Q4 2021 Medallia Inc Earnings Call
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Good afternoon, and welcome to <unk> fourth quarter fiscal 2021 earnings conference call.
Joining us for today's call and medallion CEO, Leslie stretch and CFO Roxanne home and at.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask the question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being reported and if you require any further assistance. Please press star zero.
With that I would like to turn the call over direct channel and then for introductory remarks Roxanne.
Thank you Gabriel and medallion fourth quarter and fiscal 2021 earnings Conference call. We issued our earnings release of the short time ago and furnished the related form 8-K to the SEC to access the press release. Please see the Investor Relations section of our website with me on the call today, and lightweight stretch president and CEO of <unk>.
Yeah.
Before we begin please remember during the course of this call we expect to make forward looking statements about the operations and future results of the medallion that may vary and involve many assumptions risks and uncertainties, including those related to the COVID-19 pandemic to the.
The extent possible are forward looking statements seek to take into account the impact of COVID-19. However, the crisis of this pandemic has created and very fluid and the situation is constantly evolving if any of the risks or uncertainties related to the forward looking statements develop or any of the assumptions related to the forward.
Looking statements prove incorrect actual results could differ materially from those expressed or implied on our forward looking statements.
For a discussion of our risk factors associated with the forward looking statements. Please refer to the text and the Companys press release issued today and to our periodic reports filed with the SEC, including our form 10-Q date of December nine 2020, we disclaim any obligation to update any forward looking statement on the.
Call today, we will refer to both GAAP and non-GAAP financial measures. The non revenue financial figures discussed today are non-GAAP unless their stated that the measure of GAAP.
Please refer to our press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures. Additionally in conjunction with the release of our earnings report, we have posted on our website at medallion Dot com under the Investor Relations section additional charts that identify trended.
Metric performance that we believe will aid in understanding and evaluate and our performance over time now I'll turn the call over the wisely.
Thank you Roxanne and good luck.
Afternoon, everyone.
Before I begin my prepared remarks once again, thank each and every medallions and for their hard work and FY 'twenty one.
I was pleased with the way our team stayed focused and connect you to our customers and do our business during the year.
Our opportunity and FY 'twenty two what's good for her.
Q4, FY 'twenty, one we had record SaaS revenue record top line revenue record new logos and record go launch to be precise we had 172 go lives and the quarter.
Nearly 50% of our enterprise customers, probably the 1000 users.
Added 67, new enterprise logos, bringing us to over 1070 enterprise customers with the annual contracts over 40% from the prior year.
And our employee experience customer count rose to over 100 and surgery.
Bookings from new customers and Q4 was nearly 50% of total bookings versus 40% for FY 'twenty.
Illustrates the strength of our platform as well as our significantly improved the ability for land and expand this is great for the long term health of our business.
Regarding the cross sell of additional module and should not have approximately 35% of enterprise customers with four or more modules from us.
We don't have nearly 18 of one.
100 customers 1800 customers and annual contracts. This includes approximately 700 mid market customers.
Ill focus of 75% from when we last disclose this metric on our Q2 call.
With our mid market momentum and the average selling prices net of approximately $250000 annual contract value.
For more natural land and expand SaaS level.
Turning to our new wins during the quarter just over a year ago, we announced our investment and public sector and position us for success and federal state and local government.
Our investments are beginning to pay off.
<unk> is emerging as the system that keeps all other systems citizen aware.
New U S federal government wins in the quarter included agencies, such as the Department of Education, The Federal Reserve the department of Agriculture.
And the U S. Postal service added employee experience capabilities for Q4, and and our leverage leveraging medallion for both customer and employee engagement on one platform.
The new state local government and education logos in the quarter of include New <unk>.
New Jersey Port Authority, the city of Edmonton, The state of Nebraska, the state of Indiana.
And along the state University is leveraging <unk> idea of platform to accelerate collaboration with students. The re imagined the campus experience post COVID-19.
The need for medallion and the public sector is not unique to North America, Horsham District Council and the U K is using our idea of platform to other cities to better connect with their community.
The rule and there was leveraging the power of video using moving loans to current feedback for light.
The National Health service continues to expand their usage of medallion for Q4, the again expanded to collect more signals across both the customer and employee landscapes.
Some of our commercial wins of the quarter included.
And the financial services Invesco, the financial Advisory company of May.
Property and casualty insurance company, a major U S life insurance company and a major U S Regional bank.
And health care, we owned business without the health, where we are providing a contact center solution in partnership with $5 million.
We also signed the amplify and in Italy, the world's largest health care during the hearing health care company.
And we were excited to announce the one of our largest health care provider customers. We've gone live with October vaccine patient feedback program designed to capture feedback on the back seat experience from scheduling to administering the vaccine at their locations. The feedback will allow them to measure of the quality of this critical moment for patients and to identify ways to improve.
And the experience.
As restaurants are working to serve customers. The new operating models, we had many wins in Q4 and casual dining and quick serve businesses Inc.
<unk> focused brands, Dave and Busters, TGI, Fridays and double your Canada and venues.
New business and hospitality continues to return we added resorts world and Diamond resorts and Q4, whilst our existing hospitality of enterprise customers remains active with 94% of those customers renewing for a year or more during 2020 some of them renewing during the height of the pandemic.
Yeah.
And Europe, we signed bulk of passenger cars sales the number one auto brand and Spain Telecom Italia, the number one telco and Italy.
And our tier one bank of Italy and of course, Salvatore Ferragamo of the great the Italian fashion brands.
We also signed OXXO, the largest chain of convenience stores and Latin America and of the other end of the retail spectrum, we added Harrods and the iconic UK Department store.
We're also seeing momentum and employee experience, we introduced our out of the box diversity and inclusion solutions and our digital employee experience solution.
Announced new integrations with services now busier and decision wise.
New logo wins and employee experience from Q4 included Saks Fifth Avenue Caesars Entertainment.
<unk> and credit Suisse.
