Q2 2020 Appian Corp Earnings Call
Ladies and gentlemen, please standby.
Good day and welcome to be Happy I'm Corporation second quarter second quarter 2020 earnings Conference call. Please note that today's conference is being recorded.
And at this time I like to turn the conference over to Mr., Scott Walker Investor Relations. Please go ahead Sir.
Thank you operator, good afternoon, and thank you for joining us today to we'd be happy in second quarter financial result.
With me on the call today on that Caulkins, Chairman and Chief Executive Officer, and Markowitz, Chief Financial Officer. After prepared remarks, we will open up the call. It's a question answer session.
During this call we may make statements related to our bids are forward looking statements under federal Securities laws are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Greetings payments related to our financial results trends in guidance for the third quarter the impact of coated 19 on our business is on the global economy, the benefits of our platform industry and market trends our go to market in growth strategy, our market opportunity and ability to expand our leadership position our ability to maintain.
Can upsell existing customers and our ability to acquire new customers towards anticipate continued estimate expect intend well and similar expressions are intended to identify forward looking statements are similar indications of future expectations. These statements reflect our views only as of today it should not be reflected.
It upon as representing our views I look any subsequent date.
These statements are subject to a variety of risks and uncertainties that could cause actual results could differ materially from expectations.
For a discussion of the material risks and other important factors that could affect our actual results. Please refer to those contained in our Q2 2020. Thank you filing our 2019 10-K filing and our other periodic filings with the FCC. These documents any earnings call presentation are available in the Investor section of <unk>.
Our website at Www Dot happier dotcom.
Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to tables in our earnings release any investor relations portion of our web site for a reconciliation of these measures to their most directly comparable GAAP financial measures with that I'd like to turn the call over to our CEO, Matt socket that.
Thanks, Scott Thanks for joining us today.
In the second quarter 2020 happens cloud subscription revenue grew 30% year over year $29.6 million and our adjusted EBITDA was a loss of $7.0 million.
Total revenue, including a decrease in professional services grew 2% year over year of $66.8 million.
Our cloud subscription revenue retention was 113% as of June 30, 2020, including it does renewal rate of 98%.
These results exceeded our guidance.
Happiness navigated the pandemic relatively well like a lot of companies we've seen a dip in services revenue. The we have strong results elsewhere.
Some businesses have seen lower new customer acquisition and longer sales cycles, what happens saw the opposite.
We nearly doubled our new logo wins compared to Q2 last year.
And our sales cycles in Q2 were actually faster than our historical average.
Oh It is forced every organization to reassess how they react to changing circumstances every business now understands the importance of agility.
A lot of the change that organizations want to make is done some software.
So there's new emphasis on finding ways to create applications quickly.
Naturally low code stands to benefit from this trend.
So looking at the post cobot economy concluded that local software will emerge as one of the winners.
Generally agree with that but I want to point out the most loco technology is less capable of creating powerful mission critical applications and it's in these powerful core applications with changes needed most urgently crisis companies itself or the thinking that's their business.
Where for example, the reconnects them without virtual customers.
ER automates, new processes like applications for legacy loans, well maximizes the productivity of their disbursed workforce.
Or protects the safety of employees were trying to the office.
The most important to use of low coke is on the most important applications.
Surge of interests loco was evident in the higher attendance for virtual lapping will we tripled its habits among customers prospects and partners versus last year.
You heard lots presentations for our clients about everywhere successful and the fast deployments as an example.
One organization part of the Northern European Health Department overseas Cobot contact tracing they became interacting customer this quarter and they selected our low code automation platform.
[music] coordinate hundreds of field workers, making house calls cobot positive constituents.
Well one of the steel to get the organization needed to deploy quickly a mobile applications are there dispatch teams to manage their contact tracing cases.
Happy its case management capabilities and speed, we're highlighting what our partner deployed the Apple pay less than two weeks.
[noise] also one of Europe's largest exam boards expanded their use of appia due to cope with.
The board provides education assessments for over 5 million students globally.
