Q1 2021 Earnings Call
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It sounds like there has a conference over to your speaker today Edelita Tichepco.
As President Investor Relations. Thank you.
Please go ahead.
Good morning, Thank you for joining us on today's conference call to discuss and Atlanta first quarter fiscal year 2021 financial results joining me on the core Frank Calderoni, Our Chief Executive Officer, Dave Martin, Our Chief Financial Officer.
On this call, we will be making forward looking statements, including for national guidance and expectations for a second quarter.
Dissipated future operating and financial performance strategies customer demand products and technologies.
These statements reflect our best judgment based on fact is currently known to Washington actual events or results may differ materially. Please refer to documents, we file with the FCC, including a form 8-K filed today with today's press release.
Those documents contain risks and other factors that may cause our actual results to differ from those contained forward looking statements.
These forward looking statements are being made us up to date and we disclaim any obligation to update or revise these statements.
Called reviewed after today the information presented during this call may not be card or accurate.
We'll also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.
Otherwise stated during the call all references to our gross margins expenses operating results on a non-GAAP basis or historical periods. A reconciliation of GAAP and non-GAAP results is provided in the press release and supplemental financial information on our website.
With that I'll turn it over to Frank called Bernie.
Thank you Edelita good morning, and thank you for joining us today.
As I discussed last quarter, we had several changes in our sales leadership, including the departure of our Chief revenue officer, and the introduction of new talent in the Americas, which impacted our fourth quarter performance.
Our top priority in the first quarter was to focus on improving sales execution and performance specifically related to optimizing pipeline around opportunities and customers who have the highest propensity.
Well, we have made good progress enough sales execution, such as driving stability across the teams retaining key talent and focusing our efforts with larger enterprise customers. We still have more to do and we have great confidence in our sales team.
So first quarter results, we had a strong start in February we were able to convert some of our Q4 deals that had not closed last quarter.
While we were seeing good traction through the first half a quarter covert 19 became a much more substantial impact to our customers and as a result, this affected our deal flows as customers delayed budget decisions related to spending on new projects.
This is evident in our first quarter billings, which only grew 10% over the prior year from a total revenue perspective, Q1 revenues were $104 million up 37% year over year.
Subscription revenues were up 44%.
Remaining performance obligation or rpos balanced exiting the quarter was $647 million up 37% over last year.
To recap how our business operates we predominantly serves large enterprise customers with a focus on significant investments with enterprise wide digital transformation deals with a top down selling motion.
Oh sales cycles can be lengthy depending on the scale of the project and these transformational data monetization deals will typically involves a variety of different stakeholders across several function and this can drive variability in the timing of deals.
Yeah, absolutely volume of new deals book this quarter was lower as a result of the impact of cobot, 19, which delayed decisions on deals.
As you would expect customers began to pause on projects as they refocused investments to manage the immediate impacts as cold at 19, such as ensuring their teams could work remotely we're working through disrupted operations.
We entered this quarter with a pipeline we're late stage deals were more heavily weighted.
On new logos versus expense, which is similar to what we saw in the first quarter of last year.
As customers began to pause projects due to cope with 19, new logo deals where most impacted.
As customers defer decisions on these new projects.
In this uncertain environment, especially with large digital transformation deals.
It can be challenging to get all the stakeholders to make decisions quickly, which means that a deal can take longer to get these through cycle.
Well virtually every vertical was impacted you to covert 19, we saw a greater impact in hospitality.
And travel where business is essentially came to a standstill.
In other cases companies in health care in certain types of retail how to deal with unprecedented demand and capacity constraint.
Our sales cycles were reflective of this environment.
For example in the energy sector, we had a large global oil and gas customers decide to delay supply chain initiatives.
To later in the year.
And the travel and hospitality sector, we had a large European airline delay in enterprise financial planning project due to budget constraints.
In the automotive sector, we saw multiple deals placed on hold both at automotive manufacturers.
And tier one suppliers such as a European supplier for automotive safety systems.
In summary, covert 19 impacted our business this quarter, while at the same time, we were continuing to improve our sales execution.
Deals where customer decisions have been delayed remain in the opportunity for us as there continues to be no change in competitive dynamics.
We're also pleased to see the level and type of pipeline generated over the recent 46 weeks.
Which tells us that the demand and interest in a platform and its core capabilities to drive significant agility in planning has not been impacted.
This underscores our longer term market opportunity that Gartner and its new cloud financial planning and analysis solutions report.
