Q3 2021 Zuora Inc Earnings Call
Joining us today for todays call are sourced founder and CEO teens, so and CFO Todd Mcelhatton.
This time, all participants are in a listen only mode after that.
Presentation, there will be a question minutes per session if.
If you would like to ask a question. Please press star one on your telephone keypad at that time.
With that I would like to turn the call over to Carolyn Basch Investor Relations.
For introductory remarks. Please go ahead.
[music]. Thank you good afternoon, and welcome to <unk> third quarter fiscal 2021 earnings conference call.
Joining me today are team so the words, founder and Chief Executive Officer, and Todd Mcelhatton.
<unk> Chief financial Officer the per.
Today's call is to review our third quarter results at all to provide our financial outlook for the upcoming quarter.
Our discussion on response today will include forward looking statements income.
Getting back to work on the patients outlook and financial guidance.
As a reminder, our actual results could differ materially as a result, a variety of factors you.
You can find information regarding those factors in the earnings release, we issued today and in our most recent filings.
Finally, we were for income several non-GAAP financial measures today.
Reconciliations related GAAP measures are included in our earnings per fully.
As a reminder, last quarter, we began to exclude litigation charges and benefits outside the ordinary course of business from our non-GAAP financial measures.
For a copy of our earnings press release.
Thanks to our FCC filing a replay of today's call or to learn more about <unk>. Please visit our investor Relations website at Investor Day World Dot Com.
And with that let me turn it over to the team.
Thanks, Carolyn and thank you everyone for joining US day on George <unk> third quarter earnings calls per Cisco 2021.
I'm very pleased with our third quarter results, let's walk through a few key highlights from the quarter.
We exceeded expectations across our key financial metrics, including total revenue.
<unk> revenue gross margin operating income and free cash flow.
This is even after backing out the impact of the onetime benefit the Todd will discuss later in fact, we reached a milestone of free cash flow breakeven one quarter.
We had a 25 new customers in Q3.
Moving the largest yield on the company's history.
Close deals with over $500000 on annual contract value.
We had over 100 also showing.
Sure on the strong continued potential of our lean expense go to market motion.
Yes, 41 customers to go lives.
Third on these go lives.
On the systems integration partner showing strong progress in our licensing strategy.
Finally, we have strong adoption of our most recent products.
On a two thirds of our customers are already using our platform capabilities like work flow come from objects that increased agility.
And over a quarter of our customers are now using our analytics tool, which we just launched last quarter.
These results show that we are making good progress on the fees that we outlined in previous quarters from.
[music].
In previous quarter, we've talked about how we believe our market opportunity resonates with bigger companies that's.
Thats changing customer preferences force big brands to rethink, how we innovate and turned their customers into subscribers.
And indeed, we are seeing more of the brands embracing subscription models and.
Price pipeline continues to grow we're seeing bigger deal sizes.
No as we book Mark.
You may see the piece of net new customer adds per quarter do.
The lighter than historical trends.
You will also see overall ACB per customer trend higher.
Second as I mentioned on on last call.
<unk> form is a critical part of our ability to meet the last mile in need of these larger companies and indeed, our platform is resonating with our customers and prospects on line.
Hardest part of running a subscription business.
Really automation need with the Julie and our platform is truly what enables this is jeffrey and she's differentiates zohr from other vendors in the marketplace. Our platform is a key reason why we have been successful and has allowed us to win deals than we otherwise would not have more.
Sure.
You've heard us state of the system integrators are really important partner in our journey and those partners continue to deepen.
Indeed in Q3 I saw on experienced increased demand for subscription revenue automation offerings from their customers on might on our technology to capitalize on this demand.
Finally, you heard us say in previous quarters that in order to scale to meet the demands on the marketplace, we needed to shift to a consistent way of selling one that depends on systems and not just people and one that works on enterprise accounts.
We continue to see results from our go to market changes, we implemented a year ago, which you could have refining our value selling motion and our sales organization focused on just got this morning on a few minutes.
