Q4 2020 Pros Holdings Inc Earnings Call
Greetings and welcome to the Pros holdings fourth quarter and full year 'twenty and 'twenty earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation and 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.
I would now like to turn the conference call over to Glenn.
When we did the.
Senior manager of Investor Relations.
Thank you operator, good afternoon, everyone and thank you for joining US our earnings press release, SEC filings and a replay of today's call can be found on the Investor Relations section of our website at pros dotcom.
With me on today's call is Andres Reiner, President and Chief Executive Officer, and Stefan Schulz, Chief Financial Officer, consistent with how our global teams are operating today. The three of US are hosting this call from our homes.
Please note that some of the commentary today will include forward looking statements, including without limitation, those about our strategy future business prospects and market opportunities and our financial projections.
Actual results could differ materially from such statements and our forecast in particular, there is significant uncertainty around the duration and impact of Covid.
This means that results could change at any time and the contemplated and impact of Covid on the company's business results and outlook is a best estimate based on the information available as of today.
For more information please refer to the risk factors described in our SEC filings.
Pros assumes no obligation to update any forward looking statements to reflect future events or circumstances.
As a reminder, during the call we will discuss non-GAAP metrics reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent to which available without unreasonable effort are available and our earnings press release with that I'll turn the call over to you Andres.
Thank you Belinda good afternoon, everyone and thank you for joining us on today's call and.
As I reflect on the past year I'm incredibly proud of her amazing team and how we support it are customers partners and each other despite.
Despite the impact of Covid on our business and our customers. We grew our subscription revenue by 17% in 'twenty and 'twenty.
I'm also pleased to share that we exceeded the high and over guidance range across all metrics, which stephane will cover in more detail later.
These results are driven by our people and culture, which is defined by our values of ownership and innovation and caring for each other our customers and our communities.
In 'twenty and 'twenty, we kept each other safe and supported each other through personal challenges, we stood by our customers and partner with them through the challenges they face and rapidly delivered innovations to help them come back stronger.
Innovation is core to our DNA and last quarter, we added many innovations across our platform, including next generation plug a bull AI models and self service capabilities to accelerate adoption.
We see more than ever that the ability to power and omni channel digital sales experiences and imperative for businesses today.
Industry analysts expect it by 2025 80 per cent of B to B C. L seen interactions will occur in digital channels.
Pros platform is uniquely positioned to deliver and omni channel digital sales motion and we're focused or innovations on making our platform even faster to adopt by our customers.
For example, our latest smart see PQ innovations make it even easier for customers to accelerate their digital sales transformations with self service capabilities.
And this provides businesses with greater flexibility to adjust and implementing go to market strategies and real time and deliver a better customer experience innovations like these are why this past quarter carrier selected our platform to power a frictionless digital sales motion.
Speed to market has never been as critical as it is today and digital marketplaces.
Our latest platform innovations enable customers to develop test and deliver AI powered dynamic pricing at scale and in real time.
Capabilities, such as these are Y and leading companies like Wesco are adopting our platform.
And Fortune 500, electrical distribution and services company merge with Anixter last year and pros customers. Since 2014, Wesco recognize the means value of our AI powered omnichannel platform and plans to adopt pros across your global enterprise to deliver upon their digital growth.
Entity.
The strength of our AI powered platform deep customer partnerships in the ability to deliver a frictionless sales experience meet price the choice for industry, leading companies like yes Seth.
The global chemicals manufacturer is upgrading to our cloud technology after almost a decade of partnership to deliver a better customer experience with dynamic market based prices.
And we're encouraged by the continued strong demand for <unk> solutions as companies embrace the rapid changing market.
For the travel business, we believe 'twenty 'twenty, one we'll see a continued increase in passenger demand driven.
Driven primarily by leisure and domestic travel, but not back to pre COVID-19 levels. The recent vaccine symbolizes and early step and recovery for the travel industry and we're pleased to see improved passenger demand and some markets.
Where technology is a cornerstone for new Airlines business and there's no better example, dinner and newest customer breeds Airways and innovative U S. Based startup breathe selected pros to power their revenue management strategy and drive their digital selling journey as your business comes online.
