Q1 2020 Earnings Call
The first quarter 2020 earnings relief, which was distributed today at approximately four P.M. central time, five P.M. Eastern time, if you've not received the release it's available in the investors <unk> uplands website at Investor the upland software Dot com.
I'd now like between the conference over to our host Mr. Jack Mcdonald Chairman C.E.O. up then software. Please go ahead Sir.
Thank you good afternoon, everyone and welcome to our two 120 20 earnings call I'm joined today by 10, Maddox or President and Chief operating officer might still our C.F. out.
I'd like to welcome rock background or this call for the first time raw data spin on the ground with this now for a little over a month as president and Chief commercial officer.
He joins us to lead a major initiatives to create real distribution for Oakland's cloud solutions with a new go to market leadership team.
A lot as the software industry veteran who knows our business well having served on our board for over five years and he's brought with them a team of experienced executives in marketing customer success and global account sales leadership.
This team has a proven and successful track record from high growth Enterprise software organization, I think successfully built and exited both spread fast <unk> and Bharti software.
Yeah.
Rods leadership is already apparent as he and his team have been revitalizing ever go to Mark the efforts, Rob will join us for the Q. in a so please feel free to address questions directly to him.
On today's call I'll summarize our results and recent highlights and our response to the Kobe 19 pandemic.
Following that Mike Hill will provide a more detailed look to one numbers and share with you are guidance for the second quarter and for the full year 2020, and then finally 10 Maddox will cover sales and operations highlights from the first quarter of 2020, after which will open the call out.
Four Q. Wednesday.
But before we get started Mikes Hill, we'll read the Safe Harbor statement.
<unk>.
Thank you Jack and good afternoon, everyone.
During today's call. We will include statements that are considered forward looking within the meanings of the securities loss. And addition, we may make additional forward looking statements in response to your questions.
Statements are subject to risk assumptions and uncertainties that could cause or actual results additional materially by the company caution you to consider our discussion of risk factors and other uncertainties that could cause actual results to defer materially from those the forward looking statements contained in the press release and in this conference call.
Okay.
[music] on information currently available to upper management as it today.
720 20.
We do not intend or entertain any duty to release publicly any updates will revisions to any forward looking statements, whether as a result of new information future events or otherwise.
On this call up and we'll refer to Nongaap financial measures that when used in combination with gap results provide upper management with additional analytical tools to understand its operation.
When has provided reconciliation took nongaap measures to the most comparable gap measures in our press release announcing our first quarter 2020 results, which is available on the Investor Relations section of our website at Investor Dot Upenn software Dot com.
Please note that were unable to reconcile any forward looking non gap financial measures to their directly comparable got financial measures because the information which is needed to complete a reconciliation is unavailable at this time without him reasonable efforts.
To learn more about our outreach plants, please feel free to contact us at Investor Dash relations and up when software Dot Com and went that'll turn the call back over to Jack.
Thanks, like so I'm going to start today with a review of our strong. She one performance then discuss why Oakland as well positioned to navigate the headwinds of coded 19.
I'll talk about actions we've taken in response to the pandemic and then finally I'll discuss some of the assumptions behind our outlook.
Or 2020.
But before I began on behalf of Outland I want to expand our thanks to those risking their lives every day on the front lines actors nurses and first responders and the people keeping critical services running I.
I also want to say how proud we are of the up and workforce, who spend countless hours working alongside our customers to make sure that day or well equipped for the road ahead.
Onto our two one results we had a strong she won that eat guidance and consensus for both revenue and adjusted EBITDA.
40% total revenue growth, 38% adjusted either die grows so a very strong few one this is our 23rd consecutive quarter of meeting or beating guidance and again that is every quarter since going public.
What's notable among other things is that our organic growth been recurring revenues reported recurring revenues came in at a strong 6%.
So 6% organic growth at the upper ended our target range admit single digits impressive, particularly given the code at 19 headwinds at the end of the quarter.
Lemonade frightened to one we acquired local addicts, a great strategic acquisition that added mobile app and push message into our C. Act cloud.
We are going to be pausing at an a for the short term probably a couple of quarter's well nurturing our pipeline, there's no need to rush in for N.A. right now until things clearer that we're going to use this time the complete all ongoing integrations, you'll recall that we had a very.
A busy 2019 on the acquisition front and of course, the material deal local politics, and the first quarter of 2020. So we'll use this time again to complete all ongoing integrations and the Fortifi our systems.
My guess based on prior experience is that 2021 could be a great and busy year for acquisitions, and maybe things will start back up into four of this year, we'll see.
I want to talk about up lands positioning relative too cold in 19, the pandemic in the fall out.
I think we're extremely well positioned to be a company that not only survives that comes out stronger then we went an hour to one performance demonstrates uplands ability to successfully navigate this storm or products and helped our customers succeed in the.
