Q3 2020 Qumu Corp Earnings Call

19.

A quarter in we had healthy liquidity our position with our position finished with eleven point four million dollars in cash and cash equivalents, which was up 1.5 million dollars from 9.9 million dollars it June 30th 2020 Switching gears to our Outlook as we talked about on prior calls who provides Revenue guidance based on current market conditions and expectations, including the unknown Financial impact that COVID-19 will have on economies and Enterprises around the world based on our Q3 Financial results and pipeline. We currently expect something new for fiscal 2020 to be approximately $29 representing growth of 14% compared to twenty five point four million dollars in 2019 our building subscription revenue and expanding pipeline of business to just good visibility and confidence.

For a more detailed analysis of our financial results, please refer to today's earnings release as well as our 10-q which we plan to file by November 3rd. This completes my financial summary and I'll turn the call over to TJ to discuss our operational progress and Outlook, okay.

Thank you. Dave been a pleasure to have this opportunity to speak with everyone today. It's been three months since I joined, since we last spoke the leadership team has conducted an exhaustive 360-degree review of our business. Our product offerings Geographic markets Target customers go to market strategy and business model.

This process included the entire management team and result in a new strategic roadmap for kumu going forward.

And the output of the Strategic roadmap process will guide our investments are areas of focus and our day-to-day business.

At a high level the process of building the Strategic roadmap confirmed several things including competitive strengths and advantages which are scaling live and on-demand video delivery Edge $100,000 plus users either using your own platform as a front end or by extending the reach of any standard video conferencing or Enterprise collaboration application securing both the divorce a video and storage over on demand video assets.

Streaming internal and external Enterprise video via a self-service model and storing and managing video assets and customize portals and increasing the value of that video by making it durable searchable and accessible to a global audience.

This review process also confirmed our company's core value proposition, simply put humor Bridges gaps and Enterprise communication. We provide maximum extensive including the ability to integrate with any video conferencing or workplace collaboration application like Zoom WebEx teams Google meat and slack but keep in mind our control platform is very different from the above Cloud applications Hulu is not a video teleconference platform. We will let the companies mentioned above fight over that space.

Live streaming events with over 100,000 plus attendees. We secure the delivery and storage of that video. We enable video on demand for millions of users internally and externally to the Enterprise and our video content management Powers Enterprises to be more effective and efficient with their video assets.

Are Advanced analytics covered comprehensive real time and on-demand reporting for both user engagement and Network Health?

And a robust content management capabilities allow for editing storage playlist development portal design search indexing and access permissions.

In addition to identifying key areas of strength the Strategic roadmap also revealed where you needed to improve in some cases substantial by focusing on greater efficiency wage new and clear strategies simplified pricing and processes and expansion into adjacent high-value markets.

Some of our major takeaways where the realizations that we have been under investing in our Cloud platform under emphasizing the value of our product for small and mid-market Enterprises and under utilizing our targeted channel strategy.

To be clear. Our internal review was candid and was a Frank process that difficult in requiring some serious organizational changes. We ultimately put us this will I put us on a path to long-term success one that will deliver improved value to our customers and our shareholders.

With this in mind we have already implemented a number of key changes. We have built out a new customer success organization. That will be led by Chad Sears.

It was recently accepted the role of Chief customer success officer. The creation of this new organization will place all of the previously disconnected teams that interacted with customers into a single team under a single leader off this includes our organizations such as professional services customer success customer support product management and account management teams all working in concert to ensure that our platform reduces risk for CEOs, and cios of different Enterprises as part of this change. We will also be increasing our goals for customer retention going forward with the expectation of even higher wage in 2021.

You also be consolidating our Global sales and marketing teams and all revenue operations under a new Chief Revenue officer role to improve the collaboration and execution of our sales and marketing teams.

You'll also be expanding our sales and marketing efforts not only in our existing markets, but also to mid-sized and smaller Enterprises included in this change is our new building Price tool as well. As our new e-commerce storefront targeted at medium and small Enterprises who moves known for our large Enterprise customers with fifty thousand three hundred twenty five thousand plus employees, but we are also now targeting medium and small prizes who value our live broadcast and streaming capabilities secure video delivery and management video-on-demand capabilities and robust video content management.

Driving are revitalized.

