Q4 2020 Alteryx Inc Earnings Call
Greetings and welcome to the altar ex fourth quarter 'twenty 'twenty earnings Conference call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Crisslow. Please go ahead.
Thank you operator, good afternoon, and thank you for joining us today to review all tricks this fourth quarter and full year 2020 financial result.
With me on the call today are Mark Anderson, Chief Executive Officer, and Kevin Rubin, Chief Financial Officer.
During this call we may make statements related to our business that are forward looking statements under federal Securities laws.
These statements are not guarantees of future performance they are subject to a variety of risks and uncertainty.
Our actual results could differ materially from expectations reflected in any forward looking statements.
For a discussion of the material risks and other important factors that could affect our actual results. Please refer to our SEC filings available on the SEC's website, and the Investor Relations section of our website as well as the risks and other important factors discussed in today's earnings release.
Additionally, non-GAAP financial measures will be discussed on today's conference call.
A reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's earnings release.
With that I'd like to turn the call over to our Chief Executive Officer, Mark Anderson Mark.
Thanks, Chris and thank you all for joining us on the call today.
Like most of US I'm happy that 2020 is now solidly in the rearview mirror.
It was a challenging year for so many here at ultra ex we welcome 2021 and are excited to see that the digital transformation of everything continues to accelerate.
We are seeing enterprises around the world adapt and transform with the sense of urgency.
I haven't seen before.
Not coincidentally, we expect 2021 will be a year of transformation for ultra ex as well.
As we continue to scale and evolve to meet the needs of our customers.
I submit that one cannot transform without harnessing control of one's data.
7100 customers and several hundred thousand delighted users leveraged the simplicity and power of ultra ex us EPA platform we.
We have become the instrumentation layer of their transformation initiatives and deliver significant business value with the power of analytics and automation.
On today's call I'll walk you through our 2021 operating framework and.
Kevin will then provide specifics on our Q4 and full year 2020 performance as well as our outlook for both Q1.
And full year 2021.
As many companies do we started 2021 by defining our strategic imperatives. These guiding principles are currently being federated down to each ultra ex associate globally.
With an achievable operating framework rolled out in the first few weeks of the fiscal year, our first ever virtual sales kickoff delivered thoughtfully last week, we stand ready to execute in 2021 per.
That means delivering unparalleled value to our customers as we scale.
On my fundamental leadership tenants is clear and open communications I believe clarity is critical to help us all assimilate and embraced the evolutionary path that we're on.
That said change isn't always easy requires increased effort and focus.
And I'm proud of how the organization has adapted my first 120 days and I believe we are setting the right course for many years to come.
Our first imperative is delivering strategic customer outcomes in 2021, we intend to evolve our go to market approach to.
To focus on targets that spend the most in need our innovation on those.
So firmly double down on customer success.
And to market more collaboratively with strategic partners.
I believe this is the right strategy to drive predictable accelerating and durable growth.
We do this well with many customers today, just not consistently throughout the year I expect our sales productivity to improve as a result of the increased focus and discipline of this operating framework.
To fully capitalize on the market opportunity in front of us.
We've made some necessary stage appropriate changes up and down the organization and we expect to continue to add high quality talent throughout 2021.
As you know Dean Darwin has joined US as Chief revenue Officer.
And Matthew Stubble as Chief customer Officer.
Both Dean and Matthew have jumped in with both feet and come with extensive domain expertise in their respective areas. I believe both will help us build even deeper and stronger relationships with our customers and will provide strong leadership during this stage.
In 2021, our direct sales team will be primarily focused on the largest customers and prospective customers, which generally tend to be global 2000 companies and government.
We will leverage technology and distribution partnerships in a much more pragmatic way tapping into large outcome oriented projects I'll talk more about how we're leveraging the ecosystem shortly.
Our second strategic imperative is our continued commitment to innovation and flexibility.
'twenty 'twenty, one will be a year of investment in product innovation I'm thrilled to announce our new chief product officer Suresh per call.
So roche's recent experience leading key parts of adobe's per.
Product journey to the cloud will serve our company well.
We intend to extend the security and scalability of the ultra ex API platform to work in many environments. So we will be increasing our investments in data governance and modern application development.
Our third strategic imperative is broadening the ecosystem.
As we expand our leadership position within the analytics market, we recognize we can't do it alone.
We believe having a vibrant and robust ecosystem of partners with both will function as a force multiplier.
This opportunity is global and it's now so we must broaden our reach with technology and distribution partners.
Last year, we embarked on this mission with Pwc as our first global elite partner.
We're working well together to accelerate transformation projects at innovative company innovative companies such as zoom and chewy. This quarter. For example, a fortune 500 telecommunications provider has partnered with <unk> and pwc to fully automate and improve the accuracy of the regulatory financial statements.
And expect to significantly lower the cost of compliance by tens of millions of dollars.
Internally, we've been building the framework to support strategic relationships and today I'm excited to announce that the pwc relationship has been expanded globally.
Last week, we announced Hcl as an elite partner and are already working closely with them to deliver digital transformation projects around the globe.
