Q1 2020 Earnings Call
[music].
Thank you for standing by and welcome to the Q1 Twentytwenty Terry Data's earnings Conference call. At this time all participants are in eight listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you will need to press star one.
On your telephone if you require any further assistants. Please press star zero.
Now like to hand, <unk> l. shape SPP.
Corporate development and Investor Relations. Please go ahead.
Good afternoon, and welcomed inherited his 2021st quarter earnings call pick one pair data's interim President and Chief Executive Officer will leave today's call followed by Scott Brown, <unk>, Robin who officer and then Mark Cole had turned into C.F. a world then discuss our financial results are discussion.
Today includes forecasts another information that are considered forward looking statements. While these statements reflect our current outlook, they're subject to a number of risks and uncertainties that could cause actual results to defer materially.
These risk factors are described in today's earnings release.
Date as most recent 10 k. with the S.D.C. and then the form 10 Q. for the quarter ended March 31st 2020 expected to be filed with the F.C.C. and the next few days, we undertake no duty or obligation to update or forward looking statements on today's call, we won't be a disgusting certain non gap financial measures.
Which excludes such items that stock based compensation expense. Another special items described in our earnings release.
Also discuss other non gap items, such as free cash flow and constant currency revenue comparisons reconciliation non gap to gap measures is included in our earnings release, which is accessible on the Investor Relations page of our website investor Dot tear data dot com replay of this car.
Brings call will be available later today on our website.
And now I will turn the call over to Vic.
Thank you <unk> I.
I am pleased to be one of the first two accent a warm terror data welcome to our next <unk>.
As I am sure you have all seen by now the board of Directors has elected Steve Mcmillan as the next president and seal of targeted.
Steep was a unanimous selection by the full board of directors. Following an extensive search that included many qualified candidates.
Today's announcement my G.N. only our chairman of the board covered some of the reasons for Steve selection.
He brings outstanding credentials in operational leadership.
As a wide ranging business background with the history of focused execution, which is one of our key initiatives.
Yes, let's successful transformation efforts with issues relevant to our own.
And most importantly, he leaves with a customer focus which has always been what of terror data's strings.
He has a collaborative and open leadership style.
I am sure that the terror data team will rally around and support him.
He has a proven ability to bring people together to achieve outstanding results and is precisely the leader data needs as we accelerate our transformation.
Customer success product innovation hand return to growth.
Turning to where we are today, we like every other company in New York.
Been impacted by covert 19.
However, we are seeing that are years I'll building strong customer relationships are long standing position of delivering mission critical analytics is helping us in these challenging times.
You will hear from Scotland, Mark that while we are been impacted we are working from a solid base.
Given the current environment.
We will deliver a reasonable financial performance.
The same time continuing to invest in what we'll make our business even better as we move past the impact of covert 19.
As a reminder, on the last two calls I have outlined that we need to make progress around these areas.
Accelerating our transformation to the cloud.
Oh, well underway with our efforts to position to us as that even stronger competitor in the clouds.
Driving consumption advantage and Scott will share a number of examples of our continued progress against these goals.
Finally, expanding our market opportunities.
Bite the interruptions caused by the pandemic.
Our focus on customer success and building strong partnerships continues.
Most importantly, we have built a strong and cohesive E.L.T. that it's working together as a collaborative and well coordinated came <unk>.
Common focus and goals.
No that we have upgraded a number of our leaders and I can say this is the best team I have been around in my 20 years of association with Tara data.
I know that this top notch group of executives will help Steve cramp quickly.
So while we know that this year is not going to be easy I am confident that we have planned someplace to allow us to make measured and rational decisions about driving our business through these extra ordinary times.
Before we move to Scott I want to express my Pride in the resilience <unk> data folks.
With a covert 19 outbreak we took immediate action to protect the health and safety, how far people and shifted to a remote work environment for nearly all of our people.
And during all of this are great territory to team <unk> executing on our priorities.
You'll hear about some of our actions from both Scott and Mark.
With that I will turn it over to Scott.
Thank you <unk> good afternoon, everyone.
Today, I'm going to provide insight <unk> three area.
Oh, we progress throughout the quarter and the effective coded 19.
Oh, we at least yeah, and cat and unwavering commitment to customers and what we are seeing with customers that time.
And our view as we looking ahead for the remainder of the year.