Is the ongoing fundamental shift in Enterprise video usage? It is clear that Enterprise communication has changed forever and the COVID-19 pandemic has first organizations worldwide too rapidly adopting expand the use of video both internally and externally

we are still dealing with all these applications today through continued office closures travel restrictions event cancellations and security concerns and at the Enterprise level scalability issues as well.

Well standard video conferencing and collaboration apps were able to meet the initial need for business continuity. We are now seeing a second wave of needs for Enterprises are exceeding the upper limits of what standard video conferencing internal collaboration tools can deliver and manage and this is the area where kumu excels and is distinctly differentiated.

It's part of the Deep dive. We have gone through for the Strategic roadmap. We focus on determining where in the video Market, was trusted Enterprise Solutions dents.

What we determine is that we do not compete in the basic video teleconferencing and small team collaboration spaces that are overcrowded with companies like Zoom Cisco. WebEx Microsoft teams, GoToMeeting Google Hangout and so on is the market leader in internal and external live streaming and broadcasting to more than 50,000 users and the leader in providing secure on-demand video storage in with enterprise-grade video content management.

During this pandemic many Enterprises have added video collaboration Technologies. And now we are seeing these Enterprises contact with the need to manage all of that content leverage it from a synchronous communication and maximize on-demand video to expand their communication capabilities internally and externally

and we believe in 20 21 Enterprises will require even more help from Primo to meet their business objectives and to thrive in the new work from anywhere environment.

As a concrete Next Step, we've leveraged these key findings to cement a new strategic roadmap that will enable us to accelerate growth and drive consistent profitability and what it was extremely busy. First name of the company. I can honestly say that I'm even more excited about the potential crew has to become a much larger organization. I believe we have an enormous opportunity in front of us and with the right plan people and execution. We will be leading we will be a leading cloud-based Enterprise video technology provider for the future.

With many of our roadmap changes implemented in the coming months. We believe Healthy double-digit top-line Growth and cash-flow positivity next year or Within Reach more specifically are successful execution against this plan, which is already begun and will accelerate in the balance of 2020 is expected to drive Revenue growth in excess of twenty per-cent and twenty Twenty-One as compared to our current 2020 Revenue off our sales pipeline strong deferred revenue and are growing annual recurring Revenue all give us confidence about our prospects for Revenue growth and twenty Twenty-One over of the Enterprise video industry is Alive and Well, we are continuing to see interest from a new sales perspective as well as renewals and Cloud conversions. I'd like to provide a sample of just some of the major wins from the quarter underlying ongoing trend.

We close new logo wins with global Aerospace and defense company Northrop Grumman as well as a okay the largest health insurance provider in Germany. We also drove on-premise to Cloud conversion CVS Pharmacy and a major US banking institution truest Financial.

And we secured large renewals with Lockheed Martin as well as the seventh largest bank in Europe as well as a top-20 UK law firm and a top three Executive Education Institute club members.

Customers come to Camus because they require more than a simple small-scale video conferencing or team collaboration solution to achieve true business continuity humor provides reliable secure enterprise-grade infrastructure that supports an Enterprise as permanent shift to a new Global work from anywhere environment our customers cheers Camus because we have a highly scalable platform and lack of focus on the Enterprise robust, video-on-demand capability world-class Professional Services and support and market-leading security.

Last year, received the highest score and secure in the security category and the 2019 Gartner critical capabilities for Enterprise video content management report. We offer our customers dead application protection identity protection and user controls as well as viewer tracking live monitoring and audit controls.

Enterprise video needs to be easy to use and reliable we've recognized that companies are willing to pay a premium for that reliability and many of our current customers have gladly expanded their video game commitments after a positive experience.

We do have very user-friendly on demand tools and we are recognized with reliable video content management system. All Enterprises need even if they are already using an existing video teleconference solution.

For example earlier in the quarter we built and deployed a new app that enables Zoom to be used as a front end for any large-scale video streaming broadcast while kumu handles all delivery management video Security Office integration will change the game for organizations looking not only to scale Zoom events for over 50,000 attendees, but record and manage somewhere all Zoom meetings across the organization in a secure searching and On Demand.

