Q1 2020 Earnings Call
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Excuse me, ladies and gentlemen, this is the operator.
Today's call will they get momentarily.
Until that time realize will remain on a music hold thank you for your patience.
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Good morning, ladies and gentlemen, welcome to the Conexus, Inc fiscal 2021st quarter Conference call.
At this time all participants are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
[noise] instructions will be provided at that time for you to queue up for questions.
I like to remind everyone.
This call is being recorded today Thursday may 720 20.
Oh now turn the call over to recall wants worth.
Vice President of Investor Relations that connects to speak.
Please go ahead Mr Wadsworth.
Thanks, operator, good morning at welcome to the can access earnings call I understand that there have been some technical issues get any people logged into the conference a sporting we appreciate your patience.
Today, we'll be discussing our first quarter results, which we issued which we issued pardon me after closing markets yesterday with me on the color Johnson card or President and Chief Executive Officer, and Richard low and our Chief Financial Officer.
Before we get started I want to emphasize that some of the information discussing this call is based on information out of the today May 720, 20 and contains forward looking statements that involved risks and uncertainties.
Actual results may differ materially from those set forth in such statements.
For discussion of these risks and uncertainties you should review the forward looking statements disclosure in the earnings press release as well as in <unk> silence.
During this call, we'll discuss I.F. harass results and non I.F.R.S. financial measures.
Conciliation between I FRS results and no apparatus financial measures is available in earnings press release, ending their mdna, both which can be found in the Investor Relations section of our website Tenaxis Dot com.
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Participants are advised that the web cast of Lodge and is also being recorded per play dot purposes are tied to the web cast will be made available and you'd best relations section of our website.
I do this cold or the web cast archive may be recorded or otherwise reproduced are distributed without prior written permission from Texas.
<unk>, we'll discuss the highlights or per quarter as well as recent business Feldman's, followed by Richard Cool review, our financial results outlook.
Finally journal makes him closing statements compare opening up the line for questions Oh, No turn the call to John.
Thank you Rick good morning, and thank you for joining us today.
Curse, let me say that our thoughts during this crisis or primarily for the health of our employees our customers partners shareholders suppliers.
And all of their loved ones nothing could be more important than their wellbeing.
We also extend our deepest thanks to front line and essential service workers everywhere, we are deeply saddened by the horrible las as being experienced globally and sincerely hope that you and yours are healthy and safe.
[noise] notwithstanding these unprecedented times I'm pleased to report that our first quarter results were very strong across the board, including Sass revenue growth of 24% to 34 million.
Total revenue growth at 15% to 52.8 million.
And adjusted if it got 29% of revenue.
These results were driven by our expanding base multi <unk> subscription contracts and they're corresponding longterm backlog.
It is a business model that is serving as well during these unique in difficult times.
During Q1, we were happy to experience it growing sales pipeline <unk>, we continue to expand relationships customers and we won several new customers, including one of the world's largest consumer products companies. A household name, we hope to be able to share.
In the future.
We were able to announce that pair space Technicolor one of our new customers in 2019 as finished the first phase of its global deployment of rapid response for it's connected home business.
He also continued to announce new partnerships, including one with four flow Europeans software in consultancy firm with more than 20 years of supply chain expertise and 15 locations globally.
I'm very pleased that our team has responded so well to the restrictions imposed by Covin 19.
Power level of engagement with customers and prospects remains high.
Throat the quarter, we were able to effectively deliver professional services to our customers and advanced sales engagements. Despite the unusual circumstances.
Even more ordinary times, we typically undertake many of our sales and services activities remotely.
Well nothing is normal right now I'm very pleased with our progress.
Well some opportunities of experience some delay as companies adjust their ways of working our confidence in our pipeline remains high and sales activity continues to progress.
I believe there has never been more attention on global supply chain resilience and the need to respond to daily disruption.
As a result, we are seeing healthy growth.
In overall pipeline from every sector and every geography.
Ultimately it is.
Challenging to predict how current circumstances will affect deals in most however, based on our best information.
Are very confident in achieving our initial revenue guidance for the year.
Richard will elaborate on this shortly.
We are full steam ahead on our planned hiring investments for 2020.
All of which were initially committed to based on their long term value to can access.
Continuing to build our r. and D. team.
We're adding sales and marketing personnel.
We have made recent hires into our professional services group.
No plans have changed.
The hiring process is different as interviews take place remotely and it's kind, it's very carefully consider making a change in this on certain environment.
But we are pushing forward to ensure that we are ready for the strong demand that we anticipate ahead.
As a team we are hardened by the notion that can access is helping our customers to pilot through these turbulent times.
Many of you would have seen our blog post.
Under recent sharp increase in customer usage of rapid response during the first quarter the usage rate increased by over 20%.
We are seeing much more collaboration on new planning scenarios to respond to this incredibly dynamic situation.
