Q1 2022 Anaplan Inc Earnings Call
Moving on.
During the day.
Sure.
[music].
Thank you for standing by and welcome to the end plan first quarter fiscal 2022 earnings conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
Ask that question during the session you will need to press star 1 on your telephone.
Please be advised that today's conference is being recorded.
You require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Mr.
And the Zika KEPCO. Thank you. Please go ahead ma'am.
Good morning, Thank you for joining us on today's conference call to discuss <unk>.
First quarter fiscal year 2022 financial results joining me on the call a Frank <unk>, our Chief Executive Officer, and Dave Morton, Our Chief Financial Officer.
On this call, we will be making forward looking statements, including financial guidance.
Our second quarter and fiscal year 2022.
The patent future operating and financial performance strategies customer demand for encore.
Quality is.
Statements reflect our best judgment, Volkov bucket, partly mouthwash and actual events or results may differ materially.
For further documents be filed with the SEC, including the form 8-K filed with today's culturally.
Documents contain risks and other factors that may cause our actual results to differ from those contained in our forward looking appointment.
These forward looking statements are being made as of today and we disclaim any obligation to update or revise these statements.
If this call is Turkey. After today's information for the bulk of junk call may not be kind of off net.
We will also discuss non-GAAP financial measures, which are market called in accordance with generally accepted accounting principles.
Unless otherwise stated during the call all references for gross margin for <unk>.
Operating results are on a non-GAAP basis.
Historical periods, a reconciliation of GAAP and non-GAAP results is provided in the press release any bottom line for financial information on our website.
And with that I will turn the call over to current California.
Thank you Lisa good morning, everyone and thank you for joining us today.
We started our fiscal year with a solid first quarter as the need for enterprise wide planning is increasing globally.
This quarter reflects our steady execution with healthy new customer growth ending the quarter with over 1700 customers.
Our results continued to build on our market leadership in the growing interest.
Digitizing planning across every function.
The unique breadth of our platform and the ability to cross sell with also reflected in the strength of bookings from existing customers.
Approximately 64% of new bookings this quarter came from expand deal.
We now have 473 customers with over 250 K.
Billings grew 32% year over year, and we exited the first quarter with meaning performance obligation or <unk> balance.
The $832 million up 29% over last year.
We are pleased to see that our new customer wins and expand deals were across a broad set of industries.
1 key industry, where we made an impact is in automotive.
This sector is seeing several disruptive technology driven trends in mobility autonomous driving electrification and connectivity.
As a result of these trends this industry needs a platform that can manage in real time.
All the major implications related to manufacturing and supply chain.
With a robust platform, we won several key customers in the automotive sector.
A large global auto supplier with over $40 billion in revenue chose Ana plan has the only planning solution.
That can improve the quality and overall speed of decision making across their entire business in order to proactively respond to the disruptive trends in the automotive sector.
Another key win for US this quarter, which was 1 of the world's largest commercial vehicle manufacturers based in Europe.
This customer.
Selected and a plan to improve margins through optimizing their supply chain.
This customer needed a solution to manage and increasingly complex global production network and.
And higher market volatility.
Now more than ever there is a.
Strategic management tool by connecting their goals to tangible business outcome.
I would like to provide a few examples of the ways in which we enable that for our customers.
A multibillion dollar global leader in cloud computing is leveraging and plan for go to market planning.
In the first quarter after implementation the customers for our top line revenues increase up to 10%.
And an additional reduction in their cost of acquisition by up to 10% delivering significant P&L impact.
The most advanced companies are positioning their business for the next normal after the prices and sales planning is a key area of focus.
<unk> helps customers identify sustainable profitable growth to a range of strategies around intelligence segmentation for.
Emotions trade management and pricing.
Another area of focus that has been highlighted by the pandemic is the impact on global supply chain.
For example.
The ability to get supply from the suppliers in different countries, what's happening with the end customer and the ways in which the inventory can drain your profit.
Our platform has helped many customers manage their supply chain.
A large U S appliance repair provider deployed and a plan to help drive down inventory by 55% in less than 6 months, improving working capital for the business.
Following that success in supply chain, just a year and a half later the company went live with our workforce planning solution driving improvement in productivity and greater ability to respond to changing customer needs.
In the health care industry, we have seen this space undergo sweeping change to emerge as winners healthcare companies need to have a modern planning solution, enabling rapid decision making.
Another customer a leading healthcare technology company leveraged and a plan to help improve the predictability of their business enable a better patient experience and expand revenue opportunities.
Historically, they're planning models had unpredictable swings and poor forecast accuracy.
After implementing and a plan b.
They predicted a 15% increase in revenue and ultimately landed that quarter with 98% accuracy.
These customer examples highlight how a modern approach to real time planning and drive business outcomes and serve as a key competitive differentiator in today's fast paced environment.
From an innovation perspective, we have been investing in our technology to deliver even more impact and value for our customer mix.
I'm excited to share that we are on track for launch and a planned plant IQ with Amazon forecast.
