Q1 2021 ON24 Inc Earnings Call
Yeah of Crimean hurt on hold for the on 'twenty for its first quarter 2021 earnings conference call. At this time, we're assembling today's audience of tend to be the way shortly but I. Appreciate your patience and please remain on the line.
[music].
Please standby.
Good afternoon and welcome. Please note that the lives of the interactive webcast of today's call maybe accessed via the Investor Relations section of the company's website at Www Dot investors Dot on 24 Dot com.
Upon completion of the prepared remarks, we will open the call for questions, which may be submitted via the webcast portal or the dial in line. Please.
Please note that this call is being recorded.
At this time of like to turn the comments or Tamale Bourbon with the Blue shirt group. Please go ahead.
Thank you Hello, and good afternoon, everyone welcome to the Orange report first quarter 2021 earnings conference call.
On the call with me today are Surat's, you're on the founder and CEO of non 24, and Chief Financial Officer, the bots Ronnie.
I'd like to remind everyone that some information provided during this call may include forward looking statements, including without limitation statements about on 24 its future event.
Specced at the financial and operating results.
The trends global economic trends and the expected timing and benefits if any of such strength.
These forward looking statements may contain such words as project outlook future expects will anticipate believes intends or referred to as guidance.
These forward looking statements reflect beliefs estimates and predictions as of today and on 24 expressly assumes no obligation to update any such forward looking statements.
These forward looking statements are only predictions and are subject to substantial rate.
Factors that could cause or contribute to such differences include but are not limited to risks associated with our ability to attract new customers.
On to existing customers.
The actuation in our performance of competition in our market and any decline in demand for our solution.
Our ability to expand our sales and marketing capabilities and otherwise manage our growth the impact of COVID-19 pandemic and other risks identified in the company at the SEC filings.
For a detailed description of risks and uncertainties, which could impact of these forward looking statements you should review on 24th periodic SEC filings, including the risks identified in today's financial press release.
We'd also like to point out that on today's call. We will report both GAAP and non-GAAP results. We use these non-GAAP financial measures to evaluate our ongoing operation and for internal planning and forecasting purposes.
Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP.
The fee the reconciliations of these non-GAAP financial measures. Please refer to today's financial press release, I will now turn the call over to shrunk truck.
Thank you Mollie and welcome everyone to all the 20 fours force water one day.
<unk> financial results conference call.
Thank you for joining us.
Our call today I'll share a quick information of our financial results for Q1 2041.
And that would provide an update on our business momentum.
I'll finish with a recap of our annual conference and product announcements before turning it over to Steve to review, our first quarter financials.
I'm pleased to report on financial results for the fourth score of 40 to 41 exceeding the high end of our guidance.
For the first quarter, we delivered revenue of.
The 51 1 million.
Although the coupe of sudden compared for the same period last year.
Our digital experience platform business grew 111% year over year total.
The lost $15 million.
Our increased 90% year over year, ending the first quarter of 2021 with $163 $1 million.
Sure.
At the same time, we demonstrated significant leverage which drove non-GAAP operating income of two 8 million and $3 2 million and free cash flow in the first quarter.
As we have many listeners or just getting to know on 24.
On the spend some time discussing the background on funding.
Sure.
On 24 deliveries of distillate sales platform that enables thousands of businesses the convert.
Millions of prospects into customers.
These additional expenses, which include interactive webinar experiences.
First of all conferences and always on multi media content experiences allow companies to deeply engage with their prospects at scale.
The Orange life of platform takes the audience engagement converts that into force force in data.
First of all of this debt yes.
AI driven platform.
Mix of data action of integrating that within our customer sales and marketing ecosystem.
Good day, we got on some of the world's largest and most recognized businesses in the world as our customers including.
Three of the five largest global technology companies.
All of the five largest U S banks.
Of the five largest global healthcare.
Three of the five largest global industrial and manufacturing.
We have a very large debt that we currently estimate to be over $42 billion worldwide and the.
And expect this market opportunity to grow as digital is increasingly the.
Our platform is the system of engagement that deliver the experiences purpose built for marketing and sales.
A single on 24 live experience averages 15 minutes the audience of more than 200 attendees delivering over 20 of data points of engagement for each attendee.
And that's just the single experience.
We don't provide seconds of engagement on 24 delivers all of words of engagements with prospects.
Many of our customers deliver hundreds of thousands of experiences.
Yes.
As prospects engage with these experiences they provide the additional bodies.
The deeper the engagement the bit of the first sports on data and with better data on our customers getting further personalize the next experience for the prospects.
Griffin engine, increasing the overall business impact.
That creates a flywheel effect.
And that is what is the core of our platform today.
We believe our cloud based platform stands alone when it comes to driving engagement.
Delivering data on.
This is the on 24 data rich system of engage.
Now, let's talk more specifically a lot of that.
From a profit.
There are three key components.
On the 24 of experiences.
On 24 of intelligence and on 44 connect.
First on the on 44 experiences.
We are a suite of four products.
All of 24 of elite our flagship lie interact the webinar experience product.