There's no doubt that Zoom is a popular video conferencing platform. They've made it easy for people to leader participate in video-based meetings. And their technology is one of the reasons so many Enterprises were able to bridge the collaboration Gap left COVID-19, but it's work-from-home mandates and event cancellations continue to be the norm Enterprises made more than what the standard video conferencing platforms offer. They need more scale more capability more video on demand and more robust video content management features, these types of meetings and events are what, does exceedingly will we enable standard videoconferencing place to reach thousands tens of thousands or even a hundred thousand plus people with no loss of video quality and device-independent capability.

Our strategic plan involves investing in our Cloud business to take advantage of current market trends in customer needs along this line at the end of the third quarter. We unveiled the canoe Cloud building Price tool which allows users to complete customize an annual Cloud Video subscription based on parameters, like storage and bandwidth needs distribution requirements authenticated user limits and more. We have also learned that through the use of the page with an Enterprise has that it continues to climb organizations are pushing technology acquisition Cycles at a significantly faster Pace than they were in the past according to Wayne house research. The internet streaming product category is expected to become a 4.6 billion dollar total Market by 2024 growing at a compound annual growth rate of 15% In that time that same report also found that the biggest gains and streaming spending in 2020 will come from firms with fewer than one thousand employees.

Companies with at least five hundred employees at least fifty percent anticipate spending more than $100,000 on streaming technology this year. If your Ematic increase we've seen in the usage of our Cloud platform underscores this month. And in fact in Q3 alone, we host a 30 million viewers on the canoe Cloud platform, which is up 28% from the prior quarter in 911 percent from Q3 last year off real. Mystically today's purchasers a cloud-based video technology don't have time to navigate a buying cycle that includes an RFI or request for information a sales demo a 1-month trip a concept multiple requirements Gathering workshops and three weeks of contract negotiation with this in mind our new Cloud build and price to a will cut weeks. If not months out of the sourcing to solution time frame company mandate, we will continue to focus in this area and I'm building additional customer-focused tools to accelerate accelerate that process even further.

Beyond launching new Innovative products for the current market. We are also hard at work implementing longer-term strategic initiatives to effectively and profitably scale kumu to the next level. One of these initiatives is outstanding and diversifying our go-to-market strategy, which will provide even more balanced and sustainable growth. The fact is video is quickly going down market today even 40% organization make $50,000 investment in video technology while Kuma has historically targeted growth via very large Enterprise sales and only opportunistically Pursuit additional opportunities. We are now making a concerted effort to expand into the mid-market with offerings for small to medium-sized Enterprises.

We want to make the brand more approachable to mid-market firms and are developing a go-to-market approach that is more easily digestible for small and medium-sized Enterprises abroad.

For example, we lost an e-commerce self-service solution that enables a highly automated and low-touch sale cloud-based solution to small and medium-sized organizations.

We have very user-friendly video on demand tools and we are recognized now that the SMB space can easily access and benefit from computers best-in-class platform for creating and delivering live and on-demand video at scale because of the lighter sales effort involved in this largely automated self-serve model. We are able to dramatically reduce customer acquisition cost. Thereby enabling the small medium sized Enterprise Market to become more financially to be economy more financially viable channel for us. I look forward to sharing more in and efforts in this area in the coming months. Our company has successfully been executed even growing our business during the pandemic we have offices in California and Minnesota the United Kingdom and India who has a company has essentially been one hundred percent remotes at the page again, and we believe we are working with a significant Advantage. We are already a voracious user is a video

On our company's Mission and we have been guiding our customers as they now move from using live video video on demand.

And video content management for internal functions to Now using that same video capability to interact with Partners customers and patience.

We are looking closely at our future footprint and looking to move more of our team to work from anywhere in the future video. First is the future of Enterprise Communications, and we plan to push that forward by practicing what we preach to log in on demand asynchronous communication.

Over the last few months, we believe we have improved internal Communications while decentralizing management moving to a more agile approach. We look forward to sharing our lessons learned with our customers about how we have leveraged. Our technology package is Central Business activities and grow successfully.

Today crew has a global distributed employee base spread across three continents with a median employee tenure of five and half years. And while we are technically enabled business. We recognize that are talented people power this engine.

