Q3 2021 nCino Inc Earnings Call
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Ladies and gentlemen, please standby your Encino Inc. third quarter fiscal 2021 earnings conference call begin momentarily. Thank you for your patience and please standby.
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Ladies and gentlemen, thank you for standing by and welcome to the Encino Inc. third quarter fiscal 2021 earnings conference call. At this time all participants are in a listen only mode. After the speakers presentation. There will be a question answer session. That's good question during the session you'll need to press star one on your telephone please be advised on today's conference.
On may be recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Greg Ornstein, Chief Corporate development and legal officer. Please go ahead Sir.
Tim and welcome to end Cnos fiscal 2021 third quarter earnings call for the quarter ended October 31 2020.
With me on today's call are appear on our day and seen as President and Chief Executive Officer, and David Rideau, Our Chief Financial Officer.
During the course of this conference call. We may make forward looking statements regarding trends strategies and the anticipated performance of our business.
These forward looking statements are based on management's current views and expectations and are subject to various risks and uncertainties.
Including those related to the impacts of COVID-19 on our business the financial services industry and global economic conditions.
Our actual results may differ materially please.
Please refer to the risk factors included in our filings with the Securities and Exchange Commission, which are available on the company's website at Encino Dot com under the Investor Relations section and on the Fccs website FCC Dot Gov.
Forward looking statements made during the call are being made as of today December 19, 2020 based on the facts available to us today, and Encino disclaims any obligation to update or revise any forward looking statements.
The guidance, we will provide a day is in part based on our assumptions as to the macroeconomic environment in which we will be operating in the future, including the timing and pace of recovery from any negative effects caused by COVID-19.
Such matters that are beyond our control and our assumptions may not be correct.
On today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results a reconciliation to comparable GAAP metrics can be found in today's earning release, which is available on our website and as an exhibit to the form 8-K furnished with the FCC just before this call.
With that thank you for joining us and I will turn it over to peer.
Thanks, Greg Hello, and thank you for joining us today to review our third quarter fiscal 2021 results.
First and foremost I hope everyone is staying safe and healthy even as the print that may persist the digital transformation of the global financial services industry is only accelerating.
Our customer conversations this quarter, increasing interest we are seeing from potential customers across the globe.
And the pace at which many projects are moving forward on reinforce our excitement about the digital future of banking.
The new normal of remote work has made a digital strategy more than just a luxury for the financial institution.
It's an imperative to manage day to day operations.
She knows cloud banking platform helped produce cost increase revenues improve employee efficiency and productivity, while enhancing transparency on compliance all critically important in a digital world.
Our third quarter results reflect that we are helping customers respond to this digital reality we.
We are very pleased to have posted strong results for the quarter again exceeding expectations and we are increasing our full year guidance subscribe.
Subscription revenue increased 56% year over year, while total revenues grew 43% professional services revenues were also strong mainly due to the accelerated deployment of a few large projects.
Third quarter was also highlighted by the rollout of numerous product innovations across the end senior bank operating system as part of our full release, we added new logos from financial institutions around the globe.
Ranging from an international Challenger bank to an over $50 billion of Us bank, while taking customers life in multiple countries.
Let's start by discussing our product updates into full release.
As a reminder, Encino operates one code base across the platform and we typically rollout major product improvements each spring and fall with incremental enhancements more frequently so a $1 billion community bank is leveraging the same technology as the largest global.
Banks the note installed base.
This is part of our secret sauce customers can configure their solution to reflect this specific requirements of that institution, while encino leverages the cost benefits of maintaining a single code base.
What I said build out numerous product updates the changes to encino Q organic out analytics platform are far more than an update on.
For the full 2020 release Nicky's for the first time integrated into the bank operating system.
Using artificial intelligence data analytics and machine learning Nicolaus financial institutions to leverage data and make more informed decisions in real time.
We believe Nick is a truly unique and unmatched offering.
Our plan is to launch a series of solutions on the Knick platform overtime integrated into the bank operating system.
One of our first Nics solutions automated printing is targeted at our commercial banking customers.
We have seen instances, where automated spreading has reduced the manual requirements of loan underwriting by 50% to 75% sales.
Significantly increasing efficiency for financial institutions, and accelerating the time to loan approval.