We've seen increased usage roll across geography, and vertical markets. Following the path of disruption in the weight of this virus.
These bikes and usage speak directly to our growing value to customers.
What's that alternate call over to Richard to provide further commentary on the financials for the quarter and their outlook.
Thank you John a good morning, as a reminder, unless noted otherwise all figures report is on today's call our in U.S. dollars under I.F.R.S.
Total revenue in the first quarter increased 15% of 52.8 million driven primarily by Sass revenue, which group, 24% to 34 million and by 54% growth in professional services revenue.
Professional services revenues driven by a number of factors, including the number size and timing of customer projects underway as well as the amount of work being directed by partners as John noted or death of experience and working virtually with customers allowed us to quickly adjust and leverage our people.
And processes to ensure continued customer deployment an ongoing support.
Are subscription term license revenue in Q1 was 4.9 million.
Consistent with our previous communication.
As our investors and analysts appreciate.
Subscription term license revenue varies quarter to quarter and year to year simply based on the timing of the individual underlying subscription contract renewal dates for customers who hosts their subscription on their premises.
Are investor website has an example of this accounting.
We remain pleased with a diversity and strength of our revenue base for the corridor, our 10 largest customers accounted for 32% of total revenues with no individual customer accounting for greater than 10 per cent of total revenues.
Gross profit group, 10% to 36.9 million.
Increase was driven by the growth and sauce and professional services revenue, partially offset by increased investment center delivery and support teams as well as our data center.
Cost of revenue grew largely due to headcount additions, including the acquisition upon in late January 2020.
Q1, 2020, gross margin was 70% compared to 73% and Q1 2019 due to a higher level of subscription turn license in 2019.
[noise] I remind her that S. description term license revenue represents the right to use component of the multiple years description agreement. It is fully recognized in the first month or the term and effectively contributes 100% margin.
Profit decreased by 20% during the quarter to 5.6 million or 20 cents per diluted share compared to 26 cents per share Q1 2019.
Adjusted EBITDA for the first quarter was down 6% to 15.1 million or 29% of revenue compared to 35% in Q1 of 2019.
These changes were primarily related to the margin impact I just noted regarding the timing of subscription term license revenue.
Well as they increase investment in our sales and marketing.
Product and delivery organizations.
In addition, travel inserting that costs were lower in the last month with a quarter and we anticipate these savings to continue whilst restrictions are in place.
As John noted, we continue to hire across the globe in line with our investments targeted.
Q1 cash from operating activities was up 12%.
21 billion.
From December 2019 close.
How's that March 31st 2020 cash cash equivalence in short term investments totalled 233.6 million.
[noise], our minimum contracted revenue backlog remains strong.
As of March 31st 2020.
It was 300, a 44.9 million as detailed and note 13 to our financials.
[noise]. This amount includes 310.8 million of sauce revenue backlog.
The backlog they'll be recognized over the following periods.
118.6 million, we recognized in the remainder of 2020, which 102.4 million relates to size.
[noise] 108.1 million be recognized and 2021 of which 98.
Point 2 million relates to fast business and 118.2 million it will be recognized in fiscal 2022, and later I've, which 110.1 million relates to assess business.
Total bookings and Q1 number 47.5 million, which <unk> bookings for 34.2 million.
That's you know given the nature of our enterprise sales model and it's extended sales cycles bookings vary by period, depending upon the timing of new customer wins and existing customer expansion of renewal schedules.
[noise] based on our strong feedback blog and our assessment of current market conditions in business outlook. We are pleased to be in a position to read it reiterate all aspects of guidance for fiscal Twentytwenty. The details of which you will have seen it on news released today.
At our queue for 2019 news release.
We continue to invest in our business, adding people and capabilities, we have a very strong backlog and follow.
At the same time, given current travel restrictions, we do anticipate really realizing some cost savings well. These factors may support stronger adjusted either that she meant for 2020 in light of our investment plans and recognizing the uncertainty and the current environment. We believe it is prudent to reiterate.
Are 20% to 23% adjusted EBITDA expectations for <unk> Twentytwenty, we will continue to monitor and respond to conditions that would provide an update during our two Q. conference call.
Thank you for continue supportive can access and with that I turned the call back over to job.
Thank you Richard never before his term supply chain been more prominent in the public consciousness.
We all feel it's important to every time, we enter the grocery store or pharmacy, and hope that the essential items, we need our on the shelves.
Like no event before it cobin 19 has highlighted the need for supply chain agility.
And the continuous synchronization gained uniqueness of our concurrent planning value proposition.
The need for end to end real time supply chain visibility and planning flexibility is now obvious even to us as consumers.
I assure you that it's much more obvious so the manufacturers of the critical goods. We are seeking many of which are becoming can access prospects.