Let's start with looking back at one of the most rapidly can quarter lions ever seen.
Marco cover the financial.
So I will address it on the perspective of our go to market organization.
It was a quarter of the opposite Oh from the beginning of the new year quarter N.
We started the year on valid pudding with a good pipeline for 2020.
<unk> most use underway and we were on track to the quarter.
Then the Kobe 19 outbreak made it relentless school spread and countries around the globe began to go into locked down.
And in March are.
Dramatically changed and deals were delayed as customer shifted their priorities.
The pandemic.
In line with our heritage, we reasserted are wrong commitment to customers and had then addressing their neat.
Three dimensions.
We quickly adapted to collaborating and supporting customers, Berkeley, and our teams are continuing to help customers learn what can be accomplished when leveraging data and it's in sight.
First we could burn with customers that are consulting and support services with you and we immediately pivoted remotely delivering ongoing support and serve it at the high level of performance then availability our customers know what for.
That's been away that protected the health of both our customers and our employees.
Second we have many customers were on the bottom line.
Humanities battle against the virus.
For example, you farmer.
Healthcare logistic and numerous government agency.
Where these organizations we are doing but we do that.
Helping them leverage data to get the inside the need to develop huh and vaccine.
Keep their supply pays running.
And protect the hell of their population.
And third we an awkward are how are those customers who are working hard you manage your business for a load and closures.
It is in this arena, where we had seen the greatest number of sales activity put on hold.
It is against the backdrop that are long and eat relationship with customers and commitment to there that come to the forefront.
Our team are staying in contact with the customers and we stand ready to help them when they can again turn their focus to rebuilding their business.
We believe feedback or the lead to greater consumption terror data overtime.
Oh <unk> are taking advantage of our hydrate club portfolio and weird. He continued adoption of our advantage platform as organization either value in it how're whole asset to all of their data at yeah.
There is being bought on E.W. at and is there.
On premises and in hybrid cloud environment.
A number of winds we saw our where customers are leveraging Terry data <unk>. The challenge is brought on by code at 19.
Global pharmaceutical company migrated irrigated development environment advantage on eight W.S., helping you to bring you like baby medicine and that seems to market.
A major U.S. healthco, so dramatically increasing queries handled answered throughout all parts of the operation and people move to work easy and schooling from home.
This customer recognized analytic as mission critical who ensure operational efficiency and customer care for those relying on the nation's communications infrastructure during the pandemic.
And it perk, if additional capacity to support the increase and sustain user demand.
Oh, leading provider health care facility purchase additional capacity.
Label, it to manage increasing workload directly related to the pandemic.
Harrogate analytic or the organizations go to data platform for creating actionable outcome.
Including apply team analytics for P.B.E.N. ventilators.
Clinical trending and modeling a healthy U.S.D.C. baseline.
Dating virus.
And yeah, the analytic tools.
To address you know bird shortages.
A U.S. supermarket chain added advantage.
<unk> zero or advanced sequel machine learning and graph engine to support it apply team that was dressed like coven 19 demand.
Also in the U.S., we're working directly with both public and private agencies and the White house to help alleviate the effects of the pandemic.
We're leveraging analytic you help predict where you outbreaks will likely occur.
Point population most at risk.
And estimate which resources will be needed in specific geography.
Vantage was also brought in on non cold bad when.
For example in recognition of Harry needed partnership as a vital component of it enterprise analytic ecosystem Norton Lifelock as extended its investment interior data.
Norton Lifelocks leverage is the power advantage.
<unk> a complete customer three they eat you.
And provide robot financial analysis for critical decision, making.
And one of the largest diversified financial services institution envy you add.
Upgraded it to irrigate environment to drive advanced analytic across it didn't hire ecosystem and position it for greater use cases in the cloud.
Including intelligent credit, scoring and addressing the evergreen threat of money laundering.
Looking ahead.
Much is unknown as the pandemic runs its course throughout the world <unk>.
We had our teams are resilient and working hard to execute their sales plan and provide value to our customers.
In times like these incumbency and exists is strong relationship matter a great deal.
We have seen some customer put cloud projects that whole due to the cost and complexity of migrating the clout <unk>.
Which highlights the power of choice.
I did like Harry data.
Are pipeline is holding and the volume of engagement has been very high you too that's far.