We already have multiple institutions that have purchased automated spreading all existing and new customers that happened to be based outside the us which is exciting as we continue our international growth.
One customer that purchases and it's already gone live on automated spreading this is $398 billion UK offer global bank and another is an emerging challenger bank interest radio.
For the current customer that utilizes and cnos spreading functionality. It can take as little as a few days to a couple of weeks to implement automated spreading.
Time to revenue with auto spreading the significantly faster than our core products were full deployment can range from six to nine months for community or regional bank and 12 to 24 months for a global Enterprise Bank.
Another new product is portfolio analytics, which helps financial institutions better understand their portfolios. The payment. These two of their customers and what they can expect in the future with portfolio analytics integrated into the bank operating system, we expect to be able to more aggressively cross sell this functionality interest.
Our legacy customer base as we did with a $1.6 billion community bank in the third quarter.
On additional revenues from Nick may not be material in the near term, we see Nick as further differentiating encino, helping to increase our close rates and expand our competitive moat as we lead the digitization of financial institutions of all sizes globally.
In addition to these nics solutions.
However, we also introduced enhancements to our collateral management functionality.
Specifically targeted to drive further adoption of our commercial lending solution in EMEA and APAC.
Commercial any customers will also benefit from the emphasis on increasing the ease of use especially around loan modifications and expanding portfolio management capabilities.
Product updates for retail banking focused on increasing the depth and breadth of our retail solution.
These updates take us a step closer to realizing our unique vision for retail banking.
A low touch no touch solution that makes consumer banking easy and seamless for bank employees and their clients.
We are pleased with our continued traction in the retail segment.
We signed new customers for our deposit account opening solution and we also expanded a successful retail customer.
GAAP 100 bank in the Midwest to commercial lending a good example of our land and expand model.
Our product road map highlights how the different teams within Encino, so closely aligned and all centered around our customers.
To highlight our this flywheel works Thats, probably look at the L. product development process, our customer success teams lead the way leveraging the close relationships with customers to understand the pain points and inefficiencies in their day.
This feedback held directly inform our product roadmap in fact, the need for an automated it's printing solution was established in response to customers sharing the frustration of manually in putting data from multiple times for the same loan.
Many of these customers become early adopters and provide valuable feedback as we tweak and protect the product, making it ready for general availability.
At that point, the smallest community or regional bank to a global enterprise bank can leverage our technology to increase the efficiency of their business grow revenues and help ensure the regulatory compliance of the institution.
This customer centric approach and deep understanding of our customers' business not only drives our land and expand model, but also let us configure seat deployments as their business evolves, thus helping to minimize churn.
In fact, we are already seeing this play out with selected Triple play customers, where we have helped them develop a strategy to redeploy triple piece seats. When the forgiveness program is completed.
And of course product innovation drives new customer wins.
In the third quarter, a top 50 ways bank price.
Interest our customer engagement solution and will leverage our industry expertise to achieve a very efficient deployment schedule.
Earlier in the quarter, we announce that Texas from credit was lives on our platform more recently, we added another customer in the agricultural lending space expanding our market share in this niche segment.
The platform Configurability I noted earlier is key to addressing the unique lending requirements of this market with $365 billion in assets.
While we continue to grow our customer base in AG lending, we look for similar opportunities in other industries.
On a straight year judo bank the country's first fully accredited challenger Bank is building its infrastructure on Encino, and we'll use our commercial lending system to service its small and medium size enterprise clients.
Finally, Chris.
15 customers purchased additional triple price seats to service and forgiveness customers, including a top 10, and a top 25 euros bank.
As we discussed on our last earnings call customer go lives on an important milestone for Encino and a key way we measure our success, having a customer life on production and experiencing the benefits of our software is the first step in getting the next one with that customer.
Again.
Everything at Encino goes back to our customers and our success is directly linked to this which is why customer testimonials and feedback so powerful.
For instance.
Jeff Schweitzer, President and CEO of Univest Financial Corporation, a long time and see new customer base in Pennsylvania was recently quoted as saying.
We just got a report that the loans that we are doing within scenario of lower the amount of time that it would normally take us to complete the transaction by 60%.
So that has created incredible efficiency for us.
