Q2 2021 eGain Corp Earnings Call
You are correct and hopefully he came and fiscal 2021 second quarter financial results Conference call. At this time, we're assembling today's audience and can you bring the way shortly and we appreciate your patience and please remain on the line.
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Good day and welcome to the <unk> fiscal 2021 second quarter of financial results Conference call.
Today's conference is being recorded at the Sunday turned the comments of work and Mr. Jim Byers of MTR Investor Relations. Please go ahead.
Thank you operator, and good afternoon, everyone and welcome to the game's second quarter fiscal 'twenty and 'twenty, One financial results conference call.
On the call today are of your game, Chief Executive Officer, Ashley Roy and Chief Financial Officer, Eric Smit.
Before we begin I'd like to remind everyone.
During this conference call management will make certain forward looking statements, which convey management's expectations beliefs plans and objectives regarding the future financial and operational performance.
Forward looking statements are generally preceded by words, such as believe plan intend expect anticipate or similar expressions forward looking statements are protected by the safe Harbor provisions contained in the private Securities Litigation Reform Act of 19 net.
These forward looking statements are subject to a wide range of risks and uncertainties that could cause.
Actual results to differ material respects.
The information on various factors that could affect the games the result.
The details on the company's reports filed with the Securities and Exchange Commission. The game is making the statements as of today February 10th 2021 of.
Well it seems no obligation to publicly update or revise any forward looking information and this conference call.
In addition to GAAP results, we will discuss certain non-GAAP financial measures such as non-GAAP operating income the Teva.
And included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most recently directly comparable GAAP financial measures.
The earnings press release can be found on the news release link on the Investor Relations page of regain the website.
But he gained dot com and the phone replay of this conference call will be available for one week information and the press release, the best set of and I want to turn the call over to gains CEO actually really.
Thank you Jim and good afternoon, everyone, sorry for the little late start there.
So we are very pleased with our performance on the second quarter.
Our top and bottom line results exceeded our guidance and what our head of the street consensus.
All of SaaS revenue grew 15% year over year and.
On the 21% you have to bake.
On the gross margins, we improved by 500 basis points over the prior year quarter.
We were GAAP profitable with net income of $1 6 million and we were again the cash flow positive in the quarter.
So good financial results.
And I heard of guidance.
As we have noted on our last call we are continuing to increase our investment and sales and marketing.
Halfway through the year, it's good to see that we are seeing positive indicators from the investment let me share of some metrics.
At the front of the level firstly looking at brand awareness.
The website traffic is a good metric for the Doc website traffic at the end of Q2 and.
And through January.
Is that more than 90% year over year, thanks to significant marketing investment increases, we have particularly focused on scalable digital channels.
Next we tracking all of our marketing generated leads and back in Q2 was up 60% year over year.
And our sales pipeline.
And of Q2 on.
The sales pipeline and dollar terms and there's more than twice as large as it was a year ago.
The total number of opportunities is also up and in fact, a little more than twice so the average deal size.
It was a little lower than of course before because we're getting more new logos.
I'll put you on the three buckets.
Which brings me to our number one focus for the year from the sales perspective, and in addition to scaling our team and executing the change programs and number one focus this year of progressive adding new staff levels.
And the enterprise market.
And we are seeing that trend continue to be at the base, which is about twice the number of new logos. So in Q2 on.
Do you want and put together.
We acquired 20, new south logos and fiscal 'twenty one.
Compared to seven and at the same time period last year. So we have more than double the pace and we hope to increase the south of local acquisition pace, even further and the second half of the fiscal year.
Yeah.
I'll give you some examples of the south logos the the good.
Well the logos.
The first one is that is the large north American utility.
Out of the East coast and.
Another one of the.
The top 20 health care provider and the U S.
We are helping them with their telehealth.
Telehealth solution with our <unk>.
The digital first.
<unk> capable of it be around video and messaging.
And then another one we.
Really excited about is Oh and also a major of global lots of a measure of where we have gotten and with the small footprint of couple of hundred thousand dollars, Iraq, but there's a big opportunity for us to expand and tons of digital engagement of messaging Corp.
The other one is.
Large multinational of insurance business on the Europe, where.