Fine.
This is a testament to the exceptional value of our technology and we look forward to partnering with Breeze and helping them successfully launched this year.
We're pleased to welcome carrier and Breeze, among other new customers to the pros family and continue to expand our partnership with existing customers new.
Now I'll share or 'twenty 'twenty, one strategy before I close with a few highlights on our incredible people and culture.
This year, we remain committed on our mission of helping people and companies outperform by leading their digital selling transformations. We plan to accomplish this by continuing to execute upon our strategy of driving market transformation with or into and platform further leveraging partnerships.
To accelerate growth in delivering exceptional value and an incredible experience for our customers.
We will drive market transformation with our platform by ensuring the market understand the depth and breadth of our capabilities. We will continue to innovate to accelerate time to value and empowered businesses to create and deliver personalized offers to their customers across digital and traditional channels.
We're focused on further leveraging partnerships with commerce technology platforms system integrators and online marketplaces.
Last quarter, we launched her pricing solutions on the S. E T App center to make the power of pros platform more consumable than ever to the full S. A P ecosystem we.
We will continue to extend the reach of our market leading technology through our partner network in 'twenty 'twenty one.
We will build upon our customer experience and engagement teams amazing effort last year with a continued focus on delivering exceptional value and an incredible experience for our customers. Despite the challenges of the pandemic. Our team delivered a record number of go lives in 'twenty and 'twenty.
Most of which were completed 100% virtually and.
And further strengthen our customer advocacy scores.
Incredibly proud of or team and I'd like to thank John Alessio for all his contributions to pros and building and World class organization and wish him the best and his retirement Ste.
Stepping into the role of Chief customer Officer, Smart and Symantec, we're excited to have more and backup pros and he will be responsible for into and customer engagement platform adoption in value deliver as we scale, our business and customer base.
Masa thrilled to welcome Sherry lot and back to the pros family of senior Vice President of global beta be sales share.
Sure he will be responsible for accelerating market adoption of the pros platform and so organizations seek to transform into and selling experiences to meet buyers increasing demands.
And pros, we want a better world for all and are committed to ensuring that our employees can realize their full potential.
And were employee resource groups continued to make and incredible impact inside and outside of organization through community volunteering efforts in educational programs on diversity equity and inclusion.
We're also committed to our emphasis on helping our people learn and grow.
Or team completed over 10000, and training courses, ranging and topics from leadership and teamwork to mindfulness and communications and.
I'm very proud to see our team continued to grow in the face of adversity.
He break ignition of the amazing culture team has created together I'm pleased to share the proceeds received a great place to work certification.
We remain committed to ensuring that our employees can bring their authentic selves to work and an inclusive environment. So they can thrive and grow.
We entered this year passionate about realizing our vision to optimize every shopping and selling experience. We have the right people strategy and platform to growing captured this strong market opportunity in front of us.
As I close I'd like to thank our global team for their incredible passion and efforts toward toward vision, and making pros and incredible place.
Thank you to our customers partners and shareholders for your support of pros with that I'd like to turn the call over to Stefan to cover our financial performance and outlook.
Okay.
Thank you Andres Black Andras I'm also very proud of our entire team as we continue to execute and support our customers. Despite the challenges related to the pandemic that continue to persist.
I'll start by highlighting some of our fourth quarter and full year key metrics.
Subscription revenue was $42 $9 million up 5% year over year, while our full year subscription revenue was $170.5 million, which was up 17% year over year the growth and subscription revenue drove the slight growth and total revenue for the year, which came in at $252.4 million.
Our revenue was impacted by customers that were significantly affected by COVID-19, including some customers that declared bankruptcy.
As a result, our gross revenue retention for the year was approximately 88%.
However, absent the impact of Covid, our gross revenue retention would have been between 92, and 93%, which is consistent with the retention rate last year and the expectations shared last quarter.
Our recurring revenue as a percentage of total revenue continued to grow and was 86% for the fourth quarter and 85 per cent for the full year.
Full year non-GAAP subscription gross margins were 72% as compared to 73% last year.
The decline and subscription gross margins can be attributed to investment increases and our infrastructure and the reduced revenue from customers impacted by Covid.
