Q1 2021 Docebo Inc Earnings Call
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Good morning, everyone and welcome.
Inc. First quarter 2021 earnings call.
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Investor Relations.
Please go ahead Dennis thank.
Thank you operator before we begin to achieve a we'd like to remind listeners that certain information discussed today may be forward looking in nature.
Such forward looking information reflects the company's current views with respect to future events.
Any such information is subject to risks uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward looking statements for.
For more information on the risks uncertainties and assumptions related to forward looking statements. Please refer to <unk> public filings, which are available on SEDAR and Edgar.
During the call we will reference certain non <unk> measures.
Although we believe these measures provide useful supplemental information about our financial performance. They are not recognized measures and do not have standardized meanings under ifr S.
Please see our MD&A for additional information regarding our non <unk> financial measures, including for reconciliations to the nearest <unk> measures.
Please note that unless otherwise stated all references to any financial figures are in U S dollars.
Now I'd like to turn the call over to <unk> CEO Claudio Irvine.
Thank you Dennis good morning to everyone and thank you for joining us on our first quarter 2021 pair Nicole.
With me today, Ian keeps our Chief financial Officer, and I'll ask Jeff to for our recently appointed President and Chief revenue Officer.
Learning technology has become a strategic investment for companies training for today and in a post pandemic World. We are seeing these in the ongoing strength of our sales pipeline and this is being reflected in our financial results.
In the first quarter, we were very pleased to report our revenues and growth.
Growth of <unk>.
Over 60% for the first time as a public company. Once again, we saw broad based demand, adding 154 net new customers from the fourth quarter of 2020 with strength in new logo pro four months upsell and OEM sales.
Our ability to effectively deliver learning programs for both internal and external use cases on a single platform is a core strength in fact, many of our customer use the table for both.
This makes our addressable market of learning that's much larger than the traditional LMS that you're designing it for internal training because we not only trained our customers, but also our customers' customer.
A great example of these it was a contract we signed in the first quarter. We just locally success story Lightspeed pulse, mainly at least in their own. This goal, we know that light speed.
<unk> has built a fantastic business with a software as a service platform that services over 135000 customers location.
<unk> selected the checkbook to launch a multi old games learning use cases that includes data internal employees as well as customer with the flexibility to provide unique experiences to each of their audiences.
Once these programs are also becoming a more vertical focus it and do you ever has led to several lessons success in the sports industry with some great organization, including the Toronto Blue Jays Sports Barton the entertainment the owners of the San Antonio Sports and the first peak.
The total onto Blue Jays selected the chapel late in the first quarter to create the brand at the Blue Jay training experience for the Big game day stuff.
For the school sport and entertainment investing in their employees.
Core to their culture and values as a championship driven organization.
So data use up the table they intend to give Dave staff constant access to learning tools to equip them to be successful.
First Pete is a yard development organization establish it as a partnership between golf major reorganization, including the PGA tour that Keith and team built the strength of character sort of the game of golf. They sold the platform that could provide digital access to it.
Could've equaling two patents participants and co choose across a network of 150 chapters in the U S and internationally.
This was a large and complex use cases, and we are delighted to be working with their organization like the first deep with core values that we have an item we sure.
We also had a record of cross sell activity in the first quarter and one I'd like to highlight ease with clear correct clear correct <unk> been building confidence since 2006 with a clear aligner the alternative to braces.
Column next to Jeremy we did see both began in 2017 and doctor be counting the brand for this troutman group. The programmer has grown and has shown a significant increase in engagement. This has led to clear correct.
A third leg in our consistent growth there four months have been a lot of <unk> business.
For several quarters now we have talked about building a pipeline of OEM and partnership opportunities and domestic to update you on four that we have announced it this week with the top yet being six blue water and they may char.
But <unk> is a new OEM partners for the table. They are a leading partner relationship management solution that connects technology vendors with a network of Olga.
<unk> thousand partners, but Tokyo partnering with good shape, even though yeah, Mike remain to deliver learning and certification through the Ara partner portal solution deployed by our customers and partners around the world.
<unk> is an example of how we are leveraging partners to enter new geographies. They are a global leader in the corporate training space and then you have to train at the older six hundreds of thousand professionals around the world.
<unk> will scale to table multi product learning suite to organization basically in the middle East and through Asia Pacific two of our existing partners blue water and M HR or expanding existing partnership blue water is developing a group of managers service provider offering baited them to table.
Combining blue water expertise with our multi product learning suite Amit.
<unk> is building on its early success with the table on there I trained platform by embedding the full learning suite into they have global HCM platform of people first.
In addition, we continue to strengthen our relationship with AWS by join me I as we bought them their path in the first quarter. This partnership stops into a number of AWS. They noted the program with access to AWS for resources and.