States step by 2024, 70% of new S.P. in a projects will become planning and analysis projects extending beyond finance into other areas essentially connected planning.
Oh platform has always been mission critical but this uncertain environment makes this even more relevant to our customers.
Which brings me to our teams have responded to our customers needs. What's been most impressive to me is seeing how our solutions are helping our customers adapt quickly.
Over the last two month community of experts certified Master Anna planners quickly responded.
By creating 17 production ready models that can be downloaded and deployed at no cost like any anaplan customer.
These models address covert 19 specific use cases like hospital bed planning P.P.E. redistribution, and FEMA type expense tracking.
We also launched a 90 day free trial and met with various nonprofit organization governments and customers to help them addressed their urgent challenges related to cold at 19.
We've seen increased interest in our platform with a number of app downloads up about 80% higher than the monthly average.
The most visited page on our website in April was the Lloyds dynamic clinical staffing model built on the unplanned platform.
Oh platform has helped our existing customers revised and generate updated scenarios at high speed. For example, one of our media communications customers has used anaplan to re forecast scenarios for revenue and cost.
At the detailed brand and client level over 30 different times in the past several weeks without the need to add resources or incur additional costs.
Another trend, we're seeing is the need for companies to focus on re skilling their workforces now.
We're proud to be contributing to the advancement of our professional community.
This quarter, we continue to grow the number of certified Master Anna planners now up over 100% year on year.
In addition, there has been a surge in the number of training sessions completed as people focused on developing their skills. During this time.
Our ecosystem of Anaplan users no. These skills are in high demand and this will give them the advantage to continue to drive value for their company and also for future employers.
Moving onto a few customer and large deal highlights this quarter.
One of our new customers is one of the largest insurers in the U.S.
The customer selected Anna plan to enable faster insights to our highly flexible what if analysis.
Coupled with the automation of key manual processing.
In this particular implementation anaplan will be part of the broader technology modernization initiatives involving the decommissioning of legacy modules.
In this case, we also serves as a complementary solution, helping to simplify upcoming large scale system upgrades.
This is an example of how Anaplan is winning in the larger digital transformation deals.
Another strategic deal this quarter with with one of our existing Fortune 50 customers. This large health care company, what's already using and a plan for commercial forecasting and long term supply chain capacity management.
This quarter, we signed a deal to expand their use of the anaplan platform across different function and businesses within the company.
The extended used includes R&D project planning.
Biomedical engineering planning Capex planning and in the areas within supply chain finance, such as price volume mix analysis across different products and channels.
This was a platform implementation.
Indicative of how our solution can be used in data monetization project.
These types of deals are typically significant in dollar site and required top down sponsorship.
This is an example of the type of major account.
We are focused on which can take longer to close in experience more variability and timing.
You know partner ecosystem, we have continued steady progress of the past seven quarters. The number of partners contributing to building pipeline has increased and we're seeing more about pipeline pivot toward inclusion in the larger more transformational deals.
We also onboarded genentech as a new partner a leader in driving finance transformation with over 90000 global consultants.
Finally, I'm pleased to share our partners added another 500, plus anaplan certified resources into the market during the quarter.
And in many cases, we're seeing them ramp ahead of schedule and indication of their intent to continue building anaplan pipeline.
Looking ahead, while we cannot predict the extent of disruption to our customers, we do anticipate slower new business activity through the year.
We are aware of the near term impact that economic uncertainty may have on the new deal volume over the next several quarters. However, we are well positioned with a strong balance sheet solid customer base and value proposition.
Finally, we know every business will need to forecast differently and adapt to real time critical changes related to do demand and supply reality.
Well, you're seeing this demand in our pipeline and we are confident in a long term growth trajectory ones budgets, we open.
Now, let me turn the call over to Dave who will address out first quarter financial and provide our outlook for the second quarter due.
Thank you Frank good morning, everyone.
And plans first quarter topline results were impacted by cobot, 19, and our ability to close new business deal pipeline and expand existing customers.
Is challenging business conditions negatively affected our multi quarter topline net new HCV and remaining performance obligation momentum and calculated billings growth.
Due to the ratable nature of our SaaS revenue model, we saw a lesser impact to our F Q1 revenue results.
Total revenue for the first quarter was 104 million.
37% year over year.
Within this subscription revenues grew 44% and comprise 90% of total revenue.
Service revenues were 10 million down from 11 million in the first quarter last year.
Calculated billings for the first quarter were 96 million.
10% year over year.