It allows the customer to get whatever funding, they're looking for quicker, while allowing us to continue to leverage technology and growth without having to add more physical bodies, three our team and quote.
These types of data points and results on a two differentiator for us.
And a testament to the tangible impact and senior was having on our customers and on the global financial services market.
Back to the go lives in the third quarter two financings at two cents in Canada went live on commercial lending.
One a top 10 credit Union and the other a top six bank.
We expanded on the AG lending business I discussed earlier by taking another leading act lending backed life.
One of our largest global customers with Encino deployments in multiple comes.
Trees went live with the commercial lending in its top 50 euros Bank finally.
A top 25 years bank expanded its commercial deployment, adding additional seats.
We also made further progress on building out our international footprint. Despite some of the headwinds from COVID-19.
In the third quarter, we added our first in country sales people in Continental Europe, and largely completed building out our European professional services team.
We continue to grow our team in Australia, as we see a significant opportunity in that market.
We also made strides in localizing products for each of these non us markets.
During the quarter, we were pleased to announce details about our relationships with a number of banks around the globe.
Understandably for competitive reasons financial institutions, often will let us discuss our partnerships.
So we particularly excited to announce in the third quarter that Barclays adopted the Encino bank operating system to streamline various onboarding processes.
Comment from Paul Compton, the global head of banking at Barclays and co President of Barclays Bank plc in October was very exciting to hear.
And I quote the Encino platform has helped us simplify our workflows and increase our operational resilience.
Which ultimately helps us provide better service to our clients and growth.
Another key part the announced this quarter was fifth third bank.
Jude SRAM, the bank's Chief information officer discussed challenges in the industry and how in CNS, allowing them to successfully to spawn, noting that as more and more interactions are shifting from physical to digital we want to ensure we are accelerating our digital transformation to provide our employees and clients.
With cutting edge tools and technology. The Encino platform offers capabilities that allow us to innovate faster and sort of commercial clients in a more efficient way.
Well Unfortunately, the world hasn't been able to move past COVID-19, yet we are seeing financial institutions largely refocus on their core operations in.
In summary, our pipeline is growing we see deals advancing and we are looking forward to a strong close to the year, which should set us up.
Well for next year.
Now I will turn the call over to David for him to share financial details about the quarter, our outlook for the fourth quarter and our increased guidance for the full year.
Thank you Pierre and thank you all for joining us to review our fiscal third quarter 2021 earnings. Please note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated on.
Non-GAAP Fanning financial information excludes the impact from stock based compensation and the amortization of intangible assets a reconciliation to comparable GAAP metrics can be found in todays earnings release, which is available on our website and as an exhibit to our 8-K furnished with the SEC.
Total revenues for the third quarter of fiscal 2021 were $54.2 million compared with $37.9 million in the third quarter of fiscal 2020, an increase of 43% year over year.
Subscription revenues for this quarter were $43.3 million, an increase of 56% year over year, representing 80% of total revenues in the third quarter.
Subscription revenues benefited from approximately $1 million in catch up revenues related to a triple play consortium that utilize our software to process Triple B loans.
This was a onetime rental revenue benefit and in the future. We expect an immaterial quarterly revenue contribution related to this program.
In addition, 15 customers added additional seats to service the forgiveness portion of the Triple PD Lone program.
As a reminder, revenues from Triple B customers is recognized immediately.
Unlike our core bank operating system customers, which generally activate over a defined period, depending on the contract terms at this point, we do not expect to add any new triple P. related signings in Q4 and in turn we anticipate activation schedules were returned to the historical more predictable.
Schedules, we have experienced over the years.
Professional services revenues were $11 million in the quarter, a 7% increase over the $10.2 million in the third quarter of last year.
Professional services experienced solid performance in the third quarter, particularly in Europe we.
We continue to aggressively invest in our international business.
Which helped drive our third quarter international revenue growth to 98% year over year.
Revenues outside the us or $6.6 million or 12% of total revenues in the third quarter up from $3.3 million or 9% of total revenues in the third quarter of fiscal 2020.
Non-GAAP gross profit for the third quarter fiscal 2021 was $33 million compared with $21.6 million in the third quarter of fiscal 2020, an increase of 53% year over year growth.
Gross margin was 61% compared.
Compared to 57% in the third quarter of fiscal 2020 on.