A new remote working environment hour and a price customer base or high recurring revenue high retention and high margins are limited exposure to highly impacted verticals are strong balance sheet or flexible cost structure and proven ability to write size expenses.
Physician us well to emerge from this ready to capitalize on new growth opportunities.
Let me drill down for a minute on just a couple of those points.
On enterprise customer base at 1600 major accounts, averaging 160000 per year in A.R.R. that drive 90% of our recurring revenue.
We have limited exposure to highly impacted verticals, our total revenue exposure to travel and hospitality leisure retail and energy in total all of those verticals is only 7% and of course, we are working with all of the valued customers and those verticals.
Closely and in many cases, there have been new opportunities to drive value in revenue.
By using our products.
To address the current coded situation for example, with major retailers using our messaging products to help drive customer is from brick and mortar online.
We've got a strong balance sheet because of the smart actions that we took in 2019, raising equity and putting in place a great new long term credit facility, we are sitting today with over $150 million, a cash and liquidity.
On the Oakland balance sheet.
I would get is not due until 2026 not doing till 2026, an hour annual principle amortization, it's only 1%.
And in addition to that we have no financial covenants on current borrowings.
So not only than we have a strong balance sheet, but we're also generating comfortable positive cash flow for the remainder of the year.
We've got a flexible cost structure and approved inability to cut costs if ever needed. We have proven that we can effectively manage and reduce costs. I mean look we've got to track record is 26 acquisitions. We're in each one of those acquisitions, we've taken out roughly 50 per cent.
Of operating expenses and of course near best in class adjusted either Dom origins for a cloud software company in the public market in our size categories. So we've proven that if ability.
Got a hardened business model for this kind of an environment hour upland one operating model was built from the ground up to optimize a d. sent flies remote workforce using today's online technology and collaboration tools.
60% of our employees and contractors worked remotely pre code that so pre cove, and we were 60% remote.
And moving up to 100% as we did a little over a month ago was pretty seamless for us.
Yeah, we've been doing virtual user conferences for years.
Customer engagement motions are largely remote with virtual user conferences and customer gathering not large in percent events. I would also note that a substantial portion of our sales and renewal emotions are both inside and virtual.
And we built a portfolio of products that are core to how companies accelerate and benefit from digital transformation.
The remote working environment.
In the past several weeks many of our customers I've had to rapidly enable every function in their business from sales to customer success to professional services to work remotely and our products and help them do so.
It is clear that we provide the mission critical solutions that our customers and our communities depend on especially during this crisis.
Into some analysts said noted the system shock of covert 19 may drive longer term increased demand for a number of the cloud software categories, where upland plays including customer experience management and messaging digital sales enable man.
And work flow automation.
In terms of our outlook assumptions and just a moment, Mike will review our guidance in detail, but I wanted to share with you first a couple of notes about the assumptions underneath that guy.
Hour working assumption is that bookings and renewals bookings end renewals environment will be challenged three the end of two three and will then began a return to normal.
Guidance is obviously predicated on some factors that are beyond our control such as the pace of the pandemic the response.
Any economic implications of that.
But as our guidance indicates we roughly see only a 4% reduction in revenue from our previous Twentytwenty guidance, and then point and I would note suggest a 4%.
Reduction in revenue from our prior guidance midpoint.
And roughly 65 basis point to that reduction is from foreign currency exchange rate weakness as the dollar has appreciated in this crisis environment.
And I would note that uplands 2020 guidance still reflects the increased investment and go to market initiatives.
That we talked about earlier this year, we're going to.
Persist in that important investment initiative, so that we can be at all fighting sprang coming out of this.
And we can do this because we've got a flexible cost structure comfortable cash flow and $150 million in liquidity.
We expect adjusted either die margins the float back up over time as our revenues do as well.
This management team has a proven track record in tough markets. We've navigated these types of market crashes in the past most specifically for efficient, whereas chairman and C.E.O., we weathered both the dot com crash and the great financial recess.
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Having experience and respect for history and its ability to repeat itself. We've built the business at all plan, which can reasonably withstand the shocks based on contractually recurring revenue contracts with large enterprise accounts in a high margin hi cash flow model.
In a mostly virtual operating environment, having raised capital when we could not when we had to.
Now being in a position of control.
To decide to dial back acquisition activity short term to generate more cash flow and invest and go to market initiatives.
That's why we're we're in a strong position today and why we intend to emerge out of this market downturn, even stronger than when we went in.
So with that I'm going to turn the call over to Mike will give you a more detailed look at the Q1 numbers and share with you are guide Mike.
Thank you Jack I'd like to start by reiterating what Jack said well there is no doubt that coded 19 has impacted each other's our business remains strong and an extremely proud of our employees, who has been steadfast and they're supportive our customers.