That's true one to each of these four things.
First we are seeing big brands continue to embrace the subscription models, we continue to move up market on partnership with global Enterprise companies. During this quarter, we signed agreements with big brands from core market, Hi, Tech media 90 fashion, including companies like Fuji Xerox Uli capping the catalog and one of the top three electronics.
Retailers in the U.S., we continue to execute go lives big brands across industries immediate publishing company the constant voyagers immediate 24 cash manufacturing.
Manufacturing, including Bosch Odom automotive services shown on Panasonic and seen smart infrastructure we.
We continue to help the brand speaking to turn their customers into subscribers elite Cafe is a very interesting use case here would.
We're hoping in watching subscription service on given regular touch points with the customer base as well as a steady predictable source from recurring revenue and we're seeing that dynamic play out across the entire consumer retail consumer packaged goods space.
We continued to help on large manufacturing high tech clients find new sources of growth.
In Japan with the addition of Fuji Xerox were not working with the top five multifunction printer manufacturers would help all five of them much flexible subscription services within a very competitive hardware margin.
And we continue to grow the number of our customers DCB Act from over $100000. This group now constitute over 90% of our business, we see the total of 653 companies.
The third quarter.
So these larger big rent enterprise customers ultimately represent a significant opportunity for expansion and growth as it continued to shift their businesses towards subscription models.
Let me provide some more color on the progress of our platform offering.
We believe that the success we've.
We've had in closing these large deals is a big part due to our Zora central platform, which is a suite of tools that we launched early this year.
Its features are now being used by two thirds of our customer base. This is a key competitive differentiator, particularly within the large enterprise deals.
So why the box from important what key part of winning the subscription economy is delivering a great subscription experience think of your own bikes day, how much of it is non by services that you asked is from your phone or locked on when it's for entertainment work food health learning or more our expertise and are achieving in companies know do you have to GAAP committees EPS.
Titians delivering a great subscriber excuses not eat every touch point from the customer service activation payments usage Newell's upgrade suspensions every touch point requires coordination across a plethora of actions customer facing operations like charging credit card internal operations like provisioning were shipping even finished lot.
Patients like charge backs from recognizing that.
That's why automation is so critical you cant deliver a great subscriber experience without automation.
For example, we.
We work with nine of the top 20 largest auto manufacturers you had an another one this quarter now imagine movies of cars on the road all powered by connected services our platform work, which was day enable our auto customers to successfully worked street a number of connected car services from finding parking spots Lynn.
On the music or subscribing to add on capabilities. Your body isn't about these that their delivery to their customers.
However.
Automating the always on hard coating integrations on legacy platforms use your Julie This is why our platform is so important we delivered automation at scale, while maintaining Julie.
In fact, this quarter one of the top free electronic retailers. The U.S. stated our platform is the key factor is buying decision because our hockey from tools will love. This company to quickly and efficiently launching managed warranty programs repair services video streaming trust structure. These are real tangible benefits of its customers you need to enhance value with its on customers.
Short on OCC from tools allow companies to extend it integrates or into their business to help those companies solve their last mile logistical needs and it gives a much needed agility and it makes us more sticky EPS results.
Let me now review our progress with our system integration partners as you know the onset of this year, we rely on our alliances team to deepen our relationship with our restaurants. These efforts are beginning to bear fruit.
Nor have stably strong partnerships with the sensor cash terminal on the Lloyd you why and Pwc among others. In fact, the Q3 be standard are assigned relationships, including sending a formal agreement with the large technology services company with embedded door into their enterprise solutions Docker digital transformation.
Initiatives.
Our joint customers down from some of the world's largest automobile manufacturers as well as the cap on the large retailer in France.
We signed an agreement with PBC consulting Japan to bring at least service solutions to that market.
On several or a thought that dramatically increased their number of certified partner and so on this year.
Most importantly, we are seeing a number of our partners accurately influencing and even sourcing new new deal activity in the fourth.