Plan IQ makes AI and ml more assessable to help business users make faster and more accurate decision.
We completed the early access program for <unk> IQ.
With positive customer feedback, while providing significant business outcomes.
An example, a large retailer in Asia Pacific improved forecast accuracy by several points with dealing several million dollars in potential cost savings.
Furthermore, it only took about 2 days for launch plan IQ for demand planning incorporating many years.
<unk> data for over 10000 Skus.
We also worked with a pharmaceutical company, who experienced significant improvement in predictions for a majority of their skus by up to 16%.
Enabling millions and upside to profitability.
As businesses begin to recover.
We are ready to take advantage of the improving demand environment from a go to market perspective, it's great to have bill shoe onboard as he will continue to build operational excellence in areas, such as better customer qualification rigorous opportunity reviews and coaching to drive sales productivity.
To Bill's leadership, we are also focused on the expansion of Anna plant platform to other use cases and functional areas within our customer base.
Evaluating our pipeline, we're seeing interest in areas, such as supply chain and HR as well as opportunities for multi function deal.
As part of supporting best in class expansion selling 1 of the areas. We are focused on is driving greater customer adoption and value realization for.
For example, 1 of the factors that influences adoption.
As the number of customers, who have implemented a coa or center of excellence, which broadens the use of our platform.
I'm excited to share that the number of customers with a Coa grew over 100% year over year.
The continued scaling of our partner economy will also ensure our ability to take advantage of the large market opportunity.
Throughout all of last year and this past quarter.
Our partners have continued to invest and hire and a planned resources, which is a testament to the level of customer interest and momentum they are seeing in the market for enterprise grade planning solution.
This quarter.
7 of the top 20 deals were sourced by partners and another 11 had strong partner influence in the sales cycle.
GSI are investing heavily in scaling their ana planned practice in areas such as alliance managers go to market lead solution development co marketing funds and more.
Over the next year major GSI will continue to expand and build and a planned global delivery centers around the world.
It's exciting to see our partners grow their practices across newer territory, including wins in Germany, with Eli and Deloitte and 1 of our largest deals ever in Japan with Pwc.
Our cloud partnerships with Google Cloud and AWS announced late last year allow us to further build on this ecosystem. These.
These partnerships will expand the reach of our platform through new geography, and provide powerful opportunity for collaboration with the GTP and AWS go to market teams.
From a market perspective, we believe and a planned strategic positioning within the planning category has strengthened as both Gartner and Forrester.
<unk> the importance of extended planning to other functional areas.
Similar to gardens concept of ex PMA for.
<unk> recently published a report.
That discusses the emergence of digital operations platform planning and analytics tools.
For us to reiterate that businesses need modern purpose built planning application that can cut across the business.
They recommend to customers that while EPS solutions have historically been associated with financial planning and budgeting. The category of applications has now evolved across a wider range of business functions.
We have solidified our strategic position in the ex PMA category.
Further validating Anna plans next generation approach to planning.
Looking ahead I'm excited to provide an update on our annual user conference digital CTX.
Demand for both user centered content and business decision maker content geared toward fee level and leadership has remained high.
So we have decided to host 2 global customer events.
First in June, which will feature Anna plant customers in our model build a community with a focus on user training and briefings to accelerate platform value realization.
In October we are revealing an entirely new virtual experience with business transformation leaders platform power users and aspiring master Ana planners.
Our user conference plays an important role in bringing together our world class ecosystem.
Certified Anna plant experts.
Over the last year, we have expanded the number of and a planned trained experts.
Across a variety of functional background.
The total number of professionals that completed 1 of Anna plant certification level has increased over 100% year over year.
This concludes Anna plant talent at our customers partners as well as our own employees.
We have also partnered with correlation 1 to enhance our and a plan for all program focused on building 1 of the largest and most diverse community of data professionals through training and data skills and career navigation.
In summary, we made solid progress on our growth strategy in Q1.
We are in the early stages of the recovery and we are confident in the momentum that we will build throughout the rest of this year.
Digital transformation efforts remain a top priority for many companies and we expect this will continue to be a strong driver for our business.
Before day get started on the financial details for the quarter I am sure everyone saw the announcement today.
Dave will be transitioning out of his role later this year to spend more time for the family I want to take a moment to thank you Dave for your significant contributions to Ana plan as Chief Financial Officer since joining the company in 2018 day.
<unk> has dedicated himself to our core business objectives and made a lasting impact on the company.
Dave will continue in his role until his successor is hired.
Now, let me turn over the call today, who will discuss our first quarter financials and provide our outlook for the second quarter and fiscal year 2020 to date.
Frank Thanks for the nice comments.
I'm looking forward to taking some time off for the first time in my career to spend time with their families.
The need for scenario based planning has never been greater and Anna plant is fully focused on executing against the opportunities ahead.
Even before I joined Dana plan I appreciated our focus on solving CFO pain points and have enjoyed working with the team to further that mission.
