Q1 2022 UiPath Inc Earnings Call
[music].
Hello.
Welcome to the U S pet first quarter 'twenty 'twenty 2 earnings conference call. At this time, all participants are in a listen only mode.
But he wants to require operator assistance. Please press star zero on your telephone keypad.
The question answer session will follow the formal presentation.
As a reminder of the copper.
Hey, this is being reported as some of my pleasure to turn the call over.
The Kelsey Turcotte of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today to review U Ipass first quarter of fiscal 'twenty 'twenty, 2 financial results, which we announced in our earnings press release issued after the close of the market today.
Conference call with me are Daniel Dina, you Ipass co founder and Chief Executive Officer, unless you can get the Chief Financial Officer, We will open with prepared remarks, followed by a Q&A session. Our earnings press release and financial supplemental are posted on the you Ipass Investor Relations website at IR of got you I pass dotcom.
These materials include reconciliation of different sense of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U S. GAAP.
Unless otherwise specified we will refer to non-GAAP metrics on today's call. The non-GAAP financial measures provided should not be considered as a substitute.
For or superior to the measures of financial performance prepared in accordance with U S. GAAP. They are included as additional clarifying items to aid investors in further understanding of the company's first quarter of fiscal year 2022 performance.
In addition to the impact of these items and events have on the financial results.
In addition, please note that we define a R R as annualized renewal run rate.
This afternoon's call includes forward looking statements about future events, including statements related to our market and future growth opportunities, our vision and the benefits of our product platform customer behaviors, the competitive landscape or financing.
Financial guidance and our business results in the macroeconomic environment.
Actual results may differ materially from these expressed in the forward looking statements due to many factors and therefore investors should not place undue reliance on these statements for.
For a discussion of the material risks and uncertainties that could affect our actual results.
Please refer to our earnings release and other reports filed with the SEC forward looking statements made on this call reflect our views as of today, we undertake no obligation to update them now I'd like to turn the call over to Daniel.
Thank you Casey.
Thank you to everyone for joining us on our book.
Earnings call as the Polycom book.
We've had the very strong spot.
Before I book it.
Acknowledge the impact of Covid might be continues to have or 1 of the world and especially in India.
We are actively supporting our colleagues on their families.
In the region on the recently contributed over the medium incorporate the employee donations to send in this.
Oxygen supplies in the region.
Our book.
Everyone impacted by this ongoing pandemic.
Turning to the bid.
Our leadership position in the IPO market is the game then once they buy all of our area of all girl, which increased 64% year over year to 650 free media, while net new add on.
The rich or.
The <unk> 72 million.
Continue to grow multiple of the market and the.
The market share.
In fact.
For 'twenty twin aisle, the CMO, the UI path right number 1 in RPE of capturing.
Capturing.
8 points of share versus 2019.
Separate.
The latest market share of research UI pulse.
More of a venue in 'twenty 'twenty than our thought 9 competitors combined.
We believe the.
The automation will be the next day and the software stack.
It brings together.
Our knowledge workers the building.
For the agility of most of the 72 quickly of the only.
The response to constantly changing business conditions.
And it simplifies the.
The sprawl of applications and databases, our vision is to enable the fully automated the enterprise through our unique combination of view on automation.
Management, and AI based computer vision to annually of human workers on the signs of automate the blow the war.
The robot.
This is the incredible market opportunity.
Automation using our DNA.
We have more than 50 in the year market experience.
The insights from our over 8000 from 500 customer.
Which we believe gives us the significant advantage in the market.
The result is the unique combination of.
Firstly, our end to end automation platform that addresses the broadest number of the use cases.
Flexible deployment models.
Those include the on Prem hybrid multi cloud and SaaS.
So a large and growing ecosystem of the go to market and technology partners as well as the vast community of trade automation professionals.
All of.
For the most of these loads in the first time to value for our customers on tremendous return on investment the device the automation first mindset.
And we are not standing still as.
As we continue to expand our competitive moat our ultimate.
For the vision is for all of us, though not the only to automate existing problems, but designing processes on our platform. This is the ball the objective and the.
1 we think it's possible to achieve in the coming years.
Push the boundaries of the IMO.
<unk>.
That's it.
Of the in May we announced important new platform capabilities with the introduction of UA for 'twenty on got for these include 3 new products cloud insights automation cloud robot and test mining as well as over.
The bonds of major new feature and deeper integrations across every pillar of our end to end platform.
New enterprise scale of management and governance Konkle.
AI powered discovery prioritization and integrated development.