Fourth quarter and full year non-GAAP total gross margins were 61%. This compares to 60% and the fourth quarter last year and 63% for the full year in 2019.
The decline and full year gross margins can also be attributed to the impact Covid has had on our total revenue.
Yeah.
Adjusted EBITDA loss was $4.2 million for the quarter, which was significantly better than expected.
The outperformance was driven mostly by additional cost savings realized during the quarter.
And we were able to improve upon our cost savings goals each quarter during 'twenty and 'twenty.
Starting in the second quarter, we initiated a cost savings program, which targeted savings of $13 million versus our original plan.
For the year, we ended up saving approximately $25 million.
Our trailing 12 months calculated billings decreased 18% year over year, which was a higher decline and the change and annual recurring revenue or a R. R.
The larger decrease was driven by certain one time billing events that positively impacted our 2019 calculated billings as.
As well as several customer contract restructurings in 'twenty, and 'twenty, which deferred billings and the future periods.
Our a R. R was $209.7 million at the end of the year and exceeded the guidance range, we set last quarter.
Our air or includes both subscription and maintenance contracts and the subscription component now represents more than 80% of our total E. R. R.
We generated $11.4 million and free cash flow during the fourth quarter.
Which resulted in full year free cash flow burn of $53.3 million. This was significantly better than expected as a result of our near record fourth quarter cash collections.
We were able to collect a substantial majority of payment deferrals previously offered to customers at.
At the end of the third quarter, we disclosed approximately $26 million and customer payment deferrals that were included in our accounts receivable at.
At the end of the year that amount had fallen to approximately $12 million.
Okay.
We exited 2020 with $329 million of cash and investments and have access to an additional $50 million through our unused revolving line of credit.
As previously mentioned, we have a line to a virtual first sales model and streamlined our organization along industry and geographic lines. We've also increased our investments and our revenue operations team, which includes and increased focus on sales and partner enablement.
Through this process, we reduced the number of quota carrying personnel to 51 at the end of the year.
This is a temporary decline as we have already started to build our sales team in 'twenty and 'twenty one.
We expect to increase the number of quota carrying personnel throughout the year and exit the year with more than 60 people.
Before turning to guidance I would like to discuss the continuing impact COVID-19 is having on our business.
The reduction and bookings and contract restructurings due to Covid during 'twenty and 'twenty will have an impact on our revenue growth rate in 'twenty 'twenty one.
While we believe we will grow this year many of our customers are still experiencing negative effects to their businesses caused by COVID-19.
This is especially true for our travel related customers do.
Due to the continued uncertainty and variability and the macro environment, we are not providing guidance for the full year at this time, but we will continue to provide quarterly guidance just as we did in 'twenty and 'twenty.
For the first quarter of 'twenty 'twenty, one we expect subscription revenue to be and the range of $42 million to $42.5 million.
We expect first quarter total revenue to be and the range of $59.7 million to $60.7 million.
We expect first quarter adjusted EBITDA loss to be between 12, and $13 million and lastly, with an estimated non-GAAP tax rate of 22%, we anticipate first quarter non-GAAP loss per share of between 27 and 29 cents per share based on an estimated 44.2 million basic.
Shares outstanding.
Lastly, even though we're not providing annual guidance, we do believe free cash flow will improve by at least $15 million.
Before I turn it over to questions I would like to mention that we will be adopting new accounting guidance for convertible debt.
Beginning in the first quarter of 'twenty 'twenty, one our convertible debt will be presented on the balance sheet at par value rather than the discounted balance. We believe this change will simplify our presentation and it will have no impact on our non-GAAP operating results or cash flow.
In closing I'm incredibly proud of our employees, who continue to remain focused on helping our customers. During these turbulent times.
Thank you for your support of pros and we look forward to speaking with you at upcoming events.
I will now turn the call back over to the operator for questions operator.
Thank you at this time and will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is and the question queue. You May press star two if you'd like to remove your question from the queue and participants using speaker equipment and may be necessary to pick up on your handset.
For pressing the star keys.
One moment, please while we poll for questions.
And our first question is from Scott Berg with Needham and company. Please proceed with your question.