Our P.O. exiting the first quarter was 647 million up 37% over last year.
A portion of RPL would that is expected to be recognized as revenue over the next 12 months as 330 million up 20% over last year.
The number of customers with greater than 250 <unk>. They are our was 367 this quarter.
32% year over year.
Our dollar base net expansion rate for and our AR was 117%. This quarter. Historically this has been above 120%. This reflects the lower percentage of book deals coming from expands this quarter as well as churn, resulting from one major account, where there was a change of control due to M&A.
Turning to our profitability metrics total non-GAAP gross margin for F Q1 was 78%.
Five percentage points year over year.
Within this subscription gross margins were 85% up 117 basis points year over year and services gross margins were approximately 10% of 310 basis points year over year.
Total non-GAAP operating expenses for the first quarter were 94 million up from 75 million in the prior year, primarily for go to market investments.
Given the business environment that develop through the quarter like many other companies, we pulled back on variable spend and facilities entertainment and travel.
Outside contractors as Weve reprioritize projects and prioritizing core hires within sales and engineering.
Driving leverage and Anna plants financial model has been a consistent focus and over the past eight consecutive quarters, we have improved operating margins on a year over year basis.
That's Q1 operating margins were negative 13% an improvement of approximately 13 percentage points compared to negative 26% and the same period last year.
Net loss per share in the first quarter was 10 cents based on 136 million weighted average shares.
Free cash flow for the first quarter was negative 6 million, we exited the quarter with 303 million in cash and cash equivalents and our capital structure remains well positioned.
Turning to our outlook the future impact of Kobin 19 on the global economy is unpredictable and we cannot be certain how long and to what extent this pandemic will affect our business opportunities and the coming much.
While we remain highly confident a long term digital transformation trends and the relevancy of our platform across all industries due to the uncertainties of global market conditions, we are withdrawing our annual revenue and operating margin guidance for the fiscal year 2021.
Like most companies managing through on certain conditions in their business. We've reviewed several business demand scenarios internally, assuming variable economic recovery timelines.
Even under the most conservative assumptions the nature of our annual recurring revenue from our existing customers provides us with a baseline of double digit year over year subscription revenue growth for F. Why 21.
The stable revenue and our strong balance sheet gives us confidence that we will be well positioned to catch our long term market opportunity.
For a second quarter guidance, we anticipate revenue to be in a range of 103 million to 104 million.
Within this we expect services revenue to be in the range of 8 million Tonight.
As we are withdrawn or annual guidance will provide a baseline for a second quarter billings, which we expect to be in a range of 98 million 200 million.
Variable expense control remain in place and we'll continue to support the growth drivers in a business with targeted investments in hiring and our go to market and technology platform business functions.
We expect our non-GAAP operating margin to be in the range of May get a 15% to 16%, which represents approximately 400 basis point year over year improvement at the midpoint.
Weighted average share count for the second quarter is expected to be approximately 138 million shares.
In summary, Anaplan has the capabilities and resources to manage the near term market demand conditions and the long term opportunity to serve an even greater customer ecosystem and the next phases of global planning requirements.
I'll now turn it over to the operator for questions.
[noise]. Thank you, but at this time I would like to remind everyone in order to ask a question.
The stars on the number one on your telephone keypad the gains as a matter of courtesy we ask that each participant flumist themselves to one question.
Your first question comes from Raimo Lenschow of Barclays. Your line is over.
Hey, Thank you. Thanks for taking my question and hope you Isis the old I Hope you <unk> question I have Frank on the on the sales Reorg situation like you know like if you go through this process. It's it's kind of always at journeys home like a one off a situation I want all things like if you take the analogy of low.
<unk> baseball game like where are we in that or where do you think you are in that kind of getting it back fully on track and being fully kind of optimize spread you want to be thank you.
Raimo Thanks for your question.
You know I would say that I would agree with you is it's a journey.
And as I said, a few minutes ago, I think when making a real good progress as we work to this past quarter.
The key thing that we've been focused on right now across the go to market team is really driving stability.
Especially in the Americas I know, we highlighted that last quarter, a we've been able to retain the key talent continue to focus their efforts.
I'm really.
The laser focused on some of the enterprise customers I talked about and really optimizing pipeline I mean, some of the things that you know if you think about from an execution perspective, what's gonna enable us to be successful in the short term and long term, it's really making sure that weekend a focused around the opportunities right now.
As wells in the future that works well for Anaplan and as we said, it's mostly looking at enterprise transformational data modernization, it's where a platform has a a sweet spot.