Gross margins continue to improve largely from subscription product mix as.
As well as the onetime catch up of Triple net revenues I mentioned earlier, where the costs have been absorbed ratably in the prior quarters.
Total non-GAAP operating costs for the third quarter of fiscal 2021 were $35.7 million or 66% of revenues compared.
Compared to $26.5 million or 70% of revenues from the third quarter fiscal 2020.
While we did see some cost savings due to covance, especially around reduced travel and in person events, we continue to invest to grow our international footprint.
And expand the breadth and depth of our products as well as absorb additional costs related to being a public company.
Sales and marketing for the third quarter of fiscal 2021.
It was $12.6 million or 23% of revenues compared to $11.8 million or 31% in the third quarter of fiscal 2020.
So we continue investing in sales and marketing as we expand globally sales and marketing expenses were slightly lower than originally expected during the quarter due.
Due to the ongoing reduction in travel expenses in.
In addition, some of our new hires outside the us took longer to on board. So those costs will be more impactful in Q4, along with increased spending on a digital marketing programs.
Research and development for the third quarter.
It was 14 million or 26% of revenues compared to $9.2 million or 24% for the third quarter of fiscal 2020.
We continue to invest in building out the Encino bank operating system, including Nick and our retail products as well as localizing products to support our international expansion.
General and administrative expenses were $9.1 million or 17% of revenues from.
Compared to $5.5 million or 14% in the third quarter of fiscal 2020.
We continue to invest in our DNA function to help support our rapid growth along with our increased public company related costs.
Non-GAAP operating loss for the third quarter fiscal 2021 was $2.7 million compared with non-GAAP operating loss of $4.9 million in the third quarter of fiscal 2020.
Our non-GAAP operating margin for the third quarter improved to negative 5% compared.
Compared with negative 13% in the third quarter of fiscal 2020.
Non-GAAP net loss attributable to Encino for the third quarter of fiscal 2021 was $3 million or three cents per share compared to non-GAAP net loss attributed to encino, a $4.2 million or five cents per share in the third quarter of fiscal 2020 turning.
Turning to cash.
We ended the quarter cash and cash equivalents of $378.6 million.
Net cash used in operating to activities was 10.8 million compare.
Compared to $8.5 million in the third quarter of fiscal 2020 and.
In addition capital expenditures were point $8 million in the quarter.
Resulting in negative free cash flow of $11.6 million for the third quarter of fiscal 2021.
As a reminder, Q3 is normally our weakest cash quarter, because that is as low as billing quarter of the year. Conversely, Q4 is usually our strongest billing quarter, which usually results in improving cash collections in the first and second quarters now.
Now turning to guidance.
For the fourth quarter, we expect total revenues of $53 million to $53.5 million as a reminder, the third quarter benefited from a onetime catch up of $1 million in subscription revenues note.
Note also this guidance assumes no additional immediate activations from Chiptopia signings in the fourth quarter.
And our normal seasonal mix of professional services revenue.
We anticipate subscription revenues will remain at approximately 80% of total revenue.
Non-GAAP operating loss is expected to be approximately $8 million to $8.5 million.
Non-GAAP net loss attributed to encino per share to be eight to nine cents.
This is based upon a weighted average of approximately 92.5 million basic shares outstanding.
We are increasing our guidance for the full fiscal year 2021 as follows we now expect total revenue as a 200.7 to 201.2 million.
We also expect non-GAAP operating loss for fiscal 2021 to be 14.7 to 15.2 million and non-GAAP net loss attributable to encino per share to be 16 to 17 cents.
Based upon a weighted average of approximately 87 million basic shares outstanding.
In summary.
We are very pleased with the continued momentum in the third quarter as we continue to benefit from Chiptopia related revenues, along with increased professional services activity as customers are anxious to get their programs line.
Our courage that customers are refocusing on their core business, especially the larger enterprise banks.
I don't think anyone on several back to normal, but we believe the trend is definitely improving which is reflected in our increased full year guidance, which at the midpoint represents 45% annual total revenue growth and 56% annual subscription revenue growth.
As always we appreciate the hard work and dedication of the Encino employees around the globe, along with the confidence of our customers and loyalty of our stockholders now we will open the call to questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question comes from Keith Please stand by at least on Palm Kuni roster.
