Q4 2020 Workiva Inc Earnings Call
Good afternoon, ladies and gentlemen, my name is scenarios and I will be your host operator on this call. After the prepared comments, we will conduct a question and answer session and instructions will be provided at that time, Inc.
If at any time during the conference you need to reach and operator, Please press star followed by zero.
Please note that this call is being recorded on February 17th 2021 at five P. M Eastern time.
Oh and I like to turn the meeting over to your host for today's call.
Adam Terese director of corporate development, and Investor Relations at or Kiva. Please go ahead.
Good afternoon, and thank you for joining us for Keith as fourth quarter, 'twenty and 'twenty Conference call. Today's call is the prerecorded and will include comments for our Chief Executive Officer, Marty Vanderploeg, followed by our Chief Financial Officer Stuart Miller.
And then opening the call up for a live Q&A session Jill Klindt Chief Accounting Officer is also on the call.
A replay of this webcast will be available until February 24, and.
Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section.
Before we begin I would like to remind everyone that during today's call, we'll be making forward looking statements regarding future events and financial performance, including guidance for the first quarter and full fiscal year 'twenty and 'twenty one.
These forward looking statements are subject to known and unknown risks and uncertainty where.
Where keith of cautions that these statements are not guarantees of future performance. All forward looking statements made today reflect our current expectations only we undertake no obligation to update any statement to reflect the events that occur after this call.
Please refer to the company's annual report on form 10-K, and subsequent filings for factors that could cause our actual results to differ materially any forward looking statements.
Also during the course of today's call, we will refer to certain non-GAAP financial measures reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today's press release.
With that we'll begin to be turning the call over to our CEO Marty Vanderploeg.
Hello, and thank you for joining today's call.
We are pleased with our fourth quarter and full year, 'twenty and 'twenty results, which beat guidance for revenue and operating income.
In Q4, we continued to benefit for macro business trends, which included significant increases and cloud platform deployments.
The old transformations and remote workplaces.
Well keep it has also benefited from the growing demand for Reg Tech and expire at all.
Our financial results reflect the broadening adoption of our platform and fit for purpose solutions, we exceeded 20% growth and subscription and support revenue and generated record bookings.
In 2020, 77% of new solution and new logo bookings were generated by solutions outside FCC or cedar.
As we recently announced all of our customers are now on our next generation platform, which is more open scalable intelligent and intuitive the.
The company wide initiatives was the significant undertaking and I would like to thank our employees for their dedication and hard work and achieving this important milestone.
I'd also like to thank our customers for their commitment to work, Cuba, and recognizing the value of our new platform.
Now that our platform upgrade is complete we are prioritizing three areas, where we see opportunities for growth.
And for purpose solutions global expansion and our partner ecosystem.
First our fit for purpose solutions.
Our idea to incubation framework gives us some mix of discipline and speed and agility. We will continue to launch new solutions that solve specific business problems and enable our customers to realize value quickly.
Second global expansion.
We will continue to capitalize on demand from companies outside North America that need to manage complex datasets and reduce errors and risk improve efficiency and respond to regulatory requirements.
In 'twenty, and 'twenty, EMEA, and APAC generated less than 8% of our consolidated revenue. We expect these markets to contribute and increasing percentage of total revenue overtime.
And third our partner ecosystem many.
And many of our more than 200 partners are now, creating new solutions and services on top of the we're keep of platform.
We look forward to further expanding our partner ecosystem as we work together to deploy our platform throughout global enterprises.
In 'twenty and 'twenty, our values based culture sustained that says we remain strong and connected to each other and to our customers.
And as our global teams work remotely for most of the year.
We also strengthened our commitment to advancing of diversity equity and inclusion efforts through a variety of employee and company wide initiatives.
We continue to win awards in 2020.
Including being named a top 100 best workplaces by Fortune magazine for the second year and a role as well.
Well as being named a great place to work and technology for families and for millennials.
Earlier today, we announced that Stuart Miller, our CFO will be retiring at the end of this month.