And when making those strides felt from that perspective, working not only with our own team, but also with partners and having that alignment or kind of work together. So it takes time I.
I feel good about where we are you know is this an ideal thing right now no, but it's it's part of the maturing of an organization. It really a maturing of the company and do you think back last year, we will growing in excess of 50% and just keeping up with that and making sure that we can make the investment.
You know people in a process.
To know that we have the ability to go after the opportunity that's out there, which I strongly feel very confident then is important so I think we're making good progress.
Well I don't want to pick an inning or so but really good progress we're going to continue that going into the current quarter. We've had quite a few activities already underway.
Well again like I said with Ah Derica. It varies efforts are Mount pipeline as I mentioned, we're seeing good results.
We saw a pipeline generation a increase.
Over the past a four to six weeks, which again is indication of how well everyone is getting a line, but also from the perspective of the opportunity that we see out there.
Some of it is not some of his immediate but more of it. So as we think about later in the year and so that's a good thing.
Okay perfect. Thank you.
[noise]. Your next question comes from Alex's appeal of RBC capital markets. Your line is often.
Hey, guys good morning, and thanks for taking my questions.
Frank maybe can you talk about what exactly did you see in later in the quarter from both kind of a velocity of existing deal execution, a new pipeline creation and what are some of the underlying assumptions around some of those deal delays that inform the billings growth guidance for the second quarter.
So as I mentioned, it's sort of like a whenever one kind of went into locked down toward the middle of the quarter. It hasn't got into April.
Is where we started to get or some of the headwinds with a really of customers across the board. Initially from the perspective of just pausing to figure out where things were going for them.
And then secondly, as they were making certain decisions you know some tops down decisions coming from Ceos Cfos even boards.
It was directives that will put down where first of all new projects were pretty much put on hold and decisions on those projects were being deferred and that was fairly consistent across all geographies and that was within a yield the fees first few weeks.
Really the locked down so kind of thing through that.
So we had to work through all that as I said some industries clearly were more heavily.
Weighted than others.
We ended this quarter, which we do see at the beginning of a Q1.
More about pipe, we normally see kind of the a 50 50 split in pipeline between new and expand.
This pipeline coming into the quarter was more heavily weighted toward new accounts of course, new accounts require a more extensive review and approval within companies.
So that was a bit more the impact.
But the good news if I would say this is that none of the projects have been lost.
We'll continue to work through some of them.
They've been as some had been rescheduled into Q2, others are still you know on pause for a further decision as companies are working to the the covert situation. So we'll continue to work through that.
But at the same time in April and even a in the several weeks in May which is as we continue to work on pipeline generation.
New projects as well as expand projects.
Have been coming into the pipeline and our focus now since we know as we look at Q2 in Q3, we have a higher propensity to close expand or deals a pipeline in Q2 is much more oriented towards expansion rather than new.
And so that's helping and we've also done quite a bit of worked with our planting AI technology to really look at a those customers, let's say that have more chance of working through projects.
And so we're spending more time with those customers some of them have to do with more coated related like on the front line. Some of them have to do with a working with certain government agencies and we've had a program to put in place from that perspective.
Which you've seen some traction and then others. It just.
Focusing on companies in industries that are less susceptible to some of the the initial cobot challenges that all of US it's seen over the past you Mike.
Perfect <unk>, maybe just one follow up or Dave can you talk about I think there were some.
If you look at billings from a cash flow perspective, they were a little higher than they appeared on the balance sheet and I'm curious.
If you could just go through what the major differences were there any FX adjustments and how should we think about cash flow billings for the second quarter. If there if there's going to be a disrupt the difference there as well.
Yeah. Thanks, Alex <unk>, we got a minor tailwind from some of the FX, which is not anything different that we've experienced in the past with some of the headwinds coming into our previous quarters I'm. So that will always play a point or two as we think about coming into two.
And our specific guide a we're keeping things relatively flat in regards to FX.
And just really focusing on the key operational activity and it's kind of what Frank oriented around.
Got it thanks does they said.
[noise]. Your next question comes from Heather Baloney of Goldman Sachs. Your line is [noise].
Great Thanks, Frank and Dave for Us for taking the question appreciate it.
One question was you mentioned to control change in control due to M&A as it impacting your net expansion rate I'm. Just wondering if you could share with us Oh, what would've been excluding that if that if that's something that you can talk about and then also just kind of following up on Alex's question.