While it hasn't been the start of the year that anyone expected.
<unk> would ever hope for I, certainly feel grateful.
[noise] grateful primarily that that can access team has to date been healthy.
Grateful to all the front line workers that have helped ensure that.
[noise] grateful that we offer a software platform that is being leveraged more than ever to help our customers pilot through these unprecedented and turbulent times.
Grateful that our business, while not immune to this environment continues to add major customers expand existing relationships.
Build pipeline and demonstrate resilience during this time.
Finally on behalf of can access I'm grateful for your support as always thank you for taking the time to join US on the call would that alternative line over to the operator for Q. and I.
And that.
And at this time, if you would like to ask a question simply press star in the number one on your telephone keypad.
Yeah.
And our first question comes from a line of Gus <unk> from T.I. financial.
Oh, great. Thanks, that's not great quarter fancy, taking the question just.
Guess, what the question is this <unk> historically your sales and marketing strategy has been direct sales going to rescue the companies, but I'm just wondering in the current environment given the heightened important that we're seeing supply change change is there any is there any value to maybe changing the sales and marketing strategy like isn't this is this.
Some time, maybe where you could start to advertise more broadly to make a new customers and you industries more aware of your solution and what it can do and then I guess also given again the heightened important to supply chains is there any chance that you're seeing your 18 months sales cycle, perhaps contract a bit.
Ah great questions Gosh. Thank you you know to to to be clear actually our our sales our sales cycles in our sales process. If you will our in our to work hand in hand, with our with our partner ecosystem.
So again in Q1 as as we've experienced in previous quarters. The vast majority of net new business has been in direct collaboration with with our partners and so.
This is this is what is allowing us to expand m- more rapid pace in in in terms of getting a you know a broader pipeline. So we continue down that path and and certainly.
I think that if it is serving us well in terms of Ah you know contracting sales cycles, we haven't necessarily seen a contraction in fact I mentioned that we have seen some.
Some delay and I wouldn't say, we've seen any derailment at all I would say we've seen some delay.
As you know prospects.
I'm in a very short time period, we're forced to change their ways of working and deal with you know things like absenteeism in factories are going up all kinds of challenges hitting their a day to day business notwithstanding I completely.
<unk>, you know I'd say, a a very disruptive shift in in demand patterns and demand.
Demand signals and so you know I think that we will ultimately come out of the stronger I think you know, we're seeing more than ever before the need to respond to disruptions is I I like to say every supply chain practitioner has their hands on the wheel right now you can't Master your way out of this are you.
To have your hands on the wheel and feel every vibration and respond accordingly, and and obviously you know our value proposition has been very much steeped in that that philosophy.
Great. Thank you.
Our next question comes from a line of Daniel Chan from T.D. Securities.
Good morning, guys I congratulate don't get corridor I think it's great you done with bronchitis, let alone maintain the numbers when most companies all withdrawing its so I like things changed since you gave your last update February and what are you seeing that's giving you the competence to reiterate it.
Well, thank you down and and we appreciate that and and you know our corpus is driven by a number of factors. You know first you know the benefits of subscription particular subscription with enterprise customers and they're long term long-term nature as you can see from you know the between the revenue recognize.
Eyes, and Q. <unk> and then the backlog 100 or two backlog that represents about 92% of the mid term of the consensus that's that's out there and it's actually a bit is that that range for our our guys as well so.
That's where the first and foremost the health of a thought all that John indicated and have the capability of all of our over extended sales team. So not only are are direct sales team, but those working in tandem with with our partners as well as marketing efforts. So it's it's a number of factors you know S.S. prudent you know.
This is professionals, we do have to recognize that you know these are you know different times and and you know there are there are a number of factors that you know that's a that sales cycle, but it's it's primarily first and foremost with regards to that the second element then it is clearly on the expense side of things.
And we're very fortunate we being able to continue to attract.
And retain yeah, you know some some some strong you know employees and and continue to build a new theater. So yeah. We have a good visibility with regards to that that expansion of costs are so it's it's those too you know two factors were privilege to have that type of the visibility.
Okay. Thanks for that.
And just the competitive landscape changes at all in the current environment came down a shift there were all essentially in the same circumstance I will say that you know the value.
Proposition that we provide this notion of concurrent planning and agility.
Is definitely getting a lot of attention you know there are many articles being written about this the most recent one I read yesterday from Crimson and coat.
Oh it was fantastic.
Really really drives home the need for this for this philosophy and so you know our as I stated the pipeline has grown.
They just pass and our activity are <unk>.
Sales activity just comes back to your first question remains very high virtual platform for US you know this isn't foreign we're just doing more of them.
And so.
I'm driving our confidence.
Great. Thank you.
Yeah.
Our next question comes from a line of Paul Treiber from our B.C. capital.
Thanks, very much good morning.