All of the political virtual conference and the more scalable digital events.
On the 20 per engagement of you read an always on multimedia content experience product and on 24 target of personalized highly relevant rich media content experience.
Every on site for Xps product is backed by our analytics layer on 24 intelligence.
As customers engage with these experiences leads generated for sports on data would you run through the on 44 intelligence module.
And those insights.
Yes.
Recapture of lifetime activity for every prospect.
There is three of the business interests.
The automatically recommend <unk>.
All of the content and personalize the next experience.
This propels buyers forward, taking them from one relevant experiences of the next.
Reducing friction and accelerated conversion and revenue.
The final who all 20 for connect we make the data available in the sales and marketing ecosystem of our.
Customers.
We have built near real time deep integrations with many leading CRM marketing automation and business intelligence tools.
It is our holistic platform approach.
This day.
Peter.
The integrations that sets us apart.
We've combined interactive multimedia experiences with rich customer intelligence, and then grow the edge.
Enterprises, where typically the most of them.
Yes, the providers do what we do.
Our platform provides a single integrated solution and.
And we are delivering all of this while also supporting critical enterprise requirements on the global scale.
That puts our platform of the epicenter of customer engagements across the enterprise.
Now looking forward.
We believe the future is all of our digital of course hybrid engaged.
While the physical events will come back and so on for Dave will be used to complement and augment our digital first strategy.
Ladies and gentlemen, there is no going back.
This is not just a new normal.
Is a better way.
Our strong first quarter results are proof.
Net of additional first future is now the new low or how we drive revenue per day.
You just have to look at what our customers of talent.
And the incredible results they are achieved.
One of the world's top CRM software company.
That's been a 100 K plus <unk> of our customer for several years.
And as the engage millions of the prospects and customers to up net.
Sure.
45 teams across the demand generation product market feel the marketing and more use on 24 elite and.
On the virtual conferences to create and deliver thousands of bits of little webinar experiences and virtual events in 34 different languages.
The more distal experiences they do the greater the Ottawa.
In 2020, the digital engagement strategy resulted in a 60% increase in deal size.
135% increase in marketing source pipeline.
And all of those are 200% increase in the average contract value on.
Another long term 100, K plus <unk> of our customer.
Is the multinational industrial conglomerate.
We enabled multiple business units, including energy healthcare and manufacturing the build part of the leadership provide channel enablement and drive direct sales Spike life houses of the live and on demand digital experiences powered by the entre for elite and engagement.
We're just one of their business units alone we powered digitally engaged with hundreds of.
Thousands of the prospects and customers each month.
Which led to a 400% increase of.
Leads moving into the pipeline in 2020.
And our platform is how the leading biopharmaceutical company sales.
The peer to peer price.
On the big exchanges for the exploration of new medical innovations the.
The needed to re imagine all of the company could engage healthcare professionals interdigital first of all.
Using all of 24 of elite.
Engagement hub and target.
Creative digital experiences, including virtual conferences seminars and on demand all of these hubs to increase engagement with physicians.
200%.
As the pharmaceutical industry becomes increasingly digital we see great momentum within this vertical.
And in the first quarter, we acquired new customers on various industries like pharmaceuticals manufacturing and even retail where we're seeing new use cases of March.
For example.
One of the multi product wins in Q1 on one of the nation's largest home improvement retailers, which is using the platform to educate and engage contractors and individual homeowners in the digital first way.
This is an important part of the company's strategy.
<unk> got contractor in consumer revenue streams.
They are using all 24 of elite engagement hub and virtual conference.
Liver multimedia do it yourself content on.
The improvement of tips, and even delivered digital coupons.
Online and in store purchases.
Another expansion in Q1 came from the chemical business unit of one of the largest global oil and gas companies.
The chose on 24 to accelerate traditionally long sales cycle.
They're using on 44 of elite engagement target the create a system of engagement to target hard to reach audiences.
We had already been working with their technology and oil and gas divisions, giving us in total of attraction the lag.
And expenses.
And we are accelerating our international land and expand motion with greater sales capacity.
What are you sort of by seven all of the sudden support multi lingual capabilities and more of.
This quarter.
We have grown our footprint within the leading Japan based multinational it equipment and services Scott.
It uses all 44 of elite engagement out target and virtual conference all four.
All of their digital channel enablement strategy in APAC, EMEA and North America.
Now, let's shift to the topic of innovation.
And on 24, we are committed to continuously innovating across our plants.
We recently made announcements in three.
The key areas.
One.
Developing the next level of busily engaged with the continue to truly capture audience attention and all of our dynamic and effective experiences that drive deep engagement and force person data.
True.
Powerful AI engine rebuilt the borrower experiences and create unique personalized journeys every individual audience member.
And finally, we make all of the first force in data and buying signals recollect available to the sales and marketing ecosystems of our customers.
We have built near real time deep integrations with many leading CRM marketing automation and business intelligence tools.
We have made several recent announcements in this area the.
Add important new integrations of further expand.
Rich ecosystem.