Q3, we increased the ACB deals closed the partner stores by over 100 from from 50% quarter over quarter, we nearly doubled year over year you from deals sourced from partners.
Back over one third of the 41 go lives we had this quarter involved.
Partner.
We think we're still early interest by initiatives, but we are pleased with our current progressively there we are well position for continued momentum yet by ecosystem based on the quality of the global pipeline, we see ahead.
And of course, as our business mix continue to shift towards subscriptions and away from services. We expect our overall gross margins to continue to improve.
Finally, let me provide an update on on how our new go to market changes in working on the short answer is they are working well.
The past decade, plus we believe is where it is still the most sophisticated industry, leading subscription management tools.
With these products on our Arsenal, we open up the large market opportunity, which require changes in how we go to market.
Perfect.
We shifted our go to market focus on the enterprise space, where we believe we have the largest addressable market, we implemented a value selling methodology, one that emphasizes return on investments to our customers. We moved from on Hunter farmer model to having all focused on their accounts throughout the entire customer relationship the the higher quality really.
On ships that drive up sell opportunities, we moved from an individual selling three key selling model with the full complement the skills needed to serve margin customers, including our newly formed subscribed strategy.
Everyone on the team is focused on the same set of customers and this leads to higher levels of customer success.
These changes are starting to pay off as evidenced by the number of enterprise customer wins in the quarter. The number of Upsells and the growth of our enterprise pipeline. All of these have also contributed to a steady improvement in win rates from over the past year. In addition, we monitor the distribution of the team and by sales team, we are seeing more consistent productivity.
Throughout our sales organization, giving us increased confidence that these initiatives will contribute to additional scale in our go to market efforts.
Lastly, we expect this to translate into higher net dollar retention over time, delivering greater lifetime value.
In short we believe we have made meaningful improvements as we go to market initiatives and we are poised for strong long term continued execution.
Okay now.
Now, let me turn over the call to Todd to discuss our financials in more detail.
Thanks, Jane and thanks to everyone for joining the call today, our third quarter performance exceeded expectations across our key financial metrics.
I'm, particularly pleased with our ability to show additional leverage in our operating model, we posted breakeven free cash flow one quarter ahead of plan as we look ahead, we plan to drive additional margin improvements and build a more efficient company.
Let me review our operating margins Q3 was highlighted by good traction in the larger enterprise segment as Tim noted earlier looking.
Looking at our customers over $100000 and higher in ACB, we ended with 653 customers, reflecting an 11% year over year growth. This customer group continues to represent 90% of our business.
We added a total of 25, new customers in the quarter on it.
Keynote at the size of customer deals. We added was larger than historical levels, primarily as a result on a success selling and larger enterprises.
In Q3, we closed six deals with HCV over $500000, including the largest deal in the company's history.
As we discussed on our Q2 call we were impacted with a higher level of churn in the prior quarter as a result of the pandemic and M&A as we shared with you we expected Q2 to be our toughest quarter for churn. This.
This one day transpired and in Q3, we saw churn decreased 55% from the prior quarter and a return to our historical average long term, we aim to improve this metric.
In Q3, net dollar retention was flat quarter over quarter at 99%.
As a reminder, we track net dollar retention on a trailing 12 month basis and as a result. This is a lagging indicator a higher level of churn we experienced in Q2 will weigh in on this metric looking ahead as we will lap this metric overtime.
Turning to transaction volume our systems process over $14 billion of volume in the quarter, which represents 31% year over year growth per.
Processed transaction volume its help on understanding of how much of our customers' business is running through our platform, but it does not track linearly to the quarterly revenue as our customers gain efficiencies as they scale.
Next let me review, our Q3 financial results subscription revenue grew 15% year over year to 62 million.
Note that Q3 subscription revenue included a onetime nonrecurring benefit of $1.5 million, which we did not include in our three Q3 guidance normalizing for this our Q3 subscription revenue still came in above the high end of our guidance.