The on go to market partnerships, we continue to execute on key technology partnerships with the explosion of data accelerating technical integration and business partnerships with market leaders, such as Adobe you ipads and snowflake allowed.
Allow for Swift implementation and faster time to value and outcomes.
Our recently announced partnership with Snowflake is a great example.
Good day ultra ex as part of the Snowflake ready technology partner program, allowing ultra ex customers to leveraged snowflake in day.
Database processing.
The interest from both of our teams as well as customers and prospects is incredible.
For example, Mr price a top performing Omnichannel retailer based in South Africa is leveraging the power of ultra ex plus snowflakes to automate analytics and run merchandise allocations and inventory planning across 1300 stores and 5 million Skus.
According to Mark Stirton Group CFO, Dave.
They've used ultra ex to create analytic applications.
Third by merchandising managers and accountants hosted on the ultra ex server and snowflake.
Our users get near real time results.
Also note that this type of response is not possible from any typical database.
Also on your consistently from partners and customers that upskilling their knowledge workers is a critical priority let's.
Let's face it people deserve to be freed from limitations of disconnected systems and data sources to be employable in this new world workers have to develop.
And deliver more valuable output.
Our fourth strategic imperative is to help upskill data workers globally by providing our software to educational institutions around the world. So that they can deliver data science and analytics curriculum.
For free.
We started this in a meaningful way last year with the adapt program over 12000 people.
From all over the World participated in this COVID-19 related.
Program to Upskill.
Outcomes are near and Dear to my heart as I've seen firsthand, how education and Upskilling can transform people's lives.
The TV the team is being built out as we speak and I'm excited that our cofounder Libbey Duane Adams will lead this program as our new Chief advocacy officer.
Libya remains passionate excited and dedicated ultra ex community.
In closing I'm confident about our 2021 plan.
Our own transformation journey will ramp throughout the year and I look forward to providing you with more color on our progress at our upcoming analyst day later this year.
In this highly fragmented market I believe there is customer permission for one or two very large large platforms to emerge.
We believe that if we can continue to deliver significant business value to our customers.
<unk> can be one of these winners.
We have a clear plan for success and relentless focus on customer feedback product innovation professional development and process improvement as.
As I've mentioned, our customers need us now more than ever on them.
Credibly energized by the opportunity we have in front of us.
With that let me turn the call over to Kevin.
Thank you Mark before diving into the details and as we all experienced 2020 proved to be a challenging year. However in Q4, we saw enterprise customer spending improve as larger more stable companies appeared to resume spending, especially on digital transformation initiatives, while smaller companies continued to be cautious.
We continue to see big deals getting bigger, including multimillion dollar deals.
For 'twenty and 'twenty, one we are making a series of changes to our business designed to accelerate <unk> growth.
Some of these changes include bring.
Bringing in new leadership into our go to market organization I'm excited for what both Dean and Matthew will bring to all tricks, specifically operational rigor and stage appropriate experience and leading world class teams.
Focusing our sales efforts on customers and prospects with a large propensity to buy.
Continuing to build strategic alliances as a force multiplier.
We plan to increasingly leverage distribution partners for our smaller commercial customers, where we believe these customers will be better served and.
And increasing investments in innovation to accelerate our product roadmap.
We believe these changes are appropriate and will ultimately benefit our customers through greater focus on business outcomes.
Now turning to the numbers as mentioned we ended the quarter with approximately $493 million and million dollars and are up 32% year over year.
However, <unk> did come in under our $500 million guide due to these three factors.
Contract.
<unk> was stronger than we anticipated.
This means that we executed more three year contracts that generally have lower HCV relative to one year contracts.
Second we didn't execute on the quarter as well as we expected specifically on the expansion business and we are making appropriate operational changes.
And third continued effects of COVID-19 in customer buying trends.
Renewals a significant component of <unk> remains strong within our enterprise segment.
While the trend of higher churn within smaller customers impacted verticals and those with single seats of designer continued this slightly elevated churn was most notable in Q2 of this year, but subsequently improved throughout the second half of 2020.
Our net new customer adds for the quarter were 128, which is lower than historical levels as our sales teams focused on expansion in our larger customers, particularly in our global 2000 customers.
Additionally, we continue to see higher logo churn in smaller companies at the same time, we are seeing average deal sizes of new business, increasing which we believe is validation of our strategy to focus on customers with the greatest propensity to spend.
We now have 7083 customers, including 768 or 38% other global 2000.
Net expansion for Q4 was 122% and a stronger 132% within our global 2000 customers.
Some other key wins for the quarter included Artisan partners Bell, Canada, BT Group Danaher Corporation Fidelity investment Kraft Heinz Foods company and Pfizer.
Q4 revenue was $161 million, an increase of 3% year over year.
Low contract duration did tick down slightly when compared to Q4 2019. It remained at approximately two years and as I mentioned was stronger than anticipated.
Consistent with what we saw throughout 2020 product mix had a favorable impact in the upfront percentage was at the higher end of the range.
Before moving on I want to remind everyone that unless otherwise stated I will be discussing non-GAAP results.
Please refer to our press release for a full reconciliation of GAAP to non-GAAP results.
Our Q4 gross margin was 94% up 120 basis points from Q4 2019.