Now, let's take a look at the latest innovations on building the next level of digital engagement.
We have been seeing growing demand for bidirectional video engagement between presenters the attendees.
Attendee do a 10 day and finally between sales and attendees.
And that is why the drilling onshore depot breakup.
On 24 breakout available on.
<unk> elite today.
We are enabling our customers, who have even more flexibility and audience engagement within and beyond the live webinar experience.
You can enable seamless and create the breakout growth.
The NBS to do peer to peer networking.
You can have moderated sessions with truly interactive.
Video Q&A sessions with subject matter experts.
And you can enable immediate one on ones with sales reps accelerating conversion.
This is a very exciting new capability that is a great deal of interest from our customer base.
Once again.
On what it was redefining the engagement in a digital first world.
And we will soon be delivering this product across the traditional experience products, including our virtual conference offering.
Next.
As our customers often use our platform as the primary system for sales and marketing.
Engage prospects of the customers, we are seeing demand for integrations with conversational AI GAAP.
Sales.
Our first integration of the Sky is the market leader in conversational AI grip.
Now to our seamless integration of our customers get immediately connect light webinar event prospects with their sales teams.
Another key product.
The introduction is the virtual conference growth, which complements our existing virtual conference enterprise product.
Targeted for the commercial market thus the.
<unk> quickly standup online conferences, Roadshows group training or other of multi session.
Audiences can create their own agenda.
The <unk> keynotes visit sponsors explore demo.
And net work with experts and other attendees.
With the introduction of breakouts conversational AI and virtual conference growth.
Continue to deliver the next level of digital engagement.
The second area of innovation is around our powerful AI engine.
That creates unique personalized journeys for every individual audience member on.
On April 20, <unk>, we launched the new yes based on.
The <unk> recommendation engine.
The all 20 of Toria engine Leverages, the vast pool of data collected through millions of engagement points across onshoring of our experiences to inform dynamic content.
Based on the user of the history of consuming content on.
Engine creates unique content recommendations.
Particularly tailored to the individual interests.
Our AI engine powered by force sports on data will continue to take digital experiences to the next level.
Our customers to automatically generate journeys that are uniquely matched with each individual lead or cross.
The third area of product enhancements is with our real time data integration.
The the entre of refill connect we are delivering the most connected digital engagement platform ecosystem.
We made the deep engagement data available in the sales and marketing ecosystem of our customers.
And they had some customers to take near real time action.
We have built deep integrations with many leading CRM marketing automation and business intelligence tools.
We recently announced two new and important integrations.
In the life Sciences, and pharmaceutical industries, we announced a new integration of the fever.
Events, the leading player in the market.
The integration of enabled the life science marketers the capture every level of on 24 this will experience day.
Registration on the attendance.
<unk> points of engagement.
Together with Veeva, we will give customers the single view of the audience and engage with information to better inform and trigger actions across marketing and sales.
Integrating on 'twenty relief with Veeva CRM events.
We will provide marketing and sales teams with an end to end solution for planning.
Securing and measuring the impact of additional events and engagement activities with healthcare professionals.
I'm also excited about the work we're doing the extend our ecosystem of deep integrations the sales engagement tools.
Our 360 degree of view of prospect engagement has become central to our customer sales motions, providing critical insights for sales to prioritize and personalized lead fall. This.
This data is already integrated with leading CRM systems and now we are partnering with outreach leading sales engage the platform who take it one step further.
Yeah.
With this integration.
Those teams will be able to take immediate action on force sports and data in near real time, increasing the return on engagement.
This new integration of John's others that on 24 supports of the day with all the Twentyfold connect including CRM and marketing automation tools, such as sales force.
The Adobe Marco Oracle eloquent and many others.
There is so much more we are working on as we increase the pace of innovation across the platforms. The weekend remained true to our commitment to creating the most engaging data rich dynamic scalable.
At the enterprise class digital experience platform.
We look forward to continuing to update you on our progress in this area.
Now, let me share some information about our growth vector.
First we are adding sales capacity to drive new customer acquisition expansion and upsell.
That could be of entering new international markets, including Japan and dock.
And finally, we are investing in our R&D organization and continue to develop new products to add to our overall platform of.
To wrap up.
We are very excited about the customer momentum we are seeing for both new customer acquisition and the existing customer expansion and upsell.
Our platform today enables thousands of companies.
The millions of prospects.
Two customers.
We just came off of very successful virtual conference the on 24 experience.
We have thousands of attendees John.
It is available on demand and on.
Encourage all of you to watch it.
You can find the length of the on demand replay on our homepage at on 24 dotcom.
We have also included the leg and the earnings call Webinar.
The highlight of the conference was the customer participation and the stories that they are share on the results. They are achieving using on 40 for the.
The customers presenting concluded sales force GE Honeywell SAP Google.
<unk>, the looker fidelity National information services and vendors.
The business benefits that our customers on achieving with our platform and generating sales and pipeline are impressive.
Denied.
As we move forward into a digital first hybrid war, we believe that we are ideally positioned with the data rich digital first system of engagement that enables business growth for our customers.