Partner network to further broaden the chair bridge, particularly in emerging markets.
What I like most about those deals is that they are all very different our OEM and partnership program now clear to extend beyond the HCM space demonstrating the breadth of opportunities we seek to partner with different software platform and channel partner to reach a wider range of interest pretty bad.
And audiences.
No I have spent most of this call talking about our cost a lot of momentum.
But I believe the most important announcements we made in the first quarter was the launch of the dutiable learning suite, including the chip will shape, a content creation product that leverage AI to create engaging learning content and mix. We did triple learning suite, we are transforming the table with products for the future that address.
Enterprise learning requirement, so our customer every one stop shop for all their learning needs.
Earlier. This week, we also did a webinar to further illustrate our product vision with demonstration of some of the capability of those new products for the investment community. We featured the cable shape the triple content. The chip will learn in the mass and the triple learning impact that are available now as well as the future.
That's like the triple flow that redefined the possibility of when in doubt learning is deliberate the triple content hub and the Triple learning analytics, which we think will become available at the shelf for many of our customers.
If you haven't had the chance to watch the webinar. Please go take a look it's posted on our investor relationship with site diesel suite lounge has been yes in the making and we are tremendously excited because it sets the stage for our evolution over the coming years. Thank you for listening.
We now pass the call to young to speak to the financials.
Thank you Claudio and good morning, everyone.
As always I'll remind folks that a detailed breakdown of our financial results for the three months ended March 31, 2021 can be found in our press release, MD&A and financial statements, which are all now available on our website and have also been filed on SEDAR and Edgar.
The slide deck accompanying our earnings call discussion was made available on our Investor Relations website. This morning for those who want to follow along I'm, starting my remarks on slide four.
Don Chappel exited 2020 with strong momentum in its business and this continued throughout the first quarter driven by higher new logo sales customer expansion and OEM revenue.
As message in our last earnings call in the past three months, we have continued to aggressively expand our capabilities since the end of the third quarter in 2020.
We have hired nearly 170 additional people and our results are now beginning to reflect the benefits from the increased investment.
Our focus on growing this investment will continue for the next couple of quarters as we prepare the company for the added complexity of managing its expanded portfolio of new products.
Total revenue this quarter grew to $21 $7 billion, an increase of 61% from the prior year period.
Subscription revenues grew 62% from the prior year.
$19 8 million, representing 91% of total revenue for the quarter professional services revenue in the fourth quarter was $2 million, an increase of 48% from the prior year period.
They are our growth.
Is the driver behind higher subscription revenue and internally remains the key metric that we use to measure the success of our operations.
We recorded $83 4 million in a or are at the end of our first quarter, an increase of 60% over the $52 1 million. A day are are that we had at the end of the first quarter in 2020.
The chart presented in slide four is illustrative of our progression over the past 12 months when compared to the fourth quarter of 2020.
We added 9.4 million a day are our this quarter matching the fourth quarter's net a R. R increase which is a high watermark for us.
We had 2333 customers at the end of the first quarter of 2021.
Our company wide average contract value or <unk> increased to approximately $36000 up 25% from 28000 at the end of the first quarter of 2020.
The ACB from our new customers added just this quarter was approximately $45000 and.
78% of our new logo and upsell contracts were multi year transactions.
The ongoing shift in our customer profile to larger enterprises is the primary driver in our ECP growth.
Slide five talks to gross profit for the first quarter.
As a percentage of revenue gross profit margin was 82, 2% of sales an increase from 79, 1% in the prior year.
Gross margin has increased from the prior year due to the benefits of scale with our hosting provider and remains within our target range of 82% to 85%.
It was down slightly from 84% in the last quarter for two reasons first because we increased our head count substantially in second.
As you may recall in the fourth quarter of 2020, we benefited from a year end true up in the contract with our service provider.
On slide six you can see a summary of our operating expense lines total operating expenses for our first quarter increased to $23.5 million as compared to 10 million for the prior year.
Included in the $23 million of operating expenses is a foreign exchange loss of $2 million that relates primarily to the cash held on our balance sheet and is therefore for the most part unrealized.
Operating costs, excluding this loss were $21 5 million and compared to the $16 8 million in operating costs also excluding foreign exchange impacts that we reported in the fourth quarter of 2020.
The quarterly increase in operating expenses was primarily driven by higher G&A and sales and marketing expenses.
Our G&A expense increased by $1.7 million as compared to the fourth quarter of 2020 up to $7.4 million in total.
As a result of experiencing a full quarter of higher accounting legal and insurance fees associated with our NASDAQ listing.
Within G&A.
There was also $348000 of nonrecurring costs associated with our U S IPO and the <unk> acquisition.