The first month of the corner or just kind of how we're close rate tracking versus what they might typically be in a in a first month of a quarter and just any anything you can tell us about the conservatism and you're close rate assumptions for this quarter as well. Thank you sure sure.
So I'll take the second part first and then I'll come back to the question on an hour and maybe Dave can you kind of jump in on that as well so heather as far as the first half of the quarter.
As I mentioned, we came into the quarter a strong of course, we had our kick off at the beginning of February. So everyone was really excited about you know what we laid out for the year I.
I think also.
We had a couple of you know we came in with a good pipeline.
For the quarter, so that really helped and as they said more heavily skewed toward new but but a good pipeline in both new and expand.
And then we also had some of the deals from Q4 that we're kind of coming into the quarter as well. So February had a combination of all that we did close them deals from Q4.
I'd say, we closed about 25% of of the deals from the first from the fourth quarter I'm in the month of February which was which was healthy.
Second we started to move on some of the expand business and that worked out well.
And I think also a we got a good start with our partners. So they were really energized and also very forthright in working with us in a not only teeing up at all so closing some opportunity. So so it was a good month.
And actually the month of February was better than the February last year, we actually had gross in business.
Close rates in the month of February on a year on year basis, and really kind of going in.
March as well, yeah, and I'm, sorry, I was referring to kind of if you could show. That's the first month of my first month of the score Oh, I'm, sorry, I'm, sorry, sorry, sorry, though.
Oh My mind, something so may or May is looking as he said we're building pipeline generation. So that was in April and May.
That's continuing through the first three weeks of Meg and we've also had deal closures. So I would say may right. Now is is looking okay. I mean, we were from up from the May perspective, I'm feeling good about the traction with the understanding.
The backdrop.
Coated rights on I'm using that as a guideline.
And I'm seeing a bit more of a let's say stability from April and I would say as I said, we're seeing pipeline generation built and that pipeline generation again for this quarter as well as future quarters.
Yeah, you want to jump into the anymore.
Yeah, and our our you know we called out that one item theater really a change of control.
And it's unfortunate that happen and you know clearly a lot of our churn in that and the past is we've always articulated has come from side events such as that on a normalized rate. If you excluded that item and our our would have been closer to 120%.
Great. Thank you.
Your next question comes from Bruce problem of Piper Sandler Your line is [noise].
Hi, This is Brent. Thank you for taking the call here I guess shrink just wanted to drill down into kind of how you're optimizing the pipeline. If you could just kinda walk through the changes to go to market.
Specifically around maybe the Darex field sales just given travel restrictions.
Any color on the pivot you're making on the direct sales side, just given the jury environment would certainly be helpful. Thanks.
Sure so like all companies middle of the quarter.
For us we did have a pivot in working from home.
Dealing with the locked down around the globe.
I would say I was very pleased with how our team was able to respond pretty quickly.
The good news about the unplanned platform is that we're able to work with customers remotely.
One through a the selling cycles as well.
Mission and even part of the implementation so.
From that perspective in the quarter, a the selling motions as well as the implementation with ourselves and without partners.
We were able to pivot pretty quickly and be able to do that remotely.
One of the things that came up a of course, it's not always ideal one of the benefits that we have from an anaplan perspective is whiteboarding warmer selling and usually doing that with a team.
Including Anaplan, a partner as well as with the various members at the customer.
Doing that remotely is a little bit more challenging, but we're working through that.
The other thing is that we did a significant outreach to our customers in the month of April.
Oh, I really just to first of all understand and appreciate what they were facing a around coated and not so much even selling but just.
Engagement.
And offering health, a that's kind of where some of our programs on Anaplan helps some of the hackathon work that we did what we tried to make models available in certain situations free of charge.
We did spend a good amount of time in April Im still doing that this month.
In helping customers modified some of their models to meet some of their near term needs, a especially as it relates to cash management.
Zero based budgeting is it some of the things that we're working with existing customers and there will also teeing up with a with new customers in the current environment. These opportunities with existing customers tend to be more free of charge.
For new customers they tend to be smaller in nature, but does that allows us to start to a plant some of the seat.
From an execution perspective again, it's the discipline and focus.
Around the types of customers.
In certain industries incurred in certain environments that we pivoted to as well.
And allowing us to spend more time more effort.
In using our time, most effectively as it relates to prospecting, new as well as expand opportunity.
And as I said that that tended to worked quite well for us over the past number if we.
Helpful color. Thank you.
[noise]. Your next question comes from Taylor Mcinnes of Deutsche Bank for one itself.
