Q2 2021 Model N Inc Earnings Call
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Greetings and welcome to model N second quarter 2021 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I'd now like to turn this conference over to your host MS. Gwyn Lauber director of Investor Relations. Thank you you may begin.
Good afternoon, and welcome to the earnings call for model N second quarter fiscal year, 2021 which ended on March 31st 2021.
This is gwyn lauber model and director of Investor Relations.
And with me on the call today are Jason blessing model and Chief Executive Officer.
John Ederer, Chief Financial Officer.
And then guy Who's the Vice President of F. P N a N I R and Cathy Lewis Chief Accounting Officer.
Our press release was issued after the close of market and is posted on our website.
The primary purpose of todays call is to provide you with information regarding our second quarter fiscal year, 2021 performance and our financial outlook for the third quarter and full fiscal year 2021.
Commentary made on this call may include forward looking statements.
These forward looking statements are based on management's current views and expectations as of today and should not be relied upon.
Presenting our views as of any subsequent date.
We disclaim any obligation to update any forward looking statements or outlook.
Actual results may differ materially please refer to the risk factors and our most recent form 10-Q filed with the SEC.
In addition, during today's call, we will discuss non-GAAP financial measures.
These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from GAAP results reckon.
Reconciliations of non-GAAP metrics to the nearest GAAP metrics are included in the earnings release issued today, which is available on our website.
I encourage you to visit our Investor Relations website at Investor Dog model and Dot com to access our second quarter fiscal year 2021 press release periodic S E T reports and.
And the webcast replay of this call.
Unless otherwise stated all financial comparisons in this call will be to our fiscal year 2020 results.
With that let me turn the call over to Jason.
Thanks, Glenn and good afternoon, everyone. Thank you for joining our call.
Today I'm pleased to share highlights for model N second quarter looks.
Looking back over the last year I'm amazed at how much progress model N and our customers have made despite the challenging environment I.
I am proud of the positive impact our customers have had fighting the pandemic and helping US deal with these challenging times and we are humbled to have played a small part and their efforts.
I am once again happy to report that our quarterly results exceeded our expectations.
Our success this quarter was driven by a healthy mix of large SaaS transitions customer expansions and.
And new logos from both high Tech and life Sciences.
Our professional services team despite being remote.
And so continues to execute well on project delivery and is playing a critical role and moving our customers to the cloud.
Today, I will provide more detail on our business, whilst I will share some market insights that we revealed at our recent customer of that as well as some perspective on the rest of the year before turning it over to John.
Our strong Q2 performance was powered by two large SaaS transition and continued strength in our professional services business.
Customer expansions and business services, which we recently acquired from Deloitte also made significant contributions to our results.
Total revenue subscription revenue services revenue adjusted EBITDA and non-GAAP EPS, all exceeded our guidance for the quarter.
I am also pleased to report that we are well ahead of our plan to integrate the Lloyd's business services team, which we purchased approximately 130 days ago.
We have been able to accelerate many of the operating synergies planned for later this fiscal year and then next for <unk>.
Renegotiate and key supplier contracts and thoughtfully managing other expenses. We have also integrated our sales teams, which we believe will allow us to fully capitalize on this important market opportunity in the coming years.
Our outlook for the year reflects the solid progress we were making with this business.
As we've discussed previously one of our largest near term growth opportunities is the transition of our on premise customers to model N revenue cloud.
This is important because it simplifies our business model, which we believe will continue to drive operational efficiencies.
SaaS transitions are also important because they are a catalyst for cross sell and up sell opportunities as customers modernize their model and applications and renew their relationship with us for the long term.
Since the announcement of J&J and SaaS transition last quarter. Our sales team continues to make significant progress planning out SaaS transitions with our remaining life sciences customers.
Industry reports published by IDC, and Gartner support what we're hearing from customers and prospects.
Stating that pharmaceutical and biotech companies are prioritizing cloud applications and their it budgets and analysts are projecting that this vertical will continue to see investment in 2020, one and beyond.