Well <unk> will be if you could elaborate a little bit on your last comment what's interesting is quarter proportion services bone sequentially.
You speak your ability to lead deployment in this environment with the work of constructions historically, how much have you been already do remotely and can you effectively goal from prospect to hold employment all completely remotely.
Yeah. So just a quick answer to your last question is yes, you know we have been actually doing a lot of from other current state in professional services and obviously, we you know we posted you know a healthy healthy performance there I will tell.
<unk> <unk>, we had seen some delay in project activity it has been more than off.
Sad acceleration in other projects as you know as our our customers are desperate to go alive, because they know her end and so.
You know to some extent you know while people are <unk> are spending less time on airplanes <unk> spending more time with their fingers on keyboards.
And you know that that is having a a positive effect. So I you know hopefully the answers your.
Question Paul's Great. One you know where the answer is yes. We you know, we're certainly saying a lot of sales act no with with video conferences and and the like and video based demonstrations all of which are increased.
At the moment and a and deployment activity as well. So you know it's a virtual world.
Magnitude the dropping trombone expense an event Ah constant Q1, and then just pull up.
Ballpark point of view.
<unk> rather than you Oh, yet you know percentage directly just because you know it it's kind of Barry and and as you can appreciate yeah. There are certain events.
Yeah for instance, or annual customer event that and other third party events are quite heavily weighted towards q. far so they're going to the same find time. We're we're we're growing our expense base with with a new people investments and so on and so.
And so you know the focus really is you know blending that that visibility that we have with our current expenses. So going for it we are seeing some opening up now and and and geography. So we also went anticipate there will be.
So returned to to travel level. So it's it's sort of a combination of those factor. So you know continued investment in the business the visibility the margin, that's where we're providing that that guys.
Yeah.
Thank you.
Yeah.
Yeah.
Our next question capital.
Hi, the morning, John can you expand on what you're seeing with respect to partner engagements I would think you're one of the few software categories that my pandemic. In consequently are you single arch S.I.'s wrap up a level of resources and attention.
[noise] at their directing towards you relative to park with endemic or has it that the pipeline has grown and I would say that activity continues you know current sales engagement.
That's in current sales campaigns.
Continuing happening remotely and and so I would say you know we've we've had a very healthy relationship you know.
Oh, the the partner Yeah. The global Alliance team has has been growing very steadily and.
With the Alliance partners.
Great by customer based on their unique circumstances.
It's a great question I you know, it's <unk>, it's been very interesting to watch.
How you know are the usage.
Ah their usage increases occurred over over time, it started with high Tech as you can imagine.
With with a lot of of Chinese based a raw material manufacturers and so on in that space <unk> subsequent to that in terms of.
You know what we're seeing a into by vertical I would say, there's not there's not a difference there we're not seeing any.
No one vertical over another experiencing.
Experience anything unique.
Okay and finally, there's been some press about how the body and then you start up alluded to this consequently are you seeing customers resonate a lot more with your scenario based approach or was that already happening even park and then <unk>.
I think the the evidence is just our our continued success and and our continued growth as a company.
Obviously during times like this you know as I said every practitioner has their hands on the wheel. This is not.
A situation where full automation.
Under under a storm like this actually works and more interestingly.
<unk>, we're all the data doesn't matter.
Mass based models that are you know that rely on historical.
To take this year's history into next year's projections and so again it comes back to something that we have been espousing for many years that.
It is it is far more potent to to be instantly accurate infinitely address sorry, then to focus on you know pure pure accuracy and our model has been around concurrent planning has been just.
I think about it in in terms of a sports team right [noise].
You can practice your skill and be an expert at your craft, but when you step on the field. The team that wins are the ones that that handle the conditions on the field and you never know what's gonna happen you know every day as it is a different day.
And so this notion of agility hyper agility continuous.
Synchronization of your supply chain.
You know absolute end to end visibility zero blindness across all functions.
This is the philosophy I think that will ultimately when the day.
That's great I'll pass line. Thanks.
Yeah.
And our next question uncomfortable from on line of Richard C. from National Bank financial.
Yes. Thank you I I recall, you get that it's really strong pipeline last quarter. When it comes it's quarter were there any inbound since a lockdowns that you had not been expecting so what I'm trying to get or where they're sort of <unk>.
So <unk> in downs coming in a given this backdrop and some of the challenges that.
I I would say nothing that that we have an expected we continue to be you know Richard.
You know it's to be.
Hyper razor focused and so we we continue to be hyper razor focused on the market verticals target marketing and the like that so the the pipeline has grown in every geography and I would say in every sector.
Notwithstanding you know there have been some delay.
In deal closures.
Huh.
Again as I as I mentioned, you know largely due to.
Had some customer saying you know we're short you know 40000 laptops [laughter] you know what have we have <unk>, it's those types of challenges that but <unk>.