It's been a pleasure to serve as <unk> CFO and I look forward to doing whatever I can to support Anna plants path forward, including assisting with the search process.
Now turning to the quarter.
Total revenue for the first quarter was $130 million up 25% year over year.
Within this subscription revenue grew 26% and comprised 91% of total revenue.
Service revenues were $11 million of 15.
<unk>, 15% from the first quarter last year.
Calculated billings for the first quarter were $127 million up 32% year over year, driven by strong sales execution and higher growth in net new bookings this quarter.
Remaining performance obligations or <unk> exiting the first quarter was $832 million up 29% over last year.
Current portion of RPI debt.
Expected to be recognized as revenue over the next 12 months was 442 line up 34% year over year, which represents sequential quarter year over year growth in terms of total at current RPI.
We demonstrated healthy new enterprise growth and ended the quarter with over 1700 customers.
Broadening <unk> platform within existing customers resulted in dollar based net expansion rate for NR of 118% this quarter.
In addition to the continued success in delivering a year over year growth in volume of expand deals. There was no change in churn in the first quarter and our overall customer retention rate is in line with historical levels.
Turning to our profitability metrics total non-GAAP gross margin was 77% down approximately 1 percentage point year over year.
Within this subscription gross margins were 84% and service gross margins were approximately 8%.
Total non-GAAP operating expenses were $112 million for the first quarter up from $94 million in the prior year, primarily due to investments in key areas to support future growth.
Specific investments were targeted towards go to market sales capacity pipeline generation marketing support and our product development roadmap for advancing additional features and functionality across our platform.
Operating margin for the first quarter for negative 9.6%.
An improvement of over 3 percentage points compared to negative 12, 9% in the same period last year.
Net loss per share in the first quarter was 10 cents.
Based on 144 million weighted average shares.
Free cash flow for the first quarter was $8 million.
Demonstrating our debt and working capital management and.
And we exited the quarter for $328 million in cash and cash equivalents.
Looking ahead for the second quarter of fiscal 2022, we anticipate revenue to be in the range of $133.5 million to $134.5 million.
Within this we expect services revenue to be in the range of $10.5 million to $11.5 million.
Billings for the second quarter are expected to be in the range of $138 million $240 million.
This implies a year over year growth rate in the range of 27% to 29%.
For the full fiscal 2022, we are raising our guidance of expected revenue to be in the range of $555 million for $560 million.
Moving on to the operating margin, we expect non-GAAP operating margin for the full year to be in the range of negative 8% to negative 9%, which is in line with the guidance we provided last quarter.
As businesses begin to recover we're making investments now to expand our go to market and product enhancements for next year.
Therefore operating margin for the second quarter is expected to be in the range of negative 14% to negative 15%.
Weighted average share count for the second quarter and also for the full fiscal year is expected to be approximately 146 million shares.
And clothing and a planned global market opportunity is dynamic and we are confident our business strategy will deliver continued success investing on our global reach and the feature functionality of our platform allows us to continue to define how we participate in the marketplace extend our market leadership to reach a growing base of new customers.
And provide for expanded use cases within our existing customers.
Q1 was successful and we look forward to providing updates on our execution and results as we progress through our fiscal year.
I'll now turn it over for the operator for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number 1 on your telephone keypad will.
Phosphate to some momentum compile the Q&A roster.
Your first question comes from the line of credit <unk> from Evercore. Your line is open. Please ask your question.
Yeah. Thanks, Thanks for taking the question.
Frank maybe you could help us out and I'm sure Dave that you could offer some thoughts on this as well, but if we look at sort of the bookings trends around RVO and <unk>.
It's showing a little bit more acceleration than billings, and then I realized by Dave you could maybe offer some thoughts on FX, but how should we think about where the businesses I mean, it seems like it's accelerating versus where you were last year does it just take a little while for the deals to get in the pipeline and then start to cascade into bookings because the book.
So ex strong, but obviously I think people are a little bit concerned about the billings numbers. So maybe just add some color there because obviously the stock's down the aftermarket and I think theres, a pretty big GAAP between sort of the calculate bookings number in the billings number. Thanks.
Thanks, Kirk for the question.
Yes, I would agree with the current to just made.
A couple of comments I'd make.
Similar to what I just mentioned so.
So we had a solid start for the year and we're optimistic about the kind of the environment.
The overall environment with kind of improving spending environment and the continued execution of our growth strategy we.
We feel that we're well positioned.
To really go forward.
With new business as well as expand business.
We see that continuing to accelerate as we continue through this year for Q1 performance really reflects I would say steady execution.
Both on the new customer side, you saw I mentioned about the number of new customers over.
Over 1700, so a nice healthy increase in the quarter and then we also saw a larger percentage of our mix.
Being toward expand.
So it's really showing that customers are continuing to add to their and a planned platform usage, which.
Which is good I think the NR <unk> reflects the improvement in the deal volume.