I've discussed many new plans this afternoon many of which which will require months in years to fully see through. I hope for today is that we've left you with a clear picture of what the crew of Tomorrow will look like God is our belief that these bulb actions will all lead to an improved to improve results agile processes and Technology improvements that will accelerate growth incrementally and twenty Twenty-One. And Beyond wage in summary is at the Forefront of a massive transformation in the way organizations Drive Communications going forward. We planted writing this way even to becoming a growing SAS based Cloud First Choice company. These transformation is produced a record sales Pipeline and strong deferred revenue, which coupled with our growing annual recurring Revenue gives us confidence and visibility and to not only are grown now, but for twenty Twenty-One, but for the following year as well.

Longer-term we believe our building momentum is strategic ignition issues will translate into sustainable adjusted ebitda profitability and ultimately net income profitability in the years ahead with that concludes our prepared remarks for today. Well now open it up to questions operator, please provide the appropriate instructions.

Thank you. As a reminder to ask a question. You will need to press star one on your telephone to withdraw your question. Press the pound key. Please send by what we can possibly can a roster.

And our first question will come from line of Jeff Van Rhee from Craig Halen. You mean beginning great. Thanks for taking my questions. That was a mouthful. TJ. Sounds sounds great. I appreciate the update. I really appreciate the transparency. And obviously you guys have been very very busy there. So thanks a number of questions for me first just did back till a little bit. You went through the 28th of the thoughts on twenty one and I missed a little bit in there. You mentioned something about casually said Revenue growth and excessive 20% for 21, and then we're a few other things you mentioned including one on Castle. Can you just hit that again quickly?

Yeah, let me get back to the here.

So I think what we noticed was expect you to drive Revenue growth in excess to 20% and twenty Twenty-One as compared to our current 20/20 estimate sales pipeline strong referred deferred revenue in our growing annual revenue, give us confidence for additional Revenue growth and twenty Twenty-One. Um, as far as cash flow, I think the biggest thing that we looked at is that our our goal is to obviously become adjusted ebitda positive. We had put any exact time frame on that by quarter, but we believe that this particular growth will drive us to that positivity next year got it. Got it. Okay, and then walk so obviously I think the Strategic review seems to be able to the number of things one of which is it seems you see a lot of opportunity down Market in in the cloud and you've obviously put the self enablement tools out. There are other things to try to get that in motion talk about the advantages that you see for the Camus platform in essence be historically, who's known to be Rock Solid in the massive events. You mentioned a hundred thousand, you know place

Live Events where you've got your you know, your your historical rep your reputation, but talk about SMB and and you know, what's there where the existing Solutions falling down? And why does that look like an opportunity for you at this point dead?

A very good question. I think you have to the main thing that we see is that we have been a major risk reducer for CEOs and for cios and for executives at Major fortune five hundred and Global two thousand companies who need to hold these awful events and for a lot of smaller midsize Enterprises, even if the company may not be large, they might be holding events that that have a thousand to five thousand ten thousand or fifty thousand plus and 10 days that are there and they also needed to be one seamless. One of the things that we see in the market space is that a lot of folks are you know a mile wide and an inch deep and they may have a bunch of different features. But but they don't have the same kind of reliability inability to scale to a hundred thousand plus use like we do they also work architected and built in a way that allows for these very large seamless meetings where you don't have interruptions from different users. You don't have too many competing things going on that thing that really decrease the reliability of these these large sessions and and the live streams. We also have a lot of Professional Services and key technical experts that have worked with a lot of these Enterprises to make sure.

For that they know how to run these amazing events and have them go off without a hitch and that that is what is so critical to most CEOs out there today and they're using these tools much more prior to this year off of times these events were very much on site CEO town halls or things of that nature and now they're very much off-site 100% or in the best-case maybe a hybrid scenario but video is absolutely critical as part of them. But we're also seeing stuff volume of these events going to drastically up which means that there's much greater chance that people will have problems. There's also a much larger number of users per event because before it was many times just people who are not on site who might have been dialing into an event. And so instead of that being say twenty percent of the companies attendees is now 100% of the company's attendees or a very large number and so that ability to be super reliable super low risk is something that we believe we've proven with the largest Enterprises in the world. We have a very good Global footprint both in a pack and Amelia and and and birth

Rico's and I think that our our global

Companies that trust us have seen that reliability. We believe that there are both small and medium-sized Enterprises who want that level of reliability and want to go with a platform that ensures that they will have great events as well. I think that's something that we're really going to go take advantage of yeah, you got it and then they go ahead and also note I think touch on some Gray highlights. I think additionally page where there are other competitors in the marketplace where we have always differentiated is really a security scalability and management of the video assets. And so the robustness of our platform combined with what's in the cloud hybrid solution set which is an easy-to-use easy to direct yourself through the platform solution set is very well positioned in light of the totality that offering for going ahead and and grabbing some markets here.