We have the opportunity to now go across the different geographies with all of them.
Yeah.
In terms of expansion.
We saw healthy new bookings and the quarter with new clients.
New clients, meaning existing customers new expansion on some multiple expansions the.
A large U S telco and of the top on.
The top ones I'm aware.
Sure.
We have expanded across the entire enterprise with all the analytics solution.
On the contractor.
On another one of the diversified banks, where we are now rolling out across all of the bed business units and the contact centers.
And finally, a fast growing European financial services business, where we started with <unk> and <unk>.
And 30 days engagements a year ago and now they are standardizing on our platform for both self service and agent Convention.
Yeah.
On the renewal of shrunk during the quarter. We also saw a nice a bunch of renewals and the Corp.
On a net retention rate and the quarter continued to be north of 100% and we did not see any significant unusual and sure.
Moving to our investments on the direct sales channel.
As you know we have been ramping on sales team, specifically, increasing the quota capacity for our high touch selling.
So we have executed the first phase of that expansion.
He did the hiring for the first cohort of reps and all.
Focus now, which is where we are is on onboarding and getting the school of productive.
Once ramped this team will increase the quota capacity by about 50%.
Yeah.
All of the new sales reps cookie of hard the Cisco deal. They are focused on new logo acquisition.
And the customer expansion opportunities of being handled by the tenure of drafts and partnership with the customer success team.
We plan to hire of the next cohort of reps in Q4 of this fiscal year. So it was too Jim.
On the partner front.
Again, we started investing in this and at the beginning of the fiscal year.
As you know on the existing parking the front, we continue to have a productive partnership what's the scope is low.
Several of the new logos with them in the last six months.
And part of bio partnership is now generating new logos as well.
And both with some <unk> wins as well on some enterprise wins.
Oh on the parallel shrunk in terms of I.
Adding more to our partnership ecosystem.
And Mike Taylor, who joined US at the beginning of this fiscal year to lead our business development effort.
He and his team are focusing on the on building out new partnerships with.
So some of the triggers so.
In Q2.
We signed up and brought in two new outside partners, the BT global services and invoking the out of that size.
And in fact of the top 50 on the board of Whitelist.
So both of them have now joined the partner program and we have completed formerly training over 50 consultants across the two partners.
This program now.
Continue to drive forward. This will help us scale of our implementation capability globally as well as increase our market reach which as you know that the.
<unk> objective for us and the scope.
Yeah.
Moving to the existing customers.
And I want to share of.
A couple of stories with you to highlight the value, we are delivering to clients and the resulting and expansion.
At the same time.
Equally exciting is the rate at which we're able to roll out innovation on the platform and how it's.
Something that are.
Existing clients can consume very quickly.
Okay.
On the before I get into the stories I just wanted to my remark and Baltics.
We are seeing the the.
What I called the fourth step cycle of customer acquisition.
The quick value of delivery plant expansion and then and.
Because he and marketing these four legs, starting to work nicely needs and stuff.
That's very encouraging for us.
For instance on the advocacy from all of them.
Customer feedback of ratings on the.
Gardiner G two site, which.
Most people are aware of its publicly available to talk to the clients.
The rating has trended up nicely and the last couple of quarters.
To improve.
The improved customer satisfaction and of course, we're continuing to work on back to improve it even further.
But coming back to the stories.
I want to share a couple of them. The first one is is with an existing client. This is around the expansion.
Sure.
Of course, the Salesforce takeaway.
Or and knowledge management and.
And.
18 months ago, when we first cockpit mandates for knowledge management started out being a couple of hundred thousand dollar of EVAR and.
And now they're up two of them.
Millions of dollars plus so it's good to see the speed with which we are able to systematically drive some of these expansion.
The expansion opportunities, which again speaks to the fact that as we drive more new logo acquisition, we can see how that boost our top line over the period.
And another one I want to share with a large retailer and the U S, who was again and that existing customer they deployed our smart IV, our solution and I'll talk to you and a bit of roundup.
During this holiday season.
Essentially allows the customers were calling from the smartphone check of Morocco and interest.
Switched to a so much Chuck if they want to sort of waiting for the next available voice the chip.
We were able to activate the solution and seven days.
What's the right into the existing contact center infrastructure.