It's been encouraging to see how quickly our team had been able to pivot to a remote sales model.
However, given the uncertainty.
Hard to predict when these activities will turn into transactions.
We remain totally focused and riding demand for advantage and our cloud solutions.
We have assertively taken socially responsible stand to advance vantage awareness and demand with customers in prospect.
To protect the help of our employees and our customers.
Quickly redefine and Reimagine are then 100% digital experiences.
And we have postpone our annual customer conference into the next year.
Our virtual eventful, our customers and prospect interact with terror data thought leader in in immersive learning environment without being affected by travel restrictions or risk <unk> meeting.
Further.
Sales momentum, we have developed and our executing virtual briefing centres.
Bringing our care of data experts together with customers any bully digital environment.
I'm pleased to report that in the few weeks since we lost our virtual executive groupings, <unk> Oh, Danny reaction from customers, who want to continue uninterrupted dialog with <unk> product and engineering leader and executives.
<unk> visited tailored to meet our customers business objective.
And we help them get the greatest value from their data at this scale they need.
We also remain on our mission to strengthen our partner ecosystem.
N.F. continue building for the future with our regional partnership team developing relationships.
And engaging I'm enjoying account planning with leading as time and I see.
This effort in strategic and will be built over time, but we are theme positive tracks in here.
I ended my remarks last quarter with comment around our focus on executing and delivering an exceptional experience for our customers.
Riding grow up or Tara data and value for shareholders.
The onset of Kobe 19, sharpened are focusing commitment.
We are all affected by this pandemic and will continue to keep the health and safety of our employees then our customers as our top priority as we or our customers.
It is time like that when organizations need to put all of their data into service to help them survive <unk>.
<unk>.
Or win against humanity global coal interrogate excel in this arena.
Thank you and now I will have to call tomorrow.
Thank you Scott and good afternoon everyone's.
I would like to begin by discussing how coal bed 19 impacted our business in Q1.
What we're seeing so far in Q. too.
And how we're thinking about the business for the rest of 2020.
First of all I would like to reiterate what Dick and Scott said.
I am extremely proud of how our company has responded to the crisis.
And then those yeah, the energy and efforts of our employees in support of our customers and each other.
It is truly inspiring.
Now with regard to our business trends in Q1.
Outside of China, our businesses operating normally through the first two months or the core.
We had a great deal of momentum momentum coming out of our sales kick off in January.
And we're tracking to a salad quarter and year.
However, as you know.
We do a significant amount of our business in the last two weeks of the last month or the court.
And we saw.
Answer will fall off and engagement during that time in a shelter in place and other restrictions were instituted across geography.
Affecting our ability to conduct business as usual.
This extraordinary situation negatively impacted the clothes out of our corridor.
Directly influence the outcome of our reported key metric.
And you're our growth rate cash flow and recurring revenue.
Coming into the quarter, we had some known sure.
Primarily from a legacy retailer that has been in bankruptcy proceedings any large credit card oriented financial company that has been vocal about transitioning appeared data for the last several years.
Our plan, including plenty of incremental opportunities to offset that's known activity in the corner.
But what the uncertainties due to Cove at 19.
They didn't entirely material.
Impacting our report in a year our growth and recurring revenue.
Yeah.
And with over 4 million in foreign currency headlines.
And an inability to get all renewals completed in a timely manner.
Resulted in a sequential declining recurring revenue as compared to queue for 2019.
Several of these transactions closed in April.
We will see some incremental impact from the retailer going through the bankruptcy proceedings in the second quarter.
We know no other incremental sure of this magnitude going forward.
And we have not seen material increase in unexpected sure that's far in the second quarter.
All of which are positive for us moving forward.
Particularly given the composition of our customer base, which I will speak to shortly.
That's a perpetual revenue it with higher than we expected as a few customers preferred to use cap that execute purchases.
And we see some signs that this trend potentially might continue through the year given the cove at 19 environment we are in.
That's for consulting revenue. It was also negatively impacted during the transition to work from home and shelter and play and.
And some projects were suspended and or delayed.
Total gross margins increase 260 basis points a year over year due to continued mix.
Higher margin recurring revenue.
On the other hand recurring gross margin or down over 300 basis points due to the increase mix of lower margin cloud revenues.