Of the most impactful autonation, including Joe the way the beauty of test mining.
We also significantly expanded our automation cloud capabilities to migrate build manage and measure of enterprise scale automation in the cloud.
Automation cloud software robots, the liver unattended robot capacity as needed with no infrastructure with management of required by customers.
As of the end of the first quarter more than.
'twenty 200 customers of <unk>.
Adopted.
The automation cloud.
Feedback during the better for us as for 'twenty..1 book for that's been extremely positive and I am incredibly proud of what the team has accomplished.
He wanted up for truly reflects the cutting edge capabilities, our customers need to accelerate.
The rate the automation programs.
It is the combination of user interface, the API automation, along with AI computer vision that differentiates us and enable us human emulation in the range.
Julien manner.
In March.
We expanded our API capabilities with the occupation of cloud element.
He is a great example of how the strategic tuck in acquisitions accelerate our product roadmap and bring all of them the team the.
Third we will accelerate the customer success.
We have built an ecosystem of go to market and technical partners.
Well as the slide thank.
Thank you I per community.
For example, we.
We're very pleased to have recently launch of tableau activity with the world's leader in visual.
The <unk> analytics users can now easily utilize the data fully automated produced will retrieve body of robotic automation in the the brewery reports.
In addition, the UA pulse the extension for tableau enables users to trigger the robot.
Directly from the broker report what the dashboard.
On the go to market side, we grew our worldwide partner base by more than 35 per cent year over year to more than 4000.
We also expanded.
Several partnerships, including the Lloyd which is now of the first of GSI to become of certify you Ipass service network partner.
They now have the most advanced training and resources to the lever you a part of implementations.
It's with the 35 level of quality and the legal.
In addition, we announced the global agreement with Ingram micro introducing of dedicating Ingram micro team of the UI bus exports to raise brand awareness on health channel partner.
The solution and provide the RTA to the business clients Ingram micro is also use of customer using our end to end clocks for to bring more efficiency and automation for thousands of its internal citizen developers worldwide.
The 2 day their team has automated 100 plus processes.
S plans in place to do even more.
And finally, we continue to expand our UA Puff community with the addition of several of them historically black colleges and universities.
2 of our academic alliance.
The robotic engineering is 1 of the fastest emerging jobs globally, and we are committed to democratize, the RPE technology and skills to our academic alliances.
The.
There's more people can be successful in the future of work.
We will continue to push the boundaries of the fully automated amphora price and have recently been very gratified by important industry recognition for example in March we were.
The name a leader in the Forrester wave robotic process automation among the 14 vendors evaluated you wipe out or the highest ranking in each of 3 categories.
Current offering strategy on market presence.
We are the humbled by this acknowledgment and we will strive to maintain our leadership position.
Before I turn the call over to Ashish and we take questions I would like to thank our employees partners and shareholders for their content.
Confidence in you I pause as we take this next step in our journey, we for my belief.
But where the the beginning of the unique market opportunity that will truly change how people experience work with the Alta the call over to Ashish to discuss.
Q on performance and guidance in more detail.
Thank you Daniel and thank you everyone for joining US today, we are very excited to be embarking on this next phases of public companies.
I am very pleased with our first quarter results, which yet again delivered meaningful growth of scale, given our total addressable market.
Of over $60 billion. The continued expansion of our automation platform and our validated lead in the market. We believe the remains ample room for us to continue to drive durable long term growth.
As the market leader, we know the inflection point in the adoption of automation is now as customers are choosing their long term strategic.
Our.
And as our results underscore we are consistently winning these competitive evaluations and plan to continue to innovate invest and execute to widen our competitive moat with the focus on first extending our technology leadership.
Expanding our ecosystem of go to market and technical partners as well.
T J per community and finally, attracting and retaining world class talent before discussing the details of the quarter I would like to emphasize the financial strength of our business model. We have a highly recurring subscription based business, primarily contracted annually and build and advance our technology is incredibly sticky resulting in best in class.
Well as all of the base gross retention and net retention rates, we offer our customers flexible deployment models on premise hybrid cloud and SaaS the mix of which can create lumpy revenue recognition, particularly from license revenue under ASC 606, as a result, we remind you that we run and manage our business.
Class a R R, which is most representative of the underlying performance of our business more.
Moving onto the first quarter results. Please note the all growth rates of our year over year unless otherwise indicated.
First quarter <unk> was $652.6 million up 64 per cent we delivered.
Net record incremental <unk>, which grew 55% of $72.1 million.