Professional services revenue decreased 14% year over year to 15.2 million, primarily driven by the shifting of services work towards system Integrator partners. This is in line with our strategy to improve our mix toward the higher margin subscription revenue.
In Q3 subscription revenue represented 80% of total revenue. This was our highest level in over three years. This resulted in total revenue growing to $77.2 million for the quarter.
Looking at our margins, we continue to make strides we have been successful at driving the mix of subscription revenue as a higher percentage of total revenue as.
As we drive more professional services to the ESI channel our gross margin improved non-GAAP blended gross margin is closed the quarter at 63%.
An improvement of over 500 basis points from Q3 in the prior year non-GAAP subscription gross margins were 78%.
Non-GAAP services gross margin was 1% consistent what we shared with you on past calls we will continue to run services on a breakeven basis and drive additional leverage as we engage with more of our trusted F.I. partners.
Non-GAAP operating loss was breakeven in the quarter, reflecting a 7.3 million improvement over the prior year. This was driven by reduced spend on TV events and office spend as well as the onetime benefit.
The combination of effective cost management, coupled with our improving gross margins led to a breakeven on non-GAAP operating profit well ahead of expectations.
Now, let's turn to billings on cash flow.
Calculated subscriptions billings in Q3 was 70.8 million, reflecting growth of 14% year over year, a dramatic improvement from the prior quarter. We had planned for a modest improvement to the metric after the prior quarter, but we managed to outperform primarily due to our up market enterprise wins moving.
Moving to our cash flow numbers Q3 cash flow was breakeven over $5 million ahead of expectations driven by lower cost the onetime benefit and strong collections activities. During the quarter total capex for the quarter was 1.4 million net of insurance recoveries for.
For Q4, we expect to be cash flow positive driven by the usual Q4 seasonality.
As I mentioned last quarter, we believe it's important that we improve our operating leverage and create efficiencies in business and I'm pleased we're making good progress on our free cash flow metric.
Turning to cash we ended the quarter with 178.8 million in cash and cash equivalents roughly in line with the prior quarter, we continue to be prudent with respect to spending levels and I maintained a healthy cash position to manage the business on.
Fully diluted share count as of the end of the quarter was approximately a 131.8 million shares using the treasury stock method.
Overall, we reported solid performance in Q3, we.
We see continued signs that our quarter over quarter enterprise pipeline is growing.
We continue to be very disciplined in our investments.
We have experienced success with larger customers and working with our ASI partners now, let's turn to our financial outlook. Our subscription business model continues to be resilient, but we continue to see economic uncertainty in the market, we're making a number of changes to the business and working to shift more services revenue to our EPS I partners purpose.
For fiscal Q4, we expect subscription revenue of 62 to 63 million.
Total revenue of $75 million to $77 million.
Non-GAAP operating loss of 5.5 to 4.5 million.
Non-GAAP net loss per share of six cents to five cents, assuming a weighted average shares outstanding of approximately $120 million.
We expect calculated subscription billings to grow approximately 8% to 10% year over year as we take as we face a tough compare versus Q4 of last year, we posted on our highest ever bookings quarter.
In closing on the guidance topic, we expect near term economic uncertainty to persist we continue to be enthusiastic about zohr as long term opportunity. The zohr team continues to make great slides and are optimistic about our long term subscription revenue growth.
As we look ahead to fiscal 2022, we will continue to invest in our go to market initiatives, which are showing traction and to innovate on our product roadmap, while remaining diligent and agile about the need to respond quickly to changes in the macro environment.
Our team and I will open up the call for your questions operator.
At this time as a reminder, if you would like to ask a question press star one on your telephone keypad now.
Your first question comes from the line of Chris Marai from Goldman Sachs.
Hey, Thanks, so much for taking my question.
So I was asking about the large deal on the quarter.
I think you mentioned it was the largest ever signed and could you share a bit more about maybe what industry. The customers and what was included in that deal was that just on the core billing product or was there were platform in there as well maybe read from other things on just to hear a bit more about about that deal. Thanks.