Here are the organization expects to receive tens of thousands of additional appeals to exam scores and needs an application process them quickly and accurately.
Wrapping will integrate the customers existing systems and automate the and then process. The viewers we use happens to determine the validity of the examine submit their decision.
On this expansion deal because subordinated to quickly deploy the application before the August appeal to date.
A recent poll of large enterprises showed that 53% of businesses also have people back the workplace only 12% are using software to ensure employee health on site.
Well, that's all for organizations cannot respond fast enough to health threats and they cannot guarantee the security of the employee health data, but they're collecting.
Thank you have been launched two new solutions to meet this me what for safety and campus pass.
Large enterprises and higher edit institutions are using these solutions on Appian skip a compliant cloud to check the health of their people and the safely reopened that facility starting with 11.
Installations of attracting new customers to happening this year, 76% of organizations. The bought these solutions are happening class.
Whole top 10, global auto maker, and new Afton customer chose workforce safety hardly solution workforce safety to return thousands of employees back to the U.S. locations.
Happy and easy to use solution instant mobility in case management capabilities quick Configurability allowed the automaker to respond to changing circumstances and protect our employees from cold.
Solution was configured and deployed just 14 days.
Additionally.
Our top 10 global sports brands and retailers bought happens workforce safety solutions to bring thousands of employees safely back said all the stores warehouses head office and stone Cold crisis. This new Appian customer chose our solution because of its simple user experience configurability to comply with regional regulations.
And ability to deploy to their entire organization and just weeks.
Here's an example, going higher it example in higher at a U.S. institution with over 70000 students and faculty became a new happy and customer last quarter. This college football first training certificates for hands on jobs, such as nursing mechanics, and electricians. These types of different degrees need in person practical exam, so students need to be on.
Campus to meet their to the requirements.
This was especially important for the 2020, graduating seniors.
Packing was deployed.
And thousands of faculty and students phased back to campus within 10 days of purchase.
[noise] our existing customers also adopting these solutions to return to onsite work, including a top 10 global pharmaceutical company. This longtime customer expanded their use of happen by purchasing floor plates looked like safety in Q2.
Well use our solution to manage the return of tens of thousands of employees to worldwide locations, including manufacturing facilities.
They selected happy end, because we were able to deploy to their global workforce within a month to purchase I'll talk about partners next as I mentioned earlier happy of nearly doubled its new logo deals this quarter compared to last Q2.
70% of those Lou customers will talk to us by partners.
Also partner deals close to 22% faster last quarter when they did in 2019.
For example, the park or help us when a Q to deal with a top 10 U.S. cable company. This new customer we use after him to consolidate its risk management systems into a single Watson and report on cyber security performance.
Without being the customer will gain visibility all security vulnerabilities because it can integrate data across disparate systems. One this deal have to our partner completed a complex proof of concept in just two days.
Hi, Steve is also leveraged I know, it's harder to when a deal with a middle Eastern utilities company, making limited customer in teaching.
But he bought up into a place it's being flexible legacy software and we'll build applications for the customer onboarding managing contracts maintenance and keep them as.
Well on the steel after the part of a conducted a challenging proof of concept into days.
In Q2, our key industries continue to perform well.
Life Sciences in particular, almost tripled software bookings versus Q2 last year.
More than half of the worlds 10 largest life sciences companies are happy and customers, making it our third largest industry.
One top 10 life Sciences companies runs more than that doesn't happen applications across various business segments, including corporate functions medical devices pharmaceutical and supply chain.
In Q2, they purchase licenses to coordinate the review and approval of custom medical products.
Tens of thousands of employees and independent surgeons will collaborate using this new act to ensure these designs fit individual patients.
Well one this deal because of our ability to successfully automate the mission critical processes.
Additionally, we expanded had another top 10 life Sciences companies. It uses our platform to automate all operational areas across the pharmaceutical division.
For example, they use happy to prepare and conduct patient visits in the clinical operations.
And they produced processing times from Alister minutes.
In Q2, they purchased over a million dollars developing software licenses to add more users to their clinical operations event planning and contract management applications.