We ended the quarter with more than 8500 customers with great new logos, including apply board Global healthcare exchange Overstock, Ralph Lauren Siemens mobility, and the state of North Carolina.
Expansion metrics remained best in class as existing customers accelerated their adoption of our platform and deployment of our software robots. We now have 1105 customers that account for at least $100000 and they are up sequentially from 1002, including a 100 and for customers.
I've heard of a million dollars plus up sequentially from 89, notable new logos and customer expansions. During the quarter included first Verizon Communications, which became a customer in July 2019 to support their attended automation needs. After the successful initial deployment Verizon shifted their focus to how they could.
Could use our full platform to achieve automation at scale, while continuing to expand or attended automation footprint. They're planning to now also focus on finding transformational business insights using process mining to enable a workforce of unintended robots Verizon now benefits from the value of our end to end.
And that of many interconnected automation platform.
Second fifth third Bancorp started there or automation journey with you I path in April 2020, as a part of a broader digital transformation effort.
The move to our platform using document understanding in process mining accelerated their automation program a common thread.
And it didn't see helping the bank tackle of some of the highest impact processes faster in.
In the past quarter, we entered into a long term partnership to not only increase the efficiency across their employee base, but also improve customer satisfaction.
And finally, Hackensack Meridian health the largest hospital system in new.
We on which became a customer in late 2019 started their program on the finance Department beginning in 2020, they stood up a full automation program and delivered 70 automation in 7 months across finance and accounting revenue cycle management of accounts payable and I T saving of approximately $1.2 million.
Jersey, given the success of the program in its initial phase in April 2021, H M. H expanded their program to multiple departments, including I T purchasing and HR too.
To accelerate automation of H M. H enabled the new class of citizen developers added test suite for faster implementations and introduced actions.
Which led to tighter human and robot collaboration HMH is poised to realize approximately $10 million in annualized benefit by the end of March 2022.
These are just a few examples of customers expanding automation across multiple departments and increasingly buying multiple parts of our automation platform.
Center urging our expanded cloud deployment, offering and adding test automation and process discovery capabilities. This is 1 of the world class of land and expand model looks like in practice and how it has contributed to our strong year over year growth.
Turning to revenue profitability and cash I will be discussing the results on a non.
Levered basis, unless otherwise noted.
First quarter GAAP revenue increased 65 per cent to $186.2 million and was balanced across regions. We successfully closed several large multi year deals during the quarter, including a handful of totaling $4 million in first quarter revenue that were originally on the.
The pipeline for a second quarter GAAP remaining performance obligations, our RP O were $463.9 million, an increase of 96% year over year.
While growth at scale is our priority we continue to drive operational rigor, which has resulted in strong unit cost economics positive operating income and improved cap.
Free cash flow.
Of course software robots are key to you on the path growing profitably in our own automation Center of excellence has created 300000 hours of incremental capacity since 2019 with automation is deployed enterprise wide.
Gross profit margin in the quarter was 87.6 per cent compared.
Compared to 88, 8% in the prior year period on.
Operating expenses for the first quarter totaled $147 million investments included head count additions across our sales force and customer success teams to meet the growing demand and engineering teams to drive future growth.
GAAP operating.
The loss of $236 million, including $258 million of stock compensation expenses, mainly related to our recent IPO.
We delivered our second quarter of positive non-GAAP operating income of $16.1 million compared to a loss of $36 million in the prior.
For year period free cash flow in the quarter was negative $21 million compared to negative $24.6 million in the prior year period.
First quarter free cash flow reflects seasonality, including our annual bonus payout and sales commissions related to fourth quarter performance.
Turning to our balance sheet, we ended the.
With $1.9 billion in cash cash equivalents restricted cash and marketable securities and no debt. This includes the $692.4 million of net proceeds from our April IPO.
This is our first quarter, providing guidance, let me begin by emphasizing the core principles by which we plan to run in.
Quarter with company.
We are building a generational company the secular trends of our market are only strengthening as our prospects and customers adopt and automation first mindset driving more use cases and deployment of more software robots.
In addition, we believe that our relative competitive positioning is only strengthening and we are only.
Only in the early stages of what is to come.
From a financial perspective, this means running the business with the metrics that drive the right behavior and most beneficial outcomes for our customers partners and shareholders over the long term.
Turning to the numbers this afternoon's guidance reflects confidence in our market product portfolio and.
And competitive position.