And during the holiday season.
The 30% shift of that voice traffic waiting for the voice agent will talk to us and the Skus and.
And these agents on the digital side can handle five chapter of the same time zone.
And it's huge improvement in both customer experience as well.
And so.
Interestingly.
And just a little bit about the smarter idea of solution, we announced stopped and Q2.
And the the speed with which we got and enterprise client existing one.
The use of the solution and production was remarkable less than 40 days.
And we continue to see good amount of market interest around the smart like the Irish businesses are looking to continue the shift the voice traffic to digital channels without throwing away all of the existing voice technology.
To wrap up this the story.
After the holidays.
The same client the reconfigured the small type of VR the deal what the returns questions and.
The deal with where does my all the questions and they did that entirely on the wrong.
And there's no even and Balkans back and talk about either of the pizza.
So that's the sort of trend of rolling out new capabilities on our block.
Well showcase of the power we're.
Our clients and partners can create these new solutions, the composing them using our modular capabilities and digital messaging and knowledge and AI and and analytics. So.
The to us that's the big differentiator of it we see.
The market and gravitating to work quickly and do you see.
In fact, one of the three big trends.
Customer highlights and their <unk>.
Actions for 2021, and the customer engagement space.
The good to see the.
And we have been living of today.
Okay.
So in conclusion.
We continue to invest and our sales and marketing and that trend will continue we will increase the percentage of our revenue will increase our level of investment we are seeing or the results to the pipeline starting from brand awareness marketing needs to do.
The pipeline size and and starting to.
All of the new local acquisition maximization, which is really important.
We.
We are very pleased with where we are with our product innovation pipeline and smart IV or was the solution. We launched in Q2 and there's plenty more that we're looking to announce in spring of this year.
Our Si partner development program, which is new.
And I started out on the beginning of fiscal 'twenty one is on.
And I wanted to wait what's the most.
And two partners I mentioned, British and beauty.
And on global services and info game and.
Of this 50 consultants, having gone through the formal training of all of it starting to figure it out and how they use them and all the projects as well as they haven't getting into other projects and their sites.
And finally, our partnership with two of the three contact center.
On the Cisco and Avaya and continue to be the Cisco case continues to be productive and because of our lineup.
It's good to see that we are now on the board with seatbelts wins and new enterprise logos.
So with that I'll ask Eric Smit, our Chief Financial Officer, you add more color around our financial obligations.
Thanks, Joshua and thanks, everyone for joining us today.
And actually we noted we are pleased to report another good quarter with solid set of revenue growth year over year ex.
Spending gross margins and positive EPS and cash flow.
On top and bottom line results were ahead of our guidance and street consensus for the quarter.
In addition, as always you highlighted we also saw a significant improvement and a new set of logos and the pipeline built.
And I'm looking at our quarterly results in more detail for.
For the second quarter sales revenue was $16 2 million of 15% year over year.
Accounting for 84% of total revenue.
That's right and you came and 5% of ahead of our midpoint of our guidance due in part to increased seasonal business. We saw in Q2.
For the first six months. So that's revenue was $32 1 billion of 21% year over year and accounted for 84% of total revenue.
Our trailing 12 months, that's retention rate, which includes up sell and uplift of continued to be over 100%.
Professional services revenue was $1 5 billion for the quota share.
And 15% from the second quarter last year and accounted for eight percentage of our total revenue.
The direction, we've been driving increased investments and our product to enable quick of time to value for our customers as you just highlighted.
Now looking at on non-GAAP gross gross profit and gross margins.
Gross profit for the second quarter was $14 6 million or the gross margin of 76% up from a gross profit of 13 million or a gross margin of <unk>.
Savings of 2% a year ago.
The subscription gross margin of 82% for the quarter up from 79% and the second quarter last year.
We are pleased with the significant margin expansion, which has been driven by increased automation within the hour tubes.
Professional services gross margin was 10% and remained unchanged from the second quarter last year.
Now turning to operations non-GAAP operating costs for the quarter came in the $12 3 million compared to $10 5 billion in the year ago quarter.
The increase was primarily driven by investments and sales and marketing, which was up 30% suburbia.
And accounted for 32%.
And you up from 26% and the year.