Our mid market progresses importance of highlights as you can see from our average selling price data, we've succeeded in adding of mid market and land and expand business.
Self service and ease of use capabilities of come on tremendously and the last year. However, it's important to note that our offering and the mid market is significantly different from the legacy survey and market research players. We have the video voice ideas messaging, along with contact center and unsolicited feedback capabilities, which are unique and and <unk>.
High demand across all of mid market segments.
And quick start packages for market research and academic of used cases comprises video and ideas as well as self service survey, followed and differentiated from that of the other offerings and that segment.
Yes.
Our professional services team and so again with a record number of go launch as I mentioned, they did a fantastic job and I want to thank them publicly on this call.
Our partner ecosystem continued to mature with highlights, including and the value of resale agreement with the LOE USA for commercial and government and public services GPS. The ROIC selected credits the per mined their platform to help of leaving mental health channel and the U K from.
<unk> also launched Deloitte trust that the powered by the value so slightly as a way to evaluate the unmeasured experienced the impact on a large scale.
We signed the IBM is the new go to market partner.
The value for Microsoft Dynamics, 365 is now lie and the Microsoft marketplace. App source. We also signed an alliance agreement with KPMG UK.
Sales force named the value of the fastest growing up exchange province, and.
And for Adobe medallion is the number one and fastest growing and most widely engaged tech partner and Adobe's revenue share program.
The service now and the value was named the application development partner of the year.
We signed several other new partners and Q4 included large person for chat box RBR and messaging redbox for accessing for recordings and contact centers and due to the social listening and also chump meter for social listening.
Now turning to our new acquisition best of our just announced today this technology and extends our reach into the name of its very important for our customers unsolicited digital experience. This is of vital signal field. The when added to our existing capabilities further extend our customer relationships and delivered even better cross sell upsell and new.
Business opportunities for us.
As to the innovation that we have built and acquired since going public making of the most complete customer feedback system of record the mace all other systems customer or.
The best companies wouldn't build of product or service or sell and market. It without understanding the customer of physicians first are the.
The profile of capability allows us to add the voice of customer feeling and point of view to every personal interaction and allows our users to act on and inform basis, when reaching out to their customers.
At the same time this represents a powerful early warning system for both customers and employees delivering benefits and compliance and monitoring as well as churn risk and up sell opportunity.
You Wouldnt make a sales growth and the marketing email or text or make the service call without consulting the system of record for voice of customer medallions with its unique breadth of signal capture the best position to inform all other systems based on the high fidelity of our signal field and our sentiment analysis.
All systems interactions are much more powerful and we've taken sort of current customer contracts. The same can be said for employee patient and citizens.
Turning to look at our outlook for the future of.
Pipeline growth supports our increased forecast for FY 'twenty two from.
This region, coupled with our success and new ACB bookings for the second half of FY 'twenty, one we plan to continue to invest and products and go to market capability.
And number one focus is to accelerate subscription growth based on our unrivaled product offerings and the momentum we have seen in the back half of the year alongside the strength of our partners. We feel now is the time to invest to ensure we get our fair share of the large market opportunity.
I couldnt be more excited about our prospects for this calendar year and FY 'twenty two and for the long term I will now hand over to Ross and to provide more color on our financial performance of Q4, and our outlook for the year.
Thank you Leslie and good afternoon, everyone and reported strong financial results and Q4 and for fiscal 2021, including record total revenue and record SaaS revenue, we accomplished the asphalt transitioning from out of limited physical presence of a true.
Fresh for offices as a quick reminder, unless otherwise noted all numbers. The revenue mentioned during my remarks today are non-GAAP and you can find a reconciliation from GAAP to non-GAAP results in today's press release.
Total revenue for Q4 was 128 million and and.
Increase of $17 9 million or 16% over Q4 of fiscal 2020.
In Q4 subscription revenues were $103 8 million and increase of $17 7 million of 20% year over year.
As we've noted on the past call me of modify subscription term flexible payment of invoicing terms and exchange for extensions of existing contracts for certain customers' hardest hit by the pandemic on average the extension.
And <unk> period was for one additional year.
And I think with what we projected on our last earnings call and modify subscription terms have negatively impacted our subscription revenue and quinoa for by $1 million and approximately $3 million on a year to date basis.
Expect a similar impact in Q1 of fiscal 2022 at the last day.
As a reminder, the majority of our contracts are multiyear aerie Vocable include contracted minimums, and we expect our customers to honor the agreement.
Professional services revenue of $24 2 million for the quarter, which increased 1% year over year as we continue to build out our partner ecosystem for.
For the year recurring managed services revenue accounts for more than 50% of our total of professional services revenue, which is consistent with recent quarters. As a result recurring revenue continues to be 90% of total revenue.
Turning to some key metric.
We continue to see strong growth and new logos, we ended the quarter with nearly 1800 customers, including over 1070 enterprise customers and increase of 40% year over year, and approximately 700, midmarket customers and increase of 75% for midyear for the.
The 12 months ended January 31, and 2020, our dollar based net retention rate was 115% and furthering noted during the last half of the year, we saw strength in bookings from net customers and our land and expand strategy for success, both within our enterprise and mid market segment as a result of that and.
The continued progress within mid market, we expect to see fluctuations and our net dollar retention rate.
We're continuing to see traction and our cross sell performance at 35% of of our enterprise customers are using four or more of our 15 large losses compared to 25% in the year prior.
Turning to IPO of remaining performance obligations as of.
I have shared with you before our IPO metrics are impacted by contract duration and extension as well as timing of renewals for large multiyear contract for a while.
<unk> provides strong visibility it may fluctuate.
As you recall historically medallion reviewed the vast majority of the contracts on an annual basis throughout fiscal 2020, we professionalized, our operations and pivoted to renew contracts and a multi year basis.
The results we are seeing this impact on our total and current RPM growth rate.
This year total IPO was $800 million and increase of 18% year over year current Rps, which is the amount we expect to recognize this revenue over the next 12 months totaled $396 million and increase of 15% year over year.