Sales and marketing expense for the first quarter increased by $2 $7 billion.
From the fourth quarter up to $9 1 million and represented 41, 9% of revenue.
As we message in our year end earnings call, we have been aggressively investing in our sales and marketing infrastructure.
There are also some seasonal aspects to the hiring on the sales side as we tend to onboard significantly more sales and marketing people at the beginning of the year as opposed to the middle or the end.
Our medium term expectations for sales and marketing expense as a percentage of total revenue remains unchanged at 35% to 40% and we will continue to remain there for so long as our growth trajectory continues at or close to its current level.
Yeah.
Yeah.
R&D expense for the first quarter was $4 $1 million, an increase from $3 9 million that we reflected in the fourth quarter of 2020.
The increase was driven primarily by our growth in head count.
And the work that we have been doing to launch the Dolce bold learning suite.
As a percentage of revenue R&D was 19, 1% of revenue compared to 28% in the fourth quarter last year and will likely remain around 20% of sales in the medium term as we continue to proportionally invest with our sales growth.
We reported an adjusted EBITDA loss of $2 $5 million for the first quarter of 2021.
<unk> to a loss of $2 4 million in the prior year.
We also reported a net loss of $5 6 million for the first quarter this year.
And that compares to a 0.7 million net income for the prior year period.
As we've already noted the net loss for the first quarter of this year reflects a $2 million foreign exchange loss.
Finally free cash flow was negative $2 $4 million in the first quarter.
And our balance sheet continues to be very healthy with the net cash and cash equivalents balance of $217 million.
As a management team we are focused on continuing to drive organic revenue growth for so long as our CAC ratio remains attractive.
At this stage there is nothing that I can see in the near term that would suggest the momentum in our sales pipeline or customer acquisition costs have materially changed to the downside.
As a result, we're going to keep driving the business on the path that we're on and with the new products and OEM relationships now entering the mix along with a very healthy core growth engine.
We are very excited for the future.
And with that I'll turn it over to the operator now to take some questions from the analysts.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone.
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Your first question comes from Robert Young with Canaccord. Please go ahead.
Hi, good morning.
The first place I'd like to start is in the incremental <unk> in the quarter second quarter over $9 million.
Is there a way to unpack that a bit to understand the range of.
The.
The ACB doesn't tell the full story around you know how large the largest are and how small the smallest iron I was wondering if you could give a sense of how large some of the larger contracts that you're winning now and if that is a big factor in driving you know are arch, where it is today.
The incrementally or where would you say rather.
Sure Rob.
We had one one large customer that.
That we signed.
And recorded in actually we recorded in the first quarter.
It was in excess of $1 million.
Other than that.
We had a.
A very nicely distributed set.
Similar similar actually to what we had in the fourth quarter.
Okay and then.
If you look at the what you said record customer expansion activity.
That's an ongoing trend, but can you talk about the size of expansions or are they getting larger and I think the the HCV data. If you just look at the incremental numbers I think you gave 45004 net new.
The math would suggest 60000, there and so its it seems just that the expansions on average are larger than net new is.
Is that correct and what would that imply well.
Just to remind people we.
This is the quarter, where we recorded the expansion.
With the fast food service company.
And so that helped all of our all of our numbers this quarter.
So that should site.
Okay. So it is driven by one one contract rather than like a general trend towards larger expansions.
You know what I'll, let unless you add some color to that but the short answer is no.
It it obviously was a big positive.
But but we were really pleased overall with with our expansion activity outside of <unk>.
Of that of that single contract.
Yes, Ian you're you're correct.
That's the single contract that was.
And if you come to in a nature certainly helped that bumped, our where we're observing are.
Upsell cross sell business.
We are observing success not only in more transactional use that obligate AIDS. There are indicative of the good adoption and growth across our customer is about multi department strategy is a paying back and we're succeeding.
Settled the activities, which are effectively equaled the additional customers at high at a C D than average from the past.
Okay. Thank you very much for my second question, just really quickly just given your exposure to Italy and that the cadence of the <unk>.
'twenty 'twenty I Wonder if you could remind people.
How that year played out a lot of people are looking at Q.
Q2, and beyond as being a tougher compare for most companies in there that may be different than in the case for for good shape us I thought you could remind us of how that played out last year and then I'll pass the line.
Yeah, Rob I think you're right.
We.
We had last year. If you go back to Q4 2019, and then look at Q1, 'twenty Q2, 'twenty, we had to all intents and purposes flat.
Our our growth over over those three quarters. So we will as we get to Q3 and four this year, we will we will have more difficult comps.
No question.
No.
Of course, just to put a plug in there having said that I.