Ever go second quarter.
Looking at our bottom line on non-GAAP operating income and the second quarter was $2 3 million or the operating margins of 12% compared to an operating margin of 14% and the year ago quarter.
Non-GAAP net income for the second quarter was 2 million or seven cents per basic share and six cents per diluted share.
This compares to non-GAAP net income of $2 5 million or eight cents per share on both of the basic and diluted basis and the year ago quarter.
GAAP net income for the second quarter was $1 6 million or price per share.
GAAP net income of 2 million or six cents per share and the year ago quarter.
Turning to our balance sheet and cash flows all day.
And she continues to get stronger with cash flow from operations of $5 9 million for the first six months.
We ended the quarter with cash and cash equivalents.
$54 2 million up from $46 6 million of June.
And so to your 'twenty and 'twenty.
Looking at our short term remaining performance obligation or a P O. That's.
That's what I've mentioned in the past due to customer concentration and the timing of renewals can create fluctuations in the pellets from quarter to quarter. However.
However, with the help of your renewals in Q2 with over 40 customers renewing and no significant churn beyond the two customers we disclosed last quarter.
This drove up our short term OPO to $53 4 million of 29% increase year over year.
And I went through on guidance and financial outlook.
Before getting into the actual guidance first of there are few items of once your highlights.
Oh, that's good and your guidance for Q3 includes and an expected 300000 the sequential decline.
And two fewer days in the fiscal third quarter, then and the second quarter.
And and the expected 400000 sequential decline due to seasonal volume increases, we experienced and the second quarter.
On the expected to repeat and the fiscal third quarter.
What's the focus on migrating our remaining legacy customers to says we expect the further sequential decline and our legacy revenue to approximately $1 2 million for Q3.
And what's the positive signs of new logo wins and increased pipeline, we are continuing to invest and sales and marketing and as a percentage of total revenue ex.
It would increase to approximately 36% what day.
Revenue in Q3.
And finally, we estimate stock based compensation of expense of approximately 500 thousands.
Appreciate it depreciation and amortization of the books with the 100000 and the weighted average shares outstanding of approximately $32 9 million.
So with that said for the fiscal third quarter ended March 31st 2021.
You can expect search revenue of between $15 8 billion to $16 3 billion.
Total revenue of between $18 3 billion to $18 8 billion GAAP.
Net loss of 500214, and $5 billion or a negative two cents to five cents per share and.
And not yet.
Non-GAAP net loss of breakeven to loss of the 1 billion of.
023 cents per share.
So in summary.
We're pleased with our progress this quarter.
Looking ahead, we see.
And then on investing.
She growth faster by ramping our sales and marketing.
To expand you know 150 sets accounts with the customer access.
Investments and managed services to acquire new logos, both direct and through and expanding partner ecosystem and so.
And our market opportunity by driving.
Knowledge hub standardization across the enterprise and creating critical solutions to target the mid market starting with the financial services.
Lastly, on the Investor Relations front nature of this gain will be attending a fireside chat with very low capital markets, and then and what we will be participating in the share. Please just of the enterprise communication and somewhat taking place virtually on March 10th and the following week, we'll be presenting at the 30 <unk>.
And your virtual conference on March 16th we.
And we hope to see some of you at these butcher the dense.
This concludes our prepared remarks, operator, we will now open the call for questions.
Thank you if you'd like to ask the question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure of mute function is turned off to Larsen with free try equipment again press star one to ask the question.
And we'll take our first question and Dave from Ray Mcdonald with Needham.
Hello, and thank you for taking my question. This is Alex on for Ryan and you lean to the digital and go to market strategy from an investment perspective, and that's the began to bear fruit early in the quarter with brand awareness of the digital leads generated can you talk about the incremental progress that's been made on this front and what you're seeing in terms of digital units.
Working their way through the pipeline as well as if there's any conversions to bookings that have occurred and how the schedule.
Okay.
First of all parts of the question.
So our digital marketing is probably running up to.
The three ex.
The two to three times the work and we've had been doing lots of it could be up so there's really amped it up.
Scott.
And the bulk of in terms of.
So it can get marketing the marketing.
Well as a lot more.
Virtual conference. So we have we of course.