And we expect to recognize 49% of total revenue and the next 12 months with the remaining 51% beyond the next 12 months.
Now I will turn to our non-GAAP gross margins and operating expenses.
Scripture revenue gross margin of 81% compared to 82% and the year ago quarter, the decline and subscription gross margin is primarily due to the impact of recent acquisitions.
In Q for professional services gross margin was 14% compared to 19% in Q4 of last year. We continue to focus on building out our partner ecosystem and we expect professional services gross margin will be and the range of 10% to 12% and Q1.
Sales and marketing expenses in Q4, with 51 4 million of 40% of revenue R&D expenses were $24 million for the quarter or 19% of revenue our go to market initiatives and R&D. Both remain an important investment area as we expand our platform.
G&A expenses were $11 $6 million of 9% of revenue and the quarter, we expect additional leverage on the G&A line over the longer term.
Non-GAAP operating income and the quarter was $549000 compared to 3000 and the year ago quarter non-GAAP net loss was $1 4 million compared to a gain of 491000 and.
In Q4 of last year.
Our GAAP operating income included and $11 $2 million charge associated with the retrospective adoption of the new lease standard ASC 842, which included our decision to sublease of a portion of our San Francisco and London offices.
Turning to the balance sheet, we ended Q4 with $682 4 million and cash and marketable securities.
Ascription deferred revenue was $254 5 million and increase of 14% year over year.
Let's now move on to discuss subscription billings, which we define as subscription revenue plus change and sequential subscription deferred revenue and contract assets as.
As you know there are a wide variety of factors that influence the metric therefore quarter to quarter fluctuations and volume should not be taken in the indication of changes and future revenue. We believe the most meaningful measure of our performance is subscription revenue growth for.
For Q4 of fiscal 2021, our trailing 12 month subscription billings growth rate was 14% keep in mind on a trailing 12 month basis subscription billings were negatively impacted by approximately $10 million, primarily due to new bookings and the invoicing terms that ramp over a multi year.
Period adjusting for this our trailing 12 month subscription billings growth rate would have been 17%.
Now turning to cash flow, we generated $12 8 million and cash from operations during the quarter, representing an operating cash flow margin of 10%.
As a reminder, we've historically experienced seasonality and cash flow from operations given that over 40% of the billings occur in the fourth quarter.
As a result, our cash flow has been positive in Q1, and Q4, followed by cash flow from operations being negative in Q2 and Q3 as it has been in the past few years, we anticipate the seasonality to continue.
Now moving to guidance as.
And blessing noted given the size of the market opportunity. We believe now is the time to invest in sales marketing and product innovation to accelerate our subscription revenue growth rate. Accordingly, as we continue to invest we expect the sales and marketing expense to be and the low 40% as a percent of revenue of.
Total revenue.
For Q1, we expect subscription revenue to be and the range of $103 million to $104 million representing.
Representing growth of 16% to 17% year over year, we are projecting total revenue to be between 126 per $128 million representing growth of 12% to 14% year over year. This takes into account the number of days and the first quarter.
We are assuming that the acquisition of <unk> will contribute approximately $1 million to Q1 subscription revenue for Q1, we expect non-GAAP operating loss to be and the range of 11% to $12 million. Looking ahead, we expect other income and expense to be of quarterly expense between 500 and $800000.
Primarily due to interest expense associated with the convert.
We project income tax expense to be a quarterly expense and the range of 600000 for $1 $1 million.
We anticipate basic weighted shares outstanding to be approximately of 158 million and fully diluted weighted shares outstanding to be approximately 183 million and finally, we anticipate our capital expenditure and Q1 to the approximately $7 million.
Primarily related to enhancing our data centers to meet customer demand.
For fiscal 2022, we are increasing our guidance for subscription revenue from 457 to $465 million to $469 million.
And the subscription growth rate of 22% to 23% over the prior year and this includes approximately $8 million full year of subscription revenue contribution from the acquisition of basketball. This is net of the write down of deferred revenue, we expect festivals impact on deferred revenue to be immaterial.
We expect total revenue of $563 million to $567 million, representing the growth rate of 18% to 19%. We continue to expect revenue to follow a similar pattern to this year with more than 50% of the annual revenue to be recognized in the seasonally strong second half.
Professional services revenue growth is projected to be and the low single digits and we have significantly expanded and plan to continue to expand the number of Si partners. We have this year. In addition, we continued to reduce implementation cost true are over 100 pre configured industry package solution.
And.
For fiscal 2022, we expect basic weighted shares outstanding to be approximately $164 million and fully diluted weighted shares outstanding to be approximately $187 million. Finally, we anticipate our capital expenditures and fiscal 2022 to be approximately.
<unk> $30 million.
Leslie and I will now take your questions operator.
At this time as a reminder, if you want to ask a question simply press star one on your telephone keypad.
Wish to withdraw the question press the bank.
The first question will come from Phil Winslow of Wells Fargo. Please go ahead.
Thanks, and congrats on the great close of the year of just.
And I wanted to focus and first on employee experience you have another quarter here of a strong and strong growth and customer count year over year.
The accounts.
For the understanding of the tie between the Es and CX changed, especially as they're thinking about about it.
Those are of reopening and return to work scenario and then just one follow up to that.
Yeah I think.
We of the message of getting out.
The old story GR 360 review on the chain is not enough for the simple survey it was not enough having a digital connection that you can turn on and off anytime, creating a safe space in other words, giving employees the same high fidelity to give you the customers.
And is now being seen by the best brands of the essential and I think listen the great opportunity for expansion of the business because of that market has been share of our survey vendors and also <unk>.
Of our traditional HR for the utility.
And because so we see that is the major opportunity of the juncture is important.
Between customer and employee, but the main thing is why you can get your employees and your customers.
Is that all of the signal in other words logging and give them an iPhone and give your employees or tell us sort of a bunch of machines and give them state of the our communications capability feedback capabilities sales space technology ideas technology video all of the ways that they can interact with you and help them for onboard cut of it.