Without all covered the financial results for the first quarter and our outlook for the second quarter and full year 2020.
Total revenue for the first quarter was $68 million representing growth of 40% recurring revenue from subscription and support group, 42%. Your every year to 63.9 million.
Professional services revenue was 3.8 million for the quarter, 32% your rear increase.
Central license revenue was point 4 million for the first quarter for a decrease of 45% here every year.
Moving down the piano the gross margins overall gross margin was 67% during the first quarter and our product gross margin remained strong at 69%.
Or 73% when adding back depreciation of equipment amortization of acquired a tangible assets, which we refer to as cash gross margins.
Are professional services gross margin was 40%.
Turning to our operating expenses research and development expense, none of refundable Canadian tax credits was $9.1 million for the quarter, representing 13% of total revenue.
Sales and marketing expense was 10.9 million, representing 16% of total revenue for the first quarter.
General administrative expense was $16.7 million for the first quarter, representing 25% of total revenue. However, excluding noncash stock compensation expense G.N.A. expense was $8.8 million or 13% of total revenue and a quarter.
Acquisition related expenses were 15.2 million in the first quarter, resulting from our recent significant acquisition activity with an acquisition closing during the quarter and two acquisitions closing in the fourth quarter of 2019 in fact during the period from April 2019 through March 2020, we closed.
Six acquisitions, representing combined annual revenue run rates of $87 million, all of which contributed to acquisition related expenses in Q1, representing an unusually high pace with acquisition activity.
Now that we have pause new acquisitions in the short term these costs will dramatically decline into coming quarters and without new acquisitions would go away completely by January 2021.
When I say dramatically decline without further acquisitions, we're looking at quarterly sequential reductions in acquisition related expenses, 50% or more to something around $6 million in Q2 $3 million in Q3 and $1 million in Q. for.
Operating loss was 15.3 million in the first quarter compared to a loss of 2.6 million for the same period and 2019.
While we had a tax benefit of $4.3 million in the first quarter compared to a point 6 million dollar tax benefit in the first quarter of 2019, we don't expect tax benefits and future quarters. As we are anticipating a more normalized quarterly tax provision of around $1 million.
Gap net loss was 20.1 million or loss at the 81 cents per share compared to gap net loss of 7.8 million or loss of 38 cents per share in the first quarter of 2019.
<unk> net income was 18.1 million or 72 cents per share for the first quarter compared to non-GAAP net income of 11.1 million or 53 cents per share in the first quarter of 2019.
Our first quarter 2020, adjusted EBITDA was 24.6 million or 36%, a total revenue up 38% compared to 17.8 million or 37% of total revenue for the first quarter of 2019.
Refer to the reconciliation of non gap net income and not get yes and to the reconciliation adjusted either die in the tables on today's earnings press release and form a k.
Now on turn a balance sheet statement of cash flows. We ended the first quarter with $98.7 million in cash this cash on hand, plus r. and drawn 60 million dollar revolving credit facility represents over $150 million liquidity.
For the first quarter of 2020 operating cash flow with negative 5.3 million. This is because we had a significant amount of cash acquisition costs and the quarter and as I said earlier those costs are dramatically declining in future quarters.
Normalizing operating cash flow for these costs and temporary timing difference isn't working capital accounts to one adjusted operating cash flow would've roughly band, 55% to 60% of our reported 24.6 million of adjusted EBITDA.
Again, given our forecasted sharp sequential quarterly decline an acquisition wrist expenses with new new acquisitions in the short term operating and free cash flow should start decline in the coming quarters and should be nicely positive for the year.
Furthermore, <unk> sufficient when looking at income taxes and capital expenditures cash taxes for Q1, we're point 5 million compared to cash taxes, acquaint 8 million for the first quarter of 2019.
Upland currently has approximately $321 million attacks total tax in a wells and of these approximately 197 million are usable.
Which is comprised of 166 million U.S. federal tax in a wells and the remainder mostly in the U.K.
We expect to continue to pay around $4 million to $5 million per year and cast taxes, mostly in the form of Canada revenue agency income taxes, Ireland income taxes, and send US state income taxes cap X. for Q1 was point 3 million compared to cap exit point key Milligan for the first quarter of 2019.
And we generally expect about $1 million per year of cutbacks.
As of March 31st 2020, we had approximately 537.
Point $3 million of gross debt outstanding excluding differ dead offering costs, making net debt of approximately $438.6 million after factoring in the $98.7 million of Kashmir balance sheet.
Note that the principal payments on our term debt are 1% per year or about $5.4 million per year with the remaining balanced maturing in August 2026.
The interest rate on our term debt is locked at 5.4%.
Making our annual cash interest payments about $29 million.
