Q1 2021 Upland Software Inc Earnings Call
[music].
Thank you for standing by and.
Welcome to the upland software first quarter 2021, our next call.
At this time, all participants are in listen only mode.
We will conduct a question and answer session.
Instructions will be given at that time.
The conference call will be recorded and simultaneously webcast at Investor thought upland software dot com and a replay will be available there for 12 months.
By now everyone should have access to the first quarter 2021 earnings release, which was distributed today at four P. M Eastern time.
If you have not received the release, it's available on our plans blog site.
Now I'd like to turn the call over to Jack Mcdonald, Chairman and CEO of Upland software. Please go ahead.
Thank you and welcome to our Q1 2021 earnings call.
Im joined today by Rod Brown, our president and Chief commercial Officer.
And Mike Hill, our CFO will summarize our results and recent sales product and operate like following on that.
Nick will provide some insights on the Q1 numbers and our guidance then we will open the call up for Q&A before we get started Mike will read the safe Harbor statement.
Thank you Jack during today's call. We will include statements that are considered forward looking within meetings of securities laws. These statements are subject to risks assumptions and uncertainties that could cause our actual results to differ materially.
Discussion of these risks and uncertainties are contained in our annual report on form 10-K as periodically updated in our quarterly reports on form 10-Q filed with the SEC.
Looking statements made today are based on our views and assumptions and on information currently available to upland management as of today, we do not intend or undertake any duty to release publicly any updates or revisions to any forward looking statements on this call upland will refer to non-GAAP financial measures debt when used in combination with GAAP results provide upland managed.
With additional.
I understand it's operations upland has provided reconciliations of non-GAAP measures to the most comparable GAAP measures in our press release announcing our first quarter 2021 results, which is available on the Investor Relations section of our website. Please note that we're unable to reconcile forward looking non-GAAP financial measures to their.
Their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort and with that I'll turn the call back over to Jack.
Thanks, Mike.
First quarter, we restarted our M&A engine, we completed two strategic and accretive acquisition Second Street Blues.
Bluebird and we did that while posting strong free cash flow of $12.
And that's even after acquisition expenses and while there can be no guarantees our goal is to make 2021 on a strong year for acquisitions. Our acquisition pipeline is robust and we are active in the market for additional opportunities and as we've noted before.
Our acquisition program is now self sustaining as our free cash flow and financial resources, meaning that we're no longer dependent on the equity capital markets in the first quarter, we had 9% total revenue growth.
As expected adjusted EBITDA came in at 31%, reflecting our go to market.
Investments, our Q1 free cash flow was $12 $2 million, we had 3% recurring growth and the organic side now when you exclude political related revenue from the first quarter of 2020, the comparison period, our recurring revenue.
<unk> growth was 6% on the sales front in the first quarter, we expanded relationships with 283 customers 45 of which were major expansions. We also welcomed 118, new customers to upland and in the first quarter, including 32, New <unk>.
Major customers.
<unk> side, we expanded security and collaboration capabilities across the upland product portfolio with three major releases and five feature packs in our project in it management products, we delivered product integrations with key partners sales force and Sage intact.
Following the upland and HP Hewlett Packard joint announcement in the fall, we released new capabilities in our document workflow product suite in support of HP work path on these apps will provide HP customers the ability to capture and digitize documents from multiple sources for.
Ample faxes emails scan electronic content.
To extract an index key content and then route document.
For further action directly from their HP specific devices.
Again on the acquisition front as I mentioned Q1 was an active quarter for M&A. We closed the acquisition of Blue then which is a leading customer data platform anchoring upland customer experience management suite with a single view of the customer that will drive deeper engagement across email.
MFS mobile applications and online. We also closed the acquisition of second Street. Another Nice addition to our CSM suite second streets interactive content and podcast capabilities give our customers more ways to engage their consumers.
To drive revenue as I mentioned, the M&A pipeline is strong on that again, while there could be no guarantees.
Our goal to make 2021, a very strong year per acquisitions, we are active in the market for additional opportunities so with that I'm going to turn the call back over to Mike.
Thank you Jack I'll cover the financial highlights for the first quarter and our outlook for the second quarter and full year 2021 on.