With that.
I'll hand, it over to our CFO.
The vet wanted.
The walk you through our Q1 results.
In more detail.
Thank you.
Thank you, Sean and good afternoon, everyone of sure.
Rob mentioned, we are very pleased with our first quarter results.
I'm going to start the discussion of our results with revenue and the.
Majority of our revenue is generated from subscriptions that we sell to our digital experience platform.
She is delivered through cloud based software.
We also generate revenue from professional services, which primarily consist of implementation and support services.
Digital experience platform revenue excludes revenue from our legacy product offering, which we stopped selling to new customers in 2018.
And is <unk>, 2% of our revenue in Q1 2021.
Total revenue for the first quarter was $50 1 million, an increase of 102% compared to Q1 of 2020.
Our digital experience platform revenue was $50 million, an increase of 111% year over year.
Subscription of other platform revenue for the first quarter 2021 was $42 9 million, an increase of 115% compared to the first quarter of 2020 as.
As a reminder, this includes overages, which are generally around 3% to 4% of on revenue, but can fluctuate depending on customer usage of our platform and seasonality.
Professional services revenue in the first quarter was $7 2 million, an increase of 49% year over year, representing 14% of total revenue.
As we mentioned last quarter. The first quarter is typically a seasonally low quarter for professional services for us.
We expect this revenue as a percentage of total revenue to be up in the mid teens during Q2.
Moving on the E R.
<unk> represents the annualized value of all subscription contracts at the end of the period and excludes professional services on overage.
All of our growth reflects our ability to both land new customers and expand our footprint within existing customers as they add additional users capacity and products and our platform becomes more strategic across their businesses.
Total <unk> at the end of Q1, 2021 was $163 1 million, an increase of 90% year over year the growth of our IRR is underpinned by both new customer acquisition, which continued the strong pace in Q1 as well as existing customers continuing to expand.
On their usage of our products.
The key driver of our IRR is new customer acquisition. We ended the first quarter of 2021 with 2062 customers representing growth of 37% year over year.
In addition at the end of the first quarter, we had 325 customers with <unk> of $100000 of Moore, representing growth of 102% year over year.
This demonstrates our ongoing traction with larger enterprise customers.
We are confident we will continue the leverage our existing customer base to upsell our suite of experiences providing a long runway for ongoing growth.
Before turning to expense items and profitability I would like to point out that I will be discussing non-GAAP results going forward are non-GAAP results exclude stock based compensation as well as certain other items, our GAAP financial results along with a reconciliation between GAAP and non-GAAP results.
It can be found in our earnings release.
Gross profit in the quarter was $39 7 million, representing a gross margin of 79% compared to 73% in the year ago period.
We intend to continue to invest in the scale of the business throughout fiscal 2021 and as a result, we expect this to reduce gross margins in the near term.
Turning now to operating expenses sales.
And marketing expense in Q1 was $22 2 million compared to $11 9 million in Q1 last year.
This represents 44% of total revenue an improvement compared to 48% in the first quarter last year.
We intend to continue investing in sales and marketing to support increased demand for our digital experience.
R&D expense in Q1 was $7 2 million compared to $4 million in Q1 last year.
This represents 14% of total revenue versus the 16% in the same period last year.
We have increased our R&D spending in absolute dollars over the past year and as we move through 2021, we intend to continue to invest in R&D.
G&A expense was seven 5 million for the quarter compared to $3 3 million in the first quarter last year.
G&A was 15% of revenue versus 13% of revenue last year.
Our G&A expenses have increased as a percentage of our revenue due to the costs associated with being a publicly traded company.
Overtime, we expect G&A expense to decrease as a percentage of our revenue.
Operating income for Q1 was $2 8 million.
We're a five 5% operating margin.
<unk> operating loss of $1 1 billion of negative four 5% during the same period last year.
Net income in Q1 was $2 2 million or five cents per diluted share based on approximately $42 2 million weighted average diluted shares outstanding.
This compares to a net loss of $1 $7 million or <unk> 18 per share in Q1 last year, using $9 1 million basic and diluted shares outstanding.
Turning to the balance sheet and cash flow.
We ended the quarter with $392 million in cash cash equivalents and short term investments.
Cash flow from operations in the first quarter was $3 7 million compared to $1 3 million in Q1 last year.
Free cash flow was $3 2 million in Q1 compared to $1 2 million in Q1 last year.
Free cash flow margin of 6% in the first quarter compared to 5% in Q1 last year.
In terms of head count as of March 31, 2021, we had 652 full time employees.
Which reflects growth of 19% compared to the 547 full time employees, we had at the end of 2020.
This demonstrates the continued investments we're making in head count as we scale the business.
And finally, turning now the guidance.
We are very pleased with the positive momentum in our business, especially our continued new customer growth in Q1 and high engagement from existing customers.
At the same time it is early in the year and we're coming off of year of explosive expansion for our business with the peak of COVID-19 related renewals in Q2 <unk>.
Balancing these factors the the <unk>.