And the impact of F.X. revaluation as the sudden shipped in developing markets currency rate.
Which we cannot hedge.
Created an incremental head.
We we remain pleased with our progress in the cloud any <unk> well gross margin to expand substantially over the next 18 to 24 months.
We also continued to expect total gross margins to be up year over year, even with a modest increase in perpetual revenue assumptions.
Turning too expensive.
And D. expenses were down 10% as a result of Reprioritizing certain initiative and the related costs actions, we took him queue for.
We are planning to reallocate that spend two weeks celery dark cloud effort.
And R. and D. spend is likely to be flat slightly up for the year.
The increase in S.G.N.A. spend can be attributed to investments we are making in partners.
And customer success.
As well as amortization of commissions expense, given our transition to some to a subscription model during 2019.
For the year.
We expect S.G.N.A. to be a low to mid single digits.
Taken together, we expect topics to be up low single did however, we have a number of contingency plans in place to modified if demand trends weekend versus what we see in our pipeline.
Burning to free cash flow.
Clearly experienced cats collection delays late in the corner from cool from coal bed 19.
Resulting in a significantly missing our cats collection for cat.
<unk> by over 39.
And that negatively impacted free cash flow in the corner.
However, we have substantially collected these payments in April.
<unk> subsequent to quarter in.
We have experienced request for extended payment terms from some customers in vertical that experienced an outsider impact from the pandemic.
And we have largely accommodated those requests.
Support our customers through these trying times.
Turning to the balance sheet. In addition to the cats collections impact on D.S. So.
We did see an impact on deferred revenue due to delays in closing deals and customers getting P.O.'s approved to enable in Boise as companies transition to work from home and late March.
In addition to step back at a negative billings impact on deferred revenue of nearly 40 million.
Our customer base consists of the largest and most stable companies in the world.
They are enterprise customers not S.M.B. customers.
And our growth prospects for the year.
As it has been for the last few years of R. transformations.
Is predicated on our existing customer base.
No.
Having to attract new logo.
Which in the current environment is difficult at best.
We don't normally breakout revenue by vertical but given the extraordinary time, we want to provide additional transparency to help investors understand the dynamic with our bid.
And customer base.
We have large customers in certain sectors of retail.
Hospitality and traveling transportation verticals, which have been particularly hard hit by cold at 19.
However.
These customers represented less than 12 per cent of our 2019 revenue.
And the other hand.
Financial services.
Telecommunication.
Government and healthcare customers make up over 60% of our revenue and these vertical have remained silent.
Our overall business remains robot.
And although or supply chain has seen minor impact.
We have not been impaired in our ability to deliver product or provide support to our customers.
In addition, we have a number of contingency plans in place for Oh come in corners, and do not expect to see significant disruption in our ability to deliver it to our customers.
Our financial position remains very strong.
It's roughly 150 million in excess cash.
Significant room within our deck covenants.
And a 400 million revolver, which we don't currently planned to draw.
In addition.
We continue to have plenty of access to credit to support our capitalize least programs.
However.
We do believe it's white to spend our share buyback program until further notice.
We bought back approximately 3.7 million shares in Q1.
In an average price of $20.52.
Or 75 million.
As a result are full year expected weighted average share account is approximately 111 million shares assuming no additional share repurchase.
No turning to our outlook for the remainder of the year.
Through April we obtain a high level of engagement with our customers, albeit virtually.
In a very high level of deal activity in proposals for cute too.
Obviously, the current conditions make the clothes rates of this activity difficult to <unk>.
And we we expect it will take longer to get deals done.
But it provides incremental confidence in the resilience of our business model during this unprecedented time.
We have also seen the majority of our consulting project moved to remote.
And have been able to deliver on project definitely this plane.
We have been pressed by how quickly our consulting organization was able to pivot to a remote work environment and are proud of their ability to deliver on our existing agreed.
Oh well.
We have seen and continued to expect to see new consulting projects being delayed or canceled.
While our customers focus on getting through this pandemic.
And expect this will significantly impact our consulting revenues for the here.
We have scrubbing type one.
Despite the disruptions to our business.
We have only seen it come down modestly.
And it remains supportive of our original A. are grown died.
So with less cushion.
However, given the macro uncertainty in the second half we believe it's wise to withdraw or previously unknown annual guide.