Recently I will point out that are termed that has no financial covenants on current borrowings.
We don't guide to free cash flow.
But if you look out over the next four quarters, it's a pretty good picture, taking the midpoint of the 2020 adjusted EBITDA guide of approximately $90 million as a proxy for forward and adjusted annual either die and some tracking $5 million for annual cash taxes $1 million for annual cap X.
And assume $7 million for annual differed expenses of prepaid sales conditions $29 million for annual cash interest and 5.4 million for annual debt principal payments that leaves over $40 million to cover the estimated $10 million of remaining acquisition related expenses from completed acquisitions.
Still leaves us with tens of millions of dollars a free cash flow.
On top of our roughly $99 million of cash on hand, not including availability on a revolver oral our debt remains financial covenant free on current borrowings.
This puts upland in a strong liquidity position to ride out the pandemic and prepare for future acquisitions.
Now for guidance.
As Jack mentioned are working assumption is that bookings and renewals environment will be challenged through the end of Q3, and well then began to return to normal.
Our guidance is obviously predicated on some factors that are beyond our control.
For the quarter ending June 30th 2020 open expects recorded total revenue to be between 62.5 and $66.5 million, including subscription support revenue between 59.9 and $62.9 billion.
For growth in recurring revenue at 26% with the midpoint over the quarter to June 30th 2019.
Second quarter 2020, adjusted either die is expected to be between 20.5 and $22.5 million for an adjustment you, but don margin of 33% of the midpoint representing growth of 13% at the midpoint over the quarter ended June 30th 2019.
For the full year ending December 31st 2020 open expects recorded total revenue to be between 257.4 and $269.4 million, including subscription and support revenue between 244 point age and $253.8 million.
For growth in recurring revenue is 22% at the midpoint over the year ended December 31st 2019.
Full year 2020, adjusted EBITDA is expected to be between 87.2 and $93.2 million for an adjusting you become margin of 34% at the midpoint representing growth of 9% the midpoint over 2019.
With that alternative <unk>, our president Sheila.
Thanks, Mike and good afternoon, everyone before I get into the sales product and operating results I wanted to highlight a couple of ways in which our customers had been able to to lean on our mission critical resources and expertise Jack alluded to this and his section and it's I want to provide some color as to how these customers or.
Using our capabilities to navigate these unprecedented times.
Over the course of the past several weeks mobile messaging has become a beidler resource for companies looking to reach their consumers quickly and efficiently.
So far and 2020, we've seen nearly 40% increase over the prior year in the amount of monthly text and rich format M.M.S. text messages being sent by our customers.
This is reached now hundreds of millions of messages sent per month or upland.
One close friend particular, A.U.S. home goods retailer that was significantly impacted by code bid drove significant incremental sales between March 15th in April 15th So right in the heart of the pandemic that were and these results for directly attributed to R.S.M.S. capabilities.
In a campaign aimed to drive online sales amid the brick and mortar closings that had occurred.
Customers been very enthusiastic about the success of this campaign and they see themselves continuing to run increased SMS campaigns for the long term.
As do other retailers, we're working with as they look to drive on line success.
Another example, well some companies are looking for ways to scale, there mobile infrastructure through messaging.
Many were also in desperate need of accelerating there now remote support teens and their ability to respond to the unparalleled volume of consumer inquiries one of our customers a major north American human resource software company had to rapidly transition over 16000 employees from their call.
Centers to remote work in a matter of day.
Our team provided expertise licensing flexibility and hands on knowledge that enabled the remote working of their contact centres to exceed their productivity goals amid the pandemic strengthening our long term relationship.
October 19 presents our customers with a unique set of challenges we are committed to providing them with the resources and expertise needed to operate remotely during this critical period.
This is why a few weeks ago. He launched are connected through changed public in customer Webinars series. Today. These have been some of the most highly attended an proven to be an excellent resource for business leaders across dozens of industries as they looked up when for support now in in the future.
Before I move on I'd be remiss, if I didn't acknowledge his Jack and Mike have incredible amount of hard work that our team members have put forth in order to support our customers and our business. During this time awesome boarding their own families and communities. It's been heartening to watch the up and team rally under such difficult circumstances.
Now turning to sales for Q1, we expanded our current relationships with 277 existing customers 40 of these were major expansions of over 25000 annual recurring revenue.
Hung our expansion deals of hundreds of thousands of dollars or a north American based infrastructure software company focused on big data expanded its commitment or enterprise sales and marketing clout also a global apparel retailer who expanded its commitment to our customer experience management cloud.
Global automotive services provider, who also expanded their commitment to our enterprise sales and marketing clout, our remaining expansion customers in Q1 committed nearly 4 million in aggregate annual recurring revenue.
In addition to these expansions we also welcomed 122, new customers upland than Q1.