We believe that life sciences companies will accelerate their digital transformations and leverage cloud based solutions like model N to improve overall regulatory and commercial compliance, which directly touches top and bottom line performance.
As an example during the quarter and another top five pharma company Novartis joined J&J and started their SaaS transition.
This particular customer has been with model N for over 10 years and understands the value of our offerings because they help them simplify the complexity of their U S operations.
After evaluating our cloud offerings, including new functionality combined with the ease of taking updates Novartis decided that model N as the best partner for them for the next 10 years.
We believe that model N cloud platform will provide them with the agility necessary to handle today's day dynamic operating environment.
Also in the quarter, a top five med Tech company and a global leader in diabetes care and also a long time model N customer kicked off their SaaS transition.
And doing so they also expanded their product footprint to include valid data.
Validated as a great product that helps customers audit high volume rebate claims submissions against the actual contract to ensure accurate payments.
And this case, we are replacing and aging custom built on premise solution with model and validate a cloud offering.
This is a great example of how SaaS transitions are a catalyst for customers to evaluate new model and products.
For business reasons. This customer also needs to complete their go live this year and given model and strong track record for delivery. They felt that we are the best partner to help them with their objectives and their digital transformation.
And we remain very actively engaged with all of our customers, particularly our life Sciences Big 10 customers, who are increasingly looking to model and SaaS offerings help them compete and their dynamic markets, while remaining compliant and and ever changing regulatory environment.
And I am pleased with the progress that our sales and professional services teams continue to make with our customers and I believe that we will continue to see strong adoption of our cloud products by our largest customers over the next several years.
In the quarter, our professional services team continued their strong execution as they lead our customers to the cloud and maintain a very strong track record for quality and on time delivery.
And someone who started my career and professional services I feel that the level of quality and this team and some of the best I've seen and my 25 plus years and software.
His team also continues to innovate around our implementation methodology by leveraging our expertise from working with our largest customers and investing in new approaches to enable companies of any size to be successful using model N products.
This team's work is greatly appreciated by our customers and admired by everyone at model N.
During the quarter. We also had several successful customer go lives for example, a top 10 biopharmaceutical company that focuses on new approaches for life threatening illnesses and chronic conditions went live with their upgrades for the full suite of model N products.
During this project the customer also took advantage of several new enhancements and our product and retired the majority of their legacy customization.
This project is a great example of a two step approach that some of our customers are taking to move to the cloud and initial project to get them current and cloud ready before taking the next step and moving to SaaS.
On our call exactly one year ago as the uncertainty caused by the pandemic was increasing I stated that we would continue to invest in key growth areas, including our new logo sales team.
It's our belief that leaders invest during economic downturns and this allows them to accelerate into the recovery Bill.
Building out our new logo sales team is one such example, and this investment is leading to new customers as the economy starts to recover.
We also made an important move and Q2 by training, our new logo team to sell our business services offering.
Historically, a deloitte business services has relied heavily on big Deloitte to drive sales and as a result, they had a relatively small sales team.
Now at model N and our entire new logo team has enabled to sell this service along with all of our other core product offerings I expect this to drive growth as we are able to serve a larger portion and the market and sell however, a customer wants to buy revenue management.
During the quarter, we also signed a new logo with a European division of a global biotech company that is dedicated to developing transformative cancer therapies.
This new customer will use our global pricing management and international reference pricing solutions to better compete and their European market.
This deal actually signed in January and I'm pleased to report that the customer is already live on model N.
This is a great example of our new logo team opening an account, creating future cross sell opportunity in this case their U S operations and then our professional services team delivering a rapid packaged implementation.
Our high Tech business continues to recover and has made steady progress since this time last year.
And the second quarter, we signed targets, a new logo and a well known global supplier of computer accessories and peripherals.
Hi Tech team has also had success with cross selling and Upselling efforts, adding new products and select accounts, such as channel data management and our high margin recurring revenue education offering.