Place some of the physical manifestation of culture and on boarding with this great virtual capability the sterno.
Great and then and some of the acquisition and congrats on closing of the other one but if I think about your strategy over the past call. It 12 18 months here. It seems to me that youre not only acquiring channels, but call. It a systems of interaction of our systems of accident.
Can you just price and update of the other.
Add ons, where the B b.
The contact contact center for you.
Video et cetera, and then how does flow fits into that.
Yes, the really are all about the same mission the share of number of characteristics.
Great technology there.
All of the use and customer environments around the value of the feedback platforms of present, and we see that and those either part of the signal capture spectrum for part of the intelligence and the action.
And best of those case.
Hugely important part of the signal capture today to get all of the unsolicited data all of that.
Screen recording.
Legitimate screen recording data session recording very nice movement tracking all of the understanding why basket skirt full and closed one of their own bond transaction sharper and water down all of the and creating a metric out of the digital experience score. If you will which is volume so the kind of a Tony and so we saw we.
This is the best technology.
The best of the best terms and we saw.
The demand surfacing and through the back half of the year with customers across verticals and so this is the really important technology tuck in for us.
The we will be working with and we think the customers don't want to buy these for each launches of technology from small vendors they want to buy the entire capture capability for the entire analysis of the predictive action capability we are building.
Great. Thanks, Dave.
Our next question will come from the voluntary of William Blair. Please go ahead.
Hey, Thanks for taking my questions and named the mezzanine of Sam and team Congrats nice job, especially on the mobile.
Logo count I wanted to touch initially on the investments, you're making but some of it.
And I'll have any conversations about sales force productivity and the ramp that we're is sales productivity and your view of the sort of perfect for optimal sales force productivity and if there is room to drive productivity why spend so much more on sales and the coming year versus driving productivity, which would be better leveraged help me understand sort of the thought process and how youre thinking about that.
And between bouncing that productivity improvement and and obviously investing in the new go to market.
I think it's of Great question I think the Theres. The number of the mentioned sort of part of it is international expansion, we've had great results and APAC and Latin America and India.
And we've seen the fabulous new logo for a call and we've frankly been said and recovered. So your current point of view the performance of the the tradeoff. There. We just don't know of covered our biggest challenges the where not every single out that when we get the outbound and enterprise we win most of the deals that matter and so we need to have more of that so that's really the.
Important for us so I think of the second thing you get sort of interest.
And just very important to recognize is there is a ton of bottomed out energy a ton of both of the energy around every aspects of the economy at this pandemic, we need to be positioned to really let at risk.
And things return to a new normal which will be a hybrid of where we were.
But more physical experience is already beginning to happen and we can see those and remember last year and especially in Q1 with physical experience business of some traditional retailers hospitality travel and transport, which really severely impacted okay. We want to be positioned through the letter of risk as we go forward, it's very hard to judge benefit and depend on the gear.
The we have seen more and more consistency more and more concrete evidence of many touch points and many different data points about the importance of this market, especially the digital spectrum and especially this concept.
Power environment the value of experience cloud is the system of record debates all other systems customer aware of employee aware of patient aware of from citizen of where there is a big market opportunity, so but be positioned to let it rip.
Yes.
Yes.
And youre seeing the demand of the data points accelerating the static bidding and quickly from the gas.
That makes sense.
Let's touch on one more quickly plank of the value that's become such important part of customer conversations become just the conversations.
David and done a great appetite for non 12, two years and types of projects of range dramatically unless you have to talk through how you've adjusted to increase tons of value for our customers and what are you seeing the sales cycles and implementation times.
Yes, so for buyers.
Great point too so.
And I'll give you a quote from one of our largest one of the largest largest largest U S companies largest retailers and the world talks.
And talking to the CMO recently.
She was telling me that they don't think in terms of 48 weeks of anymore and I think in terms of 48 hours and if you look out of some of the things that we did in 2020 of our FY 'twenty. One we followed up the National Health service on our idea of platform key current with feedback and fire them up within a week. So the times of argues obsolete the critics.
So you don't need the beauty of our platform as you can you can acquire one signal capture technology simple self service survey you cannot digital and you can then a voice you kind of on our video you'd go and need to boil the ocean to get value very very quickly and to the hours and our partners improving.
And getting better and better of professional services capability, but especially the medallion extra expense of the professional services team understand that the customers want to see results and the impact and in some cases of mandatory and we gave you. An example of the prepared remarks of the.
Pharmacy business, who has to get ready for the on premises vaccines.
And the now.
Let's get ready, let's do a traditional enterprise implementation GAAP. It quickly and you have to be able to turn on the volume and get things going with and hours or days for two weeks and months. So im very pleased and actually I don't want to be overconfident, but I'm very pleased with our products facility there, but also for <unk>.
And what was and our professional services people and our partners' abilities to move to move quickly and get the results from their customers.
Got it got it thanks for the colors.
Very helpful. Thanks, guys. Thank you. Thank you. Thank you.
Our next question will come from Scott Berg of Needham and company. Please go ahead.
Okay.
Leslie and Roxanne congrats on the quarter and thanks for taking my questions.
The first Roxanne and I wanted to see if you can give us a little bit of color and desktop all the time you gave the revenue contribution in <unk>.
And from that from a GAAP basis for for fiscal 'twenty, two here, but any thoughts on trailing 12 months revenues how fast they were growing you know just trying to understand maybe the financial scale of the business, but the great.
Perfect for Scott when we bought festival and we're really focused on the technology of industrial and with the technology has brought to their customer base and so I've shared with you that and fiscal FY in fiscal 'twenty. Two we anticipate that it will be about $8 million revenue contribution and so we look at is what's the value.
New is that we were getting for basketball versus other companies out there and other companies that you've looked at they have lots of pools of 20 to 30 times revenue and the space. So you would have we have about 100 customers that come with it.
So it's not a large number of customers and it's not a large amount of revenue, but we felt that this isn't really sweetheart deals and they were impacted by COVID-19 and they did have some customers and the hospitality and transport space that it impacted the growth rate, but we're looking at is what is the cash.