Hi, This is Alex on for Scott. Thanks for taking my question, we saw the company announced several airline deals with the likes of companies like.
That had agreed to migrate to the crop on the.
And the clock the cloud right before the pandemic have you seen any of these travel customers and move forward with these migration plans yet are they holding off until their respective businesses improve.
Hi, This Andres, yes, we have seen as an example emirates tests.
And the cloud.
And our traveling customers can thing and.
Hey, Paul and migrations.
We also talked last quarter about Qatar and moving to.
Yeah. So.
Okay.
And that thing this time periods to come out stronger.
That's K recover.
Great and then when Youre looking at the composition of your ramping <unk> bookings from the pandemic lows are these deals more weighted towards on newer ecommerce ecommerce and usage for pricing optimization needs, where all the smaller bite size deals. The companies will have success and 2019 are these more traditional larger.
<unk> optimization deals of the company has been seeing.
Yeah, So we're seeing a little bit about we've seen some companies a and b to b start small and.
And when I drive value Inc.
Specific markets.
We've seen and also a lot of companies lean into this digital sales motion.
And wanting to start.
Solutions to help them drive success in terms of powering digital channels as well.
Great. Thank you that's all for me.
Thank you.
And our next question is from Rob Oliver with Baird. Please proceed with your question.
Great. Good evening guys. Thank you very much happy new year to everybody as well.
Stephane and Mike a couple of questions for you just on your comment around sales head count.
And so.
And I just want to understand what you said I think you said you took sales head count down into yearend, but expect it does that and the baseline and maybe go higher.
That's right.
A couple questions around that.
Was that a result of.
Sort of the confidence around the.
And the lighter go to market not needing as many salespeople and certain strict and verticals Oh, you know or a combination of those two.
And then as you think about the sales head count throughout this year.
And if you can give us some sense of how and how do you think that might might look towards year end. I think you said you were at 51 quota carrying now and if that would be skewed more towards the.
<unk> side, Thanks, I realize theres, a lot and there I appreciate it.
Well I'll take the last part first so yes it.
It will be skewed more towards the b to B side, and you should see progress as we look to go on beyond 60 people by the end of the year you should see steady progress.
And so on that as we go throughout 2021.
In terms of what we did and in the fourth quarter and you May remember, we did signal that we felt like our R. M. Our quota carrying personnel was going to come down a little bit. It it came down a little more than what we had signaled but that was all kind.
Kind of by design as we went into the into the fourth quarter started making plans about the areas. We wanted to invest in and and quite honestly. There were some there were some you know.
Our lower performers that were worried me down as well.
So when you combine all of those things we decided to go ahead and take advantage of the shifts that we're making are making the adjustments understanding that this may appear and look as though there are some questions about whether or not there's a need for those salespeople, but there are we just made the decision to execute on the on the changes and then growth.
Out the year, but the last thing I'll say and I did comment on this as well and my prepared remarks, we do.
Feel like Theres, an opportunity to be more effective and efficient and this virtual environment. We started to see that happening from the second quarter through the fourth quarter and we expect to see that continue into 'twenty 'twenty, one as well.
And that's that's that's really helpful. Yeah, and on that last point and and Andres and just maybe for you but.
So.
And I think you know getting those sales hires as you mentioned, Stephanie and you know towards the B to B.
She seemed right I know that the wake and the pandemic you know even that area has seen some some delays and I guess just wondering.
Clearly there is some confidence you guys have and and from a macro perspective, I think we would share that but are there things you guys are seeing right.
Right now when he shifts that your customers that would indicate they're starting to move.
A bit more and more rapidly on on the <unk> side. Thank you guys very much.
And so I would say look.
Part of US last year was building a foundation for long term growth, we felt very strong about coming into this year in terms and feel like JBT.
Abd.
And pipeline work and see.
And you see those increase quite well and that and really simplifying.
The market based on industries.
So that let's say and part of the strategy, but we felt.
Thank you.
Yes.
Sure.
Long term and it's something that we felt that important changes.
Thank you.
Yes.
In terms of the pipeline strength.
Okay.
Please.
Rob and hopefully you were able to get all of that.
Yeah, I think I got most of it a little a little bit of faith at the end.