I believe that the increased activity that we're seeing and our high tech vertical, particularly following a rainmaker customer of that suggest that this vertical is on its way to recovery.
Now I'd like to talk briefly about some of the insights from our state revenue report that we published at our recent rainmaker customer event.
I think sharing this information with you as important as it will help you to understand some of the trends that we're seeing and our vertical markets and why we believe that we are well positioned for the future.
And life Sciences. The headline is the change is the new normal and gone or many of the approaches from the last 20 years.
Regulatory environments, and the U S and abroad are increasing and complexity and many life sciences companies believe the impact on their business in 2020, one will be even bigger than in previous years.
Model N and domain expertise allows us to simplify this complexity for our customers and easily provide updates through our SaaS delivery model.
Second the pandemic has had a significant impact on our customers and their revenue management processes.
During the pandemic customers developed therapies in record time and had to determine how to price and bring them to market all while working from home.
As our customers adapted to this new reality it reinforced the need for and agile best in class cloud approach to revenue management.
And high Tech and I'd also like to highlight a couple of key trends.
First artificial intelligence is moving from the much hyped technology to an important business enabler that can have a positive impact on how customers manage channel economics.
Model N is leading the industry and this area with the introduction of AI into our core revenue management products, which helps customers make better faster decisions around deal economics.
And the second key trend and high Tech is at industry consolidation combined with increasing channel complexity is resulting and the need to have better visibility and financial controls model.
Model N offers a full suite of applications, including from channel data management rebates and market development funds management and pricing that enables a unified approach to the channel for our customers.
The full state of revenue report, which includes a significant amount of additional detail as well as replace from a rainmaker customer event are available on our website and.
Get you to take a look at them and learn more about the products and the industries that we serve.
In closing I'm pleased with our results for the quarter I'm proud of how our team is executing and I am optimistic about the opportunity ahead for model N.
The increasingly complex regulatory and business environment presents significant challenges for our customers, but an opportunity for model N to help them navigate and thrive in this world given our teams deep domain expertise and our vertical solutions.
I'd now like to turn the call over to John to discuss our Q2 financial results and provide an update on our guidance John.
Thank you, Jason and good afternoon to everyone on the call.
As Jason highlighted we continue to execute well on our key growth drivers the impact can be seen in our Q2 results, which exceeded our expectations on every metric.
Certainly large SaaS transitions, such as J&J last quarter and Novartis this quarter for having a positive effect on both subscription and professional services revenue and.
We're also seeing the other elements of our strategy beginning to have an impact including customer expansions with products like valid data and channel data management and the addition of business services.
And that of our new logo sales team and the extension of our business in Europe.
Now looking specifically at our results for the second quarter.
Total revenue grew 21 per cent to $48 2 million, including $6 5 million of revenue from business services subscription.
Subscription revenue grew 24 per cent to $35 9 million and professional services revenue grew by 12% to $12 3 million.
These results exceeded our guidance for the quarter with the over performance driven by the earlier timing of subscription bookings as well as strong utilization on professional services.
And on a year over year basis, the acquisition had a positive impact on our overall top line growth.
And looking at the organic business separately keep in mind that the J&J deal in Q1 on affected the quarterly linearity of our revenue. This year also just as the upfront revenue recognition from J&J provided a boost last quarter, we faced a tough comparison here in Q2 with much higher term license revenue recognized last year.
Setting aside some of these anomalies due to revenue recognition accounting the underlying business is performing well and our first half results and revised full year guidance are ahead of the organic guidance that we provided at the beginning of the year.
Turning to profitability.
Non-GAAP gross profit for Q2 was $27 4 million or a gross margin of 57% versus 62% and Q2 last year.
Non-GAAP gross margin for subscription revenue was 66% and Q2 versus 72% last year.
And while non-GAAP gross margin for professional services revenue was 29% versus 35 per cent last year.
As we noted on our call last quarter the mix of revenue from business services had a dampening effect on our overall gross margins this quarter.
And on an organic basis, the core model N business had comparable and non-GAAP gross margins for Q2 last year for both subscription and professional services.