Our Q4 operating expenses were $103 million compared to $95 million in the same period last year.
The increase in our operating expenses is primarily attributable to increases in our overall head count levels.
Our Q4 operating income was $49 million or an operating margin of 31%.
Net income was $43 million or <unk> 62 per share based on $69 8 million fully diluted weighted average shares outstanding.
Let me briefly summarize the results for the year.
<unk> grew 32% for the year and revenue increased 19% to $495 million gross.
Arjun for 2020 was 93%, which was 90 basis points higher than 2019.
Operating expenses for the year were $383 million as compared to $309 million last year.
Full year operating income was $77 million or an operating margin of 16%.
Net income was $66 million or <unk> 94 per share based on $69 6 million fully diluted weighted average shares outstanding.
Turning now to the GAAP balance sheet and statement of cash flows in the fourth quarter, we generated $58 million in cash flow from operations and as of December 31, We had just over $1 billion in cash cash equivalents short term and long term investments.
Before turning to our outlook for 2021, I'd like to share with you the high level framework of how we are approaching this year, where we expect to invest and the implications to our financial model.
We are focused on executing against the strategic imperatives that mark outlined and this means we will be investing now to drive the next phase of growth.
This includes making significant investments in product development to accelerate innovation and in sales and marketing to better focus on larger customers and prospects.
This includes greater levels of customer support and engaging strategic partners.
We expect a modest and gradual improvement in the macro environment as we move through 2021.
However, the changes that we're making in our go to market will take effect throughout Q1, and while we expect to see the benefits of this transformation begin as early as Q2, they won't be meaningfully evident until the second half of the year.
In terms of seasonality Q1 is our lightest quarter of the year in terms of bookings revenue and <unk> growth and tends to be a heavy investment quarter as we put the necessary resources in place to capitalize on our seasonally stronger second half of the year, particularly the fourth quarter.
Given the shape of our typical revenue curve and the ramping of expenses, especially this year, we expect our bottom line to be weaker in the first half of the year and stronger in the second.
Now turning to our outlook for Q1, and full year 2021, and our guidance assumes the following.
As mentioned no material improvements in the macro environment in Q1, but a modest and gradual improvement throughout 2021.
The average duration of our subscription agreements will shorten and start trending below two years and approximately 40% of <unk> booked in the quarter will be recognized upfront with the remainder recognized ratably over the time on the contract.
Finally, I'd like to remind you that our guidance is subject to various important risks and cautionary factors referenced in our call today.
And in today's earnings release.
For Q1, approximately 75% of revenue will be recognized from deferred revenue and scheduled multiyear billings approximately 10% as expected from contract renewals with the remainder expected to come from net new business closed in the quarter.
For Q1, 2021, we expect our GAAP revenue in the range of $104 million to $107 million we.
We expect our non-GAAP operating loss to be in the range of 21 million to $80 million and non-GAAP net loss per share of <unk> 25 to 22.
This assumes 67 5 million weighted average shares outstanding.
For the full year 2021, we now expect GAAP revenue in the range of 555 million to $565 million, we expect to exit 2021, with approximately $625 million of IRR, which translates to over 25% year over year growth.
We expect our non-GAAP operating income loss to be in the range of a $5 million operating loss to a 5 million dollar operating income our non-GAAP net income loss per share is expected to range to be in the range of a net loss per share of <unk>.
To net income per diluted share of <unk>.
Our non-GAAP net loss per share assumes $68 5 million basic shares outstanding while our non-GAAP net income per diluted share assumes 72 million fully diluted weighted average shares outstanding.
Finally, we expect an effective tax rate of 20%.
In summary, I'm excited about what's to come in 2021, we believe the operating framework, we are putting in place sets us up on the right course for years to come we have a strong product market fit significant market opportunity a powerful business model and a strong financial position with over $1 billion of cash on the balance sheet.
And with that we'll open up the call for questions operator.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is on the question queue. You May Press Star two if you would like to remove your question from the queue for.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please limit yourself to one question and re queue for any follow up questions.
Our first question comes from Michael <unk> with Keybanc capital markets. Please go ahead hey.
Hey, guys I'll try to keep it to one and I'll keep it high level and from Mark Mark.
Could you talk to the first time in a while so so welcome.
Thanks, a lot Michael.
Hey.
I was wondering if you could just talk about your view of the broader data science market right, now and where you're thinking about where <unk> is fitting in where you feel like your strengths are and where you feel like there's room for expansion in terms of fitting in strategically into that market.
You bet, Michael and Gosh I feel like my opinion today is a little more informed or maybe a lot more informed than it was 90 days ago, you talked to a lot more customers a lot more partners.
Including the Hcl partnership that we announced last week.
And.
Here's the here's what I think Michael I think people love our technology for what it has helped them do and in some cases that deliver more valuable output for their enterprise than they were doing before.
One hand on on.
On two separate keyboards different versions of excel trying to gather some insight from the proliferation of data.
So so as I talk to customers they want they want to be able to consume that innovation.
Everywhere, because theyre moving data into snowflake data warehouses, and moving data into public cloud, even the big banks are going to start moving data into public cloud over the next few years.