Pipeline look like and what does our pipeline look like and what is the customer demand looks like for the deal and how important losses, now and really taking the accelerating their growth rate and bringing the key product offering not only to our current customers and.
Also to our to perspective, new customers and one of the things that really pleases us about basketball is the fact that it has a broad representation from an industry and of vertical perspective, and also for enterprise and mid market customers.
<unk> fits perfectly into our wheelhouse from the technology and platform perspective.
Got it helpful. And then from a follow up question. Leslie you guys have highlighted partners a lot on this call and I remember when you and I first met after.
The first half for Ya joined the gallium partners was a big component of your go to market strategy with the company and and has been for you historically, but how should we think about the partner contribution to the business, maybe and in fiscal year 'twenty, One and then what should our assumptions the impact of your of your net new sales here going forward maybe over the next couple of years.
Great question and <unk>.
And really pleased with the traction and actually, albeit small, but the net of <unk>.
Revenue and contract traction of that.
We had and I called out some of that.
The.
The prepared remarks of and you get these awards, because you're actually adding value of contributing revenue for these companies are still small and as our first full public year. If you like where we have signed up some of these fields. The only thing there is an increasingly important part of the spectrum of course, we don't expect them to do it all for US This key concept.
And of the system of record for customer experience that makes for other applications and systems customer aware is where that's where we've landed on the value equation for our partners agree with it and see.
And so I'm really excited about.
The long term employees first year good progress.
We're not going to depend on our partners through our numbers for US, which is why we are increasing our investment and sales and marketing.
And we're very well positioned we're also to see very large.
We opened the enterprise partner of choice and we don't have any other confusion about our independence and I think.
That is powerful for us for a double its really our technology difference that excites These partners.
Helpful. Thanks, guys congrats.
Thank you. Thank you.
The next question will come from drew Foster of Citigroup. Please go ahead.
Hey, guys. Thanks for taking the questions Roxanne on the fiscal of 'twenty two guidance. There I just wanted to touch on the net expansion rates I mean, you made some comments from the past around.
The 115% sort of threshold potentially being a bottom and maybe even accelerating that and the future of what do you what are you assuming about where.
The net expansion rates go into.
And the fiscal 'twenty, two and also related to that I mean, you had a really strong contribution from for mid market. This year, just wondering if you're sort of thinking about contribution from that cohort differently as we get into next year.
Yes.
So you had very strong bookings contribution from net new customers and the back half of the year with nearly 50% and this compares to prior years that were approximately six 2% or a little higher than that and Youre right. Our new logo additions have been great and you of over 800 customers and 1070.
And over 1070 enterprise customers at the 40% of inquiry and.
And we've seen of 75% increase from just six months and our mid market growth.
And so our focus of our number one focus as we've shared on the call and with our subscription revenue growth rate and so we'll see the strong new customer adds and the investments that we're making from a go to market perspective, we anticipate we are going to continue to see strong customer adds and what do you think that the customer adds of great for the long term.
And the health of our business and our long term ability to cross sell and up sell to our current customer base, but right now and we're focused on it.
The successful as we can possibly be with these customers and continuing to execute on our land and expand strategy and so with the strength that we have seen and the last two quarters.
And so our net retention rate may moderate here between the world for mid teens.
And if we continue to see the strength of new logos, but with that said, we're really focused on the subscription revenue growth rate accelerating the subscription revenue growth rate and we truly believe that the addition of these new customers and the momentum we've seen.
And only going to continue and help the strength of business as we go forward.
Thanks for the color there of rocks and the other thing I wanted to just get some more color on was you had a shift and the sales organization since the last update and we'd love to share what was the best cardio key priorities or whether she and tons of making any additional changes to the organization or switching up the playbook for 2021 are we prioritizing some investments.
And I'd love to hear some additional color there. Thanks.
Yeah, Great question, So Elizabeth really was already in place and the company and leading so many of our high value.
So and it was a nice accenture and seamlessly and we had a great quarter for you.
The market sort of congrats to Elizabeth and the team.
And she's already in terms of why the investment and our key verticals and also the ecosystem the supports.
Sales of enterprise sales she is a formidable sales and the year.
And the extremely.
And well regarded especially and the customer experience world and.
So it's fabulous to have per leaving the senior field couldnt per pad of butter succession and critical how does that and leader.
We did not have a <unk>.
Chief revenue officer, so the split.
A promotion and she has a much bigger organization.
And the individuals that led the industry and for the past and so this is we're really well positioned. This is just another one of our investments to be positioned and just to let it rip.
Aerospace change through the fish.
For 2003 here.
Thanks for the color guys.
The next.
Next question will come from Rob Oliver of Baird. Please go ahead.
Good afternoon, and thanks for taking my questions you guys.
The first quick question for either one of you guys just.
And how youre thinking about the COVID-19 impact and recovery relative to the.
Of the subscription.
The outlook of 20% of 23% for for the fiscal year.
Contemplated in terms of recovery and then also of what you guys are kind of seeing from customers.
Right now.
So lots of little contemplated in our guidance and the increase in our guidance and the FY 'twenty. Two just did not assume there was going to be a significant recovery and the economy for.
From the pandemic situation, but we're focused on looking at is what do we see and the pipeline what is the strength, we have seen and the back half of the year and you look at the strength and the back half of the year of the strength of Athene and the pipeline that we're really optimistic about our ability to continue to grow.
And ultimately accelerate our subscription revenue growth rate and so those are the things that we considered when we put our guidance together.
Okay, great. Thanks, Roxanne I appreciate that and then.
And then.
And follow up just on the TV and I apologize I missed it I don't know if you guys gave out but the Tvs.
But you guys have been doing a nice job I think as part of your plan of bringing those down and it seems as if the just skewed towards the mid market in terms of new customer adds and wood.
For 10 that we're going to continue to see that ACB come down is that right should we continue to expect to continue to see that come down throughout the year and will that continue even if we see the snapback and some of the.