Second quarter of 2021, we expect revenue in the range of 55 million to 51, 5 million, which represents year over year growth of approximately 39% to 42%.
Non-GAAP operating income in the range of zero to $1 million.
The margin of zero to 2%.
And non-GAAP net loss per share.
Of <unk> <unk> per share using 47 million basic and diluted shares outstanding.
Non-GAAP earnings per share of <unk> <unk> per share.
As a 57 million diluted shares outstanding.
And for the full year of 2021.
We expect revenue in the range of $207 5 million to two.
$210 5 million.
Which represents year over year of growth of approximately 32% to 34%.
Non-GAAP operating income and loss the range.
A $2 million operating loss.
The operating income of $1 million or a margin of negative 1%.
The positive 5%.
Non-GAAP loss per share of <unk> <unk> per share.
Two eight <unk> per share using 44 4 million basic and diluted shares outstanding.
In summary, we are pleased with our Q1 results.
And are well positioned to benefit from the investments we have made in all functional areas of the company.
We expect to continue the benefit from the trends driving the need for a data rich digital engagement platform.
With that chart and I will open the call up for questions.
Operator.
Thank you if you'd like to ask the question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to low snow treat dry equipment of game Press star one to ask a question.
And we'll take our first question is day from Sterling Auty with Jpmorgan.
Yeah. Thanks, Hi, guys I wanted to drill in on the the new customers that you added during the quarter can you give us a sense what industries did they represent and what size companies because I think one of the questions. We get is boy.
Boy, who is the already selling digitally who of the late comers and who's left to come to the on 24 platform.
Yes Sterling.
This is Steve I'll go ahead and start that one.
We had a really good quarter in Q1 in terms of customer growth. We added 68, net new customers and ended with 2062 customers on our customers what they are greater than $100000 of more net increased by 23 to 325 at the end of the Q1. So we're.
Very pleased with the progress we continue to make in adding new customers.
In terms of forward.
Forward looking guidance, we don't really disclose that on customer count obviously, the court that at the end of Q2, but we're seeing that.
Very good momentum, we added a lot of large customers and we're seeing it.
The multiple verticals.
Just just to add to what Steve just said Sterling.
Our ICP, we really focus on our technology, we focus on manufacturing.
Life Sciences.
Financial services professional services media and media and entertainment and we are seeing traction across the board of course, you would expect the the technology guys to be leading edge, but things like the pharmaceutical manufacturing I mean, the oil we are seeing very very good good traction I'll give you. An example of the company.
In the financial services space that would be closed in.
Last year.
In may and they increase their strength of spend significantly. This is one of the top five.
The largest.
Banks in North America. They were 100 gig LR customer last year of the camera and worked with us on the capital market side, they use elite engagement hub and virtual conferences they doubled the.
The double the run rate and they've increased their spend with us in Q1. So we are seeing we are seeing momentum across debt I'd be gave the example of integration with veeva in the pharmaceutical space, that's a very important the cash.
The degree of also the <unk> on a global basis.
Great and then you mentioned your own virtual conference debt that you held what is this end up being a big lead generation and customer expansion.
Event for you each year, just maybe some of the give us a little bit more color around the experience that you typically get coming out of your conference and what did you experience this year.
So generally are starting in the past we have done.
These experiences are physically.
And this is the first year, we really did the digitally we will probably do another one of them. Another one of this later this year typically they will do in the half year, two and a half days.
And we we did this in North America, we will do it in EMEA and APAC.
So about three or four of these events at one time, we had over 6000 people who attended this it was it was the one day event it was done.
24 by seven started in APAC EMEA, and then North America.
About over 3000 people people attended and we had about 14 15 customer stories because it goes virtual we kept at the one day.
And I think there are two key things that we're going to see a there's one of the of course from new customers.
Is it.
Is acquisition of new customers as people get more educated about the platform. They can see the action. They can they can see a lot of of the demos and the other thing is almost the sort of always being almost like a bear hug right for our existing customers to be able to see what their peers are doing.
And learned from debt that's been always been a very important part of what the confidence of being able to do now now that we are going to move to more of a hybrid situation going forward.
We would probably do this call of France, a little more frequently than with the previously.
Great. Thank you.
Next we'll hear from Chris Merwin with Goldman Sachs.
Alrighty, Thanks for taking my question.
You talked about some new product conditions, I think breakouts on there and some others as well I know these are probably still very early not contributing yet but can you just talk in general about how the cross sell motion is going at I don't think I heard you speak can net dollar retention were multi product customers of amount of missed it but I don't think I heard that of the scripts. So can you just please update us on those metrics if you can.
Or maybe just comment in general on out of the cross sell motion is going thanks.
So let me take the first part and the Steve you can take the second part of the question. So.
You know we are really excited.
Chris in terms of the expansion on up so that we saw in Q1. We are excited about how it has continued into Q2, specifically about about breakouts I mean, theres a lot of excitement of.
From our customer base for this product now you cannot only.
The reach 200 of thousands of people, who are interacting and engaging with buying the signals and engagement data in a lot of experience, but now you can move into and through one on one interactions peer to peer networking and group meetings.