[noise] North American Federal Health Policy Department is I last example in life Sciences today.
Lets customer uses shopping for compliance applications oversee international drug requests and supply shipments crossing the border if somebody's checkpoints.
In Q2, it more than double without being investment grade medical device management application.
This app will automate a registration and approval new products walks into the market.
Well one this deal over an income because our platform is flexible and enables the organization to quickly adapt to changing regulations.
Complement to our software we continue to evolve our customer success offerings. Our architects services offering provides customers with access to a team of happy in services exports.
Established best practices and they advise on application selection design into place.
We've doubled the number of architects services customers this quarter compared to last quarter.
That helps us on the software salt as well because participants in this program are more likely to make follow on license purchases.
For example, a top 10 gobbled up this is up you know like little operations and commercial banking groups earlier. This year the bank abandoned the two year long project to build a risk management after using a different technology. They pivoted, the apio and where the help of architect services the customer deployed the I can just 12 weeks.
Following the success the back purchased millions of dollars of new Afton licenses.
One last example.
A top 10 global asset management for subscribes to architect services to complement the partner led implementation team.
In Q2, the from increased its up investments with a multimillion dollar purchase to replace the entrenched legacy software in our mutual fund call sources.
As businesses emerge from the pandemic, they will looks to different technologies.
Well seek more automation.
Or cloud.
Or digital transformation and more low code.
There will be a new emphasis on agility the ability to react quickly to change.
Our locally automation platform will help businesses adapt to changing jobs.
Now I'll turn the call over to Mark for a deeper discussion of our financials.
Thanks, Matt I'll review, the financial highlights of the quarter and then we will provide details on our guidance.
Cloud subscription revenue for the second quarter was 29.6 million, an increase of 30% year over year. It above the top end of our guidance. Our total subscriptions revenue was 41.4 million increase a 12% year over year as we discussed last quarter. When we provided on your so Q1 guidance.
Actually $4 million of on Prem revenue that we had originally expected to close in Q2 2020, but instead it was closed earlier as part of Q1 2020 deals.
Professional service revenue was 25.4 million down 11% from 28.4 million in both the prior year period ended the first quarter partners continue to be a larger part of our ecosystem and are increasingly helping us somewhere software.
During the quarter all of our PS engagements, both cloud and on Prem were performed to remotely.
Total revenue in the second quarter was $66.8 million, an increase of 2% year over year and also above our guidance range.
Or cloud subscription revenue retention rate as of June Thirtyth was 113% within the 110% to 120% range that we target on a quarterly basis, we remain pleased with our customers expanded use of our platform.
International operations contributed 37% of total revenue for Q2, compared with 33% in the prior year period, demonstrating the strength of our business both domestically and internationally the increase as a percent of revenue was predominantly due to lower professional services revenue in the U.S.
Now I'll turn to our profitability metrics for the second quarter of our non-GAAP gross profit margin was 69% increase of 383 basis points compared to the same period last year subscriptions non-GAAP gross profit margin was 89% in the second quarter consistent with the second quarter of 2019.
Our non-GAAP professional services gross profit margin was 36% in the second quarter compared to 34% in the second quarter of 29 team. The services gross profit margin was positively impacted by decrease the amount of services performed by subcontractors as opposed to our internal resources, respectively. We expect our non-GAAP prefer.
Personal services gross margins to return to the upper Twentys as we onboard our annual cohort of University hires during the third quarter of 2020.
Total non-GAAP operating expenses were $54.6 million, an increase of 10% from 49.79 in the year ago period impacts recorded 19 has naturally decrease certain expenses like travel and entertainment in office related expenses. However, we continue to aggressively higher mid level software engineers and quota carrying sales.
Syrups.
Adjusted EBITDA loss was $7 million in the second quarter ahead of her guidance in compared to adjusted EBITDA loss of $6 million in a year ago period.
In the second quarter, we had approximately $600000 a foreign exchange gains compared to less than $100000 of FX losses in Q2 2018.