Hi, Thanks for taking my question could you maybe talk about the net expansion rate that's embedded in the Twoq billings and Brad a and grabs guide and how that might compare to the hundred 17% or under 20% normalized you just mentioned in the quarter I'm. If there's anything that you can share on expectations for how long that natixis.
Ranch in rate could go on near term or what are at least what you're seeing today.
Hey, Brian I seem to start off and then yeah sure sure sure. So Taylor <unk>, you know with our with our billings, we did it more from a bottoms up forecast and then we took some appropriate measures for some assume churn.
The inner harbor will really be an output both how much expands within that specific cohort. So it's not that our billings numbers actually solving for a specific and there are.
That makes sense. So as we went off and examined and did a bottoms up forecast, that's where we came up with that solid.
Forecast that we bought provided forward this specific quarter in regards to enter our as we think about things on this level of uncertainty I think it's fair to say that if things were to continue ads is with a shelter in place I kind of some of the prudent guidance we've given.
There are some book and cases that you could see a rate going as low as 110.
But that's still provide some moderate levels of expand.
And even if you take up a little bit of churn coming into the next quarter to but all things said I would see that is kind of a new floor as we continue to navigate the uncertainty that we're looking at here in the very near term.
And then and the more that we can they said focused on a expansion capabilities and then the higher mix of expand which is kind of where we're we're working on right now.
The better we're going to be able to kind of see more of that kind of follow through on the and or.
Got it and then just maybe a quick follow up because you said I'm before that.
Pipeline that the split tends to be between new business and expansion 50, 50, and you said you keep being a little bit more weighted towards expansions. This quarter any any idea on how you're expecting like that that split to look.
So in Q2 I focus right now is to is more like the balance or to get back to like that 50, 50, and even if we can skew it more toward expand.
Based on again more the challenges on bringing new business to closure, that's the objective and and the pipeline that we're building a creating.
As we see it now over the next number of month is showing that shift.
Great. Thank you.
Your next question comes from Pat Walravens of JMP Securities Your line itself.
Oh, great. Thank you very much so frankly, Dave one of your competitors is going to be reporting Tomorrow night.
And given that we're gonna have that sort of additional context, I would love to hear your thoughts on.
If you look at your billing Miss internally whatever that amount buzz.
How much of that would you say was because a kobin 19, and how much would you say was because the sales execution isn't where you would have wanted it to be.
You know it's had its hard to say I mean.
It's sort of like.
This quarter.
Coming in as I said, what the backdrop as Q4 was not the ideal situation or to have.
We we made the best of it in the early part of the quarter. They said.
Really getting everyone too fast start.
Closing transactions, but also a spending the time on further you know focus and diligence in maturing or some of our process. He says as we think about more the long term as I said before.
So a working through that you know there was and they said before we're not we're not through that I said this back.
In the February timeframe, when we were closing out Q4 that these take time and so we're working through that and that will continue to get progress. That's we think about the next couple of quarters.
But you know again covert came right on top of that and so we had if you want to say that double whammy whammy front from that perspective, and we work through it most of the.
The deal activity as far as a those decisions that were put on hold were more skewed toward.
Cobot related and budgets and things like that.
Environment, it's tough right and.
Being able to kind of work through it Dave mentioned earlier some of the decisions that we may with an airplane I think were somewhat typical of a lot of companies right pull back on some of the procurement spend some of the contracts.
Especially new contracts, so kind of working through that.
But again I I do want to highlight this I mean, having the ability to develop more models that are code that specific on the front line.
Has been very helpful.
Happens on the 17 models that were developed an hour available to customers and then also right now I I mentioned this briefly before.
Well, we're leveraging we had a a deal that closed off one of the states in the northeast there were working through the pandemic.
We're now looking to.
Replicate that and make that available to other states a across the U.S. and see if we can get them for us more leverage from that so we're honing our efforts and this is both both from a process as well as from the pandemic environment.
To see how we can continue to make and the plans platform helpful.
To customers and the most important thing is drive value if we if we drive value.
We have a higher chance of getting through budget challenges and working through that and that's where we're putting both the emphasis again on process as well as also mining the opportunities a bit more and highlighting those where they could be a higher propensity for them to ah to buy endpoint.
Okay. Thank you.
[noise]. Your next question comes from Kirk Materne of Evercore ISI.
Your line is.
Oh, yes, thanks very much in thanks for taking the questions.