I want the thanks Stewart for his dedication over the past seven years guiding us from a private company through an IPO and for the global SaaS Company, we are today.
Stuart has been a value colleague and we will all miss him.
Thanks for the Stuarts leadership, we were able to make a seamless transition by appointing Joe <unk>, Our chief accounting officer to the CFO role Joe has been with Ricky of US since our early days building of finance and accounting teams and.
And taking on more responsibility over the past several years.
Look forward to continuing to scale, where keyboard Jill on our executive management team.
In closing I'm extremely pleased that we finished 2020 with strong revenue growth and record operating income and cash flow.
While upgrading all of our customers to our new platform and continuing to provide innovative solutions.
That I will turn the call over to Stuart Miller.
I want to start by thanking all of my colleagues at where Kiva, particularly Marty the rest of the executive team and my team and accounting finance and corporate development.
I believe we're kiva is in great hands with Jill Klindt as CFO, having worked closely with her for many years.
Working with the extraordinarily talented people at this great company for the last seven years has been the highlight of my career.
Turning to our results.
We saw broad based demand for our solutions and Q4.
As a result, we are raising guidance for 2021 revenue, which I will discuss later.
As always I will talk about our results and guidance on a non-GAAP basis.
Refer to our press release for a reconciliation of our non-GAAP and GAAP results and guidance.
I'll address our performance against Q4 guidance first.
We beat Q for 2020 revenue guidance at the midpoint by $3 4 million.
Higher subscription revenue accounted for all of the beat.
We closed more deals early in the quarter, and we sold and delivered some capital markets deals within the quarter.
We beat guidance on Q4 operating income by more than $4 5 million.
The revenue beat I, just mentioned accounted for the majority of the swing.
The remainder of the beat relative to guidance included lower travel and entertainment costs.
Reduced expenses from shifting marketing and internal events to a virtual format.
Higher PTO usage.
And decreased occupancy costs.
Turning to Q4 2020 results versus Q4 of the year before.
We generated total revenue and the fourth quarter of $93 $8 million.
And increase of 16, 9% from Q4 2019.
Breaking out revenue by reporting line items.
Subscription and support revenue was $81 million of.
22, 4% from Q4 2019.
New logos and new solutions helped drive strong revenue growth and Q4 2020.
56% of the increase and SMS revenue in Q4 came from new customers added and the last 12 months.
Professional services revenue was $12 $9 million and Q4 2020.
Down eight 9% from the same quarter last year.
The decline in ex BRL services revenue outpaced growth and setup and consulting.
In Q4, 2019, we had posted a one time increase of $2 5 million and ex BRL services revenue due to a regulatory change.
Turning to our supplemental metrics.
We finished Q4 with 3007 hundred 23 customers a net increase of 213 customers from Q4, 2019, and a net increase of 140 customers from Q3 2020.
Our revenue retention rates remained strong.
Our subscription and support revenue retention rate was 95% for the fourth quarter of 2020 <unk>.
Compared to 94, 7% for the same period last year.
With add ons, our subscription and support revenue retention rate was 109, 5% for the fourth quarter of 2020 compared to 113% and Q4 2019.
The number of larger subscription contracts continues to increase.
In the fourth quarter of 2020, we counted 847 contracts valued at over $100000 per year.
30% from Q4 of the prior year.
The number of contracts valued at over $150000 totaled 419 customers in the fourth quarter of.
47% from Q4 2019 results.
Moving down the P&L.
Most profit totaled $71 million and Q4 of 22, 2% for.
The same quarter a year ago.
Consolidated gross margin was 75, 6% and the latest quarter versus 72, 3% and Q4 2019, a net expansion of 330 basis points.
Breaking out gross profit.
Subscription and support gross profit totaled $68 1 million equating.
Equating to a gross margin of 84, 2% on SNS revenue and expansion of 160 basis points compared to Q4 2019.
Driven by lower server costs related to the transition to our new platform and lower travel costs.
Professional services gross profit and the fourth quarter was $2 8 million.