Operating expenses for Q2 were lower than expected due to accelerated synergies from the acquisition good cost management overall and the timing of some R&D investments.
And as a result, adjusted EBITDA for the quarter was $3 2 million or a margin of 7%, which was flat versus Q2 last year and well ahead of the high end of our guidance of breakeven.
Finally, non-GAAP net income was $1 6 million or four cents per share versus our expected non-GAAP net loss of five to six cents per share.
Looking at the balance sheet and cash flow, we ended the quarter with $148 3 million of cash and equivalents, which which was up by about $5 million from the end of December.
For free cash flow for the first six months of fiscal year 2021 was $2 4 million compared to $3 3 million last year.
Free cash flow for the current fiscal year includes transaction related expenses of $2 4 million as well as the impact of operating losses associated with the acquisition.
Now I'd like to provide you with guidance for the third quarter and update our outlook for the year.
It's important to note that our guidance for Q3 and the full fiscal year includes the expected impact from the acquisition.
Our outlook also reflects the impact of our larger SaaS transition deals such as J&J and the first quarter, which has impacted the expected quarterly linearity of subscription revenue and profit.
Finally, we do expect operating expenses to increase slightly over the second half of the year, particularly due to the timing of some planned R&D expenses as we continue to invest for the future.
In summary for the third quarter, we expect total revenue to be and the range of $48.5 million to $49 million.
Subscription revenue to be and the range of 35.5 to 36 million non.
Non-GAAP operating income to be and the range of one eight to $2 3 million.
And non-GAAP EPS to be and the range of one to two cents per share based on a fully diluted share count of approximately $37 1 million shares.
Finally, adjusted EBITDA is expected to be and a range of two to two and a half million dollars.
For the full fiscal year 2021.
Raising our guidance and now expect total revenue and the range of $189 million to $190 million.
Scripture and revenue and the range of $139 million to $140 million.
Non-GAAP operating income and the range of 13.7 to $14 7 million and non-GAAP income per share and the range of 21% to 24 cents based on a fully diluted share count of approximately $36 8 million shares.
For the year adjusted EBITDA is expected to be and a range of 14 five to $15 5 million.
Thank you for joining us today I'll now turn the call back over to the operator for questions.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate your line is in the question queue. You May press Star two and if you would like.
And from the queue for participants using speaker equipment, and maybe necessary for you to pick up your handset before pressing the starkey one moment, while we poll for questions.
Our first question comes from the line of Gelled for Wang with Baird. You May proceed with your question.
Hi, Greg Hi, everyone, Hi, I wanted to start with the delight business services, but it's nice that the contribution and the corridor.
With that better revenues and also a narrower operating losses are better than at least and we were bottling and in the quarter and I'm wondering I think the the lower Opex side and you you explained well I'm more curious on and maybe the revenue front and what areas of the business, maybe just being tied.
And more closely to the model and sales team helped but but what areas of the business maybe to deliver top line upside and do you have any sense of what maybe revenue synergies are ultimately it could be achieved over the next 12 to 18 months.
Hey, Joe Good afternoon, it's Jason So yeah, we're very pleased with the first quarter and how things are going.
You pointed out you know, we were able to accelerate synergies and several areas on the expense side, particularly in areas of hosting and some of the software contracts.
And then on the second part just kind of the overall demand for the business.
You know this this transaction has generated considerable interest with our existing customers and prospects and that's why we've.
<unk> integrated our sales forces. So we've just got better coverage and you know.
I have a better opportunity to serve this market and allow us to fully capitalize on the opportunity over the next two to three years.
And then just going back to some other findings and the state of revenue report and and maybe yeah interweaving.
The interest you're seeing and the specific category and then some of the other comments from the third parties are just just about cloud applications getting wider appeal more interest across both biotech and pharma.
Are there things that you're seeing particular interest and you know I think one other findings is that biotechs for thinking a little more proactively about getting these solutions up and running maybe what's and earlier timetable associated or or just being more mindful of what they need as they watch the commercial operation that would seem.