Again, substantiated and kind of what's really what we're seeing with current customers and their expansion.
And I think as you pointed out Kirk I have to say that we're in the early stages of recovery.
I'm talking about the overall market in <unk> from that perspective, but I really feel confident in the momentum that we're building and I think we're going to continue to build that momentum gradually through the rest of this year.
And really close out with a good year, which positions us well for next year.
You mentioned about the bookings I do want to highlight that because I think that's important because you can see based on either the <unk>.
For the current RPM growth as well as the calculated RP of bookings.
Calculate RP of bookings as an example is approximately about 40% growth and if you look at kind of the trend over the last couple of quarters of where that's been it's continued to accelerate from a growth rate perspective, and I think that gives a better indicator of where the current business is moving.
You recall last year, we talked about linear progression each quarter I think that's continuing now and I think the current <unk> bookings.
With giving you an indicator of that and as I said I think we are in the early stages and I think we'll continue to see that play out throughout the rest of this year.
Thank you all.
Your next question comes from the line of Alex Zukin from Wolfe. Your line is open. Please ask your question.
Hey, guys. Thanks for all of it I'm not sure I correct question a different way.
Can you guys I mean I think.
We all understand.
See the optical bookings the healthy optical bookings trends, but is there something happening from a billing or invoicing duration.
Our belief is just the wrong metric to be looking at right now and maybe even as a follow up is there a way we could even start guiding to <unk>, because it's a better indicator of future performance based on your prior comments and then as a higher level question. If we think about the opportunity for.
<unk> in the existing base.
Motion that you guys.
Our expanding right now.
What is the opportunity that is there if you look at your customer base and you just size the opportunity in terms of incremental.
Incremental monetization, what where do we get to.
So couple of questions in there so Allison your first question as far as billings nothing.
Abnormal in the buildings.
To answer that now as far as the other question, which both you and Kirk at as far as whats a good indicator of trends.
We're looking at that we want to.
<unk> as this year plays out think about what that is.
That would give a good indication of the trend.
In our business I feel good about that trend similar to what I just said before.
With the backdrop of the recovery not.
Not everything from a market perspective is operating on all cylinders yet.
Clearly stay on that if I can.
Step back and look at the geographies the geographies as the mixed performance. If you look at it around the world and we are very global and so.
So as that continues to play out for the second thing is industry. Some industries like healthcare financial services technology are doing well others are still recovering.
And so we're looking at what is what is a good measure of that trend and Thats why I kind of just right now we look at billings because the guidance for billings and I feel good and how we performed on billing I mentioned about the calculated <unk>.
<unk> looking at the near term as somewhat of a trend too. So we'll continue to look at this over the next quarter or 2 and figure out it should be more transparent what we can actually provide that can give you and the investment community.
Kind of a better gauge of where things are trending, but let me I don't want to step back I really feel good about the progress that we're making what we are hearing from customers. What we're hearing from partners Inc.
Vestments that we're making the investments that partners are making and I think we're well positioned.
That makes sense I guess, let me.
Just a follow up if I think about the guidance for the year, if I think about the trend lines and subscription revenue how long you talked about the acceleration in <unk>.
Bookings that we've now seen for a couple of quarters, how long is it going to take for that to start to present more impactful in the subscription revenue line.
Alex I don't want to answer that exactly because let.
Let me just give you some color on that because similar to what I mentioned in the prepared remarks.
Sure.
The pace of recovery is improving.
I think it's great to see that things are opening up more especially in the U S and as we start to see more openings that day in Europe and Asia.
And also industry is coming back I mean, as I said before travelling hospitality is 1 example for US has not shown progress we have seen some improvement as I called out about automotive, which is a good sign.
So I feel as I look at pipeline right now, which can give you the answer to that question. We've continued to build pipeline.
If I look at the pipeline that we currently have.
It's increasing.
The size of deals is improving.
The breadth of deals meaning across the industry is improving and so I think as the next few quarters play out for this year.
We will continue to see gradual improvement and I feel good about how I think we can end this year.
Because of all of our indicators and the trend that we're seeing in the market the trend we're seeing in Anaheim.
To be able to close out this year strong.
Great. Thanks, that's very helpful.
Your next question is from Ed.
Keith.
Your next question comes from the lineup CPE plenty diary from Mizuho. Your line is open. Please ask your question.
Thanks for taking my question, Frank but just wanted to ask you about your <unk>.
Sales organization, we heard you guys did a lot of hiring.
Heading to physical.
This year.
So for a couple of things is there any change now that bill also join or Seattle or is there any chance for the cells.
The offense.
Patria assignment or any other changes done to the sell through.
So overall no change.
As you know I think everyone knows this as we start the new fiscal year.
Always some re assignment, but that's typical nothing out of the ordinary from that perspective, it's breakout bill onboard those now coming up on him.
6 month anniversary.
Internal.
Built on a substantial amount of progress kind of focusing on really building out many of the initiatives that we've had underway focusing on how we can get to an expansion of new customers.