Equating to a 22% gross margin.
Research and development expense in Q4 totaled $22 $1 million up 4% from Q4 2019 due.
Due to higher compensation, partially offset by lower <unk> expenses and occupancy costs.
R&D expense as a percentage of revenue improved to 23, 5% and Q4 2020.
From 26, 4% and Q4 2019.
Sales and marketing expense for the quarter increased 12, 8% from Q4 2019 to $35 $1 million driven by higher compensation, partially offset by lower <unk> expenses.
General and administrative expenses totaled $8 6 million and Q4 down $1 $7 million.
Compared to Q4 2019, due to reduced <unk> expense lower compensation and decreased professional services fees.
G&A expense as a percentage of revenue improved 370 basis points to nine 1%.
We posted an operating profit of $5 2 million and Q4 2020 compared to an operating loss of $4 6 million and.
And Q4 2019.
Turning to our balance sheet and cash flow statement.
At December 31, 2020.
Cash cash equivalents and marketable securities totaled $530 million and increase of $6 2 million compared to the balance at September 32020.
Net cash provided from operating activities in Q4, 2020 totaled $13 4 million compared.
Compared with cash provided of $2 1 million and the same quarter a year ago.
Remaining performance obligations on subscription contracts continue to vary from deferred revenue as we implement multiyear contracts with annual billing terms for some customers.
Turning to our guidance.
We are factoring and the expected impact of COVID-19, pandemic on our business and results of operations.
Based on information available to us today.
For the first quarter of 2021.
We expect total revenue to range from $100 million to $101 million, we expect subscription revenue to grow at a faster rate and services revenue in Q1.
We expect non-GAAP operating income to range from $4 million to $5 million.
For full year 2021, we are raising guidance for revenue.
We now expect total revenue to range from $409 million to $411 million.
We expect non-GAAP operating loss to range from $12 million to $10 million.
And the last three quarters of 2021, we are modeling higher travel costs and investment and growth opportunities.
And 2021, we expect to post positive free cash flow for the fifth consecutive year.
We will now take your questions operator, we are ready to begin the Q&A session.
If you would like to ask a question of you need to press star one iron telephone and once again that is star one iron of telephone to ask a question and your first question comes from the line of Rob Oliver with Baird.
Great. Good evening, everyone. Thank you very much for taking my question Stuart Congratulations on your retirement and certainly we'll miss working with you.
I have two quick.
Quick question and one first for you Marty.
And just you talked about.
The three focus areas of growth for the business this year.
Fit for purpose solutions global expansion and Parker <unk> partner ecosystem I was wondering and you guys had laid those out I thought really nicely at the.
And the analyst day, and I was wondering if you could just provide a little bit of color.
And where we are with some of those key initiatives right now and then I had just one follow up for Stuart.
Sure.
The I'll start sort of with the fit for purpose solutions.
And just say that.
We've had good results and.
The the first solutions, we've run through there primarily for <unk> and GSR of global statutory reporting.
The system the Julie put in place in terms of vetting developing and preparing these before we go to market has been really rigorous and very good and we have several and the pipeline.
For next year that.
And that we're excited about we're not ready to talk about what they are until we're sure we're going to go but.
And we feel good about that global expansion has been going well.
The revenue growth is higher and both.
EMEA and APAC and <unk>.
And it's on a small denominator, obviously as we referenced but.
And that's looking very good and we almost have to do that because you know a lot of our customers are deploying us more broadly and a lot of them are.
Global company, so they they want representation and support and all of those areas. So not only of expanding our market, but it's better serving our biggest customers.
Partners, we're doing really well.
That's really coming together partners are realizing that they can generate good income from themselves deploying our products and we.
We've been going together jointly and of the marketplace and doing really well, we're seeing that grow rapidly. It's a big part of what we want to do because we really want to get.
More involvement from our partners for delivering our our product we want to focus on being a software company and out of.
Our services company and.
And so that has gone well and we're really not ready to talk about metrics, yet because that metric is so ill defined but most of what we do is go to go to customers together and then we contract directly with the <unk>.