Yeah, but I very much appreciate it that much better and better off but thanks. Thanks, guys I appreciate it.
Mhm.
And our next question is from Tom Roderick with Stifel. Please proceed with your question.
Hey, guys, it's Max on for Tom Thanks for taking my questions I just wanted to start by I'm kind of talking about the beta be success and how you said looking forward. This year, there's going to be a lot of work with partners and system integrators can you talk about how the S E T absent.
And then also like those partners.
Impacted sales over the last year and quarter I guess.
Yes.
Yeah. So in terms of our partner strategy, we've continued to expand across our multiple we talked about magenta and in the last quarter and this quarter and we talked about joining the S. E. T. App Center as you know, it's a pea it said very strong ecosystem within our customer base approximately 70% of our customers our friends at.
Ecosystem and that's our continued investment and over a decade into that ecosystem. We're seeing I would say a lot of our opportunities come from their SAP ecosystem, but in general what I would tell you is that our partner team is doing an amazing job and Ah and increasing number of the opera.
<unk> are coming from or a full partner ecosystem, which includes our Microsoft partnership, which is one of our strongest partners and the market as.
And as well as partner psyche y and Accenture, and Deloitte and many of our other and Si partners and more and more I would tell you and the majority of D elsewhere partnering with one of our strategic partners.
Got you and that's really helpful. And then thinking about airlines I know that.
The previous forecasts and Theres, no real new airline bookings and the first half of 'twenty, one I imagine that's still pretty similar but theres also kind of positive notes like Breeze Airways, signing on whether or not and they go live and the first half of the year will be seen later, but if you could talk anymore about kind of ex.
Vacation around that side that'd be great.
Yeah, no. So I think that the airline industry I think is still on trying to innovate in the areas of digital sales motion and as you can imagine assets come back online the more they can move every aspect of their business their contract their group and their passenger side to be 100% frictionless.
<unk> motioned the better so digital retailing is resonating a lot well and very well on.
And continuing to innovate on the latest generation revenue management solutions and I would say that at this point a lot of airlines are waiting to see a day the passenger volumes continued to improve.
And they did see with the rollout of the vaccines and initial improvement as I commented in my prepared remarks, but predominantly it's been.
On the domestic side and leisure travel.
And and we expect that to gradually improve I would say back half a day year, we should see a semi.
And the improvement, but in the first half I would say travel is still going to be little bit better than last year, but not not a significant improvement.
Great. Thanks, that's all from Inc.
Yeah.
And our next question is from Jackson Ader with J P. Morgan. Please proceed with your question.
Great. Thanks for taking my questions guys on the.
First one is just maybe a little bit more color on that.
And the expectations for our.
Growth in 'twenty one.
Not necessarily looking for obviously for guidance, but just.
How should we think about the relative kind.
Kind of growth or or or strength between airline and b to B and then and also as you think about maybe the mix.
M <unk>.
Between renewal bookings and net new bookings.
How that should shape up here in 'twenty one.
Yeah, I'll, let <unk> comment on the the new and renewal, but you know we are as I said and in my prepared remarks, we do expect our overall business.
And <unk> to grow.
And in order for us to be able to do that a R. R has to has to grow as well as you probably already know of.
And and B to B will definitely be the driver to that we're not at this point and time planning on a O a significant recovery in the in the travel space at least as we're planning for 'twenty and 'twenty one.
And I think the reason for that is we're going to wait to see more momentum building not only from a passenger's perspective, but also from a from an investment perspective, and so as we start to see that then we'll start to book.
Book to more of a of a travel component to our growth plans.
But our growth plans are primarily driven by a part b to b.
Okay, and then Andres.
On the on the mix between kind of net new and and renewals and then I just have one quick follow on.
And so so I would tell you last year or next and and it's been pretty standard throughout the year. So it's about 50% is new versus existing and.
That's maintained I expect that to continue to be similar this year I would say, we have a pretty strong migration pipeline and and we've continued to see success last year, we expect that to continue this year as well it said pretty robust net new on.
On the B to B side, obviously.
Okay, and then the follow up on on gross retention.
And I appreciate the color on the difference between Covid impacts and and non COVID-19 impacts with the with the retention range, but.