Included 49, new major customers, we've committed over 25000 annual recurring revenue.
Among our larger new customers committing hundreds of thousands of dollars for North American specialty insurance provider committed to our project an I.T. management clout.
Also any large virtual healthcare provider, who committed to our enterprise sales and marketing cloud any leader in integrated technology solutions, but the retail petroleum and commercial fueling industry.
<unk> upland supply chain collaboration solution.
Our remaining new customers and Q1 committed over 2.8 million annual recurring revenue.
Lastly, we continue to focus on solution selling to existing customers are making good progress on our across a pipeline and bookings among our Q1 cross sell bookings was a worldwide Entertainment company well after a very positive experience with our document workload cloud committed to R.P.I.T.M. or.
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Arsene interest from our customers both within a given cloud and across clouds as weak become more programatic around cross selling are ultimately scene and improve pipeline.
On the product from as it relates to product, we continue to invest in our foundational elements of our portfolio or pushing forward customer driven innovations in product development. We had seven major releasing q. on and 15 feature packs for example, in our enterprise sales and marketing clout concentrated on <unk>.
Vacation and modernization of the products, while improving performance and system reliability.
February we really significant updates for our marketing content operations offering known as host focusing on the user experience, which included a redesign preview pane a new catalog to manage tasks and the ability to route idea notification to specific users and groups by content type.
In addition.
Improvements made to the up and analytics platform further supports customers and extracting real value for meaningful metrics provides ways in which they can continue to empower the remote sales forces.
Our project Tonight team manager management cloud focused on several major innovative additions and many customer enhancements throughout the quarter.
Significantly we released Microsoft teams integration across our P.I.T.M. clouds.
He's provide customers with deeper collaboration capabilities for their own remote workforces.
Within the document work flow cloud, we released intelligent capture which combines simple cloud base administration with flexible document capture indexing and work flow customization.
Document work for Clowdus now able to fully support on premise remote and hybrid work environments, providing the tools to drive process improvements across document intensive digital transformation project and finally over to our C.X.M. cloud or customer experience management cloud mobile continue.
Used to be a critical part of the strategy.
Mentioned, we announced the acquisition of local Ericsson Q1 company that combines push INAP inbox and remarketing with rich audience segmentation with the addition of local lyrics are six them cloud now provides a broad set of mobile experiences that help customers deliver personalized engagement across the customer journey.
As you can see we're doing significant customer driven innovation that is delivering even more value for our customers even in this challenging environment.
On the operational fronts, our ingenious and all defy integration plans are in full swing expect these will be completed by mid year for local it actually began the integration into the up and one platform and integrated our teams into the sea XM organizational structure within weeks of the announcement of the acquisition.
This afforded us the ability to quickly began getting in front of our global customer base with a highly attractive C.X.M. portfolio.
Addition, us well or greater crossville potential.
Further we evolved our product integration playbook by adding additional source code and open source analytical tools. We also upgraded elements of our third party backoffice infrastructure.
Support continued future growth across regions and a license type.
Finally, we continue to successfully reduce the physical office space footprint inherited through our acquisitions and extended are connected work anywhere approach.
Four I conclude or I want to know that as we pause the acquisitions as Jack mentioned, realizing this time to strengthen our operational foundation or integration playbook and our go to Mark and investment initiatives. This way, we can hit the ground running towards the end of the year and into 2021.
That I'll pass the call back to Jack.
Extend look I realize we just tag along call them, which be giving you a lot of information a guy jest, but if you take nothing else from this I would note only a 4% revision the revenue Bronco Big 19, 20% revenue growth this year 2020 with no.
Further m. in a for the remainder of the year. So even if we do know other acquisitions.
Still have revenue growth 20%.
90 million and adjusted either die that's the mid pointed guidance for this year.
Positive free cash flow for the rest of the year, and 150 million and cash and liquidity.
And finally were able to deliver all that and continue our go to market investment initiatives. So we come out of this stronger than we went in.
And now we're ready to open up the call for Q. and.
At this time I would like to remind everyone in order to ask a question. Please press start the the number one on your telephone keypad.
If you'd like to withdraw your question. Please press the pound key.
The first question comes from Brad Credit. Please. Please go ahead.
Great. Thank you very much and thanks for all the detail really really appreciate it and it's great to see the discipline.
<unk> with which are approaching you know these are surfing unprecedented times, Jack maybe maybe if I get start just by asking you you've talked about how well positioned upland is to handle the current crisis. The the low exposure to highly impacted industries.
Enabling your customers to work from home the benefits of up when one but at the same time I knew you were only lowering at the mid point the full year guy by by only 4%, but but clearly you're seeing something as we look forward as as the rest of the world that you know <unk>, causing you to take a more conservative you can you be.