So they want they want to I mean.
The hard questions I'm getting is we want ubiquity of Av.
You have used in your innovation and and I think there's tremendous opportunity or the other thing I hear from customers is.
Honestly I heard this a lot in.
Uh huh.
Network security.
Far too fragmented marketplace, the supply chain of vendors as a hot mess.
Some customers.
Deal with upwards of 40 or 50 vendors 10 on the way in any year tend on the way out and they want fewer vendors they want less complexity. They want a lot more automation that's quite a bit.
And so I think like I said on the script, Michael I think theres permission for us too.
Average our relevance from up from a tech standpoint, and really build machines like capabilities in both delivering organic innovation, but also integrated integrating inorganic innovation as fast as we can while transforming the business right and and and evolving our go to market and as Youre hearing.
Oh the team here is trying to do all of this at the same time and.
It's certainly no trivial task, but not not a lot of our first goat rodeo is here so.
Really well.
Really really pleased with the progress that we've made so far I mean, just a tremendous amount of really positive progress.
I think the team that we have here is as excited about some of the some of the stage appropriate changes that we're making and really try to do everything that we can based on our experience.
<unk> taken advantage of this massive opportunity because I think in three or four years there's.
There's going to be a couple of very large domain vendors in this space and it's going to be.
Maybe some on that that that does the best job of delivering the right customer experience at the right cost.
With the right sense of urgency.
And and do it in such a such a way that you earned permission to come back again.
Alright I appreciate it.
Yes, sure. So it's a welcome and I'll keep it to the discipline on just one question. Thanks very much.
Thank you Michael Thanks, Michael.
Next question comes from Brent price, one with Piper Sandler. Please go ahead.
Thank you I guess first off from Mark here really encouraged by your ability to continue to attract the quality of new hires here Dean Matthew Jeffrey Bill now assure us today, a great job in a short period of time, attracting high quality leaders. My question is for Kevin here I wanted to.
Circle back on the AOR guide, which does imply I think 27% are gross I think that is.
Above the 25% outlook that you guided to initially last quarter rarely do we see CFO has raised guidance, particularly after a mess and so.
Just given the leading metrics on our P O looks pretty weak here what gives you confidence after missing any of our outlook for Q4 that that warrants a slightly more bullish view on the AOR growth going into 2021, yes, what am I missing here.
Yeah, Thanks, Brent happy new year, good to talk to you.
Look I mean as as we look at.
Where we're sitting.
For the year relative to the renewal base, we have customer conversations and frankly more importantly, some of the stage appropriate changes that we've made you mentioned introducing dean in and Matthew to the team in.
What they will bring to the organization is.
They pushed through their changes through their organizations.
We have confidence that we'll exit this year.
At 625 $625 million on IRR.
Brent if I could just say one thing firstly, thank you for the thoughts I appreciated your researcher later this week.
I won't even know definitively it's not just senior leaders right as you know well it.
It takes it takes a village to get something really important like helping customers transform their businesses and so I'm just.
Very humbled by the volumes of people that are coming up and down the organization.
To do things like Python automation for customer success to do things like deals desk formulations, so up and down the machinery that people want to come to a place where there's clarity of purpose and where there's just a tremendous opportunity with a clarity of purpose.
To go do something fantastic and that's what we think we're going to do.
Great well, thank you I'll leave it there.
Thanks Brent.
Next question comes from Jack Andrews with Needham. Please go ahead.
Well good afternoon. Thanks for taking my question I wanted to touch on your the way you view your ecosystem partners, particularly as it relates to the Hcl relationship to me Hcl is accompanying the engagements with them technology executives, rather than I guess line of business users and so I just wanted to.
Better understand how do you think about the different personas that you need to address.
This ecosystem is it is it should we think about multiple personas now in terms of maybe line of business versus a data scientist vs as well.
Yeah, well, let me tackle the last part of your question because.
Jack because I think very thoughtful questions, but thank you on.
On the persona that we're we're targeting I think they're changing I think the persona.
On the knowledge worker that is making decisions on.
On on on business transformation.
They're like my 25, and 28 year old daughter knowledge workers engineer or sales person, they're making decisions and and there. They are interacting with us electronically interacting with thoughts on our website at end and trying trying to so I think we've got to evolve the persona that we target and.
The way that we go.
Target them.
The CFO is another example of.
I think in the past.
They have tried to deal with knowledge workers at a lower level, but absolutely see as cfos are making Budd.
Budget decisions on transformational priorities and they're looking to big domain partnerships that the first part of your question.
To help them with that so firstly I breakup partnerships into two different section two different categories one.
Distributions slash influenced partners.
Super important for us that I can tell you that we purposely weighted with Pwc just to make sure that we we've built the capabilities within <unk> and then out in the field to be able to federate. This relationship and make the most of it as well as have the right kind of resources that can walk into a CFO appointment.
With a partner from Pwc in Zurich, and be part of a $100 million transformation deals.
So I think I think a few.
A few things on pack there with Hcl I think this is just the beginning of the partnership with Hcl and I think any transformation. That's happening these days is happening.
Of course across the executive team book, absolutely with the support and partnership from the CIO.