Well <unk> on or two to call and keep you updated as the year progressive.
We remain confident that we will see solid A.R.R. grow.
Improve free cash flow versus the prior year, which we still believe with the bottom.
And recurring revenue for the full year greater than the prior year.
But the magnitude of such growth will ultimately depend on the shape and timing other recovery.
Remember.
We can make up your our growth in a day like closing significant deal for free cash flow by making significant cats collections in a day.
But recurring revenue recognition.
They are grown.
Over the time remain left in the calendar year.
And if a deal takes longer than expected to close it makes a recurring revenue grow more unpredictable and the current environment.
We have several contingency plans in place depending on how long the pandemic interruptions laugh and what the second half spending environment looks like.
Right now.
Focuses on protecting job.
Cutting variable expense.
In areas like travelling entertained.
Oh toning, our tear data universe customer in partner Com.
And moving other marketing events to virtual of that.
While continuing our efforts in the cloud <unk>.
Keeping our relationship with customers God address.
And supporting our employee.
We believe during certain times incumbency is a big advantage.
We are going to press that advantage, while supporting our customers.
We are guiding to Q2 recurring revenue and nine gap earnings per share.
Recurring revenue is expected to be between 348 in 352 million.
And non gas G.P.S. between 19 cents.
And to 22%.
We believe we are being unfortunately conservative in its outlook and the low end of our recurring revenue guidance. Some limited new business in the last two months or the core.
This is not at all indicative of our pipeline.
Wanted to make sure we can deliver runner up given the current overall Max.
Oh, you're non gap affected tax rate is anticipated to be approximately 23%.
However, the quarterly ethnic them tax rate could be somewhat variable on a quarter to quarter basis. This year.
As you saw this quarter with the unanticipated tax benefit which will reverse out in future corners, as our pretax earnings increase.
Q to non gap P.P.S. assumes a tax rate of 27% in a weighted average share account of approximately 110 million.
As a reminder.
We haven't heard <unk> discussion document that provides additional details on key business segments posted on the I.R. website.
And with that.
Open it up to questions.
[noise]. Thank you if you would like to ask a question at this time. Please press start one on your telephone handset.
Our first question comes from <unk> from Morgan Stanley. Please go ahead. Your line is open.
Thank you could ask near <unk> Congratulations on your retirement, Steve look forward to working with you.
Wanting to ask <unk> a question about recurring revenue, which is you highlighted went down sequentially and not as if you had closed never knew well that got push <unk> April <unk> recurring revenue has still fallen and I know you're guiding could growth for the year, but you know.
<unk> theirs and you know many different scenarios of what could play out what would have to happen for recurring revenue to be down yearonyear.
Thanks, Yeah, great. Thanks, Yep. Thank you Katie yeah, so yeah, clearly not being able to complete our renewals timely had some impact F.X. had a big impact on the recurring line as well as almost $4 million.
Dollars and so when you add those in plus what the opportunities. We had you know in March not just pushed into April we would have you know with the effects.
You know, we would've been right at the high end about rage, and so on a full year basis.
For recurring revenue to be lower than a year ago.
We would have to see a dramatic.
Decline in or anticipated A.R. grows.
Because we don't see you know sort of unexpected things happening.
You know from from the churn side of our business. So I, we just don't see that anticipate that it would have to mean.
You know little to no A.R. girls at all for the year, which we just don't expect.
Okay. Thank you.
[noise]. Thank you hadn't dire next question comes from.
<unk> <unk> from Bank of America. Your line is open.
Yes. Thank you.
I think originally the expectation coming into the year was that consulting margins would improve significantly to 2020 certainly.
<unk> rates are getting hit now because of code would if we maintain this trajectory of decline on sort of the consulting.
Avenue, how should we think about the gross margin trajectory given some of the actions that are being already taken for 2020 and I have a quick follow.
Yeah. So <unk> clearly, we're striving for consulting margin improvement in 2020.
Over 2019, despite the impacts from coal bed 19, obviously, we're going to monitor that.
Very carefully there were a number of things that we we did coming out of Q. for into Q1 or two a line too.
More of ours more of our strategic things that Scott as as talked about in in his prepared remarks last quarter as well as this quarter.
And and but also keep in mind that you know the consulting margins improve across the are historically at Tara data Q1 has clearly been the lowest gross margin quarter and then it builds throughout to queue for but on a full year basis. We are clearly striving for improved gross margins year over year.