For the second quarter of fiscal 2022, we expect <unk> to be in the range of 700 to the $704 million as I have emphasized repeatedly air or is the key metric for measuring you ipod and it lays a strong foundation for the company as we scale.
We expect revenue.
The range of $180 million to $185 million given the variability introduced by ASC 606, we do not focus the business on short term revenue growth, which can be lumpy quarter to quarter and dislocated from <unk> and the long term growth and the health of the business.
This is evidenced by the fact that second quarter.
The revenue is expected to growth 31% of at the midpoint of guidance, while <unk> is expected to grow 55 per cent.
Last year, we closed several large multi year deals in the second quarter, which drove significant revenue contributions under 6 of 6.
And we expect our non-GAAP operating loss to be in the range of.
$35 million to $25 million as we continue to invest in the business, while still driving efficient operations.
For fiscal 2022, we expect the IRR to be in the range of $850 million to $855 million, our robust pipeline of both new and expansion deals is reflected in our <unk> guidance for.
For the second quarter and full year of underscoring the continued momentum in our business.
Finally, we expect basic share count for the second quarter to be approximately 515 million shares outstanding.
In summary, the opportunity in front of us is enormous and growing our strong first quarter results and guidance.
<unk> reflect the growing momentum in our business and the power of our automation flywheel, we are building and the innovative and enduring company and remain focused on helping our customers and partners transform how people work by unlocking human creativity through automation.
This is an exciting time for you I bet and we look forward to speaking with many of you throughout.
The quarter will now take questions and I'll turn the call over the Kelsey.
Great. Thanks, everyone for joining us. Our first question is from Keith Bachman of BMO firsthand, how could you provide color on the impacts of the growth in the quarter of existing customers.
Was driven by net retention rate of new logos.
And what you anticipate the impact of those 2 will be over the course of the year.
Thank you I, just wanna sharply and besides of any of the strength of our quarter of $653 million of their art and a record quarter of incremental era of breaking 70 million at $72 million total incremental there on when you look at that growth.
It was really founded on the fact that we're continuing to add customers at a really fast pace. So our you know our customer count is now greater than 8500 customers that that's up more than 600 sequentially and 2400 year over year quite frankly, this has exceeded our expectations and we're looking for.
For it as our pipeline continues to be strong when you look at our net dollar retention rate. It continues to be very strong and best in class and expansion of greater than 80 per cent of our air or comes from expansion versus new logos, which shows you the strength of our land and expand model and the demand for automation in this massive market.
We have expanded the platform with every release that you've seen task mining automation cloud. We look at these these items in our product roadmap to continue to fuel really both of them to the acquisition of new logos as well as the expansion opportunity that's in front of us and as the base gets bigger the ratio will.
Towards the expansion. That's just now we feel really good about where our growth is in our guide of 47% year over year at the midpoint shows you that shows you that confidence.
We're growing at significant scale.
So the next question comes from Macquarie, Fred Havemeyer Ah there appears to be a share.
Shifting your model towards shorter invoicing duration.
With the multi contract next day could you describe how this duration shift impacts of both of your revenue and a R. R. And also why you believe a are in the more.
For a measure of your company's momentum ashamed could you give us a couple of thoughts yeah sure I'm afraid of great question.
Shifting here or I know you're constantly emphasize this is the foundation of our model and the way that we look at the way that we calculate air are which has been disclosed as of Lora is really largely not impacted by duration at all we viewed duration.
He is best for our customer adoption not as a tool to make.
Make financial metrics and so therefore, we run and manage the business and sales force to a R. R.
Going to GAAP revenue.
I've stated we're under 606, we do not think that that is of represent.
Really good representation of our business model as it is impacted both by deployment models as well as total contract value.
All of you, which again, we look at that is really driving it should be driven by customer choice and as durations vary based on customer preferences GAAP revenue increases based on multi year commitments signed all of those elements are going to create variability and noise, especially in year over year comparison.
There are for us takes all of that noise.
The wisdom and so it really gives you a representation of the true growth of our company.
And in the true demand for from our customer base. So our of messaging, our emphasis which is consistent between external and internal is around <unk>. We've.
We've proven the stickiness on and the strength of our product as well as.
So we view a are the primary focus of all of our sales contracts.
And 1 of our go to market model has existed for the last 5 years, we've really been at scale for 2 to 3 years and so we see tremendous opportunity in front of us and we will continue to drive our teams to air our and look at GAAP revenue of something.
That will just you know that that we that were not going on but we're not going to overemphasize.
Right. Thanks machine and thanks for that Bryan Bergin next from Cowen actually Daniel This one's for you. What's your response to the competitive threats at Microsoft range.