Think that underscores what we've been saying all along is that the growth in our business has not been COVID-19 driven we've been very clear COVID-19 has been a tailwind and the headwind the headwind was immediate sorry, yeah.
The headwind was immediate.
Be benefiting from that over the next five years.
Yeah.
Thanks, a lot.
Your next question comes from Chris Merwin with Goldman Sachs. Please go ahead.
Okay, great. Thanks, so much for taking my question.
I just wanted to ask about the cable learning suite I know, it's very early days here, but anything you can share about initial traction and then I guess as a related question.
Does this change the competitive map for you all in any way and is there something else. So that's gonna be sold through your your OEM sales channel. Thanks.
Hey, Chris I will speaking.
Did you guys thinking that became more suite.
Did you move.
To be positioned in.
In a completely different way comparable to our competitors.
Second.
No not at all.
And what we are.
A lot of customer needs.
They need the finalized what they thought they need to build content quickly they need us to get there.
Joan Tong said to improve.
You have to go see and saw this fall.
Let's say that.
Uh huh.
Some of you, but in the future we will expand into.
Yeah, it's been built like we say the Monday you no problem.
B mall can be also included into the Oh yeah.
You gave me, but not all of them also and can be extended.
Cadence.
For example, 10 do you use a point that a lot of training, but also upon our lives. It all gets done.
We started selling the first thought that.
Slide the triple living the box, which is the blending of the.
The acquisition, we made for maintenance stuff rooftop market.
So as of today, we do not add any good to see.
Well, what what we've got a bottom of work with both performed all that well.
We are losing a lot of transitioning to a single a single product with leap and.
Then b product that we performed better than others.
We made our bet and definitely saw it.
It's a journey, but just thought.
And as you know I don't like to make projections without adding to any data.
But a lot of interference.
He said that.
I Didnt buy into based on me that to maybe tell us how somebody like me.
Maybe to.
<unk> got some advice from one vendor all without that mitigate that.
<unk> technology.
And we know the aim.
We aim to know the industry because we saw it kick in yes.
EMEA SLS.
And many others that that and maybe what you saw maybe some kind of.
Moving on now to improve.
Okay perfect. Thank you and maybe just one more question I mean, given that the strength we saw in AOR growth. This quarter are you able to.
You know, maybe just qualitatively help us understand.
The strength of the OEM relative to direct sales within.
The uptick in an IRR that we saw this quarter.
The.
Sure so.
The OEM growth has been.
Relatively steady Chris over the last three quarters, having said that.
The growth has been has been growing.
Consistently it's it's it's not growing anywhere near obviously at the same rate as our as we are overall.
But we've been working very closely with our partners and and we're really happy with the progress that we're making there we are still fundamentally.
Realizing them.
The majority of all al.
I'll say, 80% to 90% of our OEM revenue from from a single OEM partner.
And so that's why and you've heard me say this several times when I look over the next two to three years and think about it.
Think about sort of the hidden gems of why this company is going to succeed it's the OEM side that gets me the most the most excited.
Perfect. Thank you very much.
Your next question comes from Daniel Chan with TD. Please go ahead.
Morning.
Last point you made so ceridian continues to win new customers and grow its recurring revenues would you say that you're seeing greater success with the new customers that they win or have you also been successful at selling into the existing customer base as well.
They're doing both debt.
It's it's like anything else.
<unk> got better at selling and implementing its products.
2016 to 2020, and Ceridian is getting better at selling on our behalf day for its learning over the past 18 months or 24 months.
And and their their internal infrastructure is now well set and established to attack both fronts.
Okay. That's helpful. Thank you.
And then you mentioned in your prepared remarks that youre going to continue pushing youre not seeing any changes. This time last year you did talk about.
Increased inbound momentum can you just give us some color on what you're seeing in some of these markets that are reopening getting past the pandemic. What are you seeing there that's giving you the confidence to continue pushing pushing ahead.
Thank you for the question.
Right.
Yes.
The results.
Can you guys hear me.
Yes.
Sorry, I had an audio trouble with Maxim.
And I was saying, we're very satisfied with our argue.
With our results for any inbound in quarter one it definitely.
Inbound is still.
The primary contributor to our growth when you look at the channel mix between inbound and outbound.
In quarter, one and we have them.
Analyze the increase.
In them all.
Our attainment on the inbound side versus our goals and and we were very very happy to see that not only in North America.
But also in Europe, where we are to an extent, we we've seen that things have been a little bit more difficult with regards to.
The piece of vaccination assortment and so forth. So we've we've absolutely.
I loved seeing an uptick in inbound our results and and you know we believe frankly its product and the response to the investment that we've made that we spoke about this.
Past calls, we staffed our marketing and digital marketing organization into two really.