Yes sure. Thanks for the question Chris is it was actually a.
Is one of the three top on top electronic retailers and it's a big big strategic but if you look on what's going on in the retail industry certainly we see the shift from retail stores.
Commerce going on right now.
I think the story is much much deeper than that the retailers are realizing that.
Waiting for the customers to to to purchase something that's kind of the web site or to go to the store.
It is not sufficient depend on deepening relationships are going on but more constant interactions with their customers. The fact these fantastic brands.
Totally translate those brands into.
On to into a deep.
Customer relationship in other words from their customers and to subscribers.
The deal was.
For the building product.
Think of as a broader subscription management system.
And it was for the platform.
And we do you know as we get into the petition as we continue to create customer success, you will have other opportunities ups on the customers as well.
Great. Thanks, maybe just a follow up I think you also mentioned in the prepared remarks that two thirds of customers are using platform and I think a quarter. If customers are using analytics, obviously very strong attach rates for both of those products can you talk a bit more about how you are charging for both of those and how we should think about.
On improving attach and platform and analytics benefiting net retention going forward.
Yes, you can see the key part of our strategy and our ability to to drug net dollar retention over time is we have a very sticky product. We've got a great customer base, you've seen a skew towards larger come from.
We are going to have.
Longevity, and so the ability for them for us to go back and tell a broader suite of products.
After initial sales really reported so the adoption of what we were feeling really really good about.
On the plan sponsor price in different ways, it really depends but they're primarily based on price.
On the functionality of the system.
And we're not at this point, yet we're ready to from a breakout.
Revenue by the different product lines, I think I'd like to see more mature before we do that but it's very promising that we're able to bring these new products to market as well.
Hey, Chris This is hot and maybe a little bit and maybe even a little bit more color too as customers are utilizing the platform will have the ability to upgrade them as you're aware, we've got three different again.
Additions will platform, we have growth we have enterprise, we have nine and so this will certainly give customers a reason to upgrade as they have more used on the platform and get more useful functionality.
Perfect. Thanks, so much and congrats on the results.
Thanks Aaron.
And your next question comes from the line of Stan Zlotsky from Morgan Stanley.
Hi, everyone on the Calvin on for Stan I just have two questions for you guys can you hear me okay.
Yes, we can hear you Cowen.
Perfect.
The first one is what are you seeing out of your partner ecosystem I know, you mentioned debt and and it sounds great I just wanted to know in terms of both as a go to market motion and how.
How partners are continuing to build out practices around Q could you comment a little bit more on where you see that going and trending over the next few quarters.
We feel really good if you look at the statistics severe we mentioned one third of our customers that went live this past quarter. There was an ESI vault in on implementation I think thats a reality that we're going to right. It's on I know you phrased it as as.
The size or building practices on rounds were what these guys are really doing is their billing practices around digital transformation.
And they are realizing that this next phase of digital transformation is not just clean balance digital technology, but actually turning them into revenue right turn into real revenue and by and large these tend to be subscription based on recurring value services or the customer centric revenues on when you look at what's happening with the physical product space right manufacture.
These are on launching products are connected to the internet. In these companies are excited about the bassi revenue streams that are available to them and so the size or really a big big part of that and so what we're seeing is as they are trying to build out their digital transformation from a grow their digital transformation practices. We are a key part of that right.
Because it's all about monetizing your customer relationship monetizing your digital initiatives. Our platform is really the best platform to do so it's the only platform that would give you insights utility in the automation of Wyndham Cod.
Awesome. Thank you for that and then on on to my second question could you comment a bit on sales productivity within the quarter. I know you mentioned the churn has returned to normal levels and where do you see that going over the next few quarters, especially with.
Co bid and with.
The overall macro environment.
Yes.
Okay all right.
Yes, so Kelvin I think where we will look to stay on the historical levels that we've had so we feel like we'll be.
On the same range, where weve been prior the other thing that I guess I would say is the on from a sales productivity. We continue to see improvements in the project activity that we've seen from sales force and where we're really pleased.