[noise], Okay, Thanks American and Scott it it feels like most people are seeing an acceleration to their plowed from their customer base sounds just curious about you have comment about.
Almost a slow down inch prioritizing cloud at some of your customers are you, suggesting that the <unk> or was that just a couple of you know customers, where you where you experience I'm just trying to understand the context of the common thank you.
Yeah. That's that's a great question Monte you know what we're focused on is a very high end of the enterprise market right. So the largest companies in the world and the movement large workloads and complex workloads is sort of the equivalent of movie.
In E.R.P. assist I'm more and more complex application. It takes a lot of time and investment that takes a lot of incremental effect on the part of the customer. What we saw was the number of customers. You know immediately cut things that were discretional spending for them and among that were.
Fix related investments to move workloads from on crime to the cloud. So I would say that things that are simple and easy for customers to move to the cloud.
That moving a certainly occurring in the marketplace, but in our state because of the complexity of what we do and moving that into the cloud requires a great deal of engineering effort programmers data scientists and frankly the customers run their visitor centre data you know if they're funny.
<unk> closes there you know fraud detection, what they do for compliance. It's all you know highly highly mission critical so they have to make sure when they make these moves that they're done with sort of a fivenines orientation. So but I would say is in our case. It is definitely a slow the customers.
Down a little bit because they're cutting discretionary project in spending they can sit on premise and frankly, how we have better economic there in the short term. So they can afford to put the investments in the movie into cloud the the macro a trend of moving the quality is not changing but in the short term we did see impose cut project.
Slowed down a little bit just to save up x. and their environment hopefully that answers your question.
Okay. Thank you so.
[laughter]. Thank you had our next question comes from Derek would affirm Cowan. Please go ahead <unk>.
Oh thanks.
Given the fact that that your systems are in physical data centers can you just talk about how how customers are managing <unk> and how much kind of remote work has impacted their ability to to make new infrastructure investments and.
Are there are the deal delays, just then those kind of distress verticals or or is kind of remote were causing it to be delayed across a lot of vertical the follow up.
Sure sure things Derek I'll take the question you know.
The first thing I would say is the delays that we saw at the end of March were across all verticals everybody was impacted everybody had to figure out how to shelter and plays try to get their family saved by using it you know into a remote working environment.
And frankly as people made the move on to a shelter and play some working from home. Some companies were more prepared to do that and others. So the delays that we saw were across you know all verticals not just those that were impacted in terms of supporting the customers on premise.
The vast majority of what we do we can actually do remotely and we were set up to do that well in advance to this crisis.
I'm the only exceptions it'd be you know physical components that go bad like a process or or drive or something that needs to have hands on the equipment to make a change in in that case, we are working with our customers to swap those components. We've had no significant you know always is no significant downtime per customers.
And any of those support request, we've been able to address but the vast vast majority of them were able to do remotely. The same is true relatives or the way the customers interact with our environment. They also are able to.
Troubleshoot to program to test to actually run the operational side remotely, though for them again, they had to make the transition to work from home, but they were able to very effectively keep our platforms running the business and then we saw a a lot of customers that came to US and said you know we have like a big coven related.
Activities. They could have been request from health care providers from the government or just to deal with we can figure he never businesses and we did a lot to support customers by allowing them to use additional capacity at no cost to them to kind of make it through the crisis, so sort of in it all hands on Dec, but we've been able to effectively support.
Them remotely.
Did you have a follow up right that.
Yeah, that's helpful color and a a follow up for Mark you had been looking for a 150 million and free cash flow and others. Some foreign currency head, there's certainly delayed payment terms that sound like our continuing acute to any ballpark as to how you feel about that number.
At this point.
Yeah. So first of all yeah, all the delay.
Ask collection activity over the last call at 810 business days or March all came in April.
More off to a great start on a full your basis, we clearly we'll have free castle in excess of what we did a year ago.
We feel good about that we still feel that 19 was the bottom.
You know <unk> you know we're.
We'll see how things are the timing go out, but no I would expect that we're going to see a very.
Oh, very nice up ticking free cash flow and Twentytwenty versus 2019.
Okay alright. Thanks.
[laughter]. Thank you and our next question comes from Tyler ride to keep from city you're line is open.