Having to deal with.
But I I would say nothing unexpected.
Okay, Okay, I know <unk> <unk>.
Question earlier about the conditions that you're maintaining guys, but can you may be touch on some of the the the broad six during all assumptions you made around maintain guy and so you are you thinking that things are going to open up probably in June like if they're going to have at the same time round the world like maybe sort of share with us what you're thinking on that.
Short Richard the so.
You know at a sort of really.
Hi level I guess, you know there there's no are obviously a a revenue on the top line and you know again, we've we've talked about the strong visibility with regards to just the the foundation of a revenue.
And and.
That was a bit of an annuity. So there may be some lumpiness <unk> you know with again, that's rather than 92% that we have a record between recognize and backlog, that's where we're saying you know the 8% is going to be.
You know this juncture from you know renewals that we have visibility towards the level of new name customer wins and then the expansion new name business. You know. It's also then driven by our view as to the for the rest of the revenue element.
Primarily by that level of activity on the professional services because the other two revenue elements I may have support are also with a strong.
Really as well as description term license then it then it becomes a matter of being and and costs sales Oh, we've talked in terms of the visibility than we have to not only the current based on the expansion.
Oh allowance for contain growth, we do see again, you know opportunities to to.
You know maybe not stand at that level, depending upon part of best but you know this point in time, we think it's pretty to continue to invest at this high level.
Oh, and the business and so we're accounting for that and then a third element is on the 14 to 16 million dollar this range or so you know we we you know our nature of our business I won't say, it's is you know.
It's it's simple, but it it. It is you know it is less open to these their abilities of you know say a perpetual business or.
You know model that with with a higher degree of confidence.
Okay. Just the last one for me you know I think you're gonna be entered bailing, a bunch of sort of new products to make demands sense was so while them that we saw last year your user conference.
Has you know the backdrops are changing the roll out there and that's that's it for me. Thanks.
Yeah. So I missed a beat you know this.
Very interesting we were you know I'm running as.
<unk>.
<unk> organization, even prior to this situation happening we run out of space in our building and so very large group of individuals and so.
Transitioning you know the R.D. factory to a full work from home protocol happen.
Mr Protocol, and we just extend it to everyone <unk> and beta programs across the board. So I'd say, we're we're on track.
And our next question comes from a line of Paul steep from school she'll capital.
Right morning.
John <unk>, just a little bit a boat what you've seen with the levels engagement with sea level executives would you say.
Hesitate to use the word norm.
<unk> have have d. engagements now that we're sort of into me sort of leveled backup that people are now actually looking at pushing capital and wishing faster and further on deployment. So rapid response are we still them sort of this uneasy period for the next little while do you think.
Well I think you know time to value is on every senior executives.
<unk>.
Right now.
And you know with with rapid response.
Our customers can achieve like Technicolor pretty rapid time to value and as I stated earlier, you know one thing I'd say the motivation came from the senior executive some acceleration in the first.
Quarter, and we continue to experience that acceleration in project deck.
Tivity you know to get to go live milestone faster of dialogue with senior executives as it relates to you know prospects and again you know Ah.
We're seeing.
Hmm senior executives pushing towards a more rapid or go some scope in order to get to go life state and and regain some control over what they might describe.
That's great and then maybe other for either one of you what's been maybe the biggest surprise in terms of you know order intake.
Last little bit where you would have thought okay, maybe we'll see a little bit of a pause on some of these things, but it it's gone the other way.
Oh, well Oh, I think you know we do have a number of vertical vectors for growth and so you know I. Thank you for touching on though so yes, we have seen expansion, we've seen expansions and users we've seen expansions insights.
Seen expansion and from existing customers and and new applications and and obviously we.
Or also seeing is and what we've been support boarding is what we call right.
Or by without a they send the interim without charge for allowing users to expand their report access. So these are basically another activity that's going on it and we're we're seeing success. There. So you know ours is a fixed determinable revenue model.
And but it is driving by those factor. So we're we're seeing.
<unk>.
Thanks.
Oh.
Mm.
'cause shall from Stiefel G.M.P.
Oh, Hey, good morning Guy. Thanks for taking my question, John Richard just curious well historically new deployments rapid response has been taught.
I too yeah, P. transformations, whether S.C.P. Oracle just wondering if it's in class.
Yeah, I I would say you know today less so we're not necessarily saying the adoption of concurrent planning and rapid response as a direct reflection.
Especially we don't require it's not a prerequisite at all you know that our our prospects are undergoing.
Yeah that kind of a transformation and so I I'd say again to reiterate it's it's more so the recognition.
But what governs supply chain planning.
Has to change you know and it has to change in order to absorb this level of volatility.
And and that's what's I'd say driving or driving the activities today.