Dealing with current customers and working with.
With them on the adoption.
And what's going to take for them to continue to leverage and a brand on the platform going forward. We've got several initiatives underway around that which is really helping us.
Get to larger deals and faster progress in moving through let's say the roadmap for those customers.
<unk> focus on operational excellence.
Taking a rigorous operating approach I mentioned that during the prepared remarks, having opportunity reviews, given coaching across the organization building continuing to build a culture and the skill set of constantly inspection opportunity advancement and execution. So we can improve the deal cycle.
Moving the deal cycle, especially with what we have in the pipeline is going to enable us to.
Improve the overall opportunity that we see over the next couple of quarters.
He is resonating with the team.
Internally and also resonating with customers he Ted.
Obviously, a lot of my.
1 on ones with Ceos, and Cfos and Ceos, and it's great to have bill jump into in addition to our lead in each of the geographies. We now have much more capability to do more of that which is which is fantastic.
Yes.
That's in line with what we have been hearing.
Another quick question you talked about a lot of deals on supply chain planning sales planning and other than financial planning, which is impressive so what's the mix in terms of financial planning versus.
Other planning modules.
If the average is still about 60.40, but I mentioned this and this is this is and I can't stress this enough.
<unk>.
And it goes back to what I mentioned about Gartner and Forrester.
Great to see recently for us to come out with a very similar survey that they've done now over an extended period of time talking to customers and prospects about the importance of enterprise planning rather than financial planning.
And that plays extremely well into Ana plans platform.
But I emphasize that because all the transaction.
Right now and that now has gone on for a couple of quarters and also what's in the pipeline. We're seeing that play out we're seeing enterprise planning, we're not just seeing financials use cases, we're seeing finance use cases that are tied to supply chain tie to sales performance management tied to humans.
Human resource.
Analysis right.
And that plays to our strength.
When you look at what we what we have to offer and so yes, we are seeing.
An increase in supply chain activity workforce planning activity sales performance management, and then gone back to work.
Talking about the Bill I mean, this is right in the sweet spot sales performance management he's been extremely busy.
Talking to heads.
And other corporate company heads of sales operations really kind of because they are looking for efficiency in how they manage their sales execution and he had experience even with what he was doing at medallion before coming to Amp line and now seeing the platform here firsthand, so really leveraging that talking with his peers.
The marketplace has been fantastic, but we are seeing a significant amount of these enterprise opportunity.
Thanks for the color Frank.
Your next question comes from the line of rentals from Jefferies. Your line is open. Please ask your question.
Good morning, Frank just as it relates to the new logos.
Existing has been very strong and you mentioned that pick up as a percent.
Can you just want to know when do you expect the new logos to have a bigger impact on.
Do you expect that to happen.
Turn up in the back half of 'twenty 1.
Great question I mean.
So let me just stop.
Again, when we we talked about over 17 on customers left last quarter, we talked about over 16 million customers.
So a nice really nice pickup and this is in the Q1 with the new logos. So those are customers that are picking their head up after what they've been through over the past year, and saying, Hey, I want to work with you and how I can build.
<unk> Enterprise plan.
My organization, so that provides us with.
Also great opportunity. The other thing I would just highlight is the comment I mentioned about pipeline.
We also look at <unk>.
Those customers come on.
What other.
Now for us to have some further expansion, but it also allows us to look at other new customers and what I was saying before as far as the pipeline is showing even with other new customers that we have and their average deal sizes are increasing.
So I would expect over the next few quarters as we continue to progress for this year.
You will see that continuing to come back and that'll continue to happen over the last quarter or 2 and I expect that to continue throughout this year.
And.
Goes back to where organizations are as far as just for leasing budget first of all Brian <unk> been a bit conservative, especially when you think about enterprise transfer.
Transformation projects because of what they've been through and the second point that comes up which we're seeing in now that hopefully more companies are going to go back in the June July timeframe into the office if the.
<unk> of skill.
Bringing people together to work on projects, having them fully focused I think that's also going to provide some additional <unk>.
Incentive for them to upsize their projects that really take on the project. The last thing I just want to mention because I have been looking at a lot of.
Surveys that have been done that was running the recently.
I appreciate it where it is.
Look back over the past year, where it's stated that 70%.
Projects or investments or really put on hold over the past year and net.
More recently indication is about 50 plus percent of that are expected to be projects to come back within the next 6 months, So that survey and various other service I've read kind of a showing those pause projects are now starting to come back for expected to come back and we're seeing some of that in the pipeline.
Great just a quick follow up I know, we'll get more in the 10-Q, but just as it relates to the Geo trends or was there anything notable or surprising do you Frank as it related to <unk>.
The business in Europe, or Asia versus the U S.
So as I mentioned I mean again the recovery is mixed.
Its mix from a geography and its mix from a industry from a geography perspective.
We're seeing strength in the U S. As you would.
<unk>.
I mentioned.