Roger spending engagement from from customers that may be either delaying or sterling projects because of COVID-19 or whatever thank you.
Other.
All of that.
We kind of should predict that but I think the main point is the agility of the field for land and expand the value of note.
Large scale for the pyramid the enterprise only.
And I think and also the heavy lift of Big Enterprise solution, which is not the case actually never been the case that is the positioning of some of the more for your from competitors.
Truth is we have the land and expand capability, we have a lot of information of the point of we have a great sales service capability as good as anybody.
So of service doesn't take you all the way when you're implementing 10000 stores 90000 employees of Big Enterprise. So I don't know, which direction, it's going to go and my main point is that we are much more agile and we're going to go after markets, where other people frankly have been on the road and shooting fish in the barrel right and we're going to go after that.
Aggressively there is a fantastic opportunity there under a new markets that don't have and have implemented experienced management of the way the week of deliberate. So the point is agility of the point is flexibility of land and expand modular approach and.
Back to broker for commercial pricing approach of all of those things are in place now which position us very well alongside the the sales and marketing investments that we're making and we'll see we'll keep reporting on it and talking about it but.
But it is indicative of our ability for land and expand and go there and b and be aggressive commercially when we need to.
I appreciate it thank you guys.
Next question will come from Daniel Bartus of Bank of America. Please go ahead.
Great Hey, guys. Thanks for taking the question.
And maybe for book is both and Roxanne just wanted to circle back to what Youre seeing and the pipeline that gives you confidence that growth accelerates through the year and that you have such a strong second half and is that pipeline already there to support it or do you need your recent sales and marketing investments to ramp to support the.
Great question the pipe.
One is healthy.
I mentioned, a little bit of the prepared remarks that certainly is one of the.
So that gives us confidence, but the other thing is the and the pandemic and and this virtual selling environment.
More time, we have there we have decoupled productivity from the air miles.
And I think that's extremely important and same for implementations. So we also have as we mentioned and the previous.
Response of <unk>.
<unk> the loan that expand and win more logos and so.
Of all of those things are part of it and we're not really heavily we're not depending on some return to the old normal weather or not depending on the other told but just look of the quality of the wins that we had all of the competitors all.
All of those were superb win some replacements the of mostly at the headwinds where the bunch of survey of T pool, and our difference is really shining through all of these things together, there's just the the markets. The there's other data points the tellers.
Just the good situation for us to invest smartly and prudently and our growth.
Great Great. That's that's helpful and then.
Roxanne I would've thought that your expansion business might of been stronger in the second half of 'twenty one.
And just because and antiquated and makes it tough protection and land new logos, but you guys showed the reverse so.
And just curious if you can speak to the pricing power that you had in the second half as customers came back for renewal under these different certain times had your pricing power compared to maybe pre COVID-19.
So our expansion of business was strong and the second half however, our new logo business was even stronger and so.
So as we have been focused on expanding our presence expanding our presence and mid market expanding our presence geographically.
And in specific verticals, such as healthcare and pumps that we have been very successful and very successful and EMEA. We've been very successful and eight and successful and APAC that has really allowed us to drive net new logo and we feel that our pricing is fair and our pricing.
And our ability to price and how we price.
And our pricing preference of consistent with what it has and before and we provide a high value to our customers and we provide something that no. One else provides out there our ability to capture the signals and annualize the signals and allow organizations to act on them and bring all of the other systems that they have and tour.
Our system to analyze and make the system employee and customer aware is like something that is not out there with anyone else.
That really helps us and we drive of high level of ROI and a high level of return is into the cost reduction or improve the customer retention and revenue with the customer base for our customers.
Great. Thanks, guys.
Thank you.
Your next question comes from the President Sean of Credit Suisse. Please go ahead.
Great. Thanks for taking my question Leslie If you think in terms of experienced management, Inc. Excuse me of embedded from the beginning of the new products service sort of experience versus added at the and based on your conversations where our customers on this adoption curve and how has COVID-19 maybe changed that.
The question, So I don't know if Inc.
Yeah.
It's still people still know initiating building products from from scratch with feedback embedded.
The wholesale and that's why we're here and you will have to tell you about the message to the market, but there is more and more of that we.
We did see some people if you take the restaurant business for example last year.
All of the sudden they were new customers alright. Thank you for taking some of the home services all of the submental new customers. So the desire to have this deep connection with customers. The suddenly very urgent and you cant depend of just old school loyalty systems to do that so we did see from benefits and benefits from our new solar.
And the prepared remarks, and I talked about the restaurant business in particular, the rehab and also the renewals that took place and the hospitality business here of 94% renew and for a year or more and one of the most if not the most challenged sector and our economy and our global economy and.
So the people.
People do understand that they have to meet the speed connections that theres, an opportunity to create customer context, which informs the them and are much more.
Average of way and so becoming this platform of customer awareness is the goal. That's obviously golar has value for everybody a great value to our partners because we add value to the CRM environment of our HR environment of our market environment and so.
Sure. So all of the screens are beginning to build nicely too.
A nice crescendo.
So that when we see some we.
We do get the benefit of a return to normal which we're not dependent at all.
We are and an even better position.
That's very helpful. And then just one quick follow up just from the demand environment, where are the relative to pre pandemic levels and if you think about customers that maybe delay decisions and the middle of the pandemic did they come back in the fourth quarter or are they may be more of a fiscal 'twenty two story.
No.
So the other.
And the demand environment, we feel good about hence our investment position of disposition.
But as the demand environment.
And just going to be satisfied with the old School simple survey of market research and Moscow ratings for its high technology, that's going to look to leverage high technology that cash.
Customer awareness capabilities, the ability to create fast touch points with other systems and other environments.
Customers are sophisticated small leads and the large.
And so that's why we built out of the platform the way the way we have again the roadmap is the condition of.
And our customers. So I think we're very well positioned.
This year, especially.
And I'm very excited to get on with the selling motion.