Okay interesting and then and then just wanted to to ask you about the pipeline in in terms of the vertical markets. You know obviously are becoming even more critical what are you seeing in terms of the puts and takes in those vertical.
<unk> related to you or.
<unk>.
<unk>.
Yeah. So.
Yeah, I I made that statement very deliberately that we have seen a growing pipeline in every geography, and every vertical and I'm not surprised quite honestly when you deal with volatility of demand signals or supply availability both.
You know some verticals are seeing a tremendous spike in demand and also you know unprecedented volatility you you have no idea, what where the demand signals are coming from that can't be predicted so you up.
Maybe slowing down dramatically in the first order businesses to make sure that your your I'm not absorbing access and <unk>.
Oh your own your own factories, and making sure you your eliminating all potential of waste.
So both case.
Having a I'd say a uniform.
Increase in in pipeline Cross every geography, and all verticals, including aerospace.
Okay. That's very interesting. Thank you appreciate that and then my last question.
And you know you know obviously covert is created a significant change how have you guys responded in terms of your thinking to change your strategy any changes on the emoney side or the mid market.
Opportunity and one.
Mhm be helpful I keep.
Well that's a that's a that's a great question. So with regards to you know R.R.M. in a.
Being always how can we further accelerate the growth how can we expand the capabilities rapid response and in the past you know we've been sort of more options that stick a as opportunities were presented to us with our expansion of the manager.
A team of later had our at our increase death.
And a number of areas, including product management, R. and D. capability.
Please thought leadership, we've been taking more of a of a of like stand or our capabilities and so.
It's not lost on US you know some of the opportunities that are out there and the in the market today and so you know we're gonna continue evaluate and you know always with a view of how we can accelerated sock on it'd be you know necessarily a revenue by and we're not that type of company. So it's it.
It is is going to be focused on Halloween furthering celebrate our overall top like.
You think I appreciate you taking questions.
Yeah.
Okay and our next question comes from the line of Robert Young from cord.
Hi, Good morning, you shared a bunch of elevated usage statistics highlighted some complementary reporting access and so no. You recently created a focus sales team specifically on existing customer expansion and so there's wonder if you would talk about how that's gone how it's performing how that's.
If it's something that you now thank you need to expand given you know this usage.
<unk>, we are absolutely first off we are absolutely expanding that team and so you know Paul Karate she'd commercial office or you know part of these patch the sales team awhile ago and this has significantly expanded in the last 18 months was a team dedicated to.
Working with our testing customers and helping them under.
So that team is expanded a geographic how about by the way different geography. The then they you know the new name customer base. They they partners that.
<unk>.
Getting have that have expanded so we are absolutely seeing you know contribution yeah.
Helping them to gain higher return on investment and so that process starts actually with our customer support team our customer success team and.
And are also with our knowledge services and helping them understand how they can a better utilize their careers description and then through that really an expansion. So that team the sales team or the internal sales team exists that's right existing a base sales team works hand in glove with with the other part.
So the organization to to really radiate to use a rotten response.
<unk> when when you're planning for the future are you thinking of any difference in the way the bad split and they keep since 65 35 made it more towards new logos is there anything that would give you a sensor that change.
Well, it's it's yeah and that sort of the weighting and that's where I'm over the last you know a few years average and <unk> well very quiet a quarter, but I think you know that two thirds you know that sort of 60 40 sort of feels about right. You know the <unk>, we're fortunate with the you know expansion, especially.
A number of marquee names you know, it's driving the driving the the the new customer growth that that is still they the key driver up and you know that's you know, whether it's 35 or 40% expansion from existing customers. That's that's not a growing base as well as you can you looking and see the compound math.
So you know I I think you know as a management team would probably be comfortable in that you know 60, 65% you know continuing for new name a new name expansion.
Okay, and then lastly lots of good commentary around the pipeline. Thanks for that are you seen any signs of the delayed weighed the demand.
As you know people get on top of the fires you know get in their business continuity plans in place and whatnot I mean, a lot of your larger customers are being complex machines and so are you thinking about a delayed wave of demand an are there any early signals in that you talked a little bit about I needed in bounds broadening funnel like are there any sign.
That you are gonna HAFTA material expand to handle you know higher level demand maybe next year.
Yeah. That's a great you know the tail end of the quarter and it continues we're seeing growth in the pipeline.
<unk>.
We're just seeing it right, which were it's it's it's healthy and the sales activity continues as well. So we're we certainly see for this calendar year, we're confident in our confidence is high enough to be reaffirming our original guidance.
As it relates to you know be you know beyond that and and we start thinking about the next year or two years beyond that I do believe that.
This notion of.
No changing.
Changing the manner, which supply chain planning occurs you know that will be that will be a topic him. A again, we're seeing a lot of articles being written about this if anything this is just highlighting a very.
Significant proof point.
That you know supply chains have to be far more agile and resilient.