Our guidance does not consider any additional potential impact to financial and other income and expenses associated with foreign exchange gains or losses, as we don't estimate movements in foreign currency exchange rates.
Non-GAAP net loss was 8.2 million for the second quarter 2020 or loss of 12 cents per basic and diluted share compared to non-GAAP net loss of $7.2 million or a loss of 11 cents per basic and diluted share for the second quarter of 2019. This is based on 68.4 million and 64.8.
Basic and diluted shares outstanding for the second quarter of 2020 in the second quarter 2018, respectively.
We ended the second quarter was 69.8 million shares outstanding compared to 67.6 million at the end of the first quarter. The majority of the difference in common shares relative to March 31, 2020 reflects the increase of 1.9 million primary shares issued and a June follow on equity offering.
Turning to our balance sheet as of June 30, 2020, we had cash and cash equivalents of $256.1 million compared with 159.8 million as of December 31, 2019. The cash increased primarily reflects the completion of our June equity offering, resulting in 107.9 million to proceed to the company after underwriting.
Discounts conditions and expenses.
Well this equity raise we continued to strengthen our balance sheet for the second quarter cash used in operations was $3.1 million for the six months ended June Thirtyth 2020 cash used in operations was $7 million.
Total deferred revenue was 92.1 million for the second quarter with respect to our billing terms. The majority of our customers in voice on an annual upfront basis, but we also have large customers that are bill quarterly or monthly.
Due to the variability of ability terms changes in our deferred revenue are generally not indicative of the momentum in our business.
Now turning to guidance for the third quarter 2020 cloud subscription revenue is expected to be in the range of 31.4 million and $31.9 million represent representing year over year growth of between 28 in 30%.
Total revenue is expected to be in the range of 70.5 million in $71.5 million.
As a reminder, that total revenue guide reflects some headwinds to our professional services business due to cope with 19 adjusted EBITDA loss is expected to be in the range of 11 million and $10 million non gap and net non-GAAP net loss per share is expected to be between 18 and 16 cents. This assumes 70 million basis.
In diluted common shares outstanding.
So the full year 2020 due to the continued uncertainty surrounding the ongoing impact of Kroger 19, we will not provide a full year outlook qualitatively, we expect to see some headwinds to our preferred professional services business and our ability to close new logos through the second half of the year.
On the cost side many of our expenses have been naturally adjusted for example, traveling entertain it has been dramatically reduced in DNA hiring has decreased.
With that let's turn it over to questions.
And ladies and gentlemen, if you would like to ask a question today. It is our one on your telephone keypad again, if you'd like to ask a question if star one on your telephone keypad, we will take our first question and it comes from Sangita Singh. Please.
Go ahead.
Thanks for taking my question wanted to dig a little bit into the pipeline you see the back half a year or do you like new local digital projects coming back.
Line or is the outlook still subdued.
And maybe on top of that are there any changes to pricing on incentives that you're doing to get customers. So we start. These projects. If you know all August to get them Guy.
Yeah, well, let me take that Okay first of all we had some successful solutions launches in the second quarter.
But I want to reassure you that that is not the driver behind our.
Behind the increase but we've seen in logos and on the strength of our pipeline.
We are we are also succeeding on non solutions opportunities.
And so the answer to the second part of your question about whether we're offering a special deal is now because in fact, the the pipeline is strong and we are able to get new logos evil outside of these solutions context.
Got it that was very helpful. And then maybe you can one quick follow up on the Kansas path and the workforce solution like how should we be thinking about the lifetime value of the solution you know in a post covered world just how can they be thinking about that customer.
Thank you so much.
That's why we think about this a lot easier solutions that address an emergency situation.
And we want to be sure that the relationship that we create that every buyer can be transitioned into a lasting relationship. We don't want to just be there for the emergency when a lot of people are partner going into the future and so we know we've got a window to impressed.
And we are focused on that we realized a little beginning we see will says Oh, my God dress rehearsal right for a real customer relationship and there were already seeing success with that we've already seen cases, where solutions customers delay with what we've done turnaround across the platform were bought another application. So we are we're focused on that.