Our first question comes from so Ken clearly Barclays. You May proceed with your question.
Okay, Great Hey, guys. Thanks for taking my questions here and some great customer examples there in the prepared commentary.
The second how are you good year from day good good Pierre good to hear from you as well maybe maybe first for you Pierre.
Can you just talk about what you're hearing from customers that use your tools for the paycheck protection program and May be just as importantly, how they're thinking about those tools going into next year when when knock on wood.
Those seats will be used for PPP or forgiveness, yes, very good question so that.
Most of these customers this was.
But really I think accelerating the understanding for the need for the digital tools and so what we are doing is working with many of them to expand the offering for digital lending across to other portfolio elements, but firstly, we are leaving those solutions in place because it is in anticipation of a follow on round trip.
Copy and we'll have to see what happens there.
But as soon as we know that will either use the seeds for the next round of Threepd that comes to fruition and if not.
We have plans with our clients to redeploy that to expand into other products.
Inside the bank.
Got it gone, but thats really helpful.
Hi, Mike from my follow on for for you David.
Maybe related to services revenue.
It was good to see the acceleration here I guess I'm curious do you have any anecdotes or data points on whether services revenue tends to lead or lag subscription revenue or just generally anything we can glean on the subscription part of the business from from this quarter services results.
Yes, I don't think Theres any I don't think you can glean anything to subscription because remember.
The majority of our projects are deployed by our partners and we don't you don't have visibility into that we had a very strong results performance in Europe with the services team and then also the Americas. So we expect.
That will continue as we showed higher guidance for the fourth quarter as well, we do have seasonality to remember for the fourth quarter just normal seasonality, we have people going on peto, we have the holidays to deal with and so we we do expect that will be sequentially down as we look at the fourth quarter.
Got it very helpful. I'll hop back in queue. Thanks, guys.
Good good to hear from you.
Thank you. Our next question comes from Brad Sills with Bank of America Securities. You May proceed with your question.
Oh, Great Hey, Thanks, guys wanted to ask a question on international it sounds like you're seeing some real traction there.
The services business would that translate into a subscription as well and just any commentary on some of the investments you're making there and how those are playing out.
Yes, Brad good to hear from you let me make an overall comment and then David you can take the more detailed ones.
As I mentioned throughout as we got to know all of you that the frustration is yet as we cannot travel to Europe because of growth with and actually go on hire people and drive from momentum into the market. However, even under these circumstances.
We are seeing great traction we've hired people locally into countries now in Europe.
As you know our main office in London.
We also see very good interest in our pipelines.
Across the European continent.
Continents, So I am actually very optimistic that the investments we are making are beginning to pay off.
And the same problems debts that was here five years ago on how we penetrated the market. We are seeing exactly the same problems over there and we see the beginning of that momentum coming as you know we've got good traction in the UK and Ireland and I'm beginning to see that same signals across the pond in Europe.
Yeah, Brett how are you doing we had a really good quarter internationally, 98% growth 12% of total revenues the.
The services team performed very well in EMEA Asia Pacific was a good quarter.
And we are continuing to invest in their peak so teams in EMEA and APAC and then also on the support side and international on the in EMEA as well so.
So far it looks good.
Cove It has I think it's.
With all the Lockdowns that we're seeing it really hasn't had a major impact on the deployments on the services side. So we're very pleased with what we saw from the team in the third quarter.
That's great. Thanks, David Thanks, Pierre and then one more if I may just on non Eni Q. Some good traction here it sounds like automated spreading solution in one of the big banks should we expect more deals like that where.
Who is being deployed for a specific used case I know it's been.
Momentum across our embedded if you will across all the different.
Modules.
Within Encino.
But is it more used case driven are you seeing customers in the on the pipeline for Eni queue looking at an acute more pervasively throughout the organization how should we think about that thanks, guys. Yes. So I see two main benefits with Nick.
The first one is going to differentiate us further from the competition and also you know sometimes we are competing with home bolt on people on a bold any sales, which is becoming less than that but.
The more intelligent than automation, we drive into these systems to more difficulties will be from the bank to compete with the IP departments as well as his will diminish the competition on the point solutions because how do you think all these things together to give your employees and your customers at greater use of.