Got it, and then within within the sales organ R&D, you know, I guess you gave us a little bit of a picture, you know, I mean for some for even break even in 21,000 see if you can drive that kind of top, you know, top-line growth. That's what's ultimately going to drive the the valuation near an intermediate-term. But as you're talking about that Outbacks, where does the incremental op-ex come at least in the near-term or a lie? You know, I'm sure you're going to be sort of doing some substantial reallocations of cost. Just just talk about how the cost structure is going to change over the next several quarters. Cuz as you kind of effect this, um, you know the song teach a plan.

Sure, Gabe. Do you want to get that? Yeah, certainly Jeff. What we're planning on doing is we go to the the mid-market and create a high-velocity essentially SAS off here. It's the shift those resources into go ahead and drive real Revenue growth additionally from a cloud platform perspective and Justin Rd perspective. We're going to focus on correcting those Investments very wisely to make sure that where we direct those resources is delivering the features functionality that get the most out of essentially not only a scalable SAS model that also channels and change partner growth and so our focus is really to get the the spend directed at those things that are Revenue enhancing.

Okay, and then did while I've got you the you mentioned strength in the corner from overages. What was it in the quarter? And yeah, maybe maybe just start their own. Yeah, it's it's not a big number. Jeff is we've talked about it's probably in the quarter. It's less than $150,000 and what our team continues to focus on Thursday, which is consistent with what we've been doing is to make sure that we sign up our customers. I'm much larger and longer-term renewal. So we have two great examples of essentially cuz it came into overages in the. And we have moved I'll give you an example of just one of them but they they were on essentially a 5 terabyte plan and we were able to go ahead and move them to a 42 month plan to meet essentially their their Advanced needs and and that's getting them right size additionally in that same context. We're able to go ahead and expand the duration of time that we had them under wage.

contract and so as we

Encounter overages from time to time we'll build those through but really our account management customer growth strategy is aligned with growing the SAS base revenue and getting those folks converted on the back and longer-term contracts fair enough last one for me. Then he just back to the to the 20-plus growth Target for twenty one. You mentioned a number of things that were driving the visibility one which wage pipeline just talk if you would about the pipeline what's in there the magnitude out of it coverage changes and break down some more color on Pipeline would be great.

Do you know would you like to handle it or do you want me to go ahead with the coverage and I'll give some color after that? Certainly. I think we had announced last go round about 4.2 age. We're north of that at this juncture the so it's it's I was calculating it out just before this call looks like about 4.5 is where we're coming in at Birth family right now. And so that that's where we're at pipeline for the most part though. And we continue to see this trend in our business much less on-premise much less Appliance. So that life an appliance component of the pipeline continues continues to swing away as we continue to go ahead and increase pipeline for cloud and Cloud hybrid. And in addition to that. Jeff had been seeing as you know, more and more inbound requests that are coming for our capabilities. We're also seeing a nice reaction to our building Price tool where people are able to go in and really figure out what the kind of system they need and that gives us a lot of birth.

Follow up with them and move quickly into a solution and we believe that this will continue to drive more and more Cloud subscription going forward. We continue to upgrade our marketing efforts as well. And I think you'll see more coming out of that and we've helped a lot of events on really being um leaders in being able to hold events from anywhere and being able to do this in a self-service fashion. And those are creating a number of leads from both a small medium and large Enterprises. So our goal was to go after and continue to grow large Enterprise growth, but also to not, you know miss out on that the medium and smaller Enterprises that could also be a part of our our goal forward approach and we've had some success with that here in the recent past as well.

Great. Thank you so much. I appreciate it.