On the income statement total revenue for the first quarter was $74 million representing growth of 9% recurring revenue from subscription and support grew 11% year over year to $70 7 million professional services revenue was $3 million for the quarter of 22% year over year decline, which was expected due to the COVID-19 travel impacts.
Overall gross margin was 67% during the first quarter and our product gross margin remained strong at 68% or 72% when adding back depreciation and amortization, which we refer to as cash gross margin.
Operating expenses, excluding acquisition related expenses, depreciation and amortization and stock compensation were $30 4 million for the first quarter or 41% of total revenue all generally as expected.
Also acquisition related expenses were approximately $9 6 million in the first quarter and of course. These acquisition related expenses will continue as a result of our renewed acquisition activity I will note debt $1 2 million of this Q1 expenses related to an office lease exit from last year's acquisition acquisition related expenses are generally 50.
Moving to 60% of acquired annual revenue run rate.
It varies from acquisition to acquisition, depending on uncontrollable factors such as geographic location generally for each acquisition, 45% to 50% of these transaction and transformation expenses are incurred within the first three months and then taper down rapidly until complete by the acquisitions first anniversary.
Our first quarter 2021, adjusted EBITDA was $22 8 million or 31% of total revenue.
<unk>, 7% compared to $24 6 million or 36% of total revenue for the first quarter of 2020 as expected adjusted EBITDA was lower due to our increased go to market investments compared to last year.
On the cash flow for the first quarter 2021 GAAP.
GAAP operating cash flow was $12 5 million and free cash flow was $12 $2 million, even with $9 6 million of acquisition related expenses. In Q1. We also had some positive changes in some of the working capital accounts like collections on accounts receivable 2021 free cash flow should be over 30.
Million.
And possibly over $40 million, depending upon the size and timing of future acquisition. So we are focused on generating substantial GAAP operating cash flow and free cash flow even after.
Acquisition related expenses.
For the balance sheet.
This ongoing free cash flow generation is in addition to our existing liquidity at $246 $7 million comprised of approximately onex.
$6 7 million.
Of cash on our balance sheet as of March 31, 2021.
And our $60 million Undrawn revolver, this ongoing cash flow generation.
Available capital and expanding our credit facility, while maintaining net debt leverage of up to a maximum of around 4.0 times should allow for itself sustained growth without dependency on the equity markets.
I should note that our net debt leverage is currently at around three five times based on the midpoint of our 2021 adjusted EBITDA guidance.
With regard to income taxes I will note that upland currently has approximately $356 million.
Dollars of total tax NOL carryforwards and of these we estimate that approximately $215 million will be available for utilization prior to exploration as of March 31, 2021, we had outstanding net debt of approximately $345 2 million after factoring in the 180.
$6 $7 million of cash on our balance sheet I will note debt principal payments on our term debt are 1% per year or about $5 $4 million per year with the remaining balance in August of 2026, the interest rate on our outstanding term debt is locked at five 4%, making our annual cash interest payments approximate.
$30 million at our current debt levels. Additionally, I will point out that our term debt has no financial covenants on current borrowings.
Now for guidance.
For the quarter ended June 32021, upland expects reported total revenue to be between 73 and $77 million, including subscription and support revenue between 72.
The $3 2 million for growth in recurring revenue of 6% at the midpoint over the quarter ended June 32022nd quarter 2021, adjusted EBITDA is expected to be between 22 and $24 million for an adjusted EBITDA margin of 31% at the midpoint, representing a reduction of 3% a day.
Midpoint over the quarter ended June 32020, reflecting our incremental investment in our go to market activities.
For the full year ending December 31, 2021, upland expects reported total revenue to be between 299 and $311 million Inc.
<unk> subscription and support revenue between 285, three and $295 3 million for growth in recurring revenue of 5% at the midpoint over the year ended December 31 2020.
Full year 2021, adjusted EBITDA is expected to be between $94, four and $100 4 million for an adjusted EBITDA margin of 32% at the midpoint, representing a reduction of 3% at the midpoint over the year ended December 31 2020.
Again, reflecting our incremental investments in go to market activities, so with that I'll pass the call back over to Jack.
Thanks, Mike and now we're ready to open the call up for Q&A. Please feel free to direct questions to Mike Rod or me.
We will now begin the question and answer session.
Ask a question you May press Star then one on your telephone keypad.
Sure.
Please pickup your handset before pressing the key.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble on Iraq.