And so Hcl has long done very well in the office of the CIO, but but but if you think about the the work.
Projects that they are integrating and right now in becoming a large and growing part of their business. This digital transformation has taken beyond the office of the CIO and it into the functional executive leadership so.
I think these these give you a representation of what the partnerships distribution partnerships might look like in the future Jack that theyre going to be a large theyre going to be domain tier one and we're going to make sure we build capabilities with our teams to be able to work with these important partners and influencers.
Secondly, we've got technology partnerships like we have with Adobe like we have with Snowflake again customers are open to multi vendor solutions. They want the integration of those solutions to be seamless and guess what they don't want to do any work on that regard they want their vendors to abstract the complexity.
So absolutely share Miller and her team are working with Dean on the sales teams to identify the kind of partner the customers are asking us to integrate with so that the multitude of connectors that we have the multitude of API as we build and the software developer kits that we built down the road.
We will make us a really easy company to partner with and do business with the net.
That's the future state of what customers are expecting.
Absolute integration and specific business outcomes. So I appreciate the question Jack hopefully that debt.
It was a comprehensive answer.
Hey, guys. Thanks for your perspective.
Next question comes from <unk>, sorry, with William Blair. Please go ahead.
Hey, guys. Thanks for taking my question.
Markets are going to be on.
On Big fan.
<unk> of the space on why you didn't Palo Alto, but but just I guess, a tougher question here analytics since historically never been sold.
My partners that much like system integrator partners sure, but not the partner model that was employed at Palo Alto.
Right.
We're bringing on a sales team that is very much Palo Alto and a bar distributor sales team so help us on investors because questions come up.
Other times understand how that transition plays out like how do you get someone who used to get to sell to vars and CDW and westar.
West on and we can pick all of them.
Ex Vmware other Palo Alto partners.
To committing to driving enterprise sales growth with large organizations the complexity of what analytics is.
On that approach I, just love to understand a little more color on how you think about that and how that plays out over the next.
Again.
In the next couple of quarters. The next 24 36 months.
Yes.
Yes.
Thank you so much for the question appreciate it.
Yes.
Agree to a certain extent I think this space is a relatively young space I think that's why I'm. So excited about the opportunity that we have in front of US I think we're in early innings. As this plays out and I think we've defined the Tam. These days in terms of tens of billions I think in the future sometime down the road not too far down the road it'll be expressed at hundreds of billions.
And and it's going to come with <unk>.
<unk> technology that gets proliferated and Federated, so that it's easy to consume and it adds value for customers and that value is a priority for that business. So that they spend money this quarter not two years from now on that innovation.
And it's going to come with it.
Fluids of key domain partners at almost every technology that I've been involved in networking.
Certainly 25 years ago, Cisco in the application delivery controllers and security.
Partners play a variety of roles. Some are just pure distribution, we don't need distribution partnerships, we saw software.
On the distribution part of the pure distribution partnerships that I see from the future, they're going to be the likes of Amazon, Google, Microsoft because they're going to facilitate our customers are using.
Using our innovation and their environments, where they have data.
<unk>.
I think I think.
So the kinds of partnerships that will continue to grow on the other regional partnerships because data is continuing to grow both on and it's only getting more obvious that the companies that are going to have some success.
Getting deterministic.
Hum priorities from their data are going to be the more successful ones.
So listen I sure Hope you give me more credit.
They do.
Listen.
I don't even on a book.
But we're not we're not just hired a bunch of we're not just hiring a bunch of power security sales people.
On the they'll represents the minority of the salespeople, we I'd rather you would go on.
I'll I'll share with you.
And the extended team at the analyst day, the volume of Inbounds, we're getting from people all around as quite humbling and Ed you know what I'm, mostly looking for is people that have stage appropriate experience.
In.
And in an area, where technology is being used to provide important prioritize solutions for customers and.
And then training the amazing team of people that we already have here, we've got some terrific people all across the board and just giving them some stage appropriate training.
Get them on their journey. So so so it's not going to happen overnight, but but but but definitely feel like partner influence will become more and more important and overtime.
Over time.
That will show up in the productivity line of our salespeople.
And I appreciate that right I think that's totally true.
I look at your customers like Mckinsey and BCG and pain, and I think about the strategy and you do and how they are all massively etc invested in alternative it makes sense that the partnership is going to be different.
But it's great just to hear color on your thoughts on how that might change right. It's a different partnership than a bar and I think you spoke to that so I appreciate that I just want make sure I was clear so absolutely not negative at all but there is a shortage.
I'll also operated and Altera ex operator, so I just want to be clear, but there's no. Appreciate it appreciate the color. Thank you I'll jump back into queue.
Yep.
Next question comes from Pat Walraven with JMP Group. Please go ahead.
Oh, great. Thank you and Mark congratulations on hiring Suresh. This at this question it'll be in that vein I.
Thanks.
Yeah, that's it but it should be a good one it will take them.
Is it fair to say that that Altria ex is sort of late in getting to the cloud I think that's sort of debt.
That's a pretty common view, among investors and and if so where where does that hurt and where does that maybe not heard so much.
Well listen I think I don't like to think of it Pat in terms of earlier late honestly I think if we had a rotating to the cloud a year ago, we'd be in trouble.