Conversion and and we're already seeing successful that's the good news is happy and show as well I feel works well in people adopt the software. They typically do like it we've got extremely high customer satisfaction, often called off highway analysts for that.
On like we could get more customers or whatever reason, it's just gives us a serious trials. She will they can do it I believe that said, we have an exceptionally strong retention rate on whatever sahil <unk> debt would do that so we know that's a challenge we do want to convert handle we're working on it ceding already.
Got it thanks, so much.
And our next question comes from Mohit, Doug you.
Hey, guys. Thanks for taking my question and contracts and the sort of quarter. My first question is it onto you highlighted.
Really good production in terms of you lose it seems like boots on shock me this quarter seems to be a that you were able to leverage automatically system on which contributed towards towards because one of the good. So wondering has anything changed too in terms will be button weekly system, either <unk> or the playbook that.
We do a a very healthy performance in that regard this quarter and also what sort of what are you seeing them so be spots like Detroit or didn't specify what we ought to get do with children you should age.
You mentioned, obviously look we'll get becoming public money doing well there, but just wondering if you could give us more color on that but you can system at the bottom yet.
When I was one of pushing them ones.
Great two keys to our success with partners last quarter were even more relevant in the midst of the Kobe crisis, and we were a relevant through solutions through low code because low code is just by its nature important because it allowed people companies to react quickly to change and secondly to along.
The process of maturation of relationship building and outreach to these partners, but to put us front of mind when they see a problem. They think of US and that's just part of the fruits of along investments when you put those two factors together and we we.
It is stronger than they've ever been with them.
Understood My final question.
On the profession, so that she business late so I mean, it's it's no surprise all they see they do some headwinds there, but can you help us back segments like it is your claim food and beverage partners moves were pushing films. So there's one and then obviously there's school there right. So you could take about a normalized run rate been pool, which subsides hopefully.
How should we think about that business school.
Actually the mine lives thinking.
Yeah, that's right. Okay. So going forward I expect it fills me a grower a week.
And just some unique circumstances right now she bought Oh I believe that we can grow our professional services like very modest rate will have partners enthusiastically growing and taking a good deal with the upside in the additional market space that we're creating with our software Oh, there's room for everybody to win here and how.
Our individual services are still valuable because they've demonstrated what can be done with our software our value proposition constant very clearly.
So I believe there's a there's room for all we don't need to strength ARPU lessons along with.
We instead expect it to coexist happily and grow slowly once we're out of the cobot situation.
Think we talked about the architect services as well [noise].
Coming in at the high end.
In helping customers saw very complex problems and we you know we work with several of our customers that were basically partner led engagements. The patent cases were down by the partners who came in kind of with the Swat team. If you will the architect services and help them out and so I would expect we're going to be offering continued off these high level a high margin.
Offering so I think going forward will be a grow our butts and that's quite it'll be a little bit it'll be slower slower growing in it.
So actually.
And our next question comes from our Jim up here.
Hi, guys.
Your job executing in the quarter here, so it's the mall tough environment.
Yes.
But where are you on the R&D side, you know it's been great to see some of the productivity of the product or you talked about some of the new so listen the units. This quarter I think you made some walks into the core platform as well along with the ARPU away and process mountain integration can use.
Just maybe give us an idea of as were thinking or to your R&D efforts, where you're deploying resources, whether it's on the public relations bought or or or further enhancements on the core platform.
Yeah I'm glad you asked about this because I'm also proud of the results than we had with our R&D side. This past quarter in the face of an emergency we produced some applications and we produce them faster than anyone else in the market to my knowledge was able to produce them.
Digital health strategy or something every every business needs right now to protect their returning workers as they come back to the workplace as I mentioned only about 10, 12% of them actually habits, the others, using pen and paper or sell or or something like that which really isn't responsible digital health strategy has three core components and we put all.
Three of these together and got to market.