[noise] Hey, Thanks, a lot to take my question. So you all are doing well I wanted to follow up just on the commentary on what you're seeing so far in April maybe if you could just kinda compare how the the business environment is traveling so far relative to maybe a year ago and then.
If you could just kinda flush out what what you're expecting in terms of you know how that progress this or the end of the quarter to to hit your guidance. Thank you.
Yeah, I don't know I'll have got way in here too in in a second but clearly we're saying.
Most of activity as we mentioned on our.
Prepared remarks around the activity in the level of engagement that we've seen obviously virtually.
It's been.
A lot you know lots of activity happening and engagement. There. We've closed several of the transactions that we're hopeful that close in March ended up coming in in the first part of first half of of April. So we feel good about how that's tracking you know Scott can provide some color and how he sees it you know going across.
The balance.
Of the corridor.
But clearly you know the incumbent.
You know, we're the incumbent and that type of customer base in the long.
Oh really long term relationships, we've had with our customers is is is boating well for us, but I'll I'll, let Scott comments as well.
Yeah, Tyler I would I would say is you know we saw a dramatic drop off an activity and just interactions with customers in that late March time frame, where they were not able to take meetings in calls and we had a lot of things that were activities that would've helped us to get deals done that were push.
But in early April thing picked up significantly and by mid April we were in you know a regular meeting cadence with our customers and they had pivoted completely to virtual interactions and so had we and I think one of the things that unique about Tara data is our customer relationships.
Are you know 10, 15 20 years and late then building relationships is generally done face to face the net whiteboard and over a meal, but maintaining the relationships and continuing to grow them. You know that can be done over technologies. So as we made the shift in April what we saw.
It was the amount of interaction we have with our customers has actually gone up versus what we would traditionally do in a in person sales model because we can do more touches with more people, but the relationships that we had built over many years that relationship equity really paid off for us. So I think the fact.
That we are an incumbent that we've done with them a long time that we have contracts with them that you have it just seems systems in place, but the capacity to grow on the man.
Really provides them you know the environment that says you know as as an incumbent they know well, we can't quite quickly and easily get back to working together virtually where I would say that's much more difficult for somebody that's trying to land you logos or build trust or put in new systems or do proof of concept. So are.
Outlook as we look ahead for the year from the team has been you know optimistic when we look at the activities.
That we have an April and the deals that came over from Q1.
We have been solid we've had very little slip in terms of the things that came from Q1 acute too and our overall deal volume for the year in our pipeline is very similar to what it was going in the cold in crisis. So.
The Big question for everybody is close rates, you know customers don't yet know exactly what they're spending environment is going to be when you talk to them, they're not sure what their business is gonna be it the the U.R.D. shape recovery and what will be the topics and Catholics budgets are able to apply.
Who are projects and others and so we were working together and we haven't seen people pulled back but obviously they afterwards to their budgets are across and see as the economy begins to come back.
Hopefully the answers your question Tyler Yeah.
Yeah.
That's helpful maybe.
Follow up for from our <unk> and feel free to jump in Scott It makes sense, but I'm just as you think about your you know you're prior recurring revenue Guy.
In in understanding that you do have a nice recurring model here I guess, what what made you make the decision to suspend guidance for the full year I mean sounds like you're not seeing anything unusual in terms of turn rates and while you did see a drop off in business activity in March it seems like things are.
You know at least somewhat back to normal so I guess <unk> you know what what made you suspend guidance and then as you think about kinda incremental A.R.R. This year, how much of it is kinda coming from newer projects and new workloads versus you know existing yeah perpetual system.
They're deals that are out there up version. Thank you.
Yeah. So Tyler you know the decision on guys to just given all the <unk> the macro uncertainty ones is autonomy gonna reopened.
You know like I mentioned in my prepared remarks, we can see a lot of A.R. girl in a day right all the way up to 12 31 and.
And achieve a our growth.
You know aspirations on what we see but depending on when that falls and when it turns on to be advertising revenue makes the recurring revenue guide much more unpredictable, but we're clearly you know year over year on a quarterly basis expect more than we had in in <unk> you know in each quarter.
I'm a year ago, which tells US we're gonna see recurring revenue grader.