With our customers so.
You had another question.
Yes, no I appreciate it that's a really really great Marty. Thank you very much and and then Stuart just one for you just on the on the.
And the guidance I know you said, it's still factors in.
The COVID-19, I think you also said from a cost perspective.
It sounds like you guys are expecting some return to normalcy normalcy at least from cost outlays and the back half of the year. So just wondering how those two things match up and if the.
What were some of the factors that you thought about when thinking about the of the revenue guidance for 19.
And for 'twenty, one and in light of COVID-19, Thank you guys very much.
Yes, one of the expense side first.
We are.
And we're fairly optimistic about the ability to get.
Shots and arms and the efficacy of the vaccine and we also thought it was just prudent from a.
Forecasting standpoint to assume that those costs were going to rise and.
And due to increased travel.
And the back half of the year actually it starts to ramp and our model starting in the second quarter.
And then on the the revenue side, our optimism really.
Is as it's always been has been rooted in the pipeline and the maturity of that pipeline and we run a fairly granular business. So.
And we've got many years of experience with it so we're pretty confident and and what we're seeing with the pipeline and it.
The demand has been very broad based.
Thank you again.
Debt.
Your next question comes from the line of Matt Stotler with William Blair.
Hey, guys. Thanks for taking my questions Marty it's good to connect with you Joe good to speak with you again and.
Stuart.
Obviously, the launch coverage of about six weeks ago, but you and I have been talking for the better part of for years. So it's been a pleasure and congrats on the retirement and best of luck going forward.
Thank you Matthew.
A couple of.
Maybe product specific questions here, so first on ECS and just love to get an update on the traction you're seeing with that offering how many customers you have using it today and when you think about what that adoption could look like and what kind of penetration do you think is likely or reasonable when you look at that target.
5000, plus potential customer base over time.
Well, let me.
In terms of.
<unk>, it's tracking about where we thought it would be.
It's behaving much like the early days for the SEC market and.
And we expect that.
We will get of.
We will have success of time goes on it's not a one shot deal and we are definitely closing business even in light of the delay that some of the countries of.
And have lately announced and customers are taking it seriously.
And we're seeing a good broad base of all the way from very small companies. The large companies looking at our solution. So we're very optimistic.
Got it that's helpful. And then just one on the on W. Data, So and when we talk to your customers and partners. It seems to be a lot of interest and W. Data.
And a lot of cases still typically pretty early stage customers evaluating the practical use case value proposition.
And so there are some high attach areas like global Stat reporting you guys have talked about in the past can you just give us some more color on and the overall interest for a cash rate that youre seeing with this capability and.
And what Youre doing the drive broader customer adoption here. Thank you.
Yeah, I think that.
That question is really sort of locked in the fact that we're trying to move to more of a platform company. Obviously, our journey there it takes us through selling solutions, but obviously some of our customers have seen and understand the value of the platform W. Data has been more incorporated and the platform and late and this is it.
And it's one of the key parts of it being able to connect and then.
Prepare your data.
And is vital to our platform. So as we move toward of platform sale, we are seeing it.
And and a lot of the newer.
Solutions that we're rolling out and so.
W data is still a very important.
The thing that we do and we're seeing good attachment rates.
Julie you want to add anything.
No Martin. Thank you you kind of sort of theory, it's now just scan.
<unk> of our.
And the platform and part of our growth strategy, rather than a single solution offering that Lasalle separately.
Great. Thanks, Martin Thanks, Julie and thanks, everybody.
Your next question comes from the line of Terry Tillman with true with security.
Yes, good afternoon, and congrats on the quarter.
Stuart.
We're going to Miss you, congrats and Youre going to Miss our engaging questions and I'm sure and these earnings calls Jill welcome aboard and good luck with our questions, but yes.
And I guess, maybe my first question and I don't know if this is for Marty or who it's for but I'll just throw it out there the.