And our first question comes from the volume of William Blair.
Please go ahead.
Yes.
Hi, everyone. This is Jake on from provide on congrats on the great quarter.
Just first of all I would love to share how the Bluebird and second Street acquisitions are progressing I know, it's early but just would love to hear about the initial interest from current customers.
Okay, great. Thanks for the question so very excited about both <unk> and <unk>.
Second Street acquisitions.
Accretive acquisitions, but also highly strategic.
Both of them fit into our CSM.
Product suite.
And fulfill some key functions there.
<unk> is a CD.
Customer data platform and it enables us to maintain a centralized.
Record on.
Behalf of archive.
Their consumers.
So that they can create.
<unk> marketing campaigns, which they can then execute across multiple digital channels right and we've already got those capabilities as part of our product portfolio around.
SMS text delivery in App and push notification E mail and web.
This adds a very powerful.
Core platform to our CX suite.
On the second Street side.
A key.
Challenge for our customers is to continue to build their database of consumers and so second street brings to the table a number of proven technologies and interactive content and content assets.
That can be used to.
Right.
Subscriber and user.
Databases.
And thus increase the effectiveness of our customers' consumer marketing campaigns.
Two great acquisitions.
The Inc.
Gration is proceeding as planned.
On both of them.
One of the things that we're doing differently today.
With Ross' leadership is beginning to drive.
Cross sell campaigns for these products much sooner than we would have before are really looking at debt product fit and how we bring acquired products into our existing sales distribution is now a core part of.
Our pre closing diligence and we really like to hit the <unk> hit the ground running now on that so.
Let me.
Pass it over to Raj to give.
His thoughts on not on early days of.
Pushing those products through our channel cross sell and early observations there.
Yeah, so building on that.
We started talking second street in earlier in the quarter and Bluebird on a little bit later in the quarter and as Jack said.
Those two products themselves can leverage each other as <unk>.
Second street being that place to really gather audience data to decorate.
The database that we got from <unk>. So so the very fairly crisply its very early and integrating both these companies buy fairly crisply, we were able to get.
Our CSM customer experience management salespeople.
Cross selling those products with the second street in moving sales teams. So we.
We are part of the playbook there really we really worked on last year was making that a much more Chris and quick process of getting those in front of our customers.
And so.
We're excited about just sort of how quickly we were able to get that out there. It takes time to sell enterprise software to people and build pipeline.
But that does that kind of tucked in pretty quickly and the sales cycles have already begun and pipelines are getting generated.
For both of those products into our base.
Great. Thanks for the color.
Follow up on the M&A funnel, where you're seeing the greatest opportunity do you think you'll continue to invest in <unk> or.
Is it likely that youll target a different segment with the next acquisition.
So we've got.
Very strong pipeline right now really across all four.
Key product suites, and frankly in some other use cases in the enterprise because there are really six or seven.
Use cases are buying centers that we're addressing so it's a pretty strong pipeline.
Those my guess would be the next one will be outside of <unk>.
And.
There's a lot that we're looking at.
On contact center, there are some opportunities and document workflow as well as in the ITM. So.
Youll see activity.
And all of those areas as we move.
Through the year.
Great. Thanks for taking my questions.
Our next question comes from Brent Thill of Jefferies. Please go ahead.
Hi, this is not soda on for Brent Thill.
Congrats on the free cash flow number this quarter.
Maybe the first question is for both broad and Jack.
Yes.
It's been a little bit over a year since rod joined the team.
And I know you mentioned, it's still early.
But I wanted to ask like.
If we were to crane debt and like baseball terminology.
Earnings of the cross sell journey on <unk>, and maybe like when could we see that cross sell motion really taking hold in terms of driving organic revenue growth.
Yes. So this is Ron I'll start and Jack and color commentary here. So I appreciate you pointing out that I've been here for a year.
We have made a lot of progress over the last year.
And go to market infrastructure and the flow of information.
Just sort of as a refresher you have added new executive leadership in marketing sales customer success had a global accounts, we hired his team day global account managers to manage our 175 customers vertically.
Those teams are now in place and ramping on their knowledge of the customers and building pipeline.
And we like what we see there the other thing we did was retooled demand Gen bottom up so you'll see a new upland website. We launched in late January really designed to drive pipeline frankly, and then the other thing we did which we stood up late last year, but build out just building out in Q1 is the qualifying sale.