Because the vast majority of large data.
Uh huh.
Our largest customers.
I was talking to one chief data officer of a tier one bank.
In the U S. A few weeks back and he said that 1% of his his data is in public cloud it's going to go there over the next five to 10 years, maybe we'll go fast depends on a lot of things.
But he was asking for me to help help our innovation teams spin up the capability.
So that it can be.
Delivered in a <unk> or from a browser and so I think what ultra ex chose to do and I'm not going to second guess Dean and the team's decision was to apply innovation to the amazing set of tools that we have that we're transforming.
The output for data science citizen data scientist and and and and as I sort of quickly learned from customers and from analysts a technical analysts I spoke with.
Hum.
It made it very clear to me that.
Flexibility is got to be something that we got to get better at and.
And removing friction and also being able to spin up in those environments or in a multi tenant SaaS environment, absolutely will be priorities, you'll see dates.
And then on roadmap from Suresh in a few months at the analyst day, So I've been spending a lot of time with them on that.
Recently now so we're going to the cloud because our customers have told us they are definitely going to the cloud and our.
Our plan is to.
To be fully functional.
At the time when the market is mature and I think that's still some time from now.
Great. Thank you for that perspective.
Yeah.
Next question comes from quite correctly.
Sorry, if I, if I can just debt, but I will tell you the hiring of <unk> was a targeted higher we look for companies that had made the journey from on Prem multi versions of their other of their other different sort.
<unk>.
To make it more available to be more friction free and low.
What I found with a lot of candidates, but gloomier with fresh was the involvement that he had in a number of products from Adobe, who really is I think Sean to new on the team did the sales to this day the best job of migrating. This this journey and I think we have a lot to learn from Sean its new and certainly I'm looking forward to learning a lot from Suresh.
On this but I think youll be a game changer for us.
Tyler Radke with Citi Bank with Citi. Your line is live you May proceed.
Hey, Thanks, Mark a question for you you talked about investing more specifically in product development in 2021 and I'm curious.
If you could talk specifically on the areas that youre going to be building out and do you think there were some maybe product issues that contributed to the quarterly performance and then I just wanted to ask from a packaging or pricing perspective.
Now that you've been in the seat for a couple of quarters or are there any changes that you're contemplating making with regards to pricing. Thank you.
Thanks Tyler.
The first one sorry, the second one first.
Absolutely, we look at pricing every year and Kevin.
I was running a tiger team right now just taken a hard look at.
Ways that we can demonstrate more flexibility and reduce friction in our pricing. So we're definitely taking a look at that.
And.
Expect more again expect more at the analyst day Tyler on that.
In terms of do we see the impact in the quarters from a product I don't think so I think a lot of companies were affected by low spending habits and I think the thing that particularly hurt us that we've talked about before.
As you know and.
In retrospect, we probably rotated a little too heavily in mid market at the at the absolute wrong time.
It turned out that a lot of those hires.
Were before Covid.
And and and.
Ed just on the board at the time and supported <unk>.
Part of the notion, but I wanted to invest a lot more in.
<unk>, which is what we're doing now and I think it's still really repurposing. The resources. So that we've got the right resources in front of the right customers at the right time, delivering the right outcomes.
And that's where.
Youre going to see and again this will be measured in productivity and sales productivity, but youll see youll see us.
Improving throughout the year on there.
Yeah.
Thank you.
Our next question comes from Steve <unk> with Wedbush Securities. Please go ahead.
Hi, gentlemen, thanks for squeezing me in I appreciate it.
And that is to be able to chat with you.
So my question is from Mark.
Mark Rewinding a little bit.
On to summit Dean's commentary over the last 12 to 18 months.
Dean had talked about.
The need for <unk> to continue to transform itself.
To becoming a provider of other.
<unk> solution.
You know as opposed to.
Analytic malware.
And I'm not characterizing altra ex that way is an analytic middle of our company, but but dean did speak a lot about.
About the work to transition to be a complete solution company and to that end we.
We saw and still see altra ex doing work in the area of data science solutions to operationalize data science and now we see ultra ex doing work on.
Analytic process workflows, and embedding yourself in and workflows, almost all on Informatica, but I wouldn't want to compare I mean very self serve product that serves citizen data. So very very innovative that way. So I'm wondering kind of which of these pivots do you see as being most <unk>.
Metal on the short term or long term and are there more pivots to come and you've spoken about cloud a little bit how does cloud play into that as well. Thank you very much you bet.
Yeah, well, thanks, a lot to unpack there Steve but.
I think dean previous comments about continuing to transition transform.
The business and trend more towards a platform company.
We made we made moves to.
Move on that path.
Developing.
New products.
Connect and promote and analytics hub.
As well as making a lot of refinements to the innovation over the last year, but but but I think again.
So much has happened in the last year that has caused at least every executive I know and talked to on a regular basis board members' Ceos.
It's just it's just a very different world and the construct of what it's going to take two to be a successful business partner on the future.
It's going to depend on having more capability in our platform, especially in a fragmented market like data analytics.
Data science and advanced analytics.
ETF.
Yeah. So.