He's got a lot that's reflecting in the.
Significant increase the rate of 90% of increase.
On the brand awareness has measured by by the restaurant traffic.
Mexico.
That's all of the calculated into the 60% increase and marketing generated leads the sale, which is quite significant.
And that's sort of the older pipeline build.
And.
Most of those opportunities of course, nocturne and good deals yet because our sales cycle of and the micron range, but the certainty.
Certainly moving along and the pipeline.
Okay.
Great and how is the adoption of the messaging hub trended has the many large increases and messaging volumes as there's been on increasing demand.
Yes, that's the thing is clearly very active oh.
What we see is messaging is is a critical and therefore.
The push by many companies.
And you offered that.
The next option to their customers and.
At the same time all of them.
Lot of these companies are through 14 of the layer of conversational automation and travel documents and make sure that they don't get overwhelmed.
And by the messaging that's been coming through messaging on.
On the with conversational automation of virtual assistant or something of the RFP.
Good day mindful.
Great that's it for me and congratulation on the quarter.
Next we'll hear from Jeff Van <unk> with Craig Hallum.
Great. Thanks, Thanks, guys. Appreciate it so a couple of couple of questions. The they turned out customers and she talked about you were you were expecting I think you said 750000 and sequential headwind how did that play out relative to expectations.
Hi, Jeff and Rob you want to take the yeah. So.
Absolutely Yeah, I think pretty much is.
We had expected.
While the genetic change from that.
Okay, Alright, and then the.
And the Ipos I mean, that's obviously something I think we've talked a lot about arc and.
It's it's a break from the long trajectory of sort of flattish or appeals, but the magnitude of it.
And I don't know can you explain a little more about the ipos and.
Considering the short term I'm, assuming it's not contract duration. So that's the that's a big jump and at the same time sort of square it with the deferred revenues, which sequentially. It looks like they were just down modestly. So I know these two lines, particularly for free game and been lumpy and hard to discern meaning from but can you sort of reconcile those two.
I think like Jeff, we're still working through that but I think of that breakfast on the coal you know these things are all subject to the variations that I think just in light of the cash.
She is raised around the renewals, especially last quarter.
Totally appropriate timing wise just to highlight this point given the the.
The strength of the renewals and I think that's really what we saw.
Yeah.
The elements of just as you know we do have renewals that's on duration of 123 years and duration and so I think it was a function of maybe of.
And the convergence and this particular quarter, whereas I've mentioned, there was Oh, we believe more activity than what normally would have expected. The one particular quarter. So that's.
That's what drove the that would say.
Yep.
Obviously, we're.
From an operational standpoint, you know you've got a pretty good feel for Covid at this point and and how the customer base is behaving youre.
Certainly the transition to cloud is done at this point.
When you think about guidance now that certainly is maybe lack of clarity from Covid is clearing how do you think about the guidance in terms of.
When you would when you would get back to giving a quarter and and the annual outlook did you chew that this quarter and just how are you thinking about that.
We did think about it I think Jim to your point certainly the clarity around COVID-19.
And there's no question that we are still seeing some element of.
Do you eat on.
The <unk> slipping I think people are still generally cautious even though like the.
The demand is high.
That combined with the.
And the increased investments that we're seeing the.
And as actually mentioned our focus now is getting this new cohorts.
Before you wrap the next team.
I would say that I.
And hopefully by the beginning of fiscal 'twenty, two would be and are positioned to put out that the annual guidance.
So kind of thinking at this point.
Okay, and then just one last quick one and as it relates then to two of the SaaS them and obviously that's the focus.
Layering of lot of a lot of reps in.
Two questions, one and any sort of crude sense of when that that SaaS line gets to the 20% growth rate.
You know and the out year and then secondly on the cohort hiring I know you had I think originally said sort of April ish, and if I heard her Josh you're it sounds like maybe more of like a may June and I know, it's hard to find talent. So I mean, just assuming it took maybe a little longer to get those guys in but maybe just those two questions and I'll, let somebody else jump on.
Yeah.
I think I've got the rights of all of the Calvin Park. Yeah go ahead.
Yeah. So I think the go to the growth rates.
Well, obviously given the significant.