And be aggressive on the search from <unk> on the various channels that we.
We can win.
Several investments in strategic account account based marketing channels, and we're seeing the fruits of that day and very very happy to see that.
Great. Thank you.
You bet.
Your next question comes from Richard <unk> with National Bank. Please go ahead.
Yes. Thank you.
A question on the competitive environment.
Sort of wondering has there been any change in terms of who you're displacing most often.
Yeah.
Hi, Maggie.
I got it higher I Richard it's.
It's a good question.
Look.
You know we.
We certainly are.
Seeing a trend of the.
Growth and success.
In the mid enterprise market at a rapid pace.
It's easier in a way too.
Establish the vendors, where we're displacing in those segments.
Because theres less right when compared to two two.
Smaller market, where there's more fragmentation.
And really were.
Strategically very focused on.
Winning the business of enterprise organizations that on a departmental level.
And so.
When you think Cogs.
The enterprises that how the E learning product is part for example of their H.
H C M.
The talent management suite look there's there's not many companies that we compete with and you guys know who those players are.
And.
And what we're hearing from these organizations from the companies that were winning somewhat named today.
When they choose us is they're very dialed any learnings.
They have a vision for learning that goes beyond internal.
We spoke about lightspeed its not.
It's not uncommon for a company in that space.
As the girl of training to audiences.
Internal and external to select a little bit more.
Maybe standards in terminal corporate solution and enterprise level.
It does a good job in the context of an HR suite.
But perhaps just not had innovative and specialized on the learning from them and that's our angle and that's how we win that business.
Okay, Richard could address it.
Yeah. My second question has to.
It relates to the table learning suite it sounds like obviously, a pretty compelling opportunity I'm just trying to understand the relative size of the opportunity. So.
If you looked at the current base yesterday in terms of the product portfolio you had prior to this announcement.
And you kind of look at you know what that opportunity is has that product been around at the beginning as it sort of three X five X 10 active I'm just trying to get an understanding of the relative.
Sort of increase in market opportunity here with that.
Recent announcements.
Yeah.
So I was just speaking to <unk>. Unfortunately, I broke my Crystal ball yesterday, so I want that.
Number and I think that everyone is trying to make projections on numbers is just drawing wrong.
The numbers.
And we are not here to start defining the market size and then all of that but I think the market.
The total addressable market, we actually have to build great products.
Meet all our customer happy so Danny D Veeva, the real Oh videos.
I mean does that ease of use of Paul Baxter, creating well Mike.
The goal.
As a consequence.
Sure.
We've all along.
If we catch equally if we did you say.
A couple of albums probably.
Plus the next phase you raise a good great question, which is it's all set up as the bond market and the scope.
It's a multiple elements.
Simultaneously.
N D. All of that are you, leaving that aside then that means that no one knows.
Okay.
Thanks, Mike.
But no. One for example is a nice thing that our big Eva They stand now you gave the lateral manav.
So and many of them most people all of that is complete.
And.
Got it thank you <unk>.
For normal which is all akshay.
No problem, that's all he made the Buffalo basketball market.
I used to always know can derail it.
Yes.
Uh huh.
And then just say neither.
I can tell numbers, but that's what we need.
It's not the way the cable was buoyed somewhat lucky.
We think that's all I've got some challenges.
But that would be that's all these needs for all I've got.
All we know from all of them eight and then we have always been great success and.
They can grow ease of courser gloves.
It's not an estimate on how big we can be.
I'm, not saying that I mean, maybe.
But we are building will be zero completely moved almost all of our problems because all of our visa was completely wrong.
And that will be a drag at all in the middle somehow that bottom a way better some fall back.
Bottom Umm Nasser book I mean, my in my heart, the camel shape, you've been more use of it.
But based on my task will never need that.
Again, creating maybe.
I'll tell you what our customers with the chamber.
The chamber learning is already <unk>.
The closer on that one.
The trading gains are successful.
Based on what was the contribution.
I'm not I'm, not making any forecast.
Oh, you have to build great products and vitamins Mike off of it.
Fair enough. Thanks, Richard Richard the only thing I'll add is.
When Claudio says, maybe maybe that'll be zero. It you know that makes me squirm, but look.
The reality is that like just to get a little philosophical for a moment this company values intellectual honesty as as much as any organization.
If ever know.
What we're trying to say is it's too early we have no data truly no data to respond to your to your question and and we want to know just as just as eat really as you do.
And.
Probably.
By the.
Third certainly the fourth quarter this year.
We'll have some data that is.
At least indicative of where we think we're gonna be and and.
Uh huh.
I know you really would love us to put a.
Pegging the board on this but but please please just be a little patient.
Soon as we have some information that we think is.