So.
We're really focused on it.
In the near term focused on on capitalizing on the really important outcomes that we deliver for our customers.
Debt debt.
GAAP represented by some of most of them too.
CFO yesterday morning.
From a large consumer packaged goods company and.
He talked about some savings somewhere between 101 hundred $50 million with their transformation initiatives largely writing on old tricks.
So we're going to capitalize on on.
Building a library of these either workflows or specific business outcomes that can be replicated either in an automated way or it can be replicated with.
<unk> group of customer success managers around the field working on working closely with the team of resources that Dean is going to build to take advantage of the new dynamics from the new persona. So.
I sure Hope you believe that.
The work that's gone into building the fiscal year plan to putting new resources in the right Places and then rolling this out over the last three weeks to the extent of three or four weeks to the extended team and a series of all hand sessions or sales kickoff, where all company kickoff.
I really feel like we're providing the context that our associates needs that our customers need it.
So I'd be comfortable about investing either staying with allscripts on the future or investing even more with us in the future.
And I think <unk> brings to the table with the ability to help us with this transformation to the cloud we have to go to the cloud because thats, where data is going and if we want our innovation to be able to access data there we're going to have to.
Deliver capability there.
And Suresh is really going to be helpful. There not just him as one person, but him as a leader.
And our recruiter.
Awesome well, thank you very much mark.
Thank you. So I. Appreciate the question next question comes from Derrick Wood with Cowen and company. Please go ahead.
Great. Thanks, Thanks for taking my question, Mark you mentioned that you're making changes up and down the organization and we've heard about some of the leadership New leadership you put in place.
I wanted to get a sense for how much change is taking place at the field level.
Perhaps what degree of churn or change is taking place at the sales rep level, what are some of the bigger changes.
Dean will you be making on the go to market side, and whether you have anything to share around how much growth in sales capacity, you're striving for by the end of the year.
Yes.
Well thanks for the question Derek.
Yeah.
Think any technology company that has that is growth.
<unk> exhibited growth over the years.
I would submit that everyone of US takes a look at things like the sales construct and comp plans and all that stuff and it makes necessary tweaks, depending on what we've learned in the last year.
There was a there was a culture of doing that here at ultra ex.
I bring a little more on operational rigor focus because I think that's necessary at this stage and beyond really to be able to harness eventually thousands of people to do the right things before and after the purchase orders cut.
The double from the details there and having people with stage ex periods.
Really matters.
And so.
I think I think you're always sort of tinkering and always developing and always evolving and so.
What I've seen happen in the past is you really start to see.
My daughter, just texted to me Thanks Monica.
You really you really you really have to you really have to take a look at.
Living on the details and I think part of what makes.
The information I get as CEO here at <unk>.
Stating is we run a lot of the business on old tricks and so really getting a lot of insights from all the different data sources that our sales teams use here.
To be effective but at the end of the day.
A year from now honestly I fully expect.
To be.
To be looking back at.
Good successful year transformation.
Okay. Thanks for the color.
Thanks Derek.
Next question comes from Chris Merwin with Goldman Sachs. Please go ahead.
Okay, great. Thanks, so much for taking my question.
I wanted to ask about customers, obviously, you called out in the script that it was a little bit lower than what you typically have seen historically, but that we've seen in part in <unk> on the sales team is focusing on expansion with larger customers can you talk a little bit about why that is the right strategy right now.
And how you're incentivizing the sales force to that end and just how we should think about that showing up on and the metrics on a go forward basis. Thanks.
Yes. Thanks, Thanks for the question, Chris I'll take the first part of that and then maybe hand it over to Kevin for some more color I think.
Here's my view on customer count it's important.
But right I mean, it's important that we're always adding new customers because new customers.
On the strength of those relationship and the strength of the outcomes that we deliver from those customers, we will grow our business.
I think as I mentioned earlier, however at the beginning of last year, we really were focused on mid market that has a high volume of customer count.
And.
Not not not coincidentally the mid market was I think a little.
Harder hit by by Covid, which is why we re appropriated a lot of the resources, but I also think the final thing for Q4 I think this team just from what I know the folks that I talked to pretty much every day across the field because they are focused on closing closing out Q4 closing out with the comp plan that they knew.
The quota that they knew.
And getting to accelerators.
And a little less so on adding new customers.
Yeah, and Chris look I would I would add.
Two pieces one.
Focusing on the global 2000, where we see net expansion rates.
North of 132% as well as <unk>.
Much lower churn rates I think just makes a lot of sense, we've talked for quite some time about continuing to focus on those accounts that have the greatest propensity to spend and I think if you look at the larger <unk>.
Organizations debt.
I think we are going to see better targeting of.
There's just I mean that is the lion's share of the opportunity that we're going after and so while it may result in a slower total customer growth over time, I think it actually represents a much more significant opportunity to the business and more and more and more importantly, I think in more tangible opportunity to the business.
Yeah, great. Thank you very much.
Thanks, Chris.
Next question comes from Rishi jewelry with D. A Davidson. Please go ahead.