Development <unk> SDR team, we now have a team of 15 fbr's centrally located.
Really catching and qualifying all of our lead flow that the marketing team is focused on generating so we've been doing a lot of.
Foundational work to get to get the team in place to continue to grow.
As part of that demand Gen machine. If you will a lot of the proactive campaigns. We're running now are are very cross sell specific in the cross sell pipeline is showing good growth again these deals take time to convert.
A couple of things I'll point out while we have made a lot of good progress on go to market.
And remember.
Our net dollar retention rate did decrease about 300 basis points last year due to COVID-19.
And obviously on occurring revenue recurring revenue business, we have to wait until we fully lap that COVID-19 impact due to see and appreciate really the improvements in go to market. So I'll just sort of add to that this is a multi quarter journey into 'twenty two.
And as we say there are no guarantees on outcomes, but we think this work is definitely preparing us to scale to the next level.
As a company.
Yes so.
The only thing I would add is.
I think rod is really key.
Catalyzed.
Different kind of go to market culture here at upland and he's walked through.
The key moves he has made on on personnel and on process.
And now increasingly on product as well as the distribution piece.
<unk>.
We couldnt be more excited about it.
Consistent with what he said from the beginning of what Mike and I have said it is a multi quarter journey and I think you start to see this really beginning to hit.
As you move into 'twenty, two and as Rob said, there can be no guarantees on outcomes, but we've got a great.
On the suite of products here.
Tremendous customer base.
And we think the opportunity is there to really.
Drive cross sell and new logo acquisition as we go forward. So we're excited about where we can take it.
Got it one quick follow up if I may on.
On the overall demand environment obviously.
As Rod pointed out last year, you did see some impact towards the non.
Not a whole lot.
From COVID-19, but some impact.
As we see the economy open back up.
With the phone.
Coming back to work and stuff like that.
Are you seeing overall spend on call and would be going into the back half of the year.
That.
Benefit due to a certain extent thank.
Thank you.
I think thats consistent with our outlook that we will see how the year plays out and you are right the business proved to be incredibly rich.
The resilient last year in the face of COVID-19.
And so the.
Net dollar retention rate.
Phil mid nineties, even given the pandemic, which is impressive.
I think youre seeing.
The demand environment.
<unk> began to move back toward.
On a more normal pre COVID-19 environment, our debt is that that takes a few more quarters too.
Fully play out so we're going to maintain a conservative outlook on that.
Debt.
In terms of trend it seems to be positive.
Got it thank you.
The next question comes from Scott Berg of Needham. Please go ahead.
Hi, everyone. This is John <unk> on for Scott. Thank you from taking my question.
As far as the mobile messaging products Joe.
Operating loss selection price what are you seeing.
Current use of trade gross product today relative to six months ago, obviously, theyre going to be drawn down a lot, but not euro.
Is there anything you can quantify that as far as the stretch so thank you.
Yes, thanks for the question so.
Well, we wanted to do and we talked about this last year was.
Share with investors.
Transparent view of <unk>.
Demand.
With and without.
On the political revenue that we saw.
Last year, obviously, we had a spike.
Usage not related to the presidential election cycle. So that's why we're breaking out that organic growth number.
And so that's coming in.
On organic growth number ex politics.
Mid single digit, 6% this quarter, but right, where we would have expected it.
And then there are a lot of applications for messaging beyond politics, and obviously we're focused on.
Growing.
Business and feel great about CSM as a long term offering.
For upland.
Great. Thanks, guys.
The next question comes from Jeff Van <unk> of Craig Hallum. Please go ahead.
Great. Thanks for taking my questions. Several from me I think I guess this is also run Jack if.
If I look at the bookings I know, we don't get a bookings report on the quarter, but quantitative qualitatively how did bookings come in for the quarter.
Maybe a little more color on just describing them in line with expectations particular surprises in strength.
And may be challenges as well and then also.
Pipeline makeup I know you referred to some early.
The Gators of the cross sell but just any other.
Color around the breadth and depth of pipeline would be helpful.
Yes so.
Thanks, Jeff.
Bookings in line.
Consistent with our expectations for this year, which I mentioned, a moment ago, we should.
<unk>.