It takes you further down the funnel from marketing driven sales to close the deal so theres a lot of excitement.
And yeah, we expect this to provide an uplift but it is early I mean, we just launched at the gross so it is early but this is the major part of our expansion.
The part of our expansion and up sell of cadence shape.
Yes, so Chris you'd also asked about.
And are on.
The I think the multi product metric, we talked about last time, So let me start with NR or we don't.
Not really reported on our on a quarterly basis, but as expected we had.
<unk> had a very strong quarter for NR.
Our average on a per customer continued to.
Go up in Q1 of the highest it's ever been.
We do expect R&R, the return to something closer to pre COVID-19 levels over time.
The R&R was about 110% pre COVID-19 with our enterprise business Tim.
Typically being 5% to seven points.
Higher than that enterprises, 70% of our business.
In terms of the customers with multiple products and cross sells.
Really pleased with the increase from 17% to 30% we saw in 2024 of the customers who are the two plus.
Products that we don't expect it to increase at that rate. This year, it's not really a metric we're going to disclose quarterly but I can't say that the number of customers. We have the two of more products that did increase during.
During Q1, and we're really pleased with our continued progress in that area.
Okay, great. Thank you and then maybe one other question.
It seems like another theme of the remarks was around integrations I think you've mentioned a couple of drift in outreach and the two companies within the CRM suite more broadly can you talk a bit about I guess, a the I know again, probably early but the impact that is having with your customers about increasing platform stickiness for you all and then just secondly in terms of the data that's being <unk>.
Capture because that often go into like a database that the customer maintained separately or is this with the integrations is the data going directly from on.
2004 to two of these other platforms just trying to understand.
On the kind of the pain points that are being solved here for customers and how we think about improved platform the stickiness over time. Thanks.
So so Chris just just just assure us just overall integrations within the customer sales and marketing ecosystem is extremely extremely important for us and we've spent millions of of ours kind of.
Building one of the most robust.
Third party ecosystem the deep.
Integration of the part of our engagement.
Engagement data and buying signals within the system some of those market Marchitto from Adobe Autodesk aliquot of of that sales force S&P. So that debt that is a very.
The important bought 60% of our IRR is is integrated and we generally see a much better much more stickiness and others.
When that happens so we announced the integration of Veeva in the life Sciences space that is very important to us, but it's not only just basic integration, we take all of the 2030 different engagement.
Data points and we also have created this almost near real time engagement. So when our sales force is ready when.
On a prospect is ready to buy and they are saying I'm ready to buy of 90 days, we want that information to go almost of them closer to real time true.
Through the marketing and sales ecosystem that our customer uses so we are not trying to be make or our data of silo, we integrate our data within our customer sales and marketing ecosystems. They've got sales force if they've got Marcelo we of its integrated in debt. So it's available to the sales and marketing people. So clearly it helps stickiness very significantly.
Now. The example about outreach outrages of sales enablement tool. This is the enabled SDR and others and what we are trying to doing this we provide something of a prospect engagement profile. It's a 360 of the big review of the prospect and the Air Force and the engagement on our platform everything that day. They have done what we are doing is we are integrating debt.
Within the profile of that particular prospect.
The outreach so when the SDR the following up they know a lot more about that customer again, adding value things about grip grip comes more in the direction of the engagement platform.
The people come into the engagement platform and in the order go on converse.
One on one with sales and.
We are integrating back up.
In that perspective, so that people can move the funnel of deeper into the sales conversations so all of these integrations.
One of the data integration of those are extremely extremely important from the stickiness point of view from our side, but also the value of it brings to our customers and the other integrations that we're also doing on the engagement part of the platform, making sure. It continues to transform sales and marketing for our customers.
Perfect. Thanks, so much.
Rob Oliver with Baird has our next question.
Great. Thank you guys. Good evening. Thanks for taking my question is that true charade I had one for you to start.
I know you guys are making some investments in both the international on the go to market side as well as on the product side on language and I just wanted to touch on those in.
In particular, you know in the in your in the wake of your user event, where we set some big companies Big multinationals like Honeywell.
Honeywell Vallejo talk about how they are kind of redefining their dealer and distributor of model using on 24. So I'm curious you know.
As we talk about expansion within existing accounts.
How you look at that the addition of new languages.
As a driver for expansion with some of these accounts that are already using you guys.
They are true multinational corporations, and then I had a quick follow up for Steve.
Yeah.
Hey.
In the route we have build this enterprise grade.
Accessible reliable scalable.
Privacy compliant multilingual platform for global enterprises, and commercial companies that that's the.
The way, we focus on and so the example of when we bring the customer we talked about the Japan based customer in my prepared remarks.
And once we bring that customer our focus really is to expand the customer.
Globally and because that's all of these multiples that's how these multinationals the.
Expand.
I won't give you. An example of one of the largest industrial manufacturing companies.
Well the there'd been a customer of ours for for a long time, but the brought on several divisions in multiple parts of Europe in 2020.