Is meaningful and reliable.
Then then we'll be communicating it.
Yeah, and I imagine that.
While I'm on that point yet.
Well I'll talk.
Two blocks that I'll touch on is.
So that all of the Microsoft and Salesforce, they thought all of that business.
And then there are companies that are in gene editing.
Like a Google and AWS.
He's been involved that tolling products in the markets.
And somehow that we'd be type of successful light comes at all.
We have time to meet with bank that's overpowered.
Charles.
Because we need to do that.
As noted by the company, but in the same time, we are sure that somehow that we lapped the most success and that that product will have less upset Walter we deep post.
Covering all the lifecycle from COVID-19 zynga to based on that.
Let's say that well I.
But all of that and I'm not saying models.
Because the toy box.
Okay.
Also despite a competitive ecosystem.
And that worked out.
Illinois.
Can you use the chip will shape.
They need to deal with.
One thing that you didn't even bother with that can you.
Got it.
Generally you can buy ahead of that a lot.
The cumulative impact.
Jim.
Just for maintenance and stuff like that.
On the other competitors' technology.
This is the beat to play more of the.
The product strategy.
Try to execute getting plenty of 'twenty, one 'twenty, two installments or anything.
That's great. Thanks, guys.
Your next question comes from Martin Toner with ATB capital. Please go ahead.
Thanks, very much congrats on a great quarter, and congrats or less.
On the promotion.
Thanks My question Martin.
My first question is on partner programs.
The blue water extension sounds like a.
Dedicated consulting practice that dedicated to good shape a solution.
Is that the case and has in it.
Also are you dedicating resources to this growing.
List of partners I mean growing.
Are you adding to.
Your team to manage this program I'm sure there's a large number.
Spectra's partners out there that you could add over time.
Martin Thank you for the question.
The brief answer on Blue water is a you're correct Tim as you know blue water has been for many many years as a leader in the professional services managed services and overall knowledge in the consulting aspect behind the learning and the HCM solution more broadly.
Every presented the big brands of the you know learning management systems and beyond <unk> and <unk> the industry knowledge here in North America, but also to each into Europe.
With the leadership team there we have a longstanding relationship with that we saw an opportunity oh, beginning to refine their knowledge in our technologies and they started to help us on the integration implementation throne. This on the professional services side, but they are a go to market.
The organization as well and so other than just the doing consulting.
Salting deal saw the commercial arm it that was very very interested in incorporating our technology in a you know.
Laser focused managed services approach.
They would offer to their customers.
Set of services that incorporate all the as bid.
Learning technology enabler. So we're very proud of it because I'm Oh. These guys are working with some of the best companies in North America and beyond that they know what they are doing they are high quality people, great people and high quality learning professional and we're just proud of them.
Rolling that partnership to your question about staffing it in order to support our partners people that all that yes, we are very intentional and deliberate in the way we design our partnership organization, where we don't we don't necessarily share resources across the Oems and the strategic partner business since.
In in the sense that the OEM is the one thing it has its own strategy and management and strategic with sellers.
They need a certain that in different type of approach but.
But I would say, we're largely focused on OEM are the flywheel of growth for the future, but the will catch opportunities like blue water in the world and the announcement of a vein system ease them as similar to one that you know, we like our strategic resellers and strategic partners in geographies, where we don't have them.
A very strong physical presence. That's that's a good example for middle East and APAC and I don't know if you if you're asked about it but you know I'm a charter them easy set an example of the growing and account managing an existing OEM malware, we started with ita.
A portion of their technology, but then they were so satisfied with our technology and adoption that they decided to extend it to two there are people first blast from their global HCM.
So I think overall, we're very pleased with the with that progress.
Okay.
The other point about installed but he's Uh huh.
That's all a part of that there are some bets because some years.
We're seeing some geography.
That's really neat.
But during the transition into the digital transformation.
Some of our money our full blown E companies at very high growing all that the company doesn't need any consultant to be digitally transform our company.
And we have to their lives that and learning to use it is one of the new deal level did you start kind of automation inside that.
And how does it all all that tradition.
Hybrid profitable organization.
And that don't wear the consultant can help but going ahead, Duane we doesn't want the top toy.
Or did you hold off on my phone calls.
That's great I really appreciate the thoughtful answer next question Ian mentioned.
That most of the sales came from inbound request I know you guys are building your outbound sales force can you talk a little bit about.
The about that or what your expectations are for these people and when do you think it will start contributing to our numbers.
Sure you know.
I believe what I, what we what we said is that inbound is a great contributor we are actually.
Satisfied and and very aligned with the plan that we had for outbound in terms of contribution as the source of China local lead generation well. Our plan is to continue to support the sales execution, we both inbound and outbound and and in addition to ours.