Yeah, and so people you know every boardroom I believe this every boardroom will be asking their C.E.O.'s what will you do next time.
What really you do next time and and there'll be measuring their supply chain resilience and responsiveness and agility.
Right, that's what they're that's what they're going to be after and so I do think will come out of this stronger.
Like Ben asked one little question, when you're talking about handing out yeah complementary reporting I think deacons currency aspects of your product <unk> people started slowly growing to think of it as a system of record. So that has really good implicate.
You shouldn't on you know how important you are true correct.
Your software and supposed <unk> are you are you seen customers.
<unk> <unk> more as a system of record.
And then I'll pass one.
Yeah, I think you know it into the point of you know even Gardner has a magic quadrant call system interest to be not only system of record, but mission critical and that's really probably getting even more important distinction.
They consider us to be mission critical.
And so I'd say again and this time, we part of our our desire here it was to be good global citizens. During a time like this you know to to offer our customers. You know I'd say you know I'm tethered access Ah report out user access so that they could.
Eliminate any and all possible friction to absorbing this massive destruction that really was the motive to do our part everyone is is attempting to do their part to help the planet recover and that was our that was our you know that was that was our response.
Mm.
Yeah.
In our next questions concerning the mine Oh Suntan, So kumar from eight capital.
Good morning, Goldman can you up in the corner.
Thank you. The first question, how <unk> actually more of a follow up during earlier discussion one brand awareness son, with you know partners to interrupt team's going to drag the charger, but how is unsolicited then bought into look like for you guys. During this period and how would that change pretty cool.
Yeah. Both you know this is a again when I look at the precursor to pipeline.
It's what happens is during our Legion activity and that has also followed suit you know in terms of our our our Legion activities in our ability to engage with.
Market qualified leads is out.
It's it's just in the quarter period, and and so that you know obviously is fueling the overall pipeline because that is a prerequisite as a precursor if you will to pipeline and so you know I'm I'm very pleased with that with the volume I'm definitely very pleased with the volume and even more pleased.
The fact that there isn't a concentration we're seeing it across.
Europe Asia in North America, we're seeing it across the the six primary vehicles.
That that that we focus on.
Okay, Okay, and given to lift and and I'm an activity on the rock response platform, maybe you speak to some of the key learn either insights either internally from customers on back at the pandemic that good I can help guide or influence your product strategy and priority for rule.
<unk> features and functionality.
Yeah, well the the first thing that we noticed is the the sheer volume of simulations that are occurring.
That is by far the you know definitely more users and more simulations occurring in you know we measure.
You know even the the number of of planning computation is that occur and so on and they're measured in billions in at the moment. So.
In fact tens of billions. So you know I'd say that as you would expect during a time like this the you know people are are assessing alternative course corrections in real time, and so the need to.
Very rapidly you know very rapidly run alternative simulations and scenarios is critical it it's not uncommon for our customers to be running hundreds of scenarios hundreds of stimulations a day hundreds of them.
And this you know for supply chain practitioners I I can assure you.
This is not easy to do you know if you look at the legacy approach.
To solving supply chain problems, you might be able to run 10 in a day not hundreds not 600 not a thousand.
Not a cross every function not end to end and so I'd say that as the primary.
Usage that we're seeing in terms of.
Volumes.
Hmm, Okay. Good and you guys see opportunities for Sydney, when you use cases or <unk> acceleration of of of keeping the functionality that may be enrolled not today.
Oh I think we're you know you. We're absolutely you know full steam ahead. If you will on our original product Road map you know we feel like that is the.
We're on the right past, there and and if anything the usage of rapid response right now.
Has more to do with its base functionality that was invented years ago. You know this notion of response <unk> response management.
Scenario planning end to end concurrent planning these are the new things that we invented.
You know these are these are the the I'd say the the prerequisite things there the baseline elements of rapid response that are most being used right now.
And less less so you know more the I'd say the modern techniques. So you know I I'd say today I you know the usage of rapid response, and what's driving our product road map hasn't changed sprayers have not changed.
Great. Thank you for color going camping stick my question.
Thank you.
Hmm.
And our next question comes from the line of Stephanie price from C.I.D.C.
My name.
Oh, it's <unk>.
<unk> that partner relationships in this environment, where their partners have become more focused on that supply chain getting crank concerns and whether can access it wishing itself and you get 10 minute partners. Then they went in kind of neat more normal times.
Yeah. So we announced I think last year that are are alliance are formal partner Alliance group is now roughly 25.
25 partners in the in the Global Alliance practice for Us and and I'd say again, you know they I I wouldn't say that we are increasing or decreasing. It's you know, it's very steady steady state in terms of our engagement with them in Q1.
Vast majority of net new business came through their influence again.