And as they expanded into those the force of debate one of the one of the divisions for the force live experience the day that over a thousand of 10 days.
And where audiences are also more engineering supply chain oriented these people really.
Really gravitate more towards the digital even more than physical so.
These guys are committed to more of a hybrid of hybrid of engagement going forward. So when we talk about that.
Languages on others, our focus really is we might bring somebody from Doc or Germany, but then our focus is expanding that.
Across the World that's a very key part and that's what you also heard in the in the virtual conference. So enterprise scale multiple languages privacy compliant that's a very important part of what we provide our customers and take the headache out as they're trying to.
Engage with their prospects at scale and Thats, probably what you heard of the carpet strength.
Okay, Great. That's helpful. Thanks, and then Steve just a quick one for you as you thought about the.
The guidance for the rest of the year just curious for any color on what you want.
What assumptions you have embedded in there for <unk>.
All four of return in the economy I know, we're still at various stages globally in terms of you know.
Lockdown and stuff, but just just curious how you guys thought about the impact of COVID-19 relative to the guidance. Thank you guys.
Sure.
Our annual guidance reflects our best.
The view is we see the business going forward at the at this point our customers.
Continue to engage with us quite well, we're seeing a very high level of customer engagement across the board with our customers and that's.
Selected in our Q1 results and.
Also the.
The guidance that we have.
We provided.
And then tried to chew on and add anything to that.
No I think.
We are seeing very strong trends.
From a new customer wins to expansion.
And up sell of I mean, we do up there.
Rob.
As we do look at Q2 and the end of the year. If we are early in the year. We don't want to get ahead on our skis. We did if you look at Q2. It is our toughest comp quarter by far of the renewal base is is the in Q2 as largest by a significant magnitude and so that's also something.
Debt, we've factored in our guidance because you know in.
In Q2, we did see some.
Some COVID-19 related by but we always the factored that within and out of date.
<unk>.
Okay guys. Thanks, Thanks again.
Okay.
We will now hear from Brent bracelet with Piper Sandler.
Thank you and good afternoon, I guess shroud I wanted to drill down a little bit more on the peak renewal cycle.
All of our customer conversations shifting as we get closer to the reality of up of reopening.
How are the some of the early renewal conversations going are there any customers that are going to completely go physical and not virtual it's gonna be hybrid just walk us through.
How you are engaging with some of these existing customers and how the maybe the messages is pivoting more heavily towards lead gen or something else just trying to get the early view on on what those existing customers and renewal conversations look like today.
Okay.
Yes.
Let me answer it.
Two parks Brett So first of all we are thrilled with the customer engagements that we saw on Q1 on that has continued in the Q2.
And on based on what our customers are telling us I mean the.
The future is about hybrid engagement there has been a permanent change in behavior.
As a data point I will tell you in the United the time people spend R&D spend on our platform.
In Q1.
Is four is up from Q4 last year, the four of 5%.
Four of 5% higher.
I'll give you. The example of one of the largest hmos.
In the country and in point of the 20 they move there.
The accelerated growth through digital as the.
Salespeople interacted with hospitals, that's what the bid but.
Quite of there.
Moving into more of a high growth cadence this year the increase their spend with us. So both of the conversations that we are hearing again and again with many of our of many of our customers I mean in my prepared remarks, I talked about of one of the largest euro of companies that increase their deal size of about 60%.
Marketing sourced by the 135% average contract value, but one of the percent so but that side of business impact.
There is no going back for these companies the.
That being said I mean, we didn't know that in Q2 last year.
There was it was the peak of COVID-19 related by end.
And many of these accounts are up for renewals of what we effect.
We expect that some children on downsizing in the and the minority of those accounts and we've always factored that in our guidance.
So we are prepared for that and that's why we've all we've already factored in.
That's certainly helpful color there and then my last one really is just around just sales capacity if I look at.
Sales of marketing investments, it's up I think 87% year over year into Q1.
You talked about heavily investing and adding capacity over the last couple of quarters, how much how much more do you have to go here. How are you feeling relative to kind of coverage relative to kind of the plan at this point just any additional color on relative to additional investments in sales and marketing going going forward here.
Zane kind of Q1.
Yes, so the the that.
So last year we.
We got we were caught we were really behind the right. So part of that was and also.
On the productivity numbers increase significantly and other stuff. So this year. We are we are we are planning for.
We are proud of catch up and adding the capacity. So we've had the added significant number of sales of.
The capacity this year, we've added marketing and we we expect the AD that more of I think.
We are not done yet, but you should expect that the people we hired in the second part of last year, because that's when we really started the ramp and generally assuming of six to nine months out that some of those people will start producing by the end of Q2 and the areas that we've kind of focused on has been the enterprise commercial.
And internationally and sort of new markets I think we will continue to add more people on the commercial side I expect that we will continue to add more people on the international side. Those are the areas. We are seeing the traction.
Totally makes sense and certainly you're seeing a pretty good good uptake and 100000.
The new customer cohort the numbers there so it sounds like of that strategy is working at least here in Q1. So thanks, that's all I had.