When what when do you think about the market opportunity for enterprise process automation.
And how do you consider the relative mix between simple attended only automation cases.
And so more complex attended and unattended cases.
Thank you Kelsey.
I would start by saying the true.
We are really differentiate the first of all.
And our philosophy towards automation.
We have the unique platform that aims to emulate people in their work Microsoft has build the local no blood for whose main goal is to provide new applications.
<unk> and analytics to the people they have like comparing apples to oranges.
Our approach is extremely difficult to replicate the requires a huge experience curve that we have built over the last 15 years.
Our plus for them.
The combination of UI, API and computer vision AI.
That is again extremely difficult to replicate.
Is our secret sauce.
<unk>.
Moreover, I would say that our differentiation comes from.
The free made sure directions first of all we have this unique end to end horizontal plot for that is really necessary to win in the space and this is the space that is of borrowers the.
The highest return on investment and the fastest time to value.
That.
<unk> seen almost everywhere in the world the enterprise software, where in the business, where we can improve the return of investment and that was very beneficial for all with our history, we consistently have proven on wheat.
Have based on our competitors.
With our technology. If you if you go there and if you can show that.
You are able to implement in halftime imagine the.
The exponential return on investment that happens when you deploy escape on by the way we are the tech.
Knowledge.
Allergy that is proven to deploy at scale, while I would say the Microsoft approach for us not tested.
A lot of skills deployments.
The second important differentiator for us is our ability to accommodate our customer.
Infrastructure.
And our flexibility of deployment.
Have a book to deploy in the multi cloud multi floor for on Roger.
With respect our customers choices and we don't lock them in.
On a particular of cloud or in a particular of infrastructure.
So it's.
And of course system.
Which is really important and delivering automation at scale.
But I would like to conclude talking about with our thought leadership.
They are.
He has to advance our semantic automation.
Our platform and this is the plus for the emulates people and generally speaking there is an extraordinary amount of semantic information that you can find the documents and user interfaces. The conversations that has been a lot of really untapped by.
<unk> with our advanced computer vision and machine learning, we have the first company able to tap into the trove of information and now our newly released of past mining is 1 of the first that goes deeper into this direction.
Great.
No.
We're going to open the call up for questions now.
You're asking at each 1 of you ask just 1 question and 1 follow up and then.
You get back into the queue, the operator, I'm going to turn it over to you right now.
Thank you of that star 1 to be placed in the question queue and as a reminder.
Please ask 1.
Good question and 1 follow up if you'd like to remove your question from the queue. Please press star Q. Once again, that's star once he placing of the question queue start to trim of yourself. Please ask 1 question and 1 follow up the return to the queue. Our first question today is coming from Keith Weiss from Morgan Stanley. Your line is now live.
Thank you. Thank you for taking the question of the substantive thing on in for Keith Weiss.
Congrats on a on a on a really strong set of results for start up of the fiscal year I wanted to talk about the plot for the I know you were sort of mentioning some of the highlights including cash mining cloud automation robots.
We think about where the automation platform.
What is sort of low code at the piece of the puzzle.
From your perspective.
In terms of building that and building out that sort of end to end automation playing is that something that you'd think of as the partnership opportunity or is that something that that's the capability that you sort of bring into.
For them over time.
Well I wouldn't like to start by saying we have been the low code no code automation plots for since the beginning of our existence.
Democratization of automation was always the pillar of our success.
To the but indeed, we were of plots were dedicated to automation.
We are considered by independent reviews and by our revenue 1 of the largest if not the law of just low code No code.
Perhaps for that exist.
The in the business. If you look at the plot for like June 2 it's overwhelming the amount of positive reviews there.
And that was completed by our recently introduced no code application platform I want to remind you that.
Just the belief that automation is the new layer that will sit on the top of applications and this new that will be the only layer that will connect end users with the automation. So we really believe in our approach and honestly. If you are looking at a lot of local.
Bulk of platforms, you will see that the end result in many cases, it's actually on automation.
I feel that we really have the very strong NGO to enter in this market and we have always.
Going off the respecting.
Most of the more choice and it's.
What the very encouraging fact is that we have seen the tremendous adoption of our no code low code application development have been like for the incidents in the first months more of like the 2000 of obligations created on.
The work a lot for it so I.
I truly believe that low code no code was the keeping the sales show us make the most success and we are continuing to invest here.
Understood and it makes a ton of sense and that's my follow up I guess the question would be more for the machine.