Around our with our account development teams that if you will you can see them is they're not outbound the workforce in the context of existing customers to support them.
What we have said over and over at our our cross selling and up selling strategy.
Or our strategy overall at a high level. It remains unchanged. The you know what some things that I'm happy to share is that we have reinforced our outbound organization. We'd certainly new management are individuals that are bringing to you can get it.
Beauty and center, bringing the skill set did that to before it was very much grown in them.
God only knows and we felt that he was the absolute appropriate time of Turing foresaw with transformational talent that helps us accelerate to that that plan that we have ahead of us in terms of contribution for the future you can stay assure that.
We are a we're very much interested in continuing to manage the mix of inbound and outbound them and here's what we like about outbound we know that by creating outbound deals that we are able to enter in the organizational goals earlier than when we do.
So with inbound and that means that really the projects that have the wider scope oftentimes so and they also are less competitive because we establish a much more strategic relationship from the get go.
So I'm not.
Not only very excited about outbound, but the theory dialed in it and with the addition of new talent on the management side are looking forward to grow in that business I'm sure that.
Thanks, very much looser I appreciate it.
And I appreciate you.
Your next question comes from Steve <unk>.
<unk> with eight capital. Please go ahead.
Hey, guys congrats.
Congrats on a strong quarter.
First question I had was.
No one wanted to get an update on <unk>.
Form a tree. Some you know how is the integration progressing to date has there been any change in your outlook or impact that you expect to generate from this business. This year.
Uh huh.
Susan I hope.
Apologize, but my my connection. This morning is is terrible and you were breaking up I couldnt understand the question.
Yeah.
Please.
And I was asking if you guys can provide an update on your recent acquisition.
From the trees.
Curious how the integration is progressing to date in and has there been any kind of change in the outlook or impact that you guys are expecting to generate from the business. This year.
Yeah, sometimes.
Pardon me.
Me neither.
With a very nice long ago by the way into the table games fastball friendly Eli.
And.
Although he is a great business.
Inside the our suite.
Got it together.
I'll go one of the things about this.
Is that off the table.
About the market.
Okay.
Actually we are they more in the product.
We are analyzing that.
Of the thoughtfulness.
We have deals with all the all the math.
But if I'm not wrong.
Right.
Lying on basketball helped us back last fall.
<unk>.
Then Tom then became the keeping the <unk> got it and just a very well paying it.
Just want to make it to say I believe.
'twenty 'twenty two so there is very solid.
And that is solid.
Because do not forget that DNI will temporarily impulse achy April might be.
Is this all being debt and then the same dilemma that he is the senior forgive me I D O I.
Yeah.
There is a lot of investment because you cannot you can only guess their return on investment when you measure quantitative data like our long train than than that I'm, just trying to find the corsair well thought of as core in the.
Oh, well that's Mustang.
<unk> assessed their return of not only that a ton of investment you need to call it that.
And the fact that they love that came as a painting they've got the positive impact on these studies on the business and also I mean industry benchmark you've been waiting to provide the NOI. So yeah, yeah marketing brought up we are excited we are.
And we can wait.
Uh huh.
Well when I read their 40%, but that's one break in keeping item.
Perfect. Thank you.
And just to touch on kind of your your broader M&A strategy. You know you guys are obviously in an aggressive ramp up mode and you guys are focused on execution.
One customer organic perspective, but did you guys see.
More opportunity now to do more M&A and kind of near to midterm here too.
Enhance your platform and roadmap.
So.
Assuming we have an interesting that cash balance.
Well, we yes, we don't want to make M&A.
Just because we have money in the bank and we need to prove that we use this morning.
The first thing that we want to avoid making mistakes.
And this is what worries me a lot.
Let's say that.
We we we are not all the entities by any competitor for sure.
We.
There are opportunities there.
We didn't even think Brian.
Oh, well ultimately likewise floor, a possibility for something we cannot using that money because we do not have the knowledge.
So if any of that's something that is a phone she blew our suite learning suite.
Michelle N V.
That we can get them off their money.
And then.
And we were joking with at all beyond the light Oh, you have all of those.
Something into the vehicle Oems.
This was a joke, but this is the kind of technology that we don't that expense seems to be so if you have to be able to buy it technology is it.
This is not to be off but something that's really both expertise our methodology.
The two buildings.
These days and we are hoping to explore.
Let's not forget that some offset with the prices that are that offset the non speaking the disable visual and I'll get off I thought not reachable company culture.
So it's a thoughtful.
Well, there's lots of them.
Maybe not.
Not in a hurry.
Yeah.
Great.
Thank you for so cheap that guys.
Right.
