within area that impacted us.
But more in in the especially March.
With with scenario, where we saw.
Slide impact, but overall I would say, we're seeing a improvement trends.
Yes, we're looking forward.
Got it and then just as far as like looking at it and it's all about the the second derivative. These days and indeed, thank you for providing us with Q2 guidance, but just maybe qualitatively right. What are you seeing in the first month of Q2.
As far as you know demand trends and how things are are you are maybe turning around or maybe a maybe even improving of the sales cycles for the deals that pushed out of March quarter are they coming back into the pipeline that taken up those conversations.
Yes, I would say that look activity levels continue to be very strong on and we've seen a.
Probably a little bit of improvement specially in the in the last two weeks I would say early April was harder even though we did have some deals say close but there were predominantly.
Last quarter deals, but you know I would say April was with much more where companies weren't as accessible by even though we're very accessible from the virtual perspective, and we've seen any improvement now and that definitely and a lot of activity across.
Quite a bit of opportunities on the b to be Frank.
Lastly, travel, it's an area, where where we don't expect a lot of opportunity in Q2 or Q3.
We expect most most of the business to push to the fourth quarter.
Got it and just the on the due to be side.
Yeah, maybe some of the deals that you use there were very getting very close are you expecting to close in the month of March rates close out Q1, and they subsequently slipped out of that quarter.
Did you close the any of them and in in Q2 or that's still in the pipeline to be determined.
Yeah, I gave a couple of examples one net new that we closed.
In early April and then existing as well that we close.
Within the first two weeks to the quarter.
So we did see some we sit we saw others that are still planned for this quarter on and we did see some that pushed out to Q3.
Got it perfect. Thank you so much you check thank you.
Thank you My final question. This afternoon comes from the line of Jackson Adder with JP Morgan. Please proceed with your question.
Alright, thanks for taking my questions guys.
I just one one quick clarifying question for you step and be the Korean a half million dollars of of the impact the temporary impact.
Is that in that an annual number you will just be.
Taking as a charge in the second quarter or is the annual impact.
Something closer to $12 million to $15 million updates.
Temporary reductions.
Yeah, So does that bring a half million dollars is specifically for Q2.
So.
But I would not extrapolate that for the full year. So for example.
To your point of sale.
Applying to say 12 for the year I wouldn't do that because.
There's going to be.
Changes to our estimates as time goes on hopefully silhouettes companies that we've identified are not going is it as much trouble is they appear to be now or maybe they are in maybe the reserve is appropriate. So it's just really hard to gauge how we should be thinking about a reserve in the third and fourth quarter and it's one of the reasons why we.
We withdrew our guidance for the full year, but yeah, I would not assume that it's really really geared towards a Q2 estimate only at this point.
Okay, alright, great. Thanks for that and then.
I just want a follow up another been a lot of questions on the b to b segments, but I think the one and chemicals and energy I mean, that's all pretty wide commodity price swings here in the first few months of the year. So.
I guess, we're just curious did you see any actually picked up in demand from that specific vertical just given this would probably be a good time to try and and grab a neutral to forecast demand in that sector.
Yes, so we did see into energy space, we did see.
Opportunities that they have high close in that area in in projects and it's been mostly existing accounts continuing to expand.
And in our areas I would say that's an industry that right now having access to our technologies as important as ever anywhere where you see in lot of fluctuation whether it be demand channel on price.
Commodity shifts.
That's when they need to technologies is it's more important and technology like pros.
Excellent. Thank you yeah. Thank you.
Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back to Shannon stats for closing comments.
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