An opportunity we're starting to see in Japan. So we're seeing strength in Japan, I'll, just kind of highlight some of the markets on the positive side and the other thing which has been a small market for us.
And it was sort of like put on pause because we started to invest in before COVID-19 and so that kind of put on pause is Germany.
So we're seeing some strength in Germany. Those are the markets I would say strength on the other side.
We have a big business in France, and we have a big business in the UK. The UK I would say at the mixed environment that coming back France.
Cash.
And this is more from an economic perspective, they've had some starts and stops more sales and perhaps maybe some other geographies as it relates to.
The COVID-19 situation and.
I am optimistic about what we're starting to see as far as pipeline for us in France, So France and then this other countries I would say southern Europe and also in Asia, where it has been a bit mixed.
So but for our business perspective, the mix the geography mix for US this past quarter was in line with what we've seen before.
Great. Thanks.
Your next question comes from the lineup Brent <unk> from Piper Sandler. Your line is open for you to ask your question.
Thank you I guess, Frank just sticking on the demand recovery gained here net dollar retention improve this year for the second straight quarter I think 118% is the highest we've seen in over a year. My question. Here is was the improvement in net retention this quarter driven by a handful of large deals was it across.
The broader base of customers, where you are seeing spending come back and you talked about demand recover being mixed love to better understand the breadth of expansion you saw here in the installed base was it concentrated or was it broad based.
It was broad based.
Just a simple answer was broad based.
And it also goes back to what I was saying about large deals large deals are still in.
The recovery for US right. So we see that more later this year.
But this was broad based which is good for fee and it shows and we've talked about NR in the past.
All based on the cohort of customers that we have in a certain period that we're looking at so it was broad based which allowed us to see this improvement.
Perfect and then just 1 last follow up as you think about the role of partners you talked about I think 7 of the top 10 deals influenced by partners I think in the past you've talked about 50% of our top deals influenced by partners. So walk me through what's changing here on the partner front. It does feel like they're becoming a more important.
Part of sourcing larger deals and love to understand kind of what's changed why it's shifting here and how you're going to kind of engage with those partners. Thanks.
So another good question the.
The first thing I would say is it goes back to even the comments I was just making about survey results right.
Projects are coming back online.
Those projects tend to be.
More trans transformational.
More around Digitization.
And the funding is coming back the skills.
Of course are now coming more on line.
And that especially with the GSI theyre seeing the opportunity they're doing their own survey.
So there knowing that they're going to put investment behind where they think the.
The opportunity in the market is going so we havent seeing investment by those GSI income by other partners on Anna plant I mentioned that earlier.
Net debt investment is broad based right in different parts of and a plan skills per se.
They are looking to add or have been adding.
And we just had a QBR bill and I just attended a QBR with 1 of our large CSI for yesterday.
And it was all action oriented.
Hey, how do we roll up our sleeves and look at the opportunities that we see out there and how do we make these things happen and we're trying to.
Seeing the opportunity.
We want to get in there along with the CSI and figure out how do we start to get that across the finish line much faster because the opportunity is there right. So that we're looking at ways to see how we can accelerate and part of that is investment you heard Dave mentioned earlier.
About we're on line in line for the full year from a margin perspective, but we're still where our sales were starting to accelerate.
The investment earlier in the year, primarily because of that I mean.
It's an indicator of us and by the way yesterday as part of that.
CVR, we looked at each other and said are you going to be making more investments are going to be making more investment and we kind of identified where that investment needs to be.
So the partners are in the other thing I just want to highlight just stepping back and I know we talked about this.
Last quarter.
We did.
And I say this is particularly for substantial we've now become a global alliance partner with Deloitte.
And that is in the top tier of partners and so when you are in that top tier more investment dollars goes there.
Much more visibility and so we're seeing that visibility, which is which is great and then lastly on the partner side, which I'm really excited about is the alignment of those GSI with the technology partners.
And AWS right, when we announced that both for GTP back in September and then last quarter with AWS, We said that that would be more latter part of FY 'twenty 2.
Primarily just to get everything aligned on the technology, but also from the standpoint of the go to market and are working through that we've been making great progress.
And we're already starting to see.
<unk> come through.
Hi.
And that positions us well for the back half of the year.
Premier strength. Thank you.
Your next question comes from the line of Michael <unk> from Wells Fargo Securities. Your line is open. Please ask your question.
Hey, there thanks good morning.
The Q1 results were fairly tight on what you guided for last quarter is there anything you can add just help us contextualize what drove the tighter spread as some of that this is Q1, some maybe the pace of recovery you're articulating Frank maybe just remind us the degree of visibility you have into any given quarter.
So as you were asking the questions you've been answered you took the words out of my mouth. So first yes. It for Q1 right.
Early in the year.
And then 2 as you emphasize though which I mentioned earlier.
The pace of recovery.
<unk>.
I did caution everyone.
This past year.
For all businesses.
It has been.
<unk>.
I think we're all being optimistic as far as how things are progressing and we just want to.