Experience.
As you look at those Nick examples I'm very excited about.
For instance, reboard visible equity they were focused mostly on the small credit unions and now we have.
Signed up a nice community bank.
That is much bigger than the typical trade union. They service on the portfolio analytics. Then you look at what we said in the press release around two large banks taking.
The automated spreading solution in one case it was an existing customer off from sweet when we acquired them in other cases in encino customer using our spreads over time that solution is going to help us to penetrate the spreading department or underwriting department of a bank much deeper.
Because it's really drive that level of proficiency number one and number two it will differentiate us from the in the market as the market either on the commercial loan origination.
So I'm just exciting overall on the trends I am seeing down and as we mentioned earlier on those products from implementation turned to revenue is much faster than traditional seat deployment of the big transformation projects.
That's great. Thanks, so much here.
Thank you. Our next question comes from Terry Tillman would choose to you May proceed on your question.
Yes, thanks for taking my questions and congratulations on the strong results Hi, Peter David on Greg I guess my first question just on relates maybe Peter for you from here for you on the retail banking side, just maybe an update on where you are in terms of the size and scale of that business and with the pandemic does that potentially accelerate the roadmap and the day.
Option by bigger enterprise, a global Bank and then I had a follow up. Thank you, yes as delivered to retail in general let me just describe what retail use again so.
So is this sort of mind on firstly, there is a retail lending solution. There is also a deposit account opening solution that includes checking savings money markets few logs et cetera, and then this year on boarding solution. So that three combined make sub debt and then you've got international mortgage that.
Comes from now Okay on on all those fronts, we are seeing great momentum, but as you know.
The retail product suite is much more regulated than what the commercial side. These.
And as such we just had a great release coming out on October where we further.
Refined our Honda and trips solutions as well as our dog Prep solutions, which these are very complex things you know the the regulations and requirements may vary by county, and by ZIP code, Okay, and as we mature that to actually work across the us on.
Moving to see great interest.
See that's a notion to day in banking that the retail solutions are working good enough.
And what we are beginning to prove through configuration automation and a low touch to no touch experience is that we can move the needle here for banks to make it a lot more productive and improve the customer experience and through that we are beginning to see the early signs of momentum.
Frankly speak Craig.
Craig <unk> of UBS.
I speak quite a lot with our head of sales in those markets and asking about it than every time asking this is pure there's a good pipeline and there's great interest and we think that thing is coming along.
Then in April we'll have another lease and every time, we do that we mature that seeing and be automate older processes more so I've got very optimistic view of the retail solutions.
Yes, and I guess, David maybe just a quick question, it's more just to kind of her memory. Thank god, because I may have forgotten, but.
Did you all talk about kind of the updated full year EPS by 21.
Contribution from Triple play programs, whether its program or forgiveness and any change to that and can you remind us again, what the redeployment rate you see going into next year and again congrats yes. Thank you. Thank you Terry yes, so for the third quarter Triple peak contributed about 5 million.
To the number and that includes the $1 million catch up from the consortium and for the year now, we expect $13 million and that's up from 10 million that we talked about on the second quarter and in terms of seat seats being redeployed I think its too early there was a handful of customers that we redeployed elsewhere into their works but.
But it's just too early right now the sales teams out there talking to customers, making sure that when they are up.
And need to be redeployed that there will be a home for them. So so far so good.
Thank you. Our next question comes from Josh Beck with Keybanc. You May proceed with your question.
Thanks for taking the question team good good to hear from you.
Pierre maybe just wanted to start with you certainly the tenor I think of the bank executives seems to have really improved in the last 90 days I think the loss rates that the banks had four.
Forecast things are actually coming in a little bit better. So you'd mentioned this this notion that they're starting to refocus on their core operation. So I'm just kind of curious are they pretty.
Pretty aggressively pivoting back to.
Digital transformation is it something that Theyre teed up for 2021 once they get through this year, just would like to hear a little bit more about.
Just the tenor of conversations you're having yes.
Yes, no absolutely I think what we are seeing is at the upper end of the market is that they realize this work from on phenomena the productivity they got from the people.
As really shifted there.
The outlook on on on real estate on on how you're going to treat your people population because all of us on a complete competing for talent, okay and.