The first quarter.
On our payout of our results were pretty strong on all of them on overall basis, but even on the incremental basis and he's going to talk about some of the expansion opportunities as well on the pipeline going into the into the rest of the year I think look to the Q T. R. R of guide it does imply that the incremental air comes down year over year on I just wanted to get.
Or depending on sort of what.
What sort of what factors in terms of conservatism true sort of embedding in your forecast I think with respect to customer expansion or net new.
On a contribution coming on the door.
So you know the our our philosophy on guidance on the way that we got is to give you know is to provide guidance.
And on into what we have clearer visibility right in front of us.
I would say we continue to have strong.
Confidence in the market that we're creating operating in a $60 billion plus Tam we see the strength of our land and expand model. We as you said, we have great momentum that is moving forward with us today that is.
Guidance from based on what I see right in front of US we have a quarter to continue to execute on and we've got great tailwind, especially with the release of 'twenty, 1 that for and the functionality of that it provides to continue to get high rois for our customers I actually have a lot of confidence right now in are in not just our guidance for.
Guy in the quarter, but also for the full year.
Thanks for the next question today is for me from Brad's sales from Bank of America. Your line is now live.
Hi, This is Jerry on for Brian. Thanks, So much for taking my question and congrats again on the great quarter.
And I was just wondering on the cloud offering how the adoption.
The second on tracking them and what percentage of revenue of represents.
Maybe just on more.
Color on the benefits of running new iPad on the cloud and what barriers prevent certain organizations adopting the cloud offering. Thank you so much.
Yeah. So on your question let me.
The options and then I'll get start with the numbers and then Danielle I'll turn it over to you in terms of the benefits that you're seeing kind of from the technology standpoint, I would say, we still see a from an overall standpoint on cloud is in it we're.
Really fast adopting part of our platform on where customers are using cloud components not necessarily awful fast but.
Including our hybrid offering is still a small percentage of our revenue, but with really rapid applicability and excitement from our customer base, particularly in the small and mid market.
The customers in our commercial customers that we see there. So in terms of go forward the revenue or kind of how we're thinking it really is tracking on more towards.
What is best for our customer versus any significant impact on the financials as we see it on.
It just from a from a customer point of view and then I'll turn it to Daniel in terms of specific capabilities. It really helps the speed, especially for that commercial customer base. It speeds up their adoption cycles. They don't often have large infrastructure.
Or it organizations that are a part of that so this gives really expands customer choice based on where they want it when the time and their individual preferences and that to me is why you see us continuing to accelerate our new customers on crossing 8500.8500 this quarter on Daniel can.
To add some color in terms of additional technical features and other features that our customers.
Yes qualities on the essential part of our strategy to the need to reduce the friction of adoption for our customers.
But the again doubling down on on.
So as Jim said, we are here to respect our customer technology choices, our cloud slipped. The G is multi cloud we built for all the major cloud on our strategies multiple out for them.
We have done the introduce later this year of our support.
With war exit good thing automation on the links on the Max and the.
That will increase actually all of them.
Got it thank you so much.
Thanks for the next question today is coming from.
Raimo then show from Barclays. Your line is that of life.
Hey, Thank you and the congratulations from me as well I had a piece of it quite a big.
The picture question for maybe Daniel here.
Tasked mining Daniel of like how do I have to do that to me. It almost suggests that you can it's almost like a leading driver.
For for future RPE because of you identify the areas you can automate more in the top mining part then you can put RPE on the in process money comes in and you have kind of created the full circle in terms of your client relationship is that the right way to think about it.
Is it as important as I think could you talk to that.
Yes, I think this is absolutely correct. This is the pulse of mining it's the it's basically 1 of the.
The initial deal.
Profile of of the flywheel of automation I'm very excited about the release, it's there's been like 2 years.
Tastes and more in the making it the most complex AI project that we had to you April has done today and it was the culmination of computer vision and machine learning investments over the years.
It really.
It's gone the provide the acceleration of the.
Sorry.
Sure.
Opportunities for automation is gone the multiply the number of automation I was on the top of the fun, though there's gonna increases the stickiness of our blocked for and it really addresses 1 of the bottleneck of lot of scale.
The scope of adoption.
But I wouldn't like to all sorts of.
Or reiterate what they stated in the beginning that's mining is 1 of the core pillar of the semantic Autonation plus for think of all with all of this information on that is available on the screen and document.
On the human interfaces, they are largely untapped by.