Be careful on how we're approaching it.
Great signs and we just got to get things that.
Moving so that we can accelerate and I think we're positioning everything for that similar to how it responded for some of the previous questions.
But the caution is it.
Some time in.
We're focused on it we're trying to accelerate it along with our partners, but I also want to put out there we sell primarily to enterprise right and enterprises and I think you'll see this with other companies in the SaaS space as well enterprises are taking they are moving in the right direction. They are positive they know what they need to do that they are seeing the <unk>.
Horton for Digitization.
The importance of agile planning they want to make the investment, but things just with enterprises take a little time, and we're seeing net through and it's great debt, it's coming through the pipeline and then we can then continue to increase the pipeline as well as move them through the pipeline in different stages for the pipeline.
That's all helpful. Maybe just a follow on similar question to a few of the priors, but maybe more direct was there anything significant that was booked but maybe not built for the quarter just given the difference between those 2 growth numbers I think just some more color you're able to provide there for better. Thank you.
No not really.
Nothing that really.
Okay. Thanks, I think as I said I just want to get the trend most of the trend comments for the quarter I think I've already covered and also kind of positioning that for the quarters to come right as far as the pace of recovery.
Your next question comes from the line of Stanislawski from Morgan Stanley. Your line is open. Please ask your question.
Thank you so much and good morning, everybody.
So.
Maybe.
Question for Frank.
Thing.
Odd as far as the linearity of the quarter and how everything came together.
Nothing.
I'll go back to the previous question Q1, right. So with every Q1, we had our sales kickoff meeting.
In the first month of Q1.
You have some realignment.
Territories and things like that while we were bringing people in and so forth, but nothing out of the ordinary I actually linearity was pretty.
Standard for Q1 for us.
<unk> continues to build as the quarter unfolds.
So no nothing.
Okay got it and maybe actually a different question and I don't want to leave Dave on an island of 1.
Is there is there a change in or any tweaks to how youre doing the forward guidance methodology either for this year.
Versus prior quarters prior years.
Any additional levels of conservatism, maybe that you're baking into our forward guidance.
Okay.
Dave you want to jump in on that 1.
Sure. Thanks, Dan.
There is no change whatsoever.
We exercise our prudent.
Thoughtfulness across both current quarter as well as for the year.
Got it alright.
Good luck day. Thank you.
Thank you.
Your next question comes from the line of Scott Berg from New Tam.
It is open please ask your question.
Alright for engine, Dave Thanks for taking my questions here. If you could just have 1 can you remind us your view on growth versus profitability.
Kind of a go forward basis, we'll look at the model right now obviously in mid 2000 and subscription revenue growth is probably going to accelerate a little bit here I think it probably gets into the maybe 30%, 35% range plus or minus.
The current profitability structure is 1 that probably doesn't meet the rule of 40 necessarily thats somewhat for and not that I'm, a big subscriber of that but I think we're all kind of subscribers of that general Teeter totter in moving those yield projections. Thank you.
Scott Thanks for the question.
Dave you can jump in as well.
So.
So let me start by saying.
We're positioned for growth.
The investments that we're making both on the product side as well as on the.
Go to market side is to really go after that growth that goes back to our whole thesis as far as the opportunity that's out there in the marketplace.
For us with enterprise planning.
Digitization initiatives that are underway and so we want to make sure that we're well positioned I think we are in a leadership position, we want to maintain that leadership position going forward and I think there's a great amount of Tam.
For us to go after.
So I put that out there.
On the other side.
It's really kind of having a balanced fully believe in the rule of 40.
We've been making progress.
Toward that.
Again, if you look at the margin guidance that we had for the full year, we're kind of in line with what we have said before and we're going to continue to focus on that throughout this year and as we go into next year as well so it's continuing growth primarily.
Total growth we have the better it is going to help on the margin side, but make sure. We'll still focus on the rule of 40 or anything else I may have missed that you want to jump in.
No I think you did a very fair assessment.
Yes.
Thank you.
Your next question comes from the line of Terry Tillman from truly Securities. Your line is open. Please ask your question.
Yes, Thanks for taking my questions Hi, Frank Dave in Italy, then, Dave Congrats on being able to spend more time with family and good luck with whatever you posted an ex.
I had a question a follow up first Frank in terms of plant IQ is there we're getting a little bit further along now with this innovation any way to kind of size up the IRR.
Our uplift or would this be maybe more impactful new customers versus existing customers and then I had a quick follow up.
Terry I'm glad you brought that up that's 1 of my favorites.
I have to say that we successfully <unk> yesterday so.
So we had a little bit of an internal celebration around that and I really want to put a shout out for the team.
For really bringing that across the finish line.
On schedule and on budget, so great job by the team.
The other thing I highlighted earlier.
We have been not only is now GAA, but we actually have been working with several customers since we announced back in September and those customers.
Have been extremely.
What we are learning from that is extremely valuable and the importance of bringing intelligence into their forecasting and some of the things that I gave some of those examples before.