Maybe just parse through what it is that you are seeing in terms of you know, maybe renewal business and new business and different areas of the portfolio.
You don't think will will convert as well or you know maybe from a pipeline perspective that perhaps aren't building as well, that's causing you to revise the outlook other than just the macro.
Yeah, I mean that it gets really about the bookies environment for 2223, and we just wanted to take a conservative position on guidance and assume that we're going to see a more challenged bookings environment and.
Huge tree and we saw a little bit of that and Q1.
Oh, the renewal side, you know, we continue to see very solid renewals and so it's really more of although we you know we try to always have conservatism in the numbers, it's really more a booking statement.
For the next couple of course.
Okay. That's fair, maybe if I could since you offered it up I'd love to welcome Rod you you have certainly you you've chosen a hell of a time to.
To jump in in the game in an operating role, but you're obviously familiar with the company having been on the board, but now it over the last few months or so you know on the ground level. What is it that you have learned that you now that you've taken a more active role.
That that you think you know gives you the optimism that that you can really have an impact.
And make some change here in a positive way.
Yeah. That's a great question I think the a couple of things I've learned that when you get on the ground. The the this we have a lot of really strong products stronger than I, even really could see from the board perspective.
And the customer bases.
I mean.
Alluded to you know, we're seeing a lot of positive signs him renewals, which I think is a good indicator for.
These are products that people are going to use in there you know they're they're sticky.
Urging and the teams really solid and I think what so what kind of gives me early optimism. We we've had a we changed some rhythms already we've we've sort of updated how we forecasts and we've kind of my made some modifications that we're managing where notice things to.
Tweaks to make us give us more visibility into the business.
And you know, we've just sort of be gun the process of shifting sort of evolving are selling focus in the business to be more.
More more cross product.
Account focus as opposed to really product <unk>. So again.
It's early days, but I'm optimistic because we've got a really solid base to work with and and I I think we can build on that and and get a lot better.
Crossing into our customer base.
Great well welcome. Thanks for taking the question of <unk> back in like you guys think.
Thank you.
X. question comes from the phone three was William Blair. Please go ahead.
Hey, guys, but everyone is a safe and healthy and thank you for for some of the the color, especially I guess I think that's very very helpful. I guess, maybe I want to touch first on sort of what you're seeing from the sales books it'd be great sort of understand what facility missing.
Terms of push back honoring older than it feels like there is it but I'd love to stab that are people sort of say.
Object terms legs of contracts things like that.
And then like a couple that with a cross all question, but I know I'm always across the question Guy, but anyway I love the is that what that what the customers what what you're hearing that that that sort of Jack gives you pause in the building's front maybe on the existing based more so than new because the do I get that but existing bases love to understand what you're hearing.
Sure Let me take one P.C. that on terms and then I will toss it the rod to address that.
In more detail.
See anything material.
In terms of.
You know changing cell in terms of pushing up tables or anything receivables.
I should say.
So nothing material there.
And in terms of the rest of your question I'll I'll.
<unk>.
Yeah, I think you you alluded to this you know when Jack talked about bookings in Q.T. and Q3, and our you know for forecast really being a little more conservative.
That's a little more driven from the new customer bookings than it is the expansion in crossville as you can imagine.
A new customer.
Requires a little bit more work you've got to get an entire do contract in place and you know generally takes more cycle time and so it's a generally you know what we're not seeing pipeline fall off actually the top of the pipe is pretty strong we've had.
Switched them or virtual events, we've had a number of record attendance webinars mid perhaps people does that more time now because they're working from home and then there's not a lot of distraction too we sort of see some encouraging engagement top of funnel.
Hasn't played through but but I think we're where we are definitely anticipating.
Net new customer deals taken just a little bit longer into that that's rather than most of the conservatism again or expansion businesses still feeling pretty good and and you mentioned crossville.
We are we are good at cross L. locally sort of if I've got a rebel understands through the products is really good across selling two of them into the other bayes <unk>. We're working on is is being better.
I'm really is an entire company as a as a muscle as a business to build it. So you know we've got we've got multiple cores, where the work left to do on that but.
Frankly, they're encouraged by the amount of white space, we see and it's a matter of sort of shifting the culture and executing to that.
You know that's helpful. I mean, the white space is kind of always been there you know as you think about that cross, though you know, Tim and I and jacket and I'm sure you've you've heard of when you're on the board of sort of discuss this.
<unk>.
So I guess, maybe a little color instead of you know if you can sort of the detail or or maybe it up their progress as sort of you know how that moved to product sweets away from point solutions is going you know how many upper products as each customer haven't averaged something along the lines would be helpful. It sort of what you think is a reasonable target over five years sort of a a longer time frame.
Well.
Let me, let me jump in and take just a part of that okay.