By automation and by Big data to the so we are getting to understand these data. This is 1 of your call. It the semantic autonation flow for real good thing to understand these day thought like.
On England use them I think this is extremely powerful.
And then he ran the interest.
The other guests for US we're really excited about you know we both have of monetization play with us, but he really also helps to drive automation.
Automation opportunities and the demand for automation.
A few restaurant base, we already had the a world class net dollar retention as you know and with the this further strengthens our land and expand model and if you think about what customers are saying our customers actually, especially those who was previewed. It is not just the capability. They want it helps the coes internally across departments.
And our code of across every single process to find every automated process, which further reinforces the $60 billion plus Tam in which we're trying to win that unfair share of.
Okay and the follow on it's funny, you kind of from time to India. Because that was my follow on question like if I look at your end or are you kind of operating.
<unk> seemed like way above industry standards and so the question for me was more of like do you know how do you think about the sustainability of that number even if you come down a little bit you're still going to be weighted ahead of the street. The pair of I'm, sorry of upper of vendors and all of our players, but like how do we think about that number of it going forward.
Yeah, right now what I see.
Operating of Us I actually see a tremendous demand for automation and our platform. So if you look at 2 things.
We've been out there for 5 years, plus like with the group with the Great go to market model, but as I said, we've really been at scale. It for the last 2 to 3 years take a company like Hackensack Meridian.
In front of Us and I mentioned this earlier is started in the finance department, they're able to grow across every single Department now you put cash mining in there you put the other process discovery on it you put insights into it you bring human in the loop all of the features that are incredible technology team had been releasing and that's the releasing at a faster pace.
For me that fuel continues to fuel growth classic Spansion and every single 1 of our customers. So we're really confident about our ability to sustain that not just by the features that we are producing but the ability for our platform to handle the amount of lot of nations and the diversity of the automation at scale for our customer base.
And that really creates an exciting future for us.
Okay.
Thanks for the next question today is coming from Michael <unk> from Wells Fargo Securities. Your line is that of life.
Hey, there thanks, and congrats on on reporting the first quarter here as a public company ashamed you've shown a quick.
The ramp in margin over the past year, it looks like sales and marketing spend is actually still down modestly on an absolute basis versus where that number of stood in Q1 of last year can you just talk about how you view of the balance between growth and margin here.
How much of that scale of my might be partner enabled end and should you be spending even more here of given comments.
Quickly around the inflection point in this market is happening now.
Yeah. So the the numbers actually are masking the the the continued investment that we're putting in our go to market team. So first let me emphasize that we are first and primarily focused on investing to capture of this large and.
Common market that is in front of us when you look at the numbers that we've reported there are 2 pieces the count when you're looking at of year over year comparison for sales and marketing. The first is we had a change in our accounting policy relative to sales compensation, which had a 10 million dollar impact year over year and deferring some of that compensation expense over life.
Early on track versus taking that taking more of that upfront when you adjust for that and you account for the fact that really COVID-19 the COVID-19 adjustments of.
Zero marketing events travel et cetera was last year, we had half of the quarter in which that was live and then this year. We are still we're just beginning to open.
Of course, when you account for both of those of you actually see a good dollar investment in our sales and marketing 1 of them. We that we continue to be hiring at a rapid pace to support frankly, the large demand and increase in demand on our pipeline and the demand from our customers to help them on their automation journey.
And up for the demand for our partner from our partners as well so that increase in demand means that we're going to have an investment first mindset on.
As we look at this and our leadership position gives us a lot of confidence to invest if you look at Gartner and Forrester that clear leadership position gives me a lot of confidence in the Rois that we're gonna be able to sustain.
And through the investments, we're going to we've done it and we will continue to do on sales and marketing.
That's all Super helpful color I'm, just a quick follow on in terms of expansion rates you've referenced the focus there throughout the call any commentary you can share on how that metric came in this quarter relative to historical and if not maybe you can at least reminded.
Dangers when expansion is a function of in the model here and the general cadence you see with the customers yes.
Let me, let me define it for for anybody Who's learning about our company. So net dollar retention rate of essentially is is the is the calculus that says how much does the customer continue to expand.
Minded round after their initial land for their initial purchase of automation and that is fueled by the fact that day. So many of our customers start with single points of automation, and then rapidly expand across different processes different departments and different different employee bases and so when that creates more demand.
Expand plot for the you on Paas platform and robots and that translates to more AOR of dollars for us when you think about our quarter I would say we continue to be in the best in class expansion territory on just to give you some color around it our expansion shows that we we've actually now have the 1105 customers greater with the air.