And our next question comes the line of Steven Franco from Colliers, maybe again, good afternoon. And thanks for all the details on the plan. But let me follow up on a question of coverages and a half times to get you to this year's guidance, or is that the pipeline that gets you up to 20% Revenue growth kind of walk us through how you bridge from where you are in a day to get to either double-digit or 20% growth next year. Yeah. So the the focus and the 4.5 axes against this year's Revenue Target and what we haven't done is actually communicating any sort of pipeline against them twenty Twenty-One. I can suggest a 20 21 Scrolls plans tie into the Strategic roadmap initiatives that TJ had had laid out and so pipe line is moving in the direction of of

both growth and

Growth in South higher-quality SAS base Revenue, additionally, we've got a strong recurring Revenue base to back that up as a good launching point for 4th of June the the growth next year will come through a combination of our Enterprise sales efforts as well as our SMB with essentially a bit of a topping off from our home initiatives the that's how we're looking at the 20-plus percent growth for next year. And and let's talk people lies to what extent do you have the right skill sets today in marketing to build the awareness and drive traffic to the self-service SMB. Peace. And then on the Enterprise side kind of moving away from the traditional Enterprise business focusing more towards cloud and hybrid. Do you have the right skill set and that sales team and do you have the correct number?

bodies to get to your plans for 21

great question and and Steve. I think this is a big part of the implementation of the Strategic roadmap as we go forward here. So one we've already started some of the the low-hanging fruit and important early efforts as an ink you've seen some of our public releases whether it's around the building Price tool and it's around e-commerce and the fact that we're upping the marketing game and taking some new initiatives and bring you on some additional uhh expertise to make sure that we have the the best Legion capabilities to move very quickly with this market and that's going to certainly Drive some of that. We also are continuing to grow our our key resources that are going to be a part of this mid-market Pursuits. We are really turning the sales team into a full uh-uh Cloud SAS based organization with coupons that are focused on large Enterprise medium Enterprise and also, uh taking wage of the leads. We get out of our SMB and e-commerce efforts as well. This is a transformation for us as a company to be really focused on full clouds teams and in the sales model that we're doing and that will be part.

Insignificant hiring that's coming into that as well. We're still going to come out with some more details and some of that as we move forward, but I will say we are scaling up and we will be part of a growth pattern into what I'm doing with our our key Business Development resources. We're bringing in some additional resources around our channels in our Channel management today that's going to be absolutely critical as well as we grow the channel to support what we do going forward. So there is some additional headcount and there is additional resources coming in to be a part of that.

Okay, and anything going back to Jeff earlier question do these things lead to a significant growth in overall, op expense money or their equivalent expenses that can be cut and those monies used to drive these new initiatives good question. There's some of both we are specifically looking at areas where we've had higher spend than we believe and we're saying no to certain things to to both, you know import some operational excellence to make sure we're doing the best we can with where we're investing. We're also making sure we're focusing on features and functions that are critical to our core market place and not necessarily just developing features, uh to have more features. I think that's important. We are definitely focused on those that I'm doing us to scale and secure and and handle the key Enterprise functions that we think are important. And so we're investing more in Cloud but a lot of that is some shift from other things we were working on before so I think some of that wage

Going to be you know, operational efficiencies that drive those pieces. We also been spending Less on on travel and travel for sales and moving most of that into a a remote environment.

That is giving us additional savings that are driving into what we're doing with additional sales positions including additional Business Development resources. We will also look at investing into additional resources to help wage of this growth as well. And so there's basically both are going to be used to achieve our goals. Okay. And and and where is ASP today? And how does that change if you're successful in attacking the mid-market?

ASP varies by market place. So what we've got with the e-commerce offering it's pretty much a below $15,000 ASP and that's that's served up. So that individuals and small small businesses and or business units looking to get started with this, uh, who like offering have got a great entry point that enables us not only to get contact information, but to nurture them through what we perceive as a long-term customer journey in a way that expand which is what we've been successful as successful with as a business. It's a off the cloud or Cloud hybrid. We've got a couple different offerings, but the the range of offerings is generally about thirty-five thousand dollars within average sale price for a for a for a probably a small Enterprise. It will run all the way up to probably half a million dollars if they're going cloud cloud hybrid on a per annum basis and then if there if

We and we do have a SPS that also accompanied our on-premise Solutions as well. And those those are much larger $450,000 plus depending upon the size of the size of the user base and the other pricing criteria.

Okay, great. And then my last question really appreciate the renewal rates and retention stats, but give us an idea of you know, what's a normalized metric. What should we expect these numbers to look like as we get into next year?