And then I'll I'll put that to rod.
I think one of the things that is exciting.
Ah that Ah Rod is by implementing here and I think it's worth noting.
Did earlier that you came in with a team right with it.
Or a new C.N., though a new head customer success than P.S. So.
You had a global account sales. So we really were able to bring and successful team from.
Spread fast.
And then there's a whole cohort global account managers that will be added that you know frankly, when they heard rod and the team.
At signed up all of a sudden we had a bunch of them at the door you know wanting to be part of that kind of the go to market organization. So from the perspective of 10 and Jack and Mike.
That's been very exciting one of the thing that.
Odd articulated early when when it really is still in the discussion phase here.
Was evolving from what had been a product centric sales organization to.
To an account they sales organization.
I think.
Given the structure that we have had up until this point, which was this product centric focus I don't know that we're ever going to be able to successfully execute on the broader.
Cross L.D.
Think rod is put now with with this new vision on how we go to market.
Division in place forgetting that done and of course now he's going about doing the work of of actually making it happen so without when they make flip it to Rob.
Yeah that so I'll just build on that I think step one is is getting our sales people comfortable selling more than one product and when we're doing that in the in the cloud.
Structure, so all of our sales people sit in one of our club businesses today. So so they they're they're evolving from one product to somewhere between four and six that we we're taking we're educating them on and teaching them out of so.
And.
We've shifted a lot of territories from Hey, you're the guy fill in this one product to hear your 50 accounts and here's your six products and and and that's it's a non trivial change that sounds pretty simple but.
You know teaching a it feels person how to fill the bag of tools as opposed to sell one it's a slightly different model at the same time, we're we're putting in this global account.
Team. This summer these guys are not quite on the ground, yet, but we'll have them on the ground. So they can affect.
And get going in the second half, but in this case, we're going to be those guys are gonna be representing the entire company, we're carving off a a lot of our larger customers.
And they will be quarterbacking those major accounts in representing every product that we have which is which is another new motion.
You guys May know, we bought a company called multiply last year. The great thing about that company argued account selling came with it.
Target counselling is is a methodology that.
Oh date myself I learned I learned back in the nineties when I when I care to Baggerly my career to sales Guy and I think it's one of the best sales with allergies on the planet. We are we are reengineering the entire sales model.
Making it sound more fancy than it is but we're teaching all of our wrap sorry to count selling and implementing all to fight. So we have much more visibility drinking your own champagne, so to speak and much more visibility across our our ourself cycles in our in our ability to forecast. So we're we're doing that this summer too. So we'll sort of come out of the summer with more people capable.
<unk> that are more account focused and they have in their bags somewhere between four six in the global account people you know 20 plus products.
And I knew methodology on top of it.
Sort of driving sales effectiveness with.
Those are some of the pieces were putting in place that I think.
Gives me yeah, you're right I've been on the board watching the Crossville motion for Awhile I think this is a complete d. changing how we're doing it.
Yeah.
It's really up a one quick whenever it might squeeze it in that was great color guys. Thank you for Mr Hill, there make any updated churn metrics at all you see anything even in that you might be able to comment on even month April at all any any any impact at all I know riddled with great, but just as.
As another chunk grant that we should be aware.
No, but on as Jack mentioned everything's been pretty strong and the other renewal. So so no updates no changes there.
<unk>. Thank you guys appreciated the color and go after all they will.
Thanks.
You know next question comes in Brentsville. The Jeffrey's. Please go ahead.
Oh, Hi, this is love soda on for Brent.
You know those can read them as impressive numbers. Despite you know the current environment that they were in.
Maybe one you know the first question that I had was.
One one number that caught my eye was the existing major account expansions, which you know was quite impressive this quarter sort of want it to aspect which of those four cloud categories are.
Benefiting from that work from home trend that we are seeing and is is there you know across across a motion is that already taking hold.
Or you know that is more of a long-term tales if you will.
Shorten do you want to take that one.
Sure Jack.
Yeah in terms of the clouds that benefit this remote workforce. The most is mentioned.
We do have a strong mobile messaging platform and that is really helping companies drive to more of a really digital online environment from bricks and mortar so not so much the work remote aspect there, but more of the reality that physical presence isn't as valuable as a digital presence in this.
Environment and so all the activities around driving that are super important and so are six m. cloud. It's been really strong in that regard local it acts will further reinforce that with some of the mobile app capabilities in that pushing the like if you look at the remote workforce are really were also seen.
Probably more of a hybrid environment coming out of this is though even a subs if it if a subset of the workforce goes back into a physical office, there's going to be really more people working remotely then before the pandemic.
We've got a really strong <unk>.
Contact centre productivity, a cloud offering that is connecting that physical infrastructure.