To be well aligned with wide Deloitte traditionally did well, but I'm curious if there are other specific areas given the studies you've done studies third parties I've done that seem to be really benefiting your business and kind of where the key priorities are for customers those share.
Yeah, Joe I think and one of your notes you might have a also site at the IDC report that we referenced as well and gardeners written some some similar reports and you know it certainly comes back to a combination of the things that we saw and our report as well with just regulatory complexity continuing to go up.
And model and being able to simplify that for our customers and then I think you know as we've talked about in the past I think this is an industry that had.
Been late to adopting cloud and.
The pandemic and work from home I think has really accelerated the cloud first.
Mindset and digital transformations, which of course, we benefit from both of these topics or excuse me from both of these trends you know the other thing I would say, we continue to see strength and as just as med Tech and general and it's one of the areas that we've been investing and from a product perspective and.
And we see them continue that segment of the industry continue to invest and modernize along with their pharma brothers and sisters.
Hi, Great I will leave it there thank you.
Thanks, Joe.
Our next question comes from the line of Ryan Macdonald with Needham and co. You May proceed with your question.
Hi, and thanks for taking my question and congrats on a nice quarter here Jason.
First question is around the SaaS transition you mentioned that.
You know one of the customers that started the transition during the quarter also included validated to validate and cloud offering just curious if you're seeing a shift are in and the conversations at all or or the adoption activity and you're going through these transitions from customers that are simply just focused on the transition to.
<unk> now thinking more strategically and not only transitioning but then taking the transition opportunity to continue to expand with Marlin.
Yeah. That's a great question Ryan that is certainly a pattern that's been emerging over the last couple of quarters, particularly as we get to some of our larger customers.
You know the.
They're not willing to upgrade to the cloud just for better economics, they have to see additional business value and so that's been that's opened up and opportunity for us to get in and pitch. Some of the other products that customers historically have not used it.
It's I think it's going to be increasingly a catalyst for cross sells and up sells and validate is one that generates a lot of interest our intelligence cloud offerings general generate a lot of interest and then things that we couldn't necessarily do as well and the on premise model like offering enhanced support offerings.
Our another thing that's that's emerged so I think when history is written and we'll look back and say SaaS transitions, where a great thing for us and our customers because of the incremental economics. It created but also because it was a catalyst for cross selling upsell.
Excellent and and for my follow up question I know, Jason you've done a really great job over the past couple of years or since he joined the company and building out a strong go to market motions, particularly driving improved results for the direct sales force. So so I was interested to see you know sort of post post the quarter close you know over the last few weeks here you know the.
Announcement of partnerships with channel Nymex for in the high Tech area and and global pricing innovations on the on the West Sciences vertical can you talk about how and how you expect these indirect channels to start to contribute to emotion that you've sort of already I guess mastered within some of these and markets. Thanks.
Yeah, there's really two types of partnerships well three types of partnerships that we're looking to drive. The first is on the ESI front and are these big digital transformations that model and is helping to drive that many of these companies a great catalyst to get more engaged with our big five consulting firms and and some of the other player.
And our ecosystem a global price innovations as an example of a solution a partnership where we have.
Two products that are very complementary together and and allow us to be more competitive and the marketplace and drive more value for our customers. So you can expect to continue to see those and then yeah channel dynamics as are the most recent example, and high tech of us partnering more with and influence or that is and accounts before customers even thing.
About buying software and we think that can be and interesting partnership for that type of partnership can be interest line or something.
And as well.
Yeah.
Great. Thanks, again, and congrats on a great quarter.
Thanks Ryan.
Our next question comes from the line of Jackson Ader with JP Morgan You May proceed with your question.
Hey, guys. Thanks for taking my question. The first one is on the business services are the Deloitte puts us right and the upside in the quarter I'm just curious.
How much of that was due you think due to that business, just simply performing better and independent of model N or how much of that business upside came from like you talked about just being ahead of schedule on a few integration aspects.