Mike How's your conversations with clients, maybe changed a little bit in terms of just the vertical functionality that you provide you know meaning in terms of what's going on right now I'd imagine more focus on budgeting, helping companies saves money versus maybe sales planning I was just kind of curious can you give us. Just this example, sure sure I imagine might getting up or things like that's it.
She gets a chance on that and then just to put a finer point on one of your earlier comments I assume the biggest sort of bottleneck right now is clients going from pipeline to to bookings is just budget approval I just want to make sure. That's that's kind of what you're saying Oh. So it gives us confidence gets better if you feel like that bottleneck will hopefully I'll send out.
A little bit thanks.
Sure sure. So I I will say, if I look back and I think back over the last two months.
More and more of our conversations myself included and the customer Outreached I did for several weeks.
From my home a was really to talk to finance executive a lot of Cfos.
Various members within finance organization, because again they were they were dealing with this this change this sudden change to their business and they were looking for ways of trying to pivot.
And so that's where again, we spend some time with them again offering help and assistance on helping them a redesign or modify some of their models to give them the ability to have more intelligence.
And that that's only from my perspective, but I would say across the organization. So specific solutions are on the point of liquidity a they said before zero based budgeting a part of that was also workforce because as you would expect a company started to look at their workforce and start to figure out a different things some.
We're hiring very aggressively and therefore, they had one dynamic that they had to deal with an eye I talked to one CFO, who is just couldn't keep up with the volume of hiring because of how things were shifting for them and then I talked to other cfos, where there were making tough decisions related to workforce reductions. So I would say the predominant a conversation.
One has been with Cfos and finance organization.
Pivoting from that the other side of the equation was supply chain I was.
Personally involved I would say with quite a few transactions and still in this month on supply chain visibility in supply chain again.
Modifying being more agile and supply chain and.
And so again, we're able to kinda talk about.
The value that we can provide in supply chains to allow a much deeper analysis and a much more agile.
Process for them to get information make decisions and move on from that perspective, and actually the one of I didn't mention this deal, but one of the critical deals that we had that closed in the month of April.
Was it.
Technology company that was actually working through modifications on supply and that was really pleased to see a that really come together even in the midst of what was going on in April.
Now you are lacking a point as far as budget approval, yeah. The I can't say, that's gonna be the salt everything, but I think right now that's been somewhat of the Achilles heel a in most of these transactions so it budgets.
Start to.
Free up and Ah things start to relax, yes, I would expect that hurdle to be somewhat lifted but again, we're trying right now we're all in a situation of Ah, It's an unknown environment, how fast the recovery Oh, we really into a recovery how fast that recovery will be and when companies will start to.
A free up.
Some of their investment dollars were also being again as I said prudent we're still making investments. We've we've got critical hires that with still considering and going through in the sales and engineering, but other projects. So from that perspective have been put on hold for us. So it's really kind of working through that balance.
Thanks Frank.
[noise]. Your next question comes from June Kim of Rosenblatt Securities.
Your line is <unk>.
Thank you quick question on given the current status of the spending environment out there.
Is there a plan to focus more on smaller and faster deployment up a two trinity it's better than your traditional larger ones.
[noise] the answer for that is yes at the moment or I mean, we like I said before where we're pivoting, where we can help customers and sometimes it's modifying existing models, sometimes it's creating new models that.
They can deploy within a week or two sometimes it's leveraging some of the 17 models that were created through our hackathon. The those opportunity you know just to give you an idea we kind of ballpark that it's it some of them could be worth anywhere from 50000 250000. So it just kind of gives you an indication.
One of its smaller business and we did see more of that in April and we're seeing some of that in may as well, but that's not enough to offset some of the bigger transformational.
Deals that do take a longer to close and.
Our in the midst of Ah you know budget decisions being on hold.
But yes, we're looking for all ways to.
And again those also plant feed for.
Other opportunities to further down the road.
Okay great.
If I can squeeze in one more.
So with the free trials offers and such.
You somewhat embracing a bottoms up sells approach as well you know that you'd be looking at <unk> top down approach.
Well, that's a whole different yeah. So top down is important when you're doing transformational data monetization projects because they require higher levels of executive approval that you know that's much more that goes on it's not just buying anaplan, but it's also sometimes the consultancy around that.
When you're selling some of these other transactions or making a let's say the platform available during the trial, yes that can be at lower levels in the organization a against start to.
Help but also a start to provide some potential prospects for the future and and the as he said.
You mentioned on the call the amount of activity, we're getting us to the App hub.