Strength in the fourth quarter in terms of new logo activity and I know it can kind of move around each quarter, depending on just kind of the seasoning of the pipeline, but as we're looking at 'twenty, one and we've got a couple of things going on your customer successfully re platforms.
The adult for purpose of built for use of solutions, maybe there could be a quicker path of the new.
Use case adoption and your installed base, but I'm curious this logo strength should we expect kind of a similar kind of dynamic and 21, where it's stronger new logo activity or could it shift back to maybe where youre getting a lot more from your installed base because of the success with the re platforming and then out of follow up.
Sure I'll, just give a high level question, Nancy Stewart wants to add anything but.
You know, what we've always said and which continues to hold true is roughly about half of our new sales each quarter come from.
The new customers, new logos and about half comes from new solutions and existing customers.
That ebbs and flows a little bit but for the most part of it stays right and that range and so we expect that to continue for the most part stores you want to add anything.
No I think I mean, I think that covers it Marty it's over the long run and it has been 50 50, and we've no reason to believe it's going to be otherwise and the future.
Okay got it and I know, we're talking about global expansion, but if I come back kind of to the states and look at the federal opportunity. It was great to see the deal I think it was the Doj.
Signature deal.
We saw the value of the large deal.
And the in the aftermath of that maybe Marty or team. What did you all say about the federal government and just public sector in general and what Youre seeing.
Okay.
Well, just the backup a little bit of.
Our plan and general for growth is to be broad based in terms of geographies and solutions.
And.
Clearly the the state and local governments and the federal government.
Between Covid and the election.
Definitely took a hit and so we see great opportunity there and it's just starting to revive now based on the election being over and sort of the everybody seeing the light at the end of the tunnel on Covid. So we're seeing that recover nicely, but again, it's just part of our portfolio and.
Because we are of a portfolio approach, we can always deal with.
One or two of our vectors being a little soft so we're optimistic about the future for the federal but.
You can imagine what it went through.
In terms of the Covid experience.
Your next question comes from the line of Stan <unk> with Morgan Stanley.
Perfect.
Thank you so much guys and.
Stewart of we're definitely of the Miss you.
Quick a couple of quick questions from from Ara and.
And maybe just at a very high level.
When you guys think about.
Pricing for your products.
As you go into 'twenty, and 'twenty, one and beyond into 2022.
Do you feel about the balance.
Of essentially the value. The you are delivering to your customers for new products versus.
How much you're able to monetize.
Those products across your customer base and I have a quick follow up for a store before we let them go.
I'll just give a high level point of view on that and in terms of price I think that.
Anytime you start a new solution in the market.
To get some market share and experienced the tend to start a little lower and then the SEC for instance, and that product base that we have.
Sort of gotten those prices that match value. We also of value team that looks at this and we try to match that with value. So.
So I think and some of the solutions were quite mature and we think that the the value matches the the.
And the price tag and we're we're confident in that because of the customer sat and the and the <unk>.
<unk> numbers and <unk>.
Some of the newer markets, we will see you know as of as we develop those markets will right size, it and probably move it up but almost always and you're starting the new market and you start low.
Stuart and want to add anything.
No I think you've covered it.
Alright, and then one for Stuart.
And when you think about net revenue retention I know you guys don't guide to it but when you think about it for 2021.
How do you.
What do you see happening to that net revenue retention rate as we go through the year.
Yes, so as you know the.
The components of that include price increases and and add on sales and I expect we expect to see good contribution from add on sales, we're really not planning to take.
Price at all of this year I mean very little.
So we are having good success selling volume, we'd rather sell more solutions to customers and then take price so.
And that's what I can say in terms of components of it.
The pipeline would indicate that we're.
We've got good prospects when it comes to to the add on sales.
Got it and so just seeing us as people are kind of going through we're trying to calibrate. Their models is is the current level of net revenue retention is at.
Is that what you're expecting to.
The seek moving forward.
Well as you indicated in your preamble, we've never we haven't guided to it and so we don't want to break in the news today on that front.
Fair enough alright, thanks, Stuart Thanks, Dan.