Recovery.
Will play out through the course of the year, it's not a sort of snapback on.
A phenomenon right so.
In line with how we have those.
Numbers budgeted so we feel.
Good about that in terms of pipeline growth.
I want to kick that one arrived because theres been a lot of great work that's been done.
Building a lead Gen engine.
At upland debt, we really didn't have before and again all in context. This is a multi quarter journey, but there's some exciting stuff going on.
Rod speak.
Directly to that.
Yes, so happy to on one of the color point on.
Bookings, we did see a little more new versus expansion and the mix because we as I think we will see we expect to see that as we kind of come out of COVID-19 here, you talked last year about a little bit more expansion in the mix of bookings and we saw a little bit of movement on that were a little more you kind of got it into the mix.
On to Jack's point, the SDR team is kind of on new pipeline engine.
We obviously generate multiple ways, our customer success folks client expansion pipeline, our sales people find their own pipeline. We have partners. We work with like HPE, we talked about a minute ago, we drive pipeline the kind of that sort.
Inbound pipeline that we run through our <unk>.
They had a frankly.
<unk> first quarter.
Brandon.
Literally hit their seats January 4th with a new quota for pipeline creation.
Our expectations were modest given that the team is new.
Got to those.
With with.
With a little bit of upside.
The other thing the other dynamics of the pipeline we saw a couple of anecdotes on where Watson per this right as we come out of COVID-19, we expect more.
Shorter sales cycle. So there is some pent up demand out there its not released yet we don't know when that will happen, but we saw a few what we call create and close anecdotally during the quarter, where the deal qualified and in January and closed in March which you don't usually see we certainly didn't see during quarter during COVID-19 and we said, we only saw anecdotally in Q1.
So don't draw on to that but it's it's just early indicators I think that both the Legion engine that we put in place is going to start working and again our sales cycles are not we're not a week they're measured in months. So sometimes quarters. So it is going to take a while to get on the other side of this and see bookings.
And I did mentioned before we track cross as a percentage of our pipeline and that's growing so we know what we're doing they are starting to work.
Yes.
Helpful and maybe one I guess, maybe a two part question actually but as I look at.
I think the earliest efforts that you made rob coming in well.
Primarily around renewables.
On the low hanging fruit I know, you've put leadership and process in there any quantification of the impact of those early changes and then last one from me the churn on you gave the overall number on an annual basis.
Maybe some some qualitative commentary on just kind of how that's ebbing and flowing right now.
So I think the.
On the customer success leadership and processes, we put in place.
Really.
Sort of segmented the team on major accounts minor accounts, we have other needs internally for them, but our biggest customers in the next biggest customers.
You could probably guess at how we segment them does that network is definitely bearing fruit I think we have we have more energy on our bigger customers.
Both with the global account guidance and with our customer success team. So that was really the really the biggest shift.
And just making sure the product Roadmaps are aligned and we're sort of treating the bigger customers with more energy right. So I think that that from a process perspective that that's working.
Sorry, Jack I think you had a follow on just on the on the churn question again I think.
From our perspective, it's sort of consistent with what we're seeing on bookings.
In line.
And consistent with our expectation that.
Recovery out of COVID-19 is one that plays out through the course of the year.
Not a one quarter phenomenon, but I think youre going to see that sort of net.
Improvement as we move through the course of the year.
Sounds good great and great to see the cash flow. So thanks for taking my questions I appreciate it.
Thank you.
The next question comes from James DJ Hynes from Canaccord. Please go ahead.
Hey, guys I'll.
I'll start with one for Rod and then a follow up.
Jack So rod as you build out the sales muscle.
How are you thinking about retaining acquired sales talent versus maybe going outside of the organization and bringing in reps with broader solution selling experience right. How do you strike the right balance there.
Yeah, Great question. So look when we acquire a product <unk> integrate example that gains from selling that product per.
For years.
They know that specific competitive landscape.
Frankly, they know our products because we had already integrated with with Blue than for example, with our debt through a product.
Dave we're reselling and at some point and so as a team where we want to keep the best rate and so we focus on keeping the best talent on the go to market side on these acquisitions.
Yes.
And not unlike look.
Many years ago, I ran a company that IBM acquired and they left us alone for a year to sell or to be the experts on what we do before we got integrated we'll do the same thing we let these guys bring their expertise.