Great. Thanks again for taking my question.
Pleasure.
Your next question will come from Chad Bennett of Craig Hallum. Please go ahead.
Great. Thanks for taking my questions. So just.
And and maybe we've kind of harped on this a little bit just.
And the commentary around kind of the strong second half and strong fourth quarter in the business.
Both from I think Roxanne said from an expansion and net new logo business standpoint.
I guess I'm trying to compare and contrast of the commentary to the the kind of secondary metrics and I understand we have to do the new.
Normalization for the deal mods, but I mean relative to your long term targets is there something other than SaaS billings net retention RPM go under the Hood that we're not seeing that's much stronger than those numbers dictate.
Yeah.
First and foremost.
And I guess from Chad I think that of what we should be looking out of our subscription growth rate and when we give it we've given you guidance for the share and it's just the first quarter right and just started the first quarter and we're very optimistic about what we've seen that we've seen and the growth of the pipeline what we see when we're having conversations with the customers and you're right.
And our billings growth rate.
Need to adjust that for the $10 million, that's associated with ramps billings and 17% growth rate. The other thing is we've been very open about it in the first half of the year that we had impact and we had customer impact and concessions. We've made and we've made to the tune of $3 million of share and had a 1% impact on our growth.
And for customers, who have been impacted and high end retail and the travel and hospitality.
So all of the King of U S. The confidence and our guy knowing that we're starting early in the year and the confidence and what we see from a pipeline perspective as we move forward here.
And then I don't know Roxanne, if you spoke to this but just from the deal Mod standpoint.
Was it material in the fourth quarter and and should we expect that to continue into the new year here.
So as of Q3 and modifications that we made from a rent billings perspective was $5 million and now we're at 10 million and so it was $5 million for the quarter and the kids are very effective means for us to sell through of customer base, but we're focused on with these customers whether it's new customers.
Or whether it's expansion with the customers is landing and continuing to grow and if we need to new ramp invoicing from a multiyear contract perspective and Inc.
And the revenue with that customer obviously, the straight line, but the invoicing ramp over time and that's what we'll do and we are ultimately focused on and the fact that we're going to focus on our subscription growth rate.
Okay. Thank you much thank.
Thank you Ken.
Our next question will come from Terry Tillman of tourists Securities. Please go ahead.
Yes, Hi, Leslie and Roxanne, Thanks for taking my questions as well I guess, maybe the first question Leslie relates to as you've been adding more IP more products either through acquisitions or just building out your already strong platform.
How is your sales force, whether the hunters of farmers how of depth that they are selling these additional tools and that's too early on decibel, the like video and scrubbed the city some of the other tools bought and the past how often are you starting to see these attached to the new logo business.
Because it seems like across the enterprise and mid market. It feels like your Asps would go higher over time, because you just have more to offer the customer day, one and then I had a follow up for Roxanne.
Well I think of mid market and that we are of a small one of the customers. The name of the gamers to starts and put together thousands of customers and those states and so whether we land with one molecule or and others something we're not religious about do multiple jihad.
And the value of experience cloud in terms of the sales force's ability, we use of grade sales enablement technology and we.
The superb sales enablement team and we're constantly focused on bringing that team or for the intelligent and smart people.
Video is a very simple concept of growth, we do a lot of video and cross sell the trial.
Listen Tivo's platform is really surprise sales and the cross sell upsell new sales that we've seen for.
And that technology, and Boise has gone very well.
We have generated some of the deals and are proud to report.
And our first quarter of actually from holding the asset from great bonds of jumped into the transcription business with us.
And of Big words, so again fairly straightforward Tomlinson propositions are so.
Doesn't need of THC, the sale of their stockholders of some of them and do have views and perspective.
It's very straightforward widen out the color of videos from our key buyers spent for one.
Voice one of my more looking at channel interactions one of them I know looking at the billions of voice minutes, the existence of coal center systems, the way value locked away. These are simple concepts and our view of against the.
Very well.
Got it and then just the and thanks for that by the way Roxanne in terms of the.
And the prior question or questions around ramped deal structures and I think you just gave color on 5 billion impact and <unk> like as Youre looking at on kind of middle of the funnel or kind of late stage.
Funnel of activity.
Any thoughts at all about how to think about potential that impacting billings through the year.
Because we're going update our models and Theres no reason for us and to be aggressive and thinking about subscription billings knowing that we could still have this divergence from billings of revenue and just curious what you could say to that thank you.
And I'm sorry, it's hard for me to predict what I think will happen from a ramp billings perspective, we've had $10 million of share as I shared $5 million and this quarter.
Is are you know historically has been our largest quarter of the year from a bookings perspective and so.
And what I want to share with you is that we're really focused on our subscription revenue growth range and we're focused with meeting our customer where they are so we need to do a ramped billings over a multiyear term with the customer and we feel the effects of the right thing to do for them.
And overall business perspective.
That's what we're really focused on and we're focused on growth rate, we're focused on and working with our customers because customers are at different stages of their CX journey of different stages of their ex journey and different stages of how they've been impacted by the pandemic and so.
We feel our customers are really proud of and you can see at that 95% of our customer accounts and.
Hospitality they renewed.
Some of these individuals have had and most of these individuals have had their business health care insurance brokers had their business significantly impacted so and we're working with people and those industries and we're working with people as they continue to progress their staff and ex journey, because they don't think theres any doubt that the market is.
A large market and the customer experience and employee experience is really essential care of the future of companies and their ability to growth of business and retaining the customers.
Thank you.
Thank you.
Your next question will come from Brian Schwartz of Oppenheimer. Please go ahead.
Hi, Thanks for taking my questions. This afternoon, one for the last day, one for Roxanne Leslie I Wonder if you can comment or just shed some light with us on what you're seeing under the covers here in terms of the sales cycles and the pace of conversions of those trends is it possible the compare it to the year ago period, I know thats.
And Tom I, just had dream force and the year ago period, and the business did really well and Q4, but.