In fact that we've talked about with those two losses that will obviously have the drag.
Against the year over year comparisons through Q2 of next year, but obviously with the ramping of these.
The sales reps and hopefully that'll.
Come sooner than that.
And we see that something that you have to.
I guess, maybe it's true.
The net.
A couple of quarters.
And the.
Yes sure.
And so.
You're right about the fact of the talented and hard to find and so yes. It does take a month or two of more than you thought it would.
But I think the next cohort will be equally of function of how we quickly get these the fed.
Cohort ramped up and productive so we're watching that closely.
Sort of started the conversation, but really start pulling the trigger on net once we get comfortable that this quarter is underway.
Sounds good I appreciate the commentary thanks guys.
Chuck.
We'll now hear from Richard Baldry with Roth capital.
Thanks and.
Some of the new logos coming in or on the smaller side and so I'm curious the time to go live.
Maybe as a different front and just the sales cycle being nine months, how how soon or how quickly do you think that typical new logo wins and can be.
And we turned on and it start to impact. The current revenues is it two quarters and of all of that up of 100% it feels like.
How fast they come on and it gives us an idea of how quick that acceleration comes.
Eric do you want to talk to that.
Yeah. So I think the you know typically for us and we've continued to shorten that cycle. So for.
For.
Most of these accounts.
That would be within the months following the the.
The signature.
And some instances.
Especially when you're dealing with a partner that they may be.
Are the factors that would delay of longer than that.
So it's within what we strive to get it done within the 30 day window.
And and then maybe could you give a little more broader discussion around sales corp, and its called cohort number one.
And how.
How quickly you think those people kind of can take over either a geographic territories will they be split around more of the U S market will it be broader than that and sort of what the gating factors to two cohort number to be is it how fast you can get your marketing qualified lead up to it.
Give them adequate coverage on.
Are there other factors, we have to think of that thanks.
I can take that.
And so.
The current expectation is.
Six months.
The context right now some of the ramp faster than others, but for the.
So far of that's what it seems like.
Okay, and you know presuming that that that works out would you think you'd keep up the sort of pace of hiring in out years as well or do you view this and really had sort of a one time.
Serge and then back to a more normalized growth after that.
That's a great question.
I would like to keep the cadence going but I did want to redo. The second cohort will have a better feel for it.
Okay. Thanks.
Okay.
And I hear from Mark Chappell with benchmark.
Hi, guys. Thank you for taking my question just.
Just a couple of here around the new logo wins are sort of could you just speak to whether generally these are our partner led deals or what are the big but not directly.
Directly from your sales upwards of your direct sales efforts.
Sure I'd say right now all of that is trending about 50%.
Which which is a good place and both the.
The rest on the channel side, we're trying to increase that velocity and volume of work right now, it's running at about half and half.
For the six months.
Okay, Great. So 50 50 and are these new logo wins so the.
I assume they're generally competitive wins and if so is there.
And the one or two people youre seeing and these deals more than others.
They are competitive with.
No I think the the usual cast of characters and the fact that we see.
Because of the installed base our platform kind of attribute sales.
Because of the many of these accounts already and so there's always that option.
We feel like Boston and on the messaging side.
And and we see.
Oh, cool and and and all of that income Metallics and Oh.
Sure.
We do see occasionally.
The Zen desk and the lower end of the enterprise, but.
That would be the.
Roundup.
Okay, Great and then finally here on the new logo wins.
Maybe just talk a little bit about what solutions. Your sales teams are leading with it and go to get those wins.
Due to primarily.
One is on the physical side of messaging plus yeah that.
The transcript.
Much of demand.
Yeah.
So that's one way of seeing.
Good pull for the other one of the.
Knowledge management with.
Therefore.
Our contact center and most people contact center and.
And then sometimes the self service, but most of the contact center.
All of your hub.
What we see happening when we get them the conversation.
The fact that we bring the free capabilities together and that standard and a good place.
The messaging knowledge and analytics that becomes the differentiator for us.
Okay, great. Thank you that's all for me.
Once again press Star one if you have a question with share from Philip Rigby with D. A Davidson.
Hey, guys. Thanks for taking the questions I wanted guys and the customer migrations of bad. So you mentioned accelerating and that puts you did last quarter.