I see it for me for Us.
As a big opportunity for us to leverage below.
Bill right now now that we've <unk> or even prior to is working.
Kind of a go to market.
That in the works over the last couple of months to really kind of take advantage of this more extensively in the marketplace with existing customers and new customers.
So youll be hearing more about that over the next couple of quarters income.
It's hard right now for me to size the impact.
As far as the benefit.
But we'll have more insight.
The pipeline builds over the next quarter or 2 so we'll make sure we try to provide some additional color.
That's great and just a follow up is related to we hear from some software companies in certain segments about vendor consolidation either during the pandemic are coming out of the pandemic doing more with fewer vendors, it's kind of a.
A competition question related to like vendor consolidation are you seeing any changes or opportunities as it relates to vendor consolidation and or just competition broadly speaking. Thank you.
No nothing no.
Real change that I can really.
I think.
Typically mentioned.
By the way our net last question I just want to also emphasize the plan IQ includes the Amazon forecast.
So ill just reiterate the kind of partnerships on the technology side that we have with AWS and Amazon.
And we have 2 versions and Amazon version <unk> version, so it's great to see that <unk> been working with the AWS the products for the partnership has really progressed.
Your next question comes from the line of Josh Beck from Keybanc. Your line is open. Please ask your question.
Thank you for taking the question I just wanted to follow up on some of the commentary about enterprise transformation Frank earlier, you mentioned.
It sounds like in some cases.
These large customers might not really even have the skills or perhaps the resource to pursue really large.
Surprise transformation types of projects. So just as we go through the next.
6 to 12 months, what will you be looking for in terms of maybe biomarkers that indicate that customers are really willing to step up and really really engage in these large enterprise transformation types of projects.
So let me just clarify when I talk about availability of skills its not so much debt the skills don't exist.
In the organization I think more of it has to do with just the disruption.
That COVID-19 has provided.
And the work environment.
In aligning some of those those skills that they currently have and then prioritizing them on certain initiatives more so than net those skills don't exist.
So I just put that out there.
Clearly this also ties back into what I was saying before about the GSI.
Because the value that GSI also bring.
They bring some of the transformational skill aligned with what raw skills are available within the enterprises themselves. So.
And net net then comes down to having.
Your line budget to be able to do all that so I think it's a combination of all that.
What we're doing.
Inventory said before is.
When we do these these projects.
Going back to the planning.
With the enterprise customers planning how.
We're planning to bring skills for the table and then also the partners, bringing that scale right. So we are we're working with them early on in that planning cycle to make sure that we can lay that out.
And.
I would say on your question about the measure it's really going to be.
How fast we can get some of these deals planned.
And starting to Greenlight so.
As that continues to increase.
We'll get a better indication of how the skills are really kind of aligning in coming together to move these things forward and we see some of that so im not implying that's not happening.
And certainly highlighted automotive is a great example, where things have started to come together in.
In the past that highlighted healthcare as we can.
Industry with things that really started to come together technology, we think that really starting to come together for both are indications where those skills get aligned the budgets got put behind it and those projects move forward.
Really helpful context, thank you.
Your next question comes from the line of Patrick Walsh.
<unk> for events from JMP. Your line is open please ask your question.
Oh, great. Thank you.
Hey, Greg can I ask about the competitive environment. So.
Where are you seeing more.
Where are you seeing that and in particular.
1 stream.
Coming up a lot and just wondering for what the competitive dynamic is like with 1 stream.
So good.
Good question first of all.
As I've mentioned this before and really haven't seen any change in the competitive dynamics.
I'd start putting out there as I mentioned, a few minutes ago large opportunity from a Tam perspective, and what's happening I think when you look at Ana plan highlighting both again the gartner in the forests to positioning of enterprise planning, which aligns to our sweet spot and I think by far from an enterprise planning stand.
Point.
We clearly meet those requirements I think youre seeing in some of the competitive landscape that companies.
That are out there are looking to find ways, even through potentially some acquisitions.
To broaden.
Especially if they are in finance broaden their planning because they see that.
Net customers are really looking at enterprise planning aligned with again with Gartner and Forrester are for.
Being in their survey so I think we have a leadership position, it's a big Tam.
No specific change in the competitive dynamic.
The answer Mike, but my answer on the 1 stream I see that as a solution in the financial space specifically around consolidation.
And there is need from a consolidation in the next step in consolidation, so they're filling that need, but again I position and a plan in broad planning enterprise wide and that's debt.
Pretty much I think the market.
It's really going.
Terrific. Thank you.
So I'd like to think we're coming kind of coming up on the end of our call here. So I'd like to thank our employees our customers our partners and also investors and any other key stakeholders, we value the strategic partnership.
And as I said before.
We're seeing improvement in the pace.
A recovery and we are optimistic about the opportunity that lies ahead for us and again. Thank you for joining us today and we look forward to further dialogue next quarter.
Sure.
Okay.
[music] zone.