And then what we saw from last year, how much more is going to depend on that shape and timing or that of that recovery, but just felt for us while or pipeline is robust we've got a great customer base. The prudent thing here to do is you know just spend the the annual games now we'll reassess on a cue to cause we see what transpires.
You know by the by the the the federal state local foreign governments here over the next 90 days I'll fast or things going to truly open up and what that spending environment might look like.
Yeah, I guess, the only thing I would would add to that is as you talk to customers. They are yet to declare what they believe they're spending environment is going to be like in particular in the second half and until we have a better understanding oh, how their budget situations are going.
You know unfold for the year I think it's prudent for us to pull the guidance.
That's not a lack of confidence in our part, but you know the customers today.
Talk to them will tell you they want to continue in conversation at work forward on the projects.
They're going to have available to spend as the year goes on his and I know and they're still working through that.
<unk> and then just to reiterate you know our assumptions are coming from our existing customer base not new logo. So that's another important point.
Thank you and again, if he would like to ask a question. Please press star one on your telephone handset.
Our next question comes from <unk> <unk> from Barclays. Your line is open.
He thanks to take my question and Hope you stay safe and a nice to see you do to see your appointment quick question for me like a you talked earlier about the industry said I impacted then that's the only making about 15% of your you know off the total cost on base can you talk a little bit about kind of Ti the rest of the.
<unk> like financial services Baloney realize later in terms of bad loans, what's coming their way or than gossip is a little bit of a mass at the moment can you just told like how do you quantify that 15% and <unk> and then just maybe talk a little bit about your expectations for industries, because the one thing we saw.
Psychos, whereas that can you blame one part of the economy, but a recession is usually a bit more broad based thank you.
Yeah. So raimo this is mark so yeah, we said the the you know hospitality.
Traveled transportation and certain sectors or retail you know that been particularly hard yeah.
Approximately 12 per cent of our our our our revenue.
So, but other parts of retail you know, where we have presents are actually doing quite well.
You know.
Financial services.
The communication doing quite well.
That along with government [noise] is over 60% of our revenue so.
[noise] are verticals, where you know our largest <unk> verticals. You know are doing are doing quite well at the moment. So we'll see.
Oh and keep in mind, you know even in financial services.
Our customers are the largest banks in the world there are not regional local banks. These are the biggest most stable companies in the world. These are big Big enterprise customers not.
S.M.B. or regionalized are smaller you know it's it's so that also bodes well for us just given the nature of our customer base and again the incumbent status, we have with them that we've had for decades.
Yeah Okay.
Oh I have quite I might get stab at 12% does include our oil and gas so.
Okay. Okay. That's really helpful. Thank you and then the on team in terms. So you will be so like the big crisis moments in March and people are kind of asking for that what's your expectation for the rest of the year do you think we are beyond that kind of the extreme crisis situation then <unk>.
Come more normal again, I'm discussing stare or like what what's your planning assumptions as we go for this year.
Yeah across across a bunch of we didn't seem much in in March clearly we were you know payments that were do came late as everybody was scrambling to figure out how to shelter in place and where they were going to do that and we're like my family. In particular, if you had kids in college like what do I do like get them home all those kinds of things.
So subsequent to quarter in in certain of these [noise].
Some of our customers have come back and said Hey can we get.
Extended payment terms things that attempts there were doing Q2 and push them up to Q3 and those kinds of things we've largely kept it inside 2020.
And in some cases, it's not across the board, we don't expect that to change dramatically going forward. So, but we clearly wanted to be there or companies you know like the airline industry, you know et cetera that had a tough time, so they figured out what kind of government assistance there.
Gonna get and so forth and so we feel good about it we don't believe it's kinda <unk> have a significant impact across the balance of the year.
Okay. Okay. Thank you stay safe guys huh.
[noise] [noise]. Thank you in that concludes the questions just <unk>. This time altering the call back to victory <unk> for closing remarks.
[noise] closing as we move to this unprecedented time, we're gonna keep our focus on our top priorities.
Guiding our customers through the use of data that provides insights they need we're going to continue to drive improvements in our products.
We're going to <unk> <unk> in the execution that delivers reasonable financial results.
As Steve comes on Board, where you're confident that he will take care of data to the next level. Thank you all very much.
Thank you ladies and gentlemen, this concludes our call. We appreciate you join me.
You may now disconnect.
[noise] Oh whoa.