Your next question comes from the line of Tom Roderick with Stifel.
Hi, everybody happy new year, Thanks for taking my questions and Stuart I'll start with you it's been a real pleasure working with you. So congratulations on your retirement, we're going to Miss you over here on our and much more than I know youre going to Miss us, but but it's been great. Thank you.
The.
Maybe I'll throw the first one back at you Steward and Marty Julie Please please chime in.
And I know I think it was net earlier and then ask the question just on on Europe, and General and SaaS I was wondering if you could share some more statistics with US I think Marty you Might've said it was high single digits International as a percentage of revenue do you have that the exact number that Europe was.
Either for the full year, or where we're sort of finishing the year.
We finished the year 2020, as a percentage of either revenues or new logos and I guess, what I'm just trying to get behind it is how quickly is that <unk> or net new bookings kind of catching up to where and the quota carrying reps are and then what does that look like for next year for Europe. Thanks.
So Tom the.
Thank you for your comments are greatly enjoyed working with you as well.
So we filed the 10-K today.
And there is a footnote in the.
To the financials.
That lays out.
Americas versus rest of the world in terms of.
Floating out revenue and so that is finally as we cut it.
The majority of that non Americas revenue.
Comes from.
EMEA although.
APAC is starting to contribute but certainly in terms of the.
2020.
A substantial percentage of that $22 $3 million.
Subscription revenue.
And for $5 million of professional services revenue is coming from from EMEA.
So, it's putting up 12% to the page 90 of the the 10-K.
Okay, great and.
And then just maybe following up and that Stuart real quickly and in terms of the net.
A question on the on head count and how quickly of ramping that relative to where the opportunities are and Europe. Our international if you want to kind of it that way.
Yes, Martin do you want to talk about the.
Sure I mean.
The.
Terms of overall head count that we put a lot of growth into EMEA and 2020 in terms of head count and will continue.
This year as well.
Think that's a big opportunity and.
And APAC, it's very early days still and and we will continue to add the people there as well probably at a higher percentage even in EMEA, but it's off even the smaller denominator.
All of the indications are good in terms of demand in both markets.
Great and.
Quick follow up one for you Mark this is a bit more thematic, but with everybody talking about ESG and how to monitor that and tracking and measure and it would certainly seem like your platform and sort of tailor made for helping your customers take advantage of the reporting and connected reporting qualifications and needs around ESG and can you talk about what your customers are.
Asking for you from that matter and and how and how you think about that as an opportunity to monetize the platform.
Well.
Again the.
And the new solutions, we're working on and I really don't want to comment on we definitely see there's a market there and you'll hear from us and the future.
Okay, we'll look forward to that thank you all I appreciate it have a great night and.
And then.
Your next question comes from the line of Alex Sklar with Raymond James.
Thank you Stuart and Jill I'll Echo my congratulations to you both as well.
On the bookings strength and just I wanted to dig and a little bit more on the logo growth. The two really strong quarters in a row I think fourth quarter was the most of any quarter in the past six or seven years I can appreciate the commentary of selling the platform more broadly but has there been kind of any commonality of you can speak to in terms of these AD and a two to three solutions.
Debt are driving the most success or any geography and particular thanks.
Stuart you on line.
Take the yes, so I mean it was really.
Thank you for your comments by the way, but it was very broad based and we saw strength with.
And with global Stat, with energy with capital markets with East.
And with FCC with integrated risk. It was it was a very strong quarter overall I mean, I think we would direct you back to some of the macro trends that we're seeing the shift to the cloud digital transformation and the office CFO the.
And the realization that debt the hybrid work environment is here to stay and then customers need.
Collaborative work platforms. So all of that was.
Was heading and our direction.
Okay. Thank you and then I guess, the steward of follow up and the prepared remarks, you mentioned new logos growth drove I think 56% of the revenue growth I think that implies that those new customers are coming in at roughly two ex the company average is that right and then in terms of why the much bigger land as debt and all geography based.
Just having the broader platform the cell now anything else you can tell us and them.