Yeah.
Well now hear from Arjun Bhatia with William Blair.
Yes, Thank you for taking my questions.
Sure maybe I can follow up on that last one on the commercial side of things with the virtual conference Pro.
Maybe just remind us if this is a newer part of the market that youre going after it. So I think that you've had an established presence and if you are moving a little bit more down market to a higher velocity sales our sales model. What do you think needs to change in the in the go to market motion or the purchasing process.
Okay.
The results from this segment.
So I think the.
You got two questions one is really.
Related to commercial.
And the second is when they go the virtual conference growth. So let me let me address both of the both of them. So on the commercial part of the market.
We go up to 2000 customers and balance will be break it in two.
And the various categories.
We see of very large staff and the <unk>.
And what we call the commercial one which is.
200 people in down so we are investing in that market as we bring in the.
Elite product with the breakout I think that is also going to be an important product that will go the other day to that market.
So we see we see potential in our business using the data which system of engagement for the year.
No not the SMB market per se, but a little higher than the SMB market.
So we see pretty strong potential there now.
And we have of team and we're expanding the team on a global basis net sales all of our products now related the virtual conference gross up of virtual enterprise.
Virtual conference overall business is about 10% of our business of.
The virtual conference enterprise product did require a little more handholding merger then we wanted to do that then I think as more.
Palatable in the commercial market also of the price pointed a little lower so it's our version of making it not completely self service, but a lot more self service compared to the before and reduce the price one I'm not sure. It's still of SMB kind of level of price spot, but it's somewhere in the middle.
And it's a good entry point for the commercial market.
Okay.
Okay. That's very helpful. And then if I can if I can touch on the breakout announcements.
Seemed seemed very exciting and sort of always seem like something that would resonate in the market. Just curious how you're pricing that is that going to be part of the core platform is that on add on is it a totally different offering that customers need to purchase of help us understand the.
Pricing model there.
Yes.
Can't disclose the price model, but I think as of yet.
Taking the out of an elite origin of oil, it's an uplift to the existing subscriptions. So if somebody has a $75000 subscription one workspace on two logins, it's an uplift to that subscription.
And it's early so we're still trying to kind of figure that the out but we are selling that add the subscription as an add on okay. Now as this thing launches of the virtual conferencing, you may take a different tact and the different products, but that debt is the approach we have so weird.
You are going to market with all of our.
All of our customers from an upsell and expansion guidance is an uplift of this.
Okay understood. Thank you very much.
Our final question will come from Steve Enders with Keybanc.
Hi, great. Thanks for taking my question I wanted to follow up on the earlier question about the renewal opportunity that you're saying in another of probably a couple of months into it at this point from the first big push from a year ago, but I guess, how are those conversations progressing of for either driving longer term usage Oh of long term use of the.
The platform and facilitating multiyear deals with the.
With these customers.
Steve you want to take that I can go ahead, Yeah go ahead and take that.
Well in terms of the kind of <unk>.
Two questions you asked there let me let me start with the multiyear deal question and then I'll pivot to the other one so in terms of multi year deals.
We're very pleased with how those are going we don't really provide guidance on out of reported quarterly but it is trending in the summer fashion too.
We saw on the second half of 2020, even with our customer count and a R. R.
Growing significantly so we're really pleased with how our customers continue to see the long term strategic value on our offering and we continue to sign multi year deals.
Deals with them.
Terms of the renewal opportunity, we're happy with where things are at and that is reflected in our guidance of Schropp mentioned.
Q2 of last year was the peak of.
COVID-19 related buying and many of these accounts are up for renewal.
We do expect some churn of downsizing of the minority of these accounts and that was always factored into our guidance, we provided both last quarter.
And again this quarter and we are guiding to a 40% plus year over year growth rate, that's coming off a tough compare in 2020, which was a year of explosive growth for us. So we're really excited about how that's going we're excited about our new customer wins in Q1.
And the great level of engagement, we continue to see with our customers.
Okay. That's the that's great to hear and just a quick follow up I know you mentioned.
The last quarter about some sort of investments you made in making the agency channel and I'm, just wondering how that kind of progressing.
The progression so far.
Okay.
Yeah, I think Steve the well we.
We are making the investment would be hired another channel.
Channel.
Executive also in EMEA, but these things take a take a little while as you know the kind of progressed. So our expectation is we are starting from the low base. So there's only upside are I mean, the the announcement with Veeva vault is an important one we hope will drive more of.
ISP related pipeline in the life Sciences category. So does this is this is the.
This has got a multi quarter of runway Steve. So we will keep you updated but this will this will take us a few quarters.
Okay, great because you're saving that cash.
Because of that started we're starting so low I mean, theres only upside here as we move forward.
Okay Gotcha very helpful. Appreciate the time.
Okay.
That will conclude today's question and answer session I'll now turn the call over to <unk> for any additional closing remarks.
Nope.
Thank you everyone for joining us today.
See you next quarter. Thank you.
This concludes today's call. Thank you for your participation you may now disconnect.
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Okay.
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