With changes that happened, there and we're where we expected to be.
Awesome. Thank you very much.
And your next question comes from the line of Brent tail from Jefferies.
Hey, guys. This is not so day here on for Brent Bill Congrats.
Congrats on a nice quarter, it's good to see some improvement.
I wanted to ask.
A question on.
The the go to market motion and the pipeline if you will it.
It sounds like you guys are having increased enterprise traction.
And one of the teams that we've seen and our partner checks is that.
On the front office was sort of.
The focus in 2020, but in 2021, the focus is going to be book.
Back office, the digital transformation and so maybe as you look to the next tier what are you seeing out there in the pipeline is there sort of like a pent up demand that we could see a.
Come back next year.
Yeah, I would say.
If you if you look on you to the definition of Roes front office and back on that that might be a little bit day to day.
And that that division made a lot of sense when you're shipping product. The front office sold the product back office fulfilled it accounted for it.
And it's a very product centric view of the world and if you look at the companies that are subscription businesses have always been subscription businesses. For example, the telecom companies. They don't looking on like that.
Start with the customer and the growth build great subscriber experiences for those customers and those subscribers cancers have to spend the front office in interest and back office right, whether its calling the call center or or or or changing your credit card on your billing account.
Or on or or speeding up some more services on a Sunday night without having to talk to a salesperson. Those are the things that are most important.
Companies are realizing is if they're going to win in the future and just thinking about your on like right now on sitting at home picking up your phone and then food shows up right. You get worked on entertainment shows up those are the subscription experiences you will demand going forward companies realize that and they realize that that debt in order to do so they have to put in new customer centric subscription man.
Moving platform.
And so what we're seeing on the on a broader sense is the co bid sheltering play situation is only accelerating companys efforts has said we have to go build customer centric business model. That's that's really the the business on the future.
Got it.
And maybe one additional one on the go to market changes. It sounds like you are having some traction with that.
I guess.
Yeah.
In terms of the.
Competitors Youre seeing as you go up more up market.
Are you, mainly replacing like like XL systems or is it more legacy competitors.
Meeting the needs. Thank you.
Yeah, we definitely we you know we replaced on homegrown billing systems, we place Excel spreadsheets.
A lot of times, we're doing launches, where it's a greenfield opportunities. The first time. They are actually watching subscription business was a brand new application in those situations, where if we get customers up and running.
90 days or less and I would say, though that as we go up market in us subscriptions are becoming more mainstream one of the things that you can see us focus more on this where the platform is really really important is how do I integrate this thing within by Mike existing.
Existing enterprise applications backhaul and it's okay to launch something on the side. So when this is Christian starts becoming 510 20, 30% on my revenues and integrating you Mike existing enterprise software back on is really really important and we're doing a lot of those type work.
With the big companies.
Awesome I'll pass it over thank you.
And your next question comes from the line of Joseph Vafi from Canaccord.
Hey, guys. Good afternoon, nice to see the good results here and it seems like we've heard a lot more about platform this quarter than the last couple I'm just kind of wondering number one if you kind of see this quarter is a little bit of a breakout on on that on on that price.
Correct and then secondly.
It'd be interesting to get up a little bit of a metric on where platform was last quarter in terms of customer usage and then maybe a follow up after that.
Yes, it's a great question.
No I didnt have the platform on all the time in a gradual evolution of a software company, especially something we do which is a mission critical system on the platform strategies become really important.
Large companies right. This last mile customization is a lot on thats, where their secret sauce lies and still the ability for them to customize the system to meet their exact needs is really really important and in our platform continues to to to advance from you every quarter. This new capabilities range. Most recently, we talked about launching comes from objects comes from Korea capability on the other things that.
Book in the labs, if you will and in those two will continue to evolve to help companies do do do some pretty amazing things and so.
I'm trying to remember what we said last quarter in terms of adoption, but south of two years, where we sit today and so our expectation really is that every one of our companies will ultimately use the platform because they all have specific needs that they want to do that the platform really enables.