And then you have to look at the experience on relationship managers out in the field and the tools should give them. So this is driven a heightened away.
Awareness and edge ANSI towards that so I see traction at the top end of the market as well as the middle when it comes to the community banks.
You know they were they had a bigger impact.
Because with triple therapy, the workload that was done.
The disruption through co with et cetera can.
Community banks was ahead of the curve.
Like to connect one which you know is a great friend of our son has deployed this early on is really adopting it widely.
Net ahead of the curve and then new Jersey into new business in New York City, All the time with with a lot of lock down some distinctions. Okay. So if you ask Frank he's ready the ones it's behind.
I think it'll take a while to sold because we have to see what happens through this next several super pit out impacts net productivity and what they have to do.
But I feel very good that if you look at the pipelines and we mentioned we've got very strong pipelines are the highest ever is that.
The banks are engaged and they realize they have to do that on the.
Our job now is to closer to move the projects forward.
Great and maybe just following up on the on the pipeline.
Commentary. So that's certainly encouraging maybe just help us think about converting that into bookings and maybe what that cycle looks like versus say pre cold weather I imagine that we're still on the and the transition period here, but just would be curious your commentary there yes.
We are seeing that the activation schedule. These are trending back to normal. So if I look at the contract structures. We are seeing now remember triple P. accelerated the activation scheduled tremendously so on the contract into revenue right away and.
Thats why you are going to have a tough compare either quarter over quarter or maybe next year, just because of that holistic.
Phenomena, but as you look at.
What's happening out there now and the contracts I am seeing we're getting back to the more normal transformational projects with a rollout schedule and activation schedules that mimics the historical trends of what we saw on the company.
Which tells me two things the first one this is not a patchwork of solutions interest lammot on to say I've got some from digital front then it actually is people see as you're looking at the middle and back offices and how they are going to operate in the future, which is a good sign for us and I think it's 100% the ride signed for the banks to address a deadly.
Okay really helpful. Thanks, Peter.
Thank you good talking to you.
Thank you. Our next question comes from Brent Bracelin with hybrid sales you May proceed in your question.
Hi, good afternoon, and a line and thanks for taking my questions here I have a couple of one for Pierre and then a couple of follow ups or Dave if I could up here I wanted to ask about the on the partner strategy. Obviously, you had some great partners in some niche partners like Monroe, but we're starting to see a pretty nice uptick in high.
Operating at some of the larger ESI partners, particularly the Deloittes kind of stands out here and just wondering how should we interpret some of these bigger size you know and increased hiring activity do you see that as a precursor to maybe a larger bank on a nation investment cycle coming.
Is there a big incentives for these larger in size to fill practices around and see you know just trying to understand and time why we're seeing the uptick in some of those say partners around encino specifically.
Yes, we are in constant communication with our partners.
It sounds from large.
Go to market engine and dependency for us.
As you know and you can actually shooting out on PSS revenue trends that you.
We want to have our own competent teams to help on assist we know the product growth. However, the.
As we look across and that's affecting your pipelines.
Is that these companies all know that once we get out of covert.
Who knows how long that will take but we all read the news.
It's going to be a different world the customer and consumers are expecting a different level of interaction and there's many banks wondering well people ever come back to the branches at the same volumes that they use to come before because they've learned new habits.
So we are seeing that effects and you've seen the hiring is actually affecting our pipelines and the activities in conversations we're having with the largest banks in the world around what is the operating model what is the real estate model what is the brand strategy and.
Our new automated workflows of these people and what tools you provide so I think you're onto something there that is a leading indicator we sydney our pipes.
On the business is going.
Great Super encouraging there and then I guess for you David I.
I apologize.
GAAP to non here did you give us an RPL metric, yet or or is that something will have to wait for the Q that to to look at yes. No. We can tie that will be filed in the Q tomorrow, but I'll give you details here. So total ARPU came in at 453 in total less than 24 months was to 99, and then greater than 24 months was one.
Before so it's down sequentially about $3 million, but not surprising this is normal and seasonal for this time of the year Q3 is our lowest billing period and our lowest renewal period.
Of the year so.
So this is normal don't look into it.
And this is what we expected as we entered into the third quarter.
Super helpful color it sounds like so some of that bleed off two was tied to this.