We integrate them into our bigger sales organization and really the leverage comes in if I've got a small blue team or a small second street team that can give them access to a much bigger upland team and net upland team is introducing them into accounts and those as a product specialist that's how we think about it.
And we want to keep as many of these.
Sellers as we possibly can so we work to do that.
If they have sellers, who aren't as productive or maybe they're newer right. It's not as big a lawsuit they don't stick around post acquisition, but we try and keep the best ones and again, we let them focus on what they know how to do really well and we open up the doors for them and their job is to cross train our team. So a year from now 18 months from now we have lots of people who can sell that product.
Yes that makes sense and then.
Jack in response to one of the first questions around M&A, you referenced opportunities and document work flow just just curious along those lines. If there is any update on what youre seeing with your HP relationship.
Well matched.
I mentioned this in.
Opening remarks, and we highlighted it in.
Earnings release as well.
Very exciting relationship.
Debt.
<unk> has been developing really a long standing.
But a new initiative around HP work path.
Is <unk>.
So consistent with the vision that we've had for document workflow to create debt.
Integrated.
Hi, great.
Deploying the cloud deploy on Prem as needed.
Capability that can ingest.
On mine.
Distribute.
Content.
Across multiple channels.
We're very excited I'm going to let Ron.
And on that because East Inc.
Directly involved in building out the relationship.
So let me, let rod it views on that.
Yes. So obviously, we're excited about this really standing up the cloud part of the story with HP.
Our path is a big strategic initiative for HV as they've said publicly obviously, a gigantic hardware vendor trying to trying to bring more solutions to their customer base.
We did announce that relationship.
Part of the relationship back on the fall.
We've now their sales organizations trained.
It's in their bag and they're often running.
So and we are meeting regularly starting to train and build pipeline so were.
We're excited about this particular relationship.
We've worked with HV for a long time.
We haven't worked with them relative to work path in our in our cloud solutions from a document perspective so.
A new set of products for US you sort of go to market with them.
It's a strategic as I think they believe this is.
We're paying close attention to we're investing in both product and go to market and we're excited about what's possible.
Very good thank you guys.
Once again, if you would like to ask a question. Please press Star then one.
And the next question comes from Alex Skyler of Raymond James. Please go ahead.
Great. Thank you one for Ron following up on from those discussed on the cross sell early pipeline strength I wanted to ask about the changes you've made on the product side in terms of packaging and bundling and targeting some of the verticals in particular anything you can share with how that's resonating within the top 200 major top 200 or some major accounts.
And are those packages fairly set at this point are they constantly required.
Thanks.
Yes, so great question, Yes, I mean look we've got a couple of different ways.
That we cross sell.
And obviously the most successful is adjacencies.
You you own one of our customers choose to use your products and we're talking to a common buyer who would be interested another one so that we offer we offer standalone cross sell opportunities and then we will do things like bundle our estimates on our E mail or bundle our E mail and our.
CDP.
We went to market with second Street, just recently bundling it with.
But our CDP and our email products because you can imagine a big part of the email mission is to build the database and audience development tools are perfect for that.
That's really what we try and do is focus on where where we can package things together, where it's a common buyer Jack mentioned earlier, we've really simplified the buyers are going to market too you can literally navigate through our website now and theirs.
Sort of a buyer path, where you can where you can see all the products that are relevant for you.
And in some cases via bundle for example, so yes, that's how we think about on those are going to persist they're not generally not central we think they're available from when customers are ready to make the move.
And go with them, we really create them and we think we'll support them for awhile on time.
Alright, great. Thank you Jack on the.
Moving on acquisition I think when we spoke after you closed on you suggested it might have been your most strategic to date and now hearing Rod talk about how it was already integrated with industrial on the product side as well on the go to market side.
And then the early synergies on the second Street.
Make a lot of sense I'm curious when you look at the pipeline of opportunities now how many other ones.
Similar strategic mold or was this really kind of a unique opportunity.
But it's a great question.
The <unk>.
Strategic bar.
For our acquisitions has been going up through time right. This is a process that really.
Darted couple.
Couple of three years ago.
And so what we're trying to do is build a true.
Cohesive suites.
That serve key buying centers.
That is what's going to create the velocity in part.