Okay, that's great and then Todd.
Maybe on net retention I know, it's a trailing 12 month.
Metric.
But I think in teens prepay.
Prepared remarks said you had 100 upsells on the quarter.
And is there any way to look at net dollar retention or or kind of.
Our view of it or.
No an opinion on it kind of on a run rate basis on.
Or you know kind of excluding a little bit of that kind of one timers in Q2, just to kind of get a feel for.
On the cadence of the business on that metric at least right now thanks a lot.
Yes, so thanks, a lot Joe So I think I would look at net retention as you said its trailing metrics, we feel really good about the Upsells, we had when I think more importantly, if you look at the actual dollar churn on.
That decreased 55% from Q2, we said, we thought Q2 would be our toughest on that.
Definitely turned out to be the case.
More importantly, when we look at the retention, we actually improved.
Year over year. So from my perspective, I think that gives the color that we're on the right track with retention will aim not only to keep the churn down but continue to move forward on the upsells.
Great. Thanks, and then just maybe I'll just sneak one more in is it fair to say that you know.
With some of these.
You're you're signing bigger and bigger enterprises.
Fair to say that most of them are coming on line initially at that kind of.
500, K. ACB metric that you call out for larger deals or do they actually start sometime small thanks a lot.
I'll go into that.
It is a range and its little bit part of what we do we can do anything from a small launch.
And so as a company that says I want to get into solutions and not really sure. How that look lets put an idea together that launched something to be find that you can manage your customer base because of the power you bring the power of your customers and you'd be pleasantly surprised by the success of them on on all the way to to look I already got a subscription business right.
I've got $1 billion I need to move onto your platform. That's can be foundation from our growth going forward and so you're going to see deal size is really range.
Quite a bit as a result, and I think thats the power.
The pricing capability and quite frankly, that's a power subscription businesses from cloud businesses and circle and in general relative.
Ability to size.
The usage inside of consumption to two to two per putting the company wants to start with but have a path to grow with them over time to to to be worth seven digits from more.
Okay fair enough. Thanks, so much guys.
Hi, Joe.
And it looks like we have time for one more question and that will be from Scott Berg from Needham.
Hi, Ken and thanks for taking my questions and Chris Thats on the good quarter.
First of all team. It you talked about kind of the recovery of the business I guess just more debt.
Moving out a little bit is if you look the deals that you signed recently on that are made in pipeline on.
Orders so the composition of those deals on those transactions any differences, maybe how customers buy the discourse simple platform guilt free pandemic.
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[noise] team too heavy on.
Good I thought it was just me.
Net.
The 15 comes back on Scott.
Okay, I think the answer to that question there Scott.
Scott as you know we have been seeing them as you add a little bit more flexibility from a standpoint of.
Being able to Steve's team said earlier start small launch or do something larger format. This quarter. We saw that we certainly had a nice traction with some deals starting larger.
Got it helpful. And then just as a quick follow Tyler you'd mentioned your subscription.
Revenues were 80% of the overall revenue mix on the quarter 80, 20, certainly is a good level and healthier than what we've seen historically out of the company, but with the push to partners what should that mix speak going forward is 80 20 kind of the.
Plateau level here or do you actually feel that see that mix, yes, Christopher thanks.
On another we've given specific guidance on where we see that but you know I could certainly see it going lower.
I think it's certainly really important price have a healthy community.
Hey, Bill practices, we're happy for them to take the on the site work on and also gives us an opportunity.
Can you to build.
Well the pipeline, which we saw when we get traction on this quarter. So from my perspective, you know I can certainly see it going on.
Longer term below the.
Well, 20% services.
Great. That's all I have thanks for taking my questions.
All right. Thanks, Scott.
And now I will turn the call back over to management for any final remarks.
We're going to thank everybody for joining us on the Q3 earnings call.
And with that I will share the session. Thank you very much.
Thank you for joining today's conference call.
You may now disconnect your line.
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