Yeah Jackson, it's a combination of all those things you know when we issued guidance last quarter. You know we were just getting post merger integration and kicked off and wanted to make sure. We gave thoughtful guidance on this business both for the quarter and and.
And how it would contribute for the rest of the year and I think as we've gotten into it and see and the opportunity to combine our sales forces.
Interest that we're you know, we're seeing from customers and prospects.
What's driving some of the top line performance and then.
Quite honestly.
You know the expense upside was a pleasant surprise, we were expecting some pretty thorny negotiations with.
Some of the vendors that we had to.
And where he had to assume the contracts and that are going much better than expected. So it was really a combination of things that came together and the upside.
That's great.
And then a.
Follow up for John on.
On the SaaS revenue side for the first.
First how much was what the SaaS revenue and the quarter and then.
Can we clarify.
And why would.
And I understand that debt the when somebody announces or it goes to the cloud mix of SaaS transition and Theres, some pull forward and and revenue, but on a go forward basis, why would the J&J SaaS transition make.
And <unk>.
Revenue recognition as we move forward and less steady.
Yeah, well, so it doesn't necessarily make it less steady it's just the fact that some.
Some of that got pulled up into Q1, and so if you think about a deal a typical ACB deal and you recognize it all ratably over a period of time, if you alter that by recognizing more of it upfront and that just leaves you with less for the subsequent quarters.
So that's the kind of the simple short answer on the J&J side there.
Gotcha, and then how much of SaaS revenue in the quarter.
Yeah, So if I look at that.
And this is frankly, a metric that we probably need to reevaluate in light of the acquisition of Deloitte and the inclusion of business services, but if.
And if I give you the comparable metric to what we talked about last quarter I think last quarter, we said that was up about 19%.
This quarter, we were up about 8% on an organic basis.
Okay alright, thank you.
Yeah.
Our next question comes from the line of Brian Peterson with Raymond James You May proceed with your question.
Oh, hi, Thanks for taking my question and congrats on the strong quarter. So just wanted to hit a little bit on some of the integration efforts. You mentioned you know obviously, we're seeing a lot of efficiency measures is there anything in terms of the go to market and in the capability and kind of understanding what the breadth of the portfolio can be I'm, just trying to think about you know what.
Some of the sales and marketing efficiencies that are going to be generated by this.
Yeah.
At least on the go to market side, Brian and it'll be really more on the growth side of things as I said in my prepared remarks.
The business services team inside of Deloitte had a fairly small sales.
Sales team and as you know, we announced this deal and starting to get feedback from customers and prospects. One they became interested and business services and so we thought it was really important to make sure we had.
The appropriate coverage I think the other thing that has been a pleasant surprise that emerged as well as we've had customers.
Talk to us about innovating around business services and potentially developing services that werent, a part of the Deloitte portfolio. So.
That's also I think it's been one of the reasons why we've accelerated the integration and and are putting our product and go to market teams together I guess is going to give us a much more comprehensive view of the market and how we serve it.
Understood, Thanks, Jason and I and I know you made and in your prepared commentary you talked about maybe high Tech coming back you know anything you could kind of expand on there or what you're seeing and the pipeline there.
Gives me confidence and that thanks, guys.
Yeah, we're certainly starting to see green shoots and high Tech and Theres, a number of different things that I would.
Site that are giving us a bit more confidence there we had record attendance at our rainmaker account both.
Both customers and prospects and.
And particularly the prospect side of things was very encouraging as we just look at our target accounts and who we're trying to engage with on the high Tech side that number has been been trending up.
RFP activity has been healthy and then the pipeline as I talked about on past calls has certainly solidified and then it was it was good to see the team execute well and the quarter signed a new logo with targets and then prosecute and several other cross sell and upsell deals within the base.
Thanks, guys.
Thanks, Brian.
Our next question comes from the line of Nick Maddock.
And Craig Hallum You May proceed with your question.
Hi, This is Nick Modi actually on for Chad Bennett and thanks for taking our questions.