Faster than our competition first of all you got to collect a lot of data about your employees. The facilities. The places they went the vulnerabilities all that because the more you know the more you can protect people you collect all that number two you bring it to bear at the moment when those the decision to remain let's say an employee has a test stores a symptom more they they think they might be sick at that moment, you've got to me.
A quick decision. So you got to have all that data brought to bear in the moment and accessible to the decision makers and then that requires a lot of integration of course.
Well the number three whatever decision you make you got to act on it immediately do you want to tell this person not to come to work. This model do you want to sell that person that they got to get a quarantine or test do you want to revoke those tend People's badge life. It happens immediately so knowing deciding an acting has to happen quickly and Furthermore has to happen in it.
The data stored securely liking and I hipple certified cloud like they've got.
Having that product is going to save lives, it's gonna health businesses improve their relationship with their employees and it's going to give us an edge because it demonstrates what you can do with a local platform is capable building powerful applications don't rush that some market and we got a whole bunch of business from being first where they complete solution. We didn't have the biggest brown.
Then right and then we're we're not going for the lowest price, but well we didn't get to market really quickly with a iron clad application I think that made a big statement I love.
Challenges like us moments, where we got to react quickly to get that allows a product platform to shine. So we had this opportunity we demonstrate what the platform can do now we'll continue to innovate weve, where we're not done making solutions are having to the solutions. We've got we've got some exciting new features coming up which I can't talk.
But we do quarterly releases in our engineering Department were very proud of the productivity. The innovation that comes out of that this quarter was not the only quarter, we did something cool, but it's a quarter where the thing we did was particularly high profile. So I'm glad it puts a spotlight on great group of Coders, who are coming up with a site and features for us.
Every quarter.
Yeah.
Thanks, Matt that's helpful level, and then a a quick follow up on the new customer or a new logos that you talked about.
I'm, just curious whether you're seeing kind of an inflection in the awareness and studio CIO awareness of the low code category, meaning you know where these customers that were in the pipeline or or what the and danica kind of accelerated their low crowed road that a relative to what they had more maybe January.
This year.
Yeah.
Yes.
I think that's out if that's happening it's just beginning to happen.
We.
I do believe that low code as caught on this year actually I think look heard would have caught on this year, even without Togut I think it's an idea whose time had arrived I was saying at the end of last year in the beginning of this year that in this new decade I thought the majority of the software written around the world being written in low code.
And that sounding a lot less hyperbolic than it was a few months ago, because it really seems like right. The circumstances change we get addicted to speed, we decide everything should be faster I think organizations are going to expect this and you can see it in a way low code is being used lecithin, while more as an adjective. It's it's often use now.
To describe anything the authorship of which should be quick in software as opposed to just one industry that exists in order to facilitate quick authorship.
Perfect. Thank you and congrats again on the continent.
And our next question comes from Chris.
[music].
Please go ahead.
Hi, This is Kevin on for Chris Thanks for taking my question.
Net given the current environment that has there been any shifting away consumers are thinking about cloud versus on on Prem deployments.
Hi, I suppose.
I think that there is a continuing interest like I just see the same natural preference for the cloud that we have continued to see the same trends towards the cloud that there's been.
Hi, I.
I suppose there might be a little more urgency around cloud and I did lifts in cloud as one of the things that I thought would be accentuated in the post coated era, because it does allow for that remote control that instant instantiation. It's a change facilitator hi, I think there's a lot of reasons why cloud will be exempt lobby, we called out as a positive part of.
The reaction to Cove. It so I expect nothing but goodness for the cloud how does this experience how I suppose we might have seen just a little bit of an additional pass I spent remember we do a whole us all hub anyway, so up for us where we're already solidly in the cloud corner.
Great that makes sense and then maybe how how how's the federal pipeline progressing any additional color I'm trying to call out there.
Oh sure the federal pipeline is soft impressive right now it's strong we got a solution that specifically targeting the federal space. It's an acquisition management solution for writing contracts, which is something that every agency needs to do and they put a lot of focus on a pot of money behind it.