Just interest in learning more about that.
Has been pretty strong and we are more than likely going to be announcing an extension of that 90 day free trial.
Because again, we seen it'd be very helpful for us and we feel that you know.
The cobot 19 is not over and so we want to make sure that we can extend beyond and continue to work through some of those opportunities.
Okay, great. Thanks, so much.
[noise]. Your next question comes from Scott Berg of Needham Your line is [noise].
Hi, Thank you Dave Thanks for taking my question today.
One for me just on partner contributions, Dave or a Frank can you maybe give us some color on partner contributions to booking.
On how that kind of shared relative to maybe what you saw in 20 I.
Calendar or fiscal years 20, and then maybe what your assumptions are for partner contributions as you kind of get through the next quarter judo bookings. Thank you.
So part of the contribution from the standpoint of working with partners has been about 50% and increasing.
Over this past quarter again, similar to the outreach that we had with customers.
I and others on the team did outreach to the partners as well or the G.S. eyes as well as some of the others.
One to touch base environment for them, but also what they were hearing from clients.
Which was very helpful enough jointly planting.
Secondly, a was to think about or some of the pivots that I mentioned before as far as I.
I talked about the Deloitte a.
Joint offering a through the Anaplan helps that's getting a tremendous amount of traction. So how we can do things like that and then third we also have been working through and I know that's out there because I've heard some comments about it you know working with with partners on this $100 million in 100 days really to kind of put.
Objectives with ourselves joint objectives with a partners.
On creating and helping to drive new opportunity not immediately but also from the standpoint as we think about the next couple of quarters. It helps us a better aligned with them and then also figure out the joint investment that we're making on both sides for that opportunity. So all those.
Despite what we've dealt with a with cold it has been moving forward and the partners that I mentioned this in the prepared remarks, we saw an increase in over 500, a partner consultants just in the second quarter alone, which is a continuation.
And what we saw in previous quarters. So that was good that they do see the value and anaplan longer term and they do see the need for agility in planning and scenario planning and so that's helpful.
[noise] Your next question.
Final question for today comes from stands blocky of Morgan Stanley.
<unk>.
[noise], Eric I'm thinking so much for taking my question.
Two questions from my end, a wonderful Frank one for Dave.
As you were.
Be doing your sales planning sales hiring planning for the rest of the year, you mentioned, you're still hiring and some key strategic areas. How are you thinking about your sales head count for the rest of year, maybe compared versus the double digit expectation for revenue growth for the year and then.
Little bit of unexplained question on billings are you seeing any changes to customers asking for concessions or maybe changes to their billing terms going from annual typical annual prepayments you may be spreading those out into maybe quarterly or semi annual payments and if that has had any.
Headwind in the quarter on your reported billings that's it for me. Thank you.
I'll take the first one Dave I'll, let you take the concessions.
So on on the hiring Stan again, <unk>, where we're looking at critical hires only at the moment and that is a technical ones on the engineering side and then on the sell side its specific mostly in areas, where we feel that there is a opportunity lets say later in the year that we need to make.
The investment now we are we were now hiring under a plan for this year just based on the environment more so than anything else not that we see lack of opportunity. It's more a reflection of trying to balance the spending so we pulled that back but again, we're still doing some critical hiring in a in the U.S., but another.
Region, that's as well and we'll continue to monitor that.
And see how.
When we feel based on that balance we can open that up a little bit more but again, we see growth potential longer term and we want to kind of like strike that balance so that we don't just.
Stop everything and the offset of that as they said there's been some other.
The current spend and things like that travel and so forth that we've been able to clearly a pull back on to allow us to have them a investment.
Capability in these two critical areas.
Yes.
Just dovetailing on Frank's comments on on some of the pull back on Oh from spend you can just imagine that the various other enterprise customers that that we engage with on the commercial aspect of their procurement organizations are doing just the same thing.
You know we've had some moderate requests in regards to weatherfords payment extension or split billings, you know, but our our opportunity is really selling into improving our value of why we should try to keep things is close to normal but with the one you're off payment upfront, but there.
In some limited confessions.
You know last quarter, and there's some assumptions coming into this quarter as well.
Got it thank you.
[noise], what isn't gentlemen that was our final question over today I will now turn the call to our presenters for closing comments.
Thank you operator, I want to thank everyone for joining our call today, just want to thank all of our customers up partners in a shareholders and our team members of the continued support and we look forward to talking to again next quarter.
Have a good day.
[noise], ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.
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