Hey, this is Philip on for Richie Deloria. Thanks for taking the question. So I appreciate the commentary on full year outlook. I was just wondering if you could dig a bit deeper on some of the assumptions at play there on revenue on the macro environment. So if the last nine months of 2020 will be providing a relatively easier comp and just trying to balance that with.
Your expectations on the improving macro environment. So just any incremental color you can share there on whats driving your revenue growth expectation for the year would be would be really helpful.
Yeah, no that's great.
Question appreciate it so let's take I guess two pieces I want to go back and just kind of reiterate how we're thinking about.
Separate and distinct from revenue because I think there is separate dynamics there.
As we think about <unk> again, we.
We have the obvious benefit of understanding what the renewal base looks like going into the year, we clearly have.
Historical net expansion rates and what that typically looks like and then as I mentioned the go to market changes that we think will be meaningful accretive meaningfully accretive as we go through the year I think as we continue to focus on driving ACB in annual value within our accounts from a revenue.
Perspective, if you think about the inputs and what drives revenue.
One of the sensitive inputs ultimately is contract duration as I mentioned in my prepared remarks, I think we will probably continue to see contract duration pull in a bit.
And that ultimately will drive lesser revenue, so I agree with from a comp perspective.
Just looking at revenue in a vacuum.
It probably has an easier comp in 2020 than it was 2019.
But I think what youre going to find from a.
Kind of a normalized underlying growth rate that the business is going to accelerate.
Very helpful. Thank you.
Philip.
Next question, Brad Sills with Bofa Securities. Please go ahead.
Oh, Great Hey, guys. Thanks for taking my question.
I wanted to ask a question on.
Hey, there how's it going on Mark wanted to ask a question about.
<unk>.
Visualization cycle.
I know that this is just one use case for all tricks, but it is a key use case.
Sales force is talking about wall to wall deployments of tableau, Microsoft is seeing power B I expansion opportunity. So it seems like that's a trend within the visualization industry.
We're seeing more of these big expand deals I guess, what's your observation mark on that on that industry in that cycle and and.
How would you grade all tricks in terms of getting into some of these bigger expand deals that these companies are talking about thank you.
Yeah, Brad I think.
The expand deals that we're focused on.
I think.
But there is one layer in at a very very like I said before fragmented. So instead of vendors in the supply chain of what goes into applying data science and analytics to two the disparate data sources that you have.
I think what we're focusing on is just selling those meaningful.
That people are prioritizing because I'll tell you theyre not prioritizing campus, one campus wide land land upgrades or Wan upgrades.
They are not prioritizing new laptops for everybody, they're prioritizing things that are going to help their business be more successful now and Thats what were really focused on doing we're going to partner with and we've been partnering with tableau for a long time, they make a great great. This layer in most of our most of our customers are great tableau customer.
We're thankful for that integration.
So I think the opportunities to do more on this space.
Going on a little bit of a different direction, Brad, but we're really not ready to talk about that yet we will for sure talk about that in the spring.
Yeah, and Brett I'd, just add a couple more points of perspective.
Visuals and visualization is fundamentally driving.
Descriptive analytics and when you think of some of the core advantages of the Altra ex platform. One of those is automation and the other is that we connect to everything and so being able to automate your analytic.
Pipelining, if you want to describe it that way or.
Really automating analytic outcomes and informing downstream systems to make decisions.
Generally as beyond visualization, and so a lot of the use cases and the value that we're providing to customers.
Is it just that its business sense side its been some net business outcome and very small part of it is actually visualization.
Got it thanks, so much guys.
Yes, thank you very much.
Thank you Brad next question Mark Murphy with Jpmorgan. Please go ahead.
Oh, Hey, Theres pendulum.
On behalf of Marc Hey, everyone. Thank you for taking our questions.
Kevin quick question following up on.
Chris moments question is it possible to understand the opportunity within that U K in terms of what percentage of revenues. It today, what's the current penetration within the base of Cheesecake customers that you have today and also does it mean.
Focusing on GDP doesn't mean, an over indexing on investments in international regions going forward.
Yes, great question pendulum and happy new year to you as well look I mean, we have just shy of 40% of the global 2000.
I think I mentioned on the prepared remarks, we have 763 of those accounts.
Net expansion rates in that cohort of customers is a 132% so quite a bit stronger than what we see in the overall customer mix and look we're not just only focusing on global 2000, but the largest customers around the world who have the largest propensity to buy and expand and so I think if you look at it and that person.
<unk> in contrast to kind of what a more traditional standard on enterprise customer would do.
I mean, it's just it's kind of an obvious ultimate decision there in terms of your question about international.
Our orientation, the global organization to really focus on those large opportunities where they exist internationally, we will invest heavily in capturing that opportunity.
Understood. Thank you.
Thank you.
Thank you we are out of time I would like to turn the floor over to Mark for closing comments.
Thank you operator in closing I would like to thank our associates partners and customers as well as their families from incredible support and resilience from 2020.
I expect 2021 is going to be the transformation transformational year that we'll look back upon a year from now maybe two years from now on reflect in amazement as to just how far we've come.
For our customers.
Our partners associates and for our investors the market's moving very fast and we plan to seize the opportunities in front of us and solidify our position as the leader and a winner in this very important space.
This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.