Efficiency is extremely important and we have created a leading product in this market as a solution on top of our platform. How we've demonstrated a couple of a highest profile cases in the federal government clean Air Force I'll jump to show how how confident this.
So the solution is ads handling a journal that it comes out on topic just on great. Its differentiate itself against against incumbents against traditional methods hey, its flexible as agile it's quick to deploy hits user friendly, it's been doing really well and both because of that.
And outside of that a federal pipeline looks very strong.
Great. Thanks for taking my questions.
And our next question come from Alec Perks. Please go ahead.
Yeah. Thanks.
The quarter guys.
Just wanted to I know, you're not getting fiscal full year guide, which.
But you all going to take a stab at it obviously and.
And the good prayed here and the Guy.
So we don't get maybe Q ahead of ourselves on Q4, and what that means the run rate and the 21.
The mortgage isn't considerations that we should be making across the different.
Let me segments, I think you've already into that a few of them, but just to clarify.
We really dialing coupons and.
Helpful. Just so we don't extrapolate coupon btwenty one beyond.
Yeah, I, let me say just talking about the whole your guide.
We still see that there's plenty of volatility left in coated right. They could be another wave there. They were still in an area of uncertainty and we see that most profitable companies are not giving a full year guidance. That's why we decided not to what I want to clarify that I remain optimistic maybe even very optimistic.
Rick about the business, where it stands now about the second half of this year.
And and so the the lack of a full year guidance not to be taken as an expression of pessimism.
Noted.
Mark you want to add to that.
Yeah, I mean, I think if you're looking at kind of an extrapolation generally know how we like the guidance I could be conservator. So I would encourage you know when everybody was going to call it kind of profile.
The conservatism as it relates to the second half of the year, we kinda mapped out Q3 follow that same road map for Q4.
And then appropriately.
Thank you.
And our next question comes from Derrick Wood.
Hey, guys did you Andrew on for Doug.
Corridor.
I'm not wanting to touch on sales hiring a in the quarter and and what are your second plans for the second half first first out than any challenges in hiring virtually.
Sure. We are full speed ahead on sales hiring has been all year and never turned it off and yes. It is challenging you you do you see that are our comparable companies are hiring as well.
[noise]. So so that the market didn't really get easy at any point to higher good A's Luckily we've got a great product that happy customers are way, we had an engine in the market, but it's a market selfless never simple as for hiring at a distance.
That's actually not particularly difficult for us I think virtual perfectly good way to do interviews. We are practice data I've done a lot of virtual interviews and so as the whole organization I don't believe that as a stumbling block if anything it's an accelerator because in the past it was considered obligatory to meet in person or bring.
Yes candidate to the headquarters and and now it's perfectly understandable why you wouldn't do that you move forward more rapidly.
Right and then the 76% on the workforce solutions were new customers, maybe just talk about how you can upsell them later and are you seeing any signs of that so far.
And Mark Mark what that might mean for expansion rates in the second half.
Yeah.
Oh, yes, absolutely happening, where we're focused on it we're already doing it Oh, we understand if that's the off the the water business when you get Oh solutions customer and that's also why we're deploying our solutions in in family. This by the way every solution is gonna have most of them anyway.
I have another solution that connects to us as a natural.
Glide path for the customer journey to take I think what those first few purchases are very confirming purchases and you've got to get the customer in the habit of consuming buying and consuming more so we're gonna makes the systematized and easy we are absolutely I cannot on that as we altogether.
New wave of solutions customers and I think you mean did you guys know the way we generally land and then expanded it takes some time to get that expansion. These are Q2 deals that have happened so from a modeling perspective.
Early as you probably see see significant, especially the PNM would be sometime in Q4 potentially from me either more gonna be great opportunities for us for 2021 and beyond brand momentum perspective.
Great. Thanks, guys.
And ladies and gentlemen, if you would like to ask a question as a reminder, that star one on your telephone keypad again it is star one.
And at this time, we have no additional questions.
[noise].
Yeah on the golf.
Ladies and gentlemen, this does conclude or call. We do appreciate your participation at this time you may disconnect.
[noise].