Your next question comes from Nick Agostino with Laurentian Bank. Please go ahead.
Yes, good morning, and congrats on the quarter I guess.
One maybe two questions for me first you guys talked about supporting the new module launches you talked about obviously, having adding more people to support the outbound initiatives and to support Oems in general I'm. Just wondering is there org structure or something you guys think you need to change internally to <unk>.
Manage those those goes.
P layers of growth that Youre seeing right now both from a product and from a sales perspective or is there a layer that you need to introduce within the organization to be able to manage just the the level of growth you're seeing right now.
Thank you for the question.
It's the inform me the opportunity to work on my last day as the precedent during the last earnings call.
Because I didn't say I didn't do it yet.
So that is on promotion.
Yes, and the fact that I have got a lot that we bought.
I had two for most of last year as the basketball is because and so to me I passed on that kind of work outside a lot of that activity in line with anything that spread and girl.
Organizational chops saw the phone that's where we're moving the lifestyle, we are arguing that you'd you'd give on that.
And these will be done in denied because.
He's the chief revenue officer in the post that to reshape the organization from some of the multi product strategy and then and I know.
I'll chime.
In.
Just to highlight what part of the changes we are making in especially in these all of them based on detection.
Our revenues in services to support the digital suite.
Well, thank you Claudio and Nick Great question, one that we are certainly very passionate about I know I know I am and I know this is and some some aspect that we think about a lot. These days.
The first comment that comes to mind, Nick when I hear your question is that.
When you were part of the company that grows at the pace that we've been posting for the past and you know not only since we became public but even before my history at the table.
Year over year, and really quarter over quarter, we have a DNA and and they are we've developed them.
No.
And our ability to understand where we're going to go into the future and adapters skin towards next.
That is a continued process and.
This change towards multi product it is just.
And another milestone, where we where we need to execute some evolution.
No.
The multi product changes.
Claudia alluded to changes in the sales organization professional services I'll start I'll start from the outcomes, what we want out of any organizational improvement that we approach, we want happier customers that adopt our products better and stay with us longer.
So rather than focusing on on the inputs.
Inputs as in the products that we look at the outcomes as a starting point. Then then if we think that there is more complexity in terms of products that we need to think about where people are going to create where to Chris specialization I what point in time and to what extent. This is a Jordan if you don't do all.
The Siem one shot one day it is I'd rather call. It a program that gets designed and executed over time, one decision that we've been public about we've shared this in our recent call is in implementing certain overlays at sales execution level guarantee and ownership of overlay.
Quota at product families, where those product families are made of certain products that have something in common where product management to head of sales product lines.
In product marketers that work together in a in a.
Virtual hybrid pods to really lead the organization towards them building better products marketing products appropriately and then enabling the workforce overall from sales through professional services via customer experience and support it.
Two to really then have the customers that.
Have great experiences. This is the Jordan that started a few months ago. We're in the middle of it we'll continue to keep you updated them, but just know that it's this is front and center of what we're dialed dialed in.
Yes.
Okay, Great and then my second question just looking at your sales pipeline.
You guys talk about having an extensive one in the quarter itself. You indicated you had one large customer can you maybe give some indication or color as to the.
Your outlook sales pipeline.
Do you have some other large customers within that pipeline are there new geographies that have it that youre seen interest from and are there any new verticals that you might be seeing interest from and I'll leave it there. Thanks.
Yeah, Yeah. So.
So ill.
Ill respond to this question starting from the end of your your question that you were referring to verticals and verticals is one of those areas where M to your prior question. We look at that as a very important area to focus on for the future we understand.
And appreciate that when you sell.
Cell into a company understanding their business deeply and intimately makes a difference and when.
When we look at the verticals that we do really well with and at a high level. As you know there is eight to nine vertical that that really we received a repeat a success and we have found some level of magic sauce, a magic formula.
With regards to the alphabet pipeline and then with regards to are we going to land other big logos and big wins and the answer is yes, we will we will I'm I'm I'm very confident that we will and both are.
Good companies with good they are ours as well as the Oems and you know we were we sound pretty bullish about it because we look at the data and the data speaks highly for our team's efforts in generating these opportunities.
Now will we be able to to say the names of these companies. That's the that's the fine grain detailed that is there often times as you very well know more in the quarter, where customers are legal and procurement officers, but we certainly will do our best to do so were excited about the names that we have in our pipeline and we project.
Some some exciting things ahead of us.
Okay, great. Thank you.
Youre well at this time.
This time I'd like to turn the conference back for any closing remarks.
Yeah. Thank.
Thank you again for these for the for the time, you are indicating to us.
I think we will speak again liking.
So I mean is it.
Thanks, everybody.
Thanks, everyone.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a great day.