The phone system computer telephone integration connecting at two cloud systems of record with in a customer and adding really strong capabilities for those contact center individuals. There then able to work remotely and tap into that capability. So.
That's super important as is then coupling getting the right content for those now remote contact center folks are knowledge management product, that's with in that context center productivity suite.
Were seen a lot of interest in that that was working fine for folks that we're operating with a physical call center, but with the remote.
It's even more valuable so that super important and then to put a bow on it you want to get feedback from the customers and from the context center wrap themselves on how that interaction when we have a feedback tool that does that in a very simple way take analyzing the free form text with natural language processing.
To get that input and then improve on the operations in the content that was delivered so those are some things that are helping us work effectively the remote environment and obviously our offerings are cloud based to begin with so a customer can still leverage them.
Whether they're using the browser and a physical office or a browser sitting at home doing their work. There. So just our overall offerings are are helpful in that regard.
But maybe one one more affected squeeze it in just around you know given the impact that you're seeing this year, obviously not a lot of in back but what impact does that have on the long term goal of getting to 500 million brothers and revenue.
A well that'd be pushed back or do you see like you know growing rebounding and like 2021 and beyond.
I think I see it rebounded again 2021 and be on you know having lived through these types of situations twice before both in managing as chairman at T.O. Perficient through the dotcom bubble bursting and then the 2008 great recession you.
Often see great growth environment in a week of these crises, particularly in organic growth right on the I'm, an a. side, so because I alluded to in my comments at the fried.
We are fortifying or systems fully integrating the acquisitions that we've done the date.
And then we're going to be ready to hit the ground running a an an a and I think 2021 is good D.A. Dizzy and exciting year on acquisitions you know we are.
Continuing to nurture hour pipeline, we don't see a reason to rush out and catch falling knives, right now, but as we get toward the end of the year.
And in the next year, we're going to see it on.
Of opportunity.
Oh, Thank you all pass it on.
Thank you.
You know next question comes from Scott Bird with need them. Please go ahead.
Hey, this is out an airline for Scott I'm I was just hoping you could give us a little bit additional color on any markets for customer that you've seen a strong uptick in the last month and then also any kind of customer segments that you've seen more.
That they've switched their purchasing habits in the last month, besides those like a leisure at retail like the ones that you normally think about.
Sure I think you know again, if you look at our product offerings around see X. and the right digital.
Sales engagement.
Work flow and professional.
Service automation and I.T. management really we've seen very solid renewals an expansion opportunities across all of those because we're helping our customers in this kind of an environment you know 10 alluded earlier too.
The major North America, and human resource software company that had to move.
Rapidly transition their contact centres to remote work environment in a matter of days 16000 employees and being able to do that from the technical standpoint from a licensing standpoint.
But to support them. So it's been those kind of engagements.
Or in retail and and it's interesting on the usage side right you've seen.
Picked up in certain areas obviously.
You know and a decline in some others, but.
No. One is that we think could bounce back nicely. So we've seen some increase messaging volume fright, helping retailers, a transition customers, who brick and border to online or you've got a delivery or other I'd instead of directly related to work from home, but for example, elective medical procedures write an area where we.
Do a lot of usage based business I've been very quiet as a that industry. It's been sort of been locked down during that tendency of code that well those lockdowns, they're starting to come off that right. So I think you're going to see a burst of activity there on on the usage side on the.
<unk> services side.
Again remote global Workforces, our products are set up to enable that sort of in their native mode. So we've seen some good activity there as well and and so it's it's really been in each one of those areas I think if you look more broadly.
Analysts have noted you know the system shock a covert 19 is is going to dry.
Analysts believe longerterm uptick and demand for some of the key areas, where up in clay, including customer experience management in the messaging component of that including a digital sales engagement at work flow. So I like we're we're position relative.
To those trends.
Okay, Great and then as the company's moved that the term disability last year, given the changing read environment, they're an opportune injured reduce that interest rate on the facility.
You know not really be locked that rate at a little over 5%.
And so but you know the it's an <unk> you know reasonable rate on it I think the real point on the facility is that we were smart we've got both the equity offering done.
We've got that great new credit facility pushed out maturity until 2026, just 1% a year.
Principal amortization.
No financial covenants on any of the current borrowings so.
We are really in great shape.
From the capital standpoint, 150 million a cache of liquidity.
And his Mike mentioned earlier comfortably cash flow positive for the rest of the year. So.
Yeah. This puts us in a position not only to survive, but the thrive coming out.
Okay, great. Thank you.
That's a reminder, if you'd like at the question. Please press start them and number one on your telephone keypad will pause briefly to compile any remaining questions.
No for their telephonic questions at this time.
Great. Okay, well again, thank you all for your time today.
And we will see you on our next earnings call. The thank you in good afternoon.
If concludes state thank you for training.
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