Yes, so the the 56% is it relative to incremental subscription revenue.
And that number it's been at average as it goes $50 50.
And over time, and when we were implementing solution based licensing.
It got up to about 54% on existing customers and now it's 56% from new logos and so.
It's just the.
The percentage of revenue that is attributable to two new logos in the past year.
So I wouldn't really hasnt changed that much.
Okay. Thank you.
Thank you.
Your next question comes from the line of Andrew the gas free with bear and Burke.
Thanks.
My question first congrats the Stewart NGL as well.
Hi.
And in terms of just the high level paint and administration, obviously people are expecting a much more rigorous.
The regulations coming from there.
And the U S and I was just wondering if youre talking with your partners and clients is there any sort of chatter or activity that reflect like either potential for more solutions that they need to adopt or anything like that.
Yeah, I mean, we and we certainly.
And are optimistic that the buy and the administration is going to.
Kind of look at regulation and the pendulum is going to go back the other the other way some and so we are optimistic about that.
Would say that the thing I'm more optimistic about is the adoption of ex BRL and starting to hit a tipping point.
And then for <unk> and.
I think ex <unk> is already being talked about for a number of different things. Some of the solutions that we're going to look at and the future it's being adopted across the global statutory reporting and some jurisdictions. So.
When when when ex Bureau, all hits, the tipping point, it'll it'll be a meaningful thing for us and so I think the buy and the administration in terms of the U S is definitely going to help us, but I think the fact that EXPAREL is becoming almost of the go to machine readable language now is what.
What gives me.
Most of the optimism.
Thanks, and then just set of question in terms of the your go to market outside the U S. I know you're planning to do this organically and EMEA, but I was just wondering if you considered doing something.
I am more and depths with some of the larger ERP vendors when it comes to APAC.
And like for example, Black line is done with SAP.
Or something of that effect.
And I don't anticipate us doing that I mean the.
The the.
The double edge sword, right, you have better better access to markets, but you pay of heavy <unk>.
For that in terms of go forward SMS revenue and and you would.
Probably heard the rumored number for black line, but the.
We want to address our market through our partners and our own direct channels and not the.
Damage, our Tam and anyway, so I don't expect to see that unless its a joint thing.
Our go to market jointly but.
Really that's that's.
As of tough thing to do so probably not.
Understood. Thank you.
Your final question comes from the line of Mike Grondahl with North line.
Hey, Thanks, where key the team and.
Best of luck and in your retirement well deserved.
Two quick questions one.
Stuart is there anything to call out.
You talked a little bit about the <unk> upside coming from the capital markets area.
Any more you can add there or anything and the pipeline would be great and then just maybe for.
For Marty any thoughts on acquisitions going forward or if you've been spending any time there.
Go ahead, so yes, so thanks, Mike enjoyed working with the as well so.
Capital markets as part of the story and Q4, but certainly global stat, and and energy and ESF and they were all.
The big contributors the capital markets piece was just.
Relative to guidance, because we generally have low expectations for that business or.
From a safety standpoint, it's better for us to.
Assuming very little from that business and some of it gets delivered within the quarter and that's why it can be and.
Upside surprise, we're just trying to avoid of downside surprise. So we don't we don't assume much there.
And then on the M&A front, Marty do you want to talk.
Sure.
My answer will be the same as Youre of Stuart we continue to look.
We think that there's opportunities and our future, but we're very careful and the last thing we're going to do is run out and do something that would.
Causes harm and we just see so much organic growth potential you Wanna comment Stewart.
No.
I mean, I think I think you covered it I mean, we've been looking more at the.
Small add ons that can accelerate our existing strategy.
We're not we're not actively looking at anything that would be transformational.
Got it thanks guys.
Thanks, Mike.
And there are no further questions at this time.
Thanks, everybody.
Thank you all.
Ladies and gentlemen. This concludes today's conference call you may now disconnect.
And then later.
And then.
Moving on.
[music].
And moving.
And then.
[music] and.
Yes.
And.
Yes.
And we will.