Could you talk about the mix of deals and the quarter that utilize deal ramps relative to I think the 50 per cent them mix. It was in the past few quarters and and any comment on your outlook for the war and the use of deal ramps will return to pre pandemic levels and then also your confidence that these deal ramps will mature as you plan for.
Yeah. Good question, Nick So a couple of things that I'll say deal ramps have fluctuated quarter to quarter pre pandemic, we were ramping about a third of our deals and each quarter and then as we've previously reported it did pick up too.
<unk> 50 per cent, a little bit above 50% at times over the last four quarters and.
Pleased that this past quarter it was actually back to pre pandemic levels, particularly for new logos and so we talked about on the last call that we were expecting as we got on the other side of the pandemic that new logos in particular.
And our need to ramp their would go down and so we have started to see some of that and in this current quarter as well as and some other deals that are in flight.
We do continue to.
Anticipate to use ramps, particularly on SaaS transitions going forward and.
And that's always an important part as we help customers offset some of the transition costs and the near term.
But it is good to see ramps mitigating in the new logo space and then as we've talked about in the past I mean, our gross renewals are very strong and we started ramping.
Ramping deals about three years ago and as some of those early ramp deals have renewed we've seen them renewing it.
The full rate so to speak so we remain confident there as well.
Awesome and then just any more commentary you can give us around your revenue expansion within existing customers around deal ramps and cross sell of additional products and then finally, how would you characterize how much opportunities still exist just with them and the current base. Thank.
Thank you.
Yes, so when we do.
And do cross sells and up sells theirs.
And typically much less of a ramp unless of course, it's tied to a large SaaS transition but.
Typically cross sells and Upsells will have lower amounts of ramps just because we're able to turn those projects or excuse me products on and and the projects tend to be quicker.
Quicker.
And then in terms of you know.
Remaining opportunity you know, we're we're 18 months into the SaaS transitions, we had our first one go live at Gilead.
18 months ago, we've got about a dozen under our belt roughly a dozen and flight and now are working through the biggest part of the SaaS transition growth lever over the next couple of years as we address our top 20 customers and you know what.
We're really excited about that opportunity because it's not just a growth lever for SaaS transitions, but also stimulates that cross sell and upsell opportunity, which we quantified and multiple hundreds of millions of dollars. So.
And it's good to start to see those cross sell upsell patterns attaching to SaaS transitions.
Thank you.
Thanks, Nick.
Our next question comes from the line of Jin Manheimer with Colliers you May proceed with your question.
And thanks, guys. Good afternoon, congrats on a good quarter I wanted to ask and.
And another thing or two about the Deloitte business.
What's that business services contribution that you quoted six and a half million all services or was there any subscription component to that.
And I hate gene. This is John it are speaking that was a total revenue for the $6 5 million. We you know we didn't break it down further than that.
And nor have we provided guidance specifically on that piece of it and I guess, the one thing I would say is that as we have moved to much more rapidly integrate this business it will get harder and harder to draw those lines of distinction, particularly as we've merged the sales forces and started to cross sell to our existing customers is.
Well, so we did want to provide a little bit of additional insight in terms of the total revenue number and that's what the $6 $5 million.
Okay fair enough and how shall we think about the growth rate of that business again, I know it may be murky post integration, but you know given the greater level of sales resources that are being dedicated how might we think about growth in and and business services.
Yeah G and we we're not guiding specifically on the growth of business services for for two reasons. One the reason that John just cited whereas we blend the.
The teams together, it's going to get harder to split out and then and then I'll tie back to the one of the prior questions. I answered you know, we're going to continue to see new offerings that develop that weren't.
Included in the Deloitte a portfolio of services when they came together so it's really hard to give a number that you know will just be a specific growth on top of the six and a half that you see reported this quarter.
Sure No I understood. Thanks, Jason and lastly did you report the 12 month R. P O or is that not a number you reported every quarter.
<unk>.
Hi, Jim This is John again, and yes. So that number is in the 10-Q, which was also filed today.