For our values of greater than $100000 and you look at our customers greater than a million dollars that is the 104 on customers that are now spending of 100 that are spending of $1 million more for us. So that is 126% growth for the million dollar customers and 60% growth for 100000.
For our customers all of that contributes to the record of incremental IRR of $72 million that we've had and what really is exciting is that our customer base as it grows will translate into this expansion which gives us.
A lot of confidence of many companies are just beginning their automation.
Which means that our growth we have a lot of confidence in not just the durability of it but the <unk>.
Stickiness and the demand from our customers.
Okay.
Thanks for the next question today is coming from Steve Koenig from F. N B C. Nicole your line is that of life.
Hi, Thanks, guys congrats.
Journey since on the quarter, 1 question really about the kind of the platform of the product roadmap and then a quick financial follow up.
Your churn is very low you have very high dollar based net retention.
Best in class.
I'm curious, if we get more granular and talk about retaining.
Congratulations on engagement with individual users kind of turn on the user level. So the automation stay current and the.
Put the full use can you talk a little bit about what elements of your product roadmap.
And of that in our most important and realizing the skull and then I've got 1 financial follow up if you don't mind.
I would like but the.
I don't know what to say, but for the old block for the.
Innovation is the cause of.
For the Q.
We have.
The block for that but the this is the from personas for.
From professional developed for 2 cities.
For the business users.
The true operations the process on those.
We have the largest group of engineers the.
The Oh, you're in the automation on field.
We are investing.
The might be seen so many of US and this is Kim the central part of our plot for.
All of our strategy was always to accelerate the adoption of the forecasts for months and the always provide the highest return on investment first of Bang to value.
And the 1 of the main pillar of the war for robust growth and she is to reduce the implementation time and reduce the amount of 9.5 of it goes into its exponentially.
The increase is the return on investment.
With the 21 book for.
We continue to listen to overcome most of the we have launched the.
That's the mining we talked about but we also have for.
The launch or cloud robots, offering which is a continuation of the advancement of all of our auto.
For the forward, we have launch of more Gabor known stools centralized cloud based co working on schools.
And we will continue to push the boundaries of what is possible all of them.
The vision, our ultimate vision is the business users will start designing process.
On the short on the men are on our blocks for not all of the automating existing manual processes.
Yeah.
I just.
The customer perspective, the easier.
Sure you know, we see user is actually the high stickiness. So we don't see licenses being migraine.
Even though the way around to different users because it gives you.
About a user who you know for for 1 of our largest financial customers. They want to spend time doing analytics and so if you look at bank of America, where we have the you know our.
Our products getting with analysts to go and get beat up they don't want to go back to the old way of doing things. So it's not.
Migrate the platform is really making it broader on the breadth of use cases, we can get allows for that grassroots demand and that is actually 1 of the things that is fueling our stickiness at an enterprise level of stickiness at the user level of itself and so and and more users are demanding it which is fueling our expansion metrics as well.
Terrific.
Thanks, and I'll, just pivot them to the the other part of incremental L are from new logos assumed you gave us some good color on that chapter.
After the Q1.
Anything you're seeing to change your view on incremental LR from new logos inflected positively. This year. That's all from me thanks very much.
Yeah, I I continue to feel you know, we we continue to feel and and and in the discussions here the.
The Tam of $60 billion is real you know every single industry. Every single Department every single process every single employee, we see that enrich and in really the pipeline of what we look at so.
You can see also customers migrating away from our competitors and to us and that that is not just necessarily just about the strength of our individual components, but that is the strength of our entire platform. If you look at Verizon.
They're they're net they've expanded with us in terms of the customer base, but that is fueling interest across.
So many other companies that are now coming in and giving us that inquiry to come in so we actually feel really strongly about the pipeline and and the validation of our market as well as the execution of our sales team and the investment that we've made with our inside sales teams now have the inside sales team in really core centers in both the U.
Cros as well as globally I I have a lot of positivity in terms of the continued execution on trajectory of not just expansion, but new logos as well.
Thank you. The next question today is coming on from Matt Hedberg from RBC capital markets. Your line is the alive.
Oh, Hey, guys. Thanks for taking my questions and.
You out on the IPO and the <unk>.
Obviously, yeah I had a question for Daniel you know when you think about the Aha moment of customers have.
Cause I think.
The treatment because 1 of the things that really stood out for me was with such high Rois from customers of all all in on the on new iPad.
The I guess from your perspective.
Congrats on just that Aha moment.
When