Triple key revenue you said what was that three 4 million in the quarter I assume so that that would be day to bleed down the line sequentially. Yet your puppy was $5 million in the quarter 5 million. Okay. That's helpful color and then I guess last question for you David here I know, it's early looking out into 2021 net and we're still.
I'll end of this.
Dabic, but just as you think about the pipeline as you think about the visibility of the business. How are you prioritizing investments thinking about sales and R&D without guiding next year, you have an appetite to lean in here on the opportunity or are you going to be a little more cautious just trying to get on early read on.
On the investment appetite and getting more aggressive on the sales on R&D flat for next year. Thanks, Yeah. Good question.
We see the opportunity. So we are absolutely investing we accelerated hiring into the fourth quarter for next year we.
We are adding sales people on the continent in Europe, because we see the demand and the interest internationally, we're adding services people there to help them on deployments of the sales were also making a major investment on the R&D side as well to mature the retail product to advance commercial and to work on and advance the knick product as well so we see.
On the opportunity the pipeline is there the interest is there the market is there and we're pushing ahead and investing as quickly and responsibly as we can.
Good stuff great to hear thanks again.
Thank you.
Thank you on our last question comes from Brian Peterson with Raymond James You May proceed with your question.
Great. Thanks. This is Alex on for Brian I want to start with net Hey, just curious about the product release cadence on the day.
And analytics tools around that kind of the similar spring fall cadence I know you've been working on a commercial on retail pricing as well as though the automated spread on you talked about today.
Yes.
So obviously as you can imagine we do some of that development work here in Wilmington, We've got visible equity in Utah.
Working on only our day to lakes our analytics.
Analytics et cetera, and then we've got the data recognition team in Melbourne, Australia, and I will tell you. This is a test always for the company culture deceive you can work over three tell interest I guess, an integrated product because all these products on integrated into the bank operating system and provides the bank offices.
Well as the consumer a singular experience he doesnt feel discombobulated, we do follow those release schedules.
But we are.
Pushing automation offer leases through the point.
Where we can actually to release interim releases and do push upgrades to customers. As these are quiet, okay. We stick to that twice a year cadence now, but we actually do every now and then of course upgrading between specifically is somebody on a project and and we we want to accelerate the adoption of that.
Which is actually being very well received but also remember if we upgrade the bank.
They have to have absorbed the upgrades and the new features and many times with these banks to take these continues upgrades on as all the features it's very difficult to absorb.
Thats why we stick to this more disciplined approach and then we'll make exceptions on a project basis.
Does that make sense.
Yeah, that's great and then just one follow up Im curious as what kind of progress. There's the pandemic year has has that caused any changes from what you're replacing I know you had that kind of four big buckets on on the competitive landscape on what you're replacing historically I'm wondering if that's changed at all as a result and on that yes, there's one once.
I think we did see not only in the old day traditionally we would go in and tackle the middle back office automate that and then rollout portals through the front ends once and I always call. It once weve cleaning the kitchen okay.
Now we're beginning to see some of these bigger banks look at Encino platform. They like what they see but they may do deposit account opening as a front end solution first and just do that and once they've got that in play because that's an urgent priority for them. We will grow from there may be two commercial lending or small business line.
Moving or retail okay.
So weve now got this thing down where we actually can go bottom end lies and do a quick hit with a quick solution be in production in two months or three months.
And then expand further.
Pending on that priority and I clearly see that is because of change behavior because of Kroger then too.
You know the log downs and we can go to the branches and so on to help their people to be productive.
This environment.
Okay, Great really helpful. Thanks, guys.
Thank you [noise].
Thank you and on not showing any further questions. At this time I would now like to turn the call back over TPM on day for any further remarks well.
Well. Thank you on thank you all for attending our earnings call today as I Hope you picked up in my comments I'm really excited about the road ahead for Encino, our pipeline has never been stronger and the conversations we are having along with signed contracts in hand reflect the increasing global demand for the digital transformation of financial service.
Yes.
While we all wait impatiently for vaccines to be widely distributed and the resumption of normal world. There is no going back for banks that.
The digital transformation is underway and only accelerating and we believe in CNO is uniquely positioned to capitalize on this tremendous opportunity. Thanks.
Thank you for your time today.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
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