It was 204 million and total.
And $108 million for the current portion.
Perfect. Thanks again.
Yep, Thanks gene.
Our next question comes from the line of Terry Tillman with tourists and May proceed with your question.
Hey, everyone. This is connor on for Terry. Thanks, again for taking my question I, just actually wanted to talk about the analytics product space and the customers that are consuming them. So in other Deutsche business as something that was going to help enable that area in terms of expansion. So I'm just kind of wondering what kind of key trends youre seeing with these products in terms of customer adoption and then where you see this.
Products heading.
Yeah. It's a great question. So part of the rationale of the Deloitte acquisition was we did get a new analytic product call. It gross to net and that is that generally answered and some of the past questions. You know, there's a lot of interest and some of these new offerings that came over from business services, So with business services.
And then the intelligence cloud is a relatively new product for us.
Net debt.
Has some of the lowest penetration and our customer base and so being able to provide sophisticated analytics on top of the transactional systems.
And historically been known so well for them really represents one of the key growth opportunities as we get through SaaS transitions you do have to be on our SaaS offering to take advantage of of intelligence cloud and so intelligence cloud along with some of the other analytic apps like valid data I think will continue to be very interesting.
<unk> for future growth.
Great. Thank you for the color.
Thanks Scott.
Our next question comes from line of.
And then.
D G I G and May proceed with your question.
Yeah. Thanks for taking the questions I guess as you look at how the vaccines Rollouts went through throughout the year have you had much in terms of participation and that and as you look forward and.
And two whether it's booster shots or you know.
Whatever kind of comes about and some of this longer term on a global basis.
Have you started looking at you know either developing a new product or helping companies that are going to potentially be involved in a and more global health care network and the future.
Yes. Thanks for the question, Matt So in terms of participation and I'm happy to report I'm vaccinated and I've got both Pfizer shots and came through it just fine. So that that was an important participation and then secondly, I mean from a product perspective.
One of our customers, who are participating and therapies and honestly med tech devices and so forth in support of the pandemic. We have seen increased activity in terms of usage of our products.
As a result of that.
So so that you know there has been a slight tailwind there and then.
Yes, I mean, as we look forward.
I do think there is potentially opportunity really just to you know to continue to help accelerate pricing strategies and market access strategies. If theres one thing that we learned and the pandemic and we certainly saw this in our state and revenue reported as well.
You know the rules we've operated underneath in the past have completely changed and time to market pricing strategies are going to have to continue to be rethought and the future and we continue to benefit from that since we're the commercial system of record for for a lot of these decisions.
Got it and then as you look at and some of the opportunities that were brought to you with the doi transaction and the pre pre revenue market and.
Can you just help us think about kind of how that pipeline is progressing and.
Sorry, if you touched on a little bit earlier, but just just sort of what that market is looking like especially as more of those companies seem to be looking at partnerships with with the larger pharma debt cards.
Yeah, as we talked about when we announced this deal that's a significant part of the market that we you know, we're generally not accessing or consistently accessing and it significantly boosted our Tam and I would say you know three plus quarters into this now we continue to see a lot of those pre revenue company.
Is that.
See a commercial approval on the horizon multiple commercial.
Approvals on the horizon and know that they need to modernize and get their revenue management infrastructure in place and you know.
And that activity and the pre commercial market just continues to pick up if you just look at the number of authorizations that are in process. So that's part of why we're excited about business services because it gives us an opportunity to access that part of the market but.
And also be able to sell how a customer wants to buy revenue management pre revenue up to some and largest companies and the world do want and business services and this acquisition now allows us to sell that way.
Alright, great. Thank you.
Thanks, Matt.
Okay.
Ladies and gentlemen, we have reached the N of today's question and answer session I would like to turn this call back over to Mr. Jason, but I think for closing remarks.
Thank you operator, and thank you everyone for attending today's call. We certainly look forward to talking to all of you throughout the quarter and have a nice evening. Thank you.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your evening.
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