It's going to create the velocity for cross sell so build those compelling product suites.
Core buying centers in the enterprise.
And then build that sales distribution channel so as I look at the opportunities we've got.
Cross other suites I see acquisitions.
Great strategic value and these are acquisitions that fit within our size and valuation.
Criteria.
And so he is going to be accretive deals as well as deals that build out the pipeline and I think that the predicate for cross sell as we get the sales distribution up and going.
Alright very helpful color. Thank you.
Our next question comes from Terry Tillman of Truest. Please go ahead.
Hey, everyone. This is connor on for Terry Thanks for taking my question I just had a question around the contact center products. It seems like Theres a lot of CX efforts being focused in this area on just kind of wanted to hear what you guys are seeing in this market. Thank you.
I'm sorry.
Some of that with the <unk>.
Static can you can you repeat that.
Yeah, absolutely. So I just wanted to ask a quick question around the contact center product. So it seems like we're seeing a lot of CX efforts focused on this area I'm just kind of wanted to know what youre thinking on what youre kind of staying in this market.
Yes, let me, let rod operating his thoughts on that yes, so thats a really good point, we actually have.
For example, one of our one of our acquisitions from a few years back on a company called <unk>, which is the voice of customer.
Value proposition.
It actually sits on our <unk> suite, we sell it to contact centers right. So you just sort of highlighted where the overlap happens between the buying group.
The customer experience products, either by marketers or they are bought by people who are current customers and contact centers and so we see the content the contact center space.
What others might call a service cloud area is really a rich area for us we only have a few solutions. There now obviously, we've got really strong knowledge management position. We've got some call center telephony that really connects.
And voice with CRM.
Business, we bought called switches, which really connect Salesforce dot com service cloud to two.
Two to telephony.
I mentioned ran rate, which is really more voice of customer Ironically voices also input into moving so if youre actually survey on your customers.
It's structured data that we tuck into the CDP and <unk>.
And to you as a consumer so these things all sort of fit together, but the last day contact center.
When we look at M&A opportunities on look at pipeline.
We want to see things in the pipeline in that area. Because we think it's we think that's a growing market in general and we certainly have interest in growing our solution suite out.
Very helpful. Thank you.
Yes.
Our next question comes from Richard Baldry of Roth Capital. Please go ahead.
Could you talk just from a high level about how the M&A pipeline and sort of reacted or altered given COVID-19 conditions sort of curious at the willingness to sell has changed on the side of the vendor price sensitivity. Maybe there is some desire to site for normalized operations before you sell it and then.
Tied to that does it skew the ability to really evaluate the quality of a targeted there.
<unk> also had a challenging 2020 right as you would expect.
How do you view those through a lens of China.
Compensate for of the year that they've had.
Okay. Thanks Richard.
The COVID-19 impact on pipeline I'd say the first one is that.
There were folks that transact last year and could not.
And so those deals are coming to market now and so.
You've got a little bit of two years of supply if you will coming to market in one year. So I think that's goodness from <unk>.
Buyers.
Respective I think there are some.
Trends in the market around digital transformation that as we know has been accelerated by COVID-19.
So I think you've got folks that are looking to.
Team up in net see the benefits of becoming part of a larger organization that can bring access to customers that can bring adjacent product set that can bring sales distribution on the table.
I think our fundamental message to sellers around speed and certainty to close.
We've been a dependable buyer.
Over the course of our career across a couple of platforms.
<unk>, maybe 50 152 letters of intent and closed north of 45 acquisitions. So we take the process seriously.
And that we represent a great home for our customers and from product and for a subset of high performing employees. So I think all of those kind of fundamental factors remain in place in terms of the kind of final part of your question.
Actually a great lens to look at how these products did through COVID-19. So obviously you look at it youre.
Youre going to put a little bit more emphasis into.
Trailing to a trailing three year trend, but it's nice to see.
How.
Net.
For these prospective acquisitions.
Under COVID-19, and so kind of a great cash right kind of weeds out.
Some of the weaker players and I think leads to.
That are over our overall quality of pipeline.
Great. Thanks.
This concludes our question and answer session I would now like to turn the conference John.
Mcdonald for any closing remarks.
Well great. Thank you very much for your time this afternoon, and we look forward to seeing you on the next earnings call.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Okay.
Yes.
Okay.
Okay.