Anything that you can share with us what youre seeing in terms of those trends and maybe how they compare the pre pandemic levels and I'll follow up for Roxanne share.
I mean basically.
The smaller deals and foster cycles land and expand Oohs and <unk>.
More of them sort of quite a lot more of interest you can see from our new logo for them. So those are the things that characterize the market.
Most of them.
It's a good business environment is higher energy more volume, we like and I think we will see.
Some return to some of the larger enterprise deals.
Deals, but we're not complaining and we've got plenty to go up.
Thank you and then Roxanne and one question for you is there anything that you can just share with us either qualitatively or quantitatively on how much you're planning to grow the sales force and fiscal 2022, I think you highlighted your introductory comment that on sales and marketing and your expenses something that Youre planning.
The lean into this year.
So that's of Great question, Brian and I would love to give you specifics, but for competitive purposes, I, just don't think giving specifics and.
The right answer what I can give you some color is that we're looking at it from the spreads that perspective, we're looking at it can make investment.
Both and mid market and in our enterprise space, because we have seen success in both areas and we continue and we believe we can continue to see success and.
And I can only reiterate what lovely heads the previously and what we said in the prepared remarks is that just for the large market.
<unk> for example of shared last year that they had gone out and many of you see three and the C suites of banner the extend that.
Fiat is going to be the number two priority that they invest in the post COVID-19 world versus the pre Covid world.
And we see what we bring from the broad spectrum and our ability to really impact the return and the ROI that we bring to our customers and where the market is is now of the timeshare and back and invest and get to the deal that we're not even getting to and increasing our footprint.
And from a geographic perspective, and also from some of the key vertical.
Thank you.
Thank you.
Our next question will come from Richard Baldry of Roth Capital. Please go ahead.
Thanks, and I know you don't break it down for a publicly but is it fair and look at accelerating growth and argue that here mid market team is probably growing much faster off of smaller base and it's still maturing head count growing much quicker and sort of your go to market messaging tuning up much faster.
Versus the traditional enterprise, which has been and the sort of steady state growth for a while that really algebraically that explains a lot of your acceleration and fiscal 'twenty one.
So yes, we have seen significant growth and our mid market sales Force and Inc.
Back 18 months for two years ago, we essentially didn't have a sales and mid market sales force, we had a very small footprint. So you're right rich, it's a very small footprint or bookings perspective.
The crown deceleration of growth has been high from that but we're also seeing strength and enterprise and specific verticals and specific geographic geography EMEA for example, and APAC has been great health care has been great we've seen and great.
Great growth and <unk> and some other.
The industry well from the industry has been impacted and we've talked about with hospitality and travel for you.
We have seen from the percentage perspective significant increases and mid market, although the at a lower base, but we've also seen from.
And some key accelerant and enterprise space that we're very excited about some of these accelerants with b and the pipeline that and look into the today.
Great. Thanks, I'll take the rest offline.
Thank you rich.
We have time for one last question from Matt Vanvliet of BTG. Please go ahead.
Yes, hi, thanks for taking the question and nice job and the quarter I guess from a higher level perspective broadly when you're talking to customers now that you have.
I would say the maybe some of the most obvious types of brands and the big companies out there on the platform when youre going into that next tranche of customers. That's maybe kind of the the later adopters.
They're still on the sort of educational element of the sales process that you have to bring the.
The transition to the survey digital survey model as maybe more straightforward from somewhere in the winter business for 20 years ago and started marketing to what it is today. So just curious how much more of and education of how all of the different channels can impact and be measured and analyzed.
You can do different than your competition.
That's a great question, Matt so.
And I think that's pretty quick.
And the proposition is powerful and and penetrates and executive discussions very quickly, especially even and when youre doing the people who've never implemented feedback platform.
Perhaps only have familiarity with survey technology.
And it happens pretty quickly, but together they got the idea of that they should be listening to social feedback that there should be reading the answer this with the.
The spectrum, there should be listening and watching video.
Airbnb and using video for a long time.
And for feedback.
You'd be tapping into everybody the make springs and sales things of some kind of contact center.
The process and operations, while mining that data legitimately for.
Sure.
Feedback Nuggets that will tell us where to go next true inside of the cornerstone.
So it's pretty it's pretty straightforward, our best salespeople and better lead and.
The positioning of proposition and maybe.
Very quickly and so.
I think the education is pretty is pretty simple and we have superb content. We have a lot of video content that we use the.
The selling engagement and.
The receptions everywhere and one of them doing very coals moving more of anymore suits and interact with customers.
Customers that either the pre pandemic and the reception everywhere as open as.
And as pretty and buying things.
For us to educate them, where it takes the campaigns.
Some things are pretty quick.
We expect people to get the proposition across the minutes not taking multiple meetings to explain what we do we don't have the east was pretty straightforward the V.
Value all for of the guest trends most of it is very clear for pieces of stone.
Got it and then on the partner side as.
As you continue to build that out or are there any particular areas of <unk>.
Strengths, whether it's on the <unk> of New York side or in particular regions, where you've had maybe more success and then Conversely, what which areas would you say are sort of meeting the most investment over the next 12 to 24 months.
Yeah, Great question Mike.
And the prepared remarks some.
Some of the progress that we've made from the very focused investment with the Lloyds.
Also called out the independent software vendor the address where we've had superb recognition from three of the biggest brands.
And the permit but I think of to your investment of question internationally is where I think we'd need to ramp up of focus.
And so you were doing the great job, especially in the markets from Korea, and Japan, and where they are working with several new potentially new great partners.
<unk> is off the road.
Second and third largest software market of the world and so investing there and are investing.
In EMEA to build of specialists local partnerships is probably the next phase for us.
Great. Thanks for taking my question.
Thank you.
And I'll turn the call back over to Mr stretch for closing remarks.
Thank you for taking the time and look forward to seeing you all on the road.
This concludes today's conference call. Thank you very much for joining you may now disconnect.
Yes.
Okay.
And then.
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Okay.
Okay.
Yes.
Yeah.