And that 92% to 93% range is still kind of low I think what pros would have expected a couple of years ago kind of closer to the mid nineties.
Is this just a function of the mix continuing to shift more to be to be or is there something else that debt.
And may be missing.
Well, Yeah, I think that's true. We've we've said that you know overall, we were and the mid nineties and travel was going to be a little higher than that <unk> was going to be a little lower than that so theres, certainly some of that and and when what you're saying.
But but I would tell you that you know we we.
We do see a mid nineties and as we get through this type of of of and environment that we're in we do see us getting back to that in the future I'll be honest I don't know that we'll see it you know quite ready quite yet and 'twenty 'twenty, one, but we do see getting back to that mid nineties as we get to kind of get back to that same.
Mix of having a travel and and B to B component, but yeah to your point no question that that would be to be it's been slightly lighter than the than the travel component.
Okay makes sense. Thank you.
Thank you.
Yeah.
And our next question is from Chad Bennett with Craig Hallum. Please proceed with your question.
Great. Thanks for taking my questions. So Stephan maybe for you just and in terms of giving us and update on on where you ended up a year and in terms of.
Contract amendments or modifications and.
You know where where we ended up if if you know I think in the third quarter, we around 18 million at that point, maybe I'm wrong, and maybe I'm dating myself, but just kind of where we are there where we ended up.
Yeah. So.
Yeah, you're right you know I commented last quarter on on three different components I talked about you know the amount of AV billings are already and say receivables that were deferred.
And then also talked about the impact on.
You know our bookings had affirmed from a from the Covid environment and then I also mentioned the impact on revenue.
The only one on updated and Q4 was the receivable deferral I talked about it going from 26 million down to 12, because we had a really good strong collection quarter in the fourth quarter, but looking at the other two metrics. Those stayed about the same. So therefore, I didnt really provide and uptake because what we were kind of projecting at the end of the.
And third quarter ended up being what ended up happening so I talked about a bookings impact of around $25 million and and that's the that's the area that we landed for the full year and and the same thing.
On the impact on revenue itself I had talked about $18 million and the third quarter and that's the that that that that estimate is the same as we ended the year and Q4 GAAP.
Got it no I appreciate the update there and so if I look at just and in terms of.
Thinking about this upcoming year and growth.
You know and and I know.
You know there there's been some like you said modifications and and hopefully.
And so we kind of recoup some of that and and and billings and cash payments or are back to normal, but if I look at recurring billings and the quarter.
I mean, they were they were down.
Mightily.
You know like 30% plus year over year and for my math is right and.
And if we just do the math on your first quarter guide and assume some expectations on deferred Rev seasonally and and so forth. It looks like they're down again, how do we unless youre seeing a major you know on the first well.
And well month, plus or the first quarter of the year, a major rebound and bookings how how do we get back to.
Not only overall revenue growth, but specifically subscription revenue growth.
Yeah.
Well I will tell you that and let me start with the back part of your question and then and get to the front part of your question.
You know, what's going to drive growth in 'twenty and 'twenty, one is going to be subscription revenue services.
Services will play a part but subscription will be the largest component.
You know when you look at calculated billings and and I'd be remiss, if I didn't talk about some of the timing impacts that are there and and I wanted to call out in my prepared remarks that the delta that we have between calculated billings and a R. R. Because to your point calculated billings looks far worse in the fourth quarter than what you saw on a R.
<unk>.
And you May recall, we had some really positive.
Events that occurred a year ago that are having a negative impact on us now and the vast majority of the decline that 30% decline you're talking about has to do with timing now there's still a component of the reduction that is because of the because of the COVID-19 impact on our business that's for sure and that you see and.
There are as well, but to kind of fast forward through the answer here you should see calculated billings and improve throughout the year in and 'twenty 'twenty one and.
And I would expect also to see calculated billings actually have a higher growth rate than you would see a or are for the same exact reasons why you see and lower impact on calculated billings and they are in <unk> and 'twenty and 'twenty. It's just it's the timing of some billings that that impact that and you know Chad.