You talk about what youre doing to drive or maybe even incentivize customer migrations to the cloud and then could you just give us an update on what youre seeing on in terms of spend uplift from customers that have migrated to the cloud.
Sure.
And so on the.
On the incentives for moving to the cloud.
We've been in conversation with almost all of our customers around the cloud migration and.
And.
What we have done now is kind of.
Three of the incentive if they sign up by the end of the <unk>.
It's clear for us.
In terms of of better commercially.
And the already give them the huge incentive by.
During the move from on premise to the cloud essentially for net charge, if the kind of quickly the deal so that and the colors of the incentive income.
The additional sort of.
On the discount levels.
Not too.
Not the whole point, where we lose money, but certainly could be very attractive and so.
Many of our customers that they're pretty much all of our significant customers.
On framework and I say significant I mean of anyone who's.
And the on Prem World paying us.
Over one.
$100000 of urine and support payments on time.
Much of the margin conversations with kind of actively on moving and it's not a question of if background.
That's one part of the response.
And then the second part of that.
Yes.
We are seeing it takes about.
Six months for customers to move to the cloud and getting used to the idea that they can activate and new capabilities very quickly.
And that part we are seeing good traction there.
So the number of all the expansion opportunities that we are now.
Benefiting from our and the pipeline are follow up sales in two of those accounts.
So yes that that is playing out.
The floor.
Great. Thank you that's that's all from me congrats on the quarter.
Okay.
And once again press star one if you have a question, we'll hear from Brett and no block with Brandenburg and capital markets.
Hi, guys. Thanks for taking my question.
Congrats on the strong quarter in terms of new SaaS customer adds.
And now if I missed it but can you provide an update to the customer.
Customer accounts or is the asphalt and Macau.
Not at this point no we just think of it.
And generally a net 150 range so we haven't.
So the other detailed updates.
Part of it yet and then the seasonal revenue that you said benefited this quarter that won't continue what are you actually referring to I I don't recall at the similar benefit and I looked at last year's Q2 of those I'm curious and try a little more color on that.
Yeah happy to so I think I mean, there were two.
Generally what we're seeing is where the customers all the.
Without the two elements the tied to this increase in volume over there.
And clearly of the.
The requirements.
You get into a situation, where they're using more than the purchase which drives some of which were there's typically the premium that has to be paid and so for those customers. We encourage them all the time two to increase the base level usage. So the.
The amount gets spit out of the overtime. So we definitely saw some aspects of debts.
The increase the usage and now working with them too.
The increase the basically of of consumption going forwards and then the other piece is really <unk>.
Round.
The safety.
Certain of our retail customers and customers that had the commerce activities.
We'd look to.
The increase the usage of stuff.
The activity around the holiday season, so that's sort of contributes and you sort of said.
Of the customers that.
So the pick up the nib business and the quarter with that drove increased volume.
Got it and the Natus last question on kind of Sysco.
They made a couple of big announcements and December kind of revamping, our web accident and the contact center solution as well as acquiring on.
And my mobile, which has I guess.
Chat and email capabilities, so how do you.
And then relative to your relationship with Cisco.
Hmm.
So yes, that's the Fairpoint because Cisco has acquired time on mobile and they do have digital messaging solution.
What we see today is that this is a multiyear journey for some of electric co to go from the installed base of the enterprise contact center, which is.
Where the most of you are at today to get to where it would be.
And a pure cloud solution and so we believe that on two fronts, one here and now for the next.
12 to 24 months, we see a tremendous opportunity of partnering continuing our partnership with them and making sure that their customer of our successful with all of our solutions both of them.
Jim basis, as well as the army.
Okay.
And we are continuing to do very well day in parallel we continue to have conversations of partner of the do it through how we can help them and their active.
The.
The strategic direction, and that's something that we continue to work on.
Perfect. Thanks, so much guys I appreciate it.
Sure.
I see no further questions and the queue I will now turn the conference over to management for any additional closing remarks.
Great. Thanks, operator, thanks again everybody.
All of listening and I look forward to providing you an update when we finish up on Q2.
Thanks.
This concludes today's call. Thank you for your participation you may now disconnect.
Okay.
Okay.
Okay.
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