Do you want me to feel that? Yeah, go ahead Steve where we're headed with. This is trying to come down to some simple metrics. That way we can communicate regularly to the street Our intention is to go ahead and put this on our investor relations website so that we make this very public. What we're focused on is is building a solid base. So if the if the beginning it's going to be about customer retention and growth we're looking to move retention north of 95% this year. We are looking to go ahead and increase or G R R & R N R R percentages will come out more publicly with those as we get to essentially next year's guidance. Um, we're going to go ahead significantly increase a r r and then additionally we will talk very specifically about what we will be doing with the SMB segment and because it's such a wage

real piece of our growth

Strategy next year as we allocate resources to it and look to achieve success with marketshare. Um, and then we'll talk to you a little bit more about channels and what we're going to be doing their job cuz TJ highlighted that is a significant initiative as well.

Okay, great. I appreciate the transparency. Thank you. You're welcome. Thank Steve.

Thank you. And our next question will come from the line Kyle Krueger from Apollo Capital maybe again, thank you. Good evening. And thank you for the extra detail and forward-looking the next year, but I have a couple of simple questions in just doing the math off at $29 million in revenues this year and you're expected minimum growth rate of twenty. I get almost $35 million in revenues. But what what what is the are are component of that and what is the expected growth rate and that's contemplated by that number? Yeah, we so we we had great momentum in the quarter 18% I mean our I would love to see that trajectory cuz essentially building that are are component and then when it's occasionally as as we've got existing on-premise customers and whatnot that expand and as we as we go ahead and and Achieve success with the SL.

Marketplace, you know, we're not providing guidance to be absolutely clear here Kyle. We're essentially putting out a trajectory that says we we we we are planning to grow north of 14 and 1/2. This year. We're essentially providing some momentum to say look this is in early strategic roadmap, but we've got a lot of confidence in it and we're going to be north of 20% next year wage based on our current thoughts as it relates executing that plan that said we will we will provide guidance when we come out with our next earnings wage earnings release and earnings call so that we can go ahead and you know, put that down and numbers and we will then start breaking out for everybody. Essentially. What's going to be within a r r and what's going to be outside bouncing around a

Okay, thank you. And and of that the the Delta the revenue Delta next year, which is about six million dollars. How much of that is based on the expectation of Revenue development in the SMB space?

Yeah, I mean again, we're not getting down to the level of specificity right now. Kyle had suggested that we've got we've got a significant Endeavor and an initiative here and and and it's a reasonably healthy number but that said we particularly with with TJ and the team we've all got experience building this out. And so as long we go ahead and work towards it will provide you with more specificity we talked about one of the metrics speed was Steve's question that that he had just asked as it relates to to what message will be putting out we will be putting out essentially the revenue Target for SMB and we will be reporting against that each and every quarter for you.

Yeah, okay.

The reason I asked that obviously is because it's a business that you know, substance substantively doesn't exist right now and there's a a different risk profile associated with the development of those those revenues. That's why I asked the question. So let me jump in just a little bit on that. You know, the reality is we feel very strongly about how our large Enterprise customer also going to continue to grow and that has been our our our sweet spot and we plan to consider to see that to grow and so that gives us confidence at the same point we will be adding middle mid-market and and smaller Enterprises as well. But but clearly you're going to see you know, we believe that the growth is focused in the large Enterprise with those other ones continuing to add to it. So I you know, like should give a bit of color to your question. Yeah. Okay. Thank you very much guys. Yeah, no problem and just one more clarifier, which might help you the some of our confidence comes from the fact that we do although it's not a Target phone number.

Opportunistically, we've we've been serving SMB and some of the ones that we have talked about over the past several quarters involve success with SMB folks. We're not actually starting at a 00 base. We've got we've got a fair amount of experience here and have a degree of confidence in the platform and our ability to go ahead and build a sales organization to go back. I don't want anybody leave the call thinking that we haven't done SMB at all before we've actually been announcing deals throughout the the various preceding quarters that I woke up that you would get a little bit of credit for. Yep. Yep. Thank you. Thank you very much understood. Thank you. And as a reminder of that star one for questions * 1

And I'm not showing any further questions at this time. I'd like to turn the call back over to DJ for any further or closer and works.

Thank you very much. I appreciate it Victor. Thank you everyone for joining our call this afternoon. We really appreciate your continued to support as we now go out and execute our growth plan and scale commute to the next level. I look forward to speaking to you all again soon and appreciate all the interest today. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, you know disconnect.