It's the reason we've kept a are ours or metric you know three or four years ago. We had talked about stopping air are and focusing just on calculated billings and we ended up keeping a R. R. Exactly for this reason the timing differences can skew you too far one way or the other and.
And that certainly was the case and in the end of 'twenty and 'twenty No I appreciate the color on the timing and the and obviously the comps are going to get easier here much just real quick if I can slip one last one and for your stuff and so maintenance revenue was down and you know.
A little over 20% in 'twenty.
How should we think about that going forward or at least for fiscal 'twenty, one and I'll hop off thanks much.
Yeah.
I Wanna comment you're right before we go to the question you're right about the you know the comps getting easier, but where I'm going is not even looking at comps the actual calculated billings should improve throughout the year on a dollar to dollar basis, So just a bit.
You're right the comps get easier too so the growth rates should be improved but back to your question around maintenance.
Yeah maintenance will will decline probably by about a similar amount that it did in 'twenty and 'twenty, we continue to expect to see the migration a b.
And who continue to move forward.
And so we expect to see a very similar reaction to maintenance revenue that you saw on 2020. Thank.
Thank you much.
Yeah.
Yeah.
And our next question is from Joe Goodwin with JMP Securities. Please proceed with your question.
Hey, guys. Thank you so much for taking my questions.
First is there any update on the number of bankruptcies I know and <unk>. There is nine is there have you guys discovered any additional ones there any update there.
You know what we're very happy to say there has not been any incremental bankruptcy.
Okay.
Awesome, Great News and then and then Andres you know just just curious.
Where are you spending most of your time today I mean, what's your what's your main focus what are you what are you really on.
On right now yeah, nonstop always Sunday go to market side, and and with our customers I would say that the majority of my time is helping to support her full and go to market team and and I love collaborating with customers and have spent quite a bit of time on that.
And so that's really where the focus is and that ladder for investments I would tell you like last year, we said challenging year for us but across every aspect of our business, we innovated and we.
We lean in very hard tour and it all sales motion and and virtual first strategy across every aspect of our business to really advance has for the future and how we're engaging from a marketing from a sales perspective.
Transforming our sales motion and our industry focus and our enablement.
Both for sales and four and partner ecosystem, and swell Sunday delivery and the sea organization and our customer engagement.
<unk> has improved dramatically.
And I would say really proud of the team for all the great efforts that they've done.
Thank you.
And just as a reminder, if you have any questions you May press star one on your telephone keypad. Our next question is from Jason Selina with Keybanc capital markets. Please proceed with your question.
Hey, guys. Good afternoon nice to hear from you.
Maybe first for Andreas.
On the beat and be industries, and you guys operate and you have several but I am curious as to which ones might be holding and better or which ones might be seeing some earlier recovery trends.
Yeah, No that's a great great question.
So we're seeing that industries like chemical distribution food industrial and manufacturing.
Does seem to be doing.
Well and I would say like industry like distribution are moving very fast to a digital sales motion.
And and moving beyond just powering the sales team.
But powering their own E commerce as well as market places and we're seeing a lot of industries like these are.
You know drive various strategic initiatives on.
Yeah on sales.
And to power these digital channels.
Okay great.
And then a quick one for first step and.
Q4, solid free cash flow quarter EBIT, the office and their Q1 EBITDA guidance no step up on the law is that just related to the timing and the hiring.
No its more just timing of how expenses fall.
And we always see the jump and payroll taxes and employee benefits that happened and the first quarter Theres also some company events that and it would take place and the first quarter that that drive up expenses you should see expenses.
They come down as we go throughout the especially on the Opex side see that come down as we get through the those minimums on the payroll taxes. So that's always a driver you want and that's the biggest reason why you see a dip and the EBITDA.
Great incredibly helpful. Thank you.
Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session.
I'd like to turn the call back to Brilinta over the book.
Closing remarks.
Thank you for listening to today's call. We look forward to speaking with you at conferences and events. This quarter, we will be attending the JMP Securities Technology Conference on March 1st and the Morgan Stanley TMT Conference on March 3rd and do you have any questions. Following today's call. Please contact.
S at IR at Pros Dot com, Thank you and goodbye.
Thank you sure Molly.
No problem and you should lie.
No problem.