I'd say that we continue to see an acceleration and partner certifications. So you know many of those you can see on on on linked in his people post their badges not everybody post post their certification badges, but I'd say, we're saying so.
Acceleration in the number of certified.
Third party consultants as they as they prepare I I wouldn't characterize it as being you know any any giant leaps, though I'd say, it's been very steady very healthy.
Great and then you find kind of one from me on existing customers. That's just one name on.
More hard hit industry, Hi Tech in my client base, what you've seen from that'd be 15 cats right that they're looking for <unk>. That's there's been any customers that are kind of looking for I since I get to pearls that price confession from the current environment.
Yeah. So we we haven't seen any you know anything unusual on on price concessions or any any of those things I think we're we're privileged to be working with some of the the largest manufacturers in the world.
I would you know and and your first question.
You know I I'm I'm, sorry, I can you remind me the first site for side of your question Stephanie <unk> no problem.
Just asking around the increase in any increase some time ago, hi, higher hits I industry.
Increasing their their usage, yeah, nothing unusual notwithstanding more simulations and you know we you know we certainly have been monitoring that the the number of scenarios, which is the first thing we saw pretty dramatic leap and.
I'm in in terms of a of high Tech electronics I'd say was first in the wave where we started to see a spike you know very quickly followed by life Sciences, and then consumer products as you know I'd say life essentially you know so into like you know the demand <unk>.
<unk> coming coming from the marketplace was was pretty dramatically different than expectation. So I'd say those are the first three in that wave and in terms of the the usage of rapid response.
I'd say the vast majority if not you know close to 100% of the increase usage has been around running alternative scenarios simulations.
Great. Thank you.
Mm.
Okay. In our next question comes from a line of Nick a casino from Laurentiis. Thank securities.
Oh, Yes say good morning, congrats on the quarter I guess two questions for me first John I think in the past you spoke about you know can access and and your your channel partners are looking at other verticals City Hall on an ongoing basis I'm just wondering if the current pandemic crisis, maybe <unk>.
Either can access or some of your S. high partners to I guess accelerate penetration or consideration into into new verticals or are you still just kinda monitoring.
Prospects, Yeah, I'm, you vertical side, but you just comfortable with the with the chances are the the verticals you have right now.
Yeah. So we've always said that you know we remain hyper and razor focused on on on the verticals in geography is in which we target and at the same time you know we do have customers that are outside those six verticals, we're always incubating and testing our value propositions across across.
<unk> those verticals and when we feel confident in in our solution in our ability to manage the those use cases.
You know then we go after them more deliberately and then we'll talk about those more publicly usually there's a bell whether account we can talk about at that time, you know, obviously, we're thinking quite a bit about our growth leavers and how we can accelerate growth from the future we feel like the the.
Pipeline of activity is quite fast in the in the areas that were already focused and and so well, we certainly don't want to become D. focused.
And and not take you to take advantage of the activity. We have immediately before us I think over the overtime and I've said. This before you know we're not in every market vertical, but it's a matter of when not if I do believe this this notion are planning and and you know this this pursuit of hyper.
<unk> is ubiquitous and it will serve all supply chain markets at some point in the future.
And then my my second question wondering on the on the new wins and specifically the S.C.P.G. client when that you announce obviously you've got some some sizable wins in that specific market I'm. Just wondering during the course of Q1 as the pandemic was making its way around the world.
Can you were there any specific customers that maybe or wins, including F.C.B. cheat. When C.B.G. went sorry that maybe you one or what is accelerating as a result of the pandemic and so my question is specific on the C.P.G. side, but also maybe any other vertical where you saw the acceleration of the when where the customer.
<unk> said, we'd want to sign up today because endemic.
Yeah, I wouldn't necessarily <unk> categorize it like that you know many of the the deals that that closed in the first quarter, we're well down the maturity path. They you know.
I was you know some of these companies are the largest in the world. They don't negotiate contracts and then 24 hour period. It just doesn't happen you know I would say that you know in cases, you know in cases of C.P.G. life Sciences High Tech electronics, predominantly where we're seeing a lot of a lot of that.
Trucks and more so.
The deals just didn't slow down you know they they did not do you focus their attention on getting things accomplished.
Once I I will say that you know projects scope.
That that is an area that has been you know or something where we've seen some discussion where you know customers and prospects are looking for an accelerated time devalue.
Right. So we knew that you see a grand scope of things and and and yes, there's a there's a holy Grail, but at some point you have to start feeling better and and so in some cases, where we're negotiating a quicker time to value on projects you know a phase one that happens in a much faster timeframe. So that they can absorb the the.
You know pandemics effects.
Okay, great. Thank you.
Yeah.
Well I think that's was the last question. So we want a tank everybody again for participating on today's call and we appreciate your I was like questions to support it can access them look forward to speaking with you gain when we're apart are due to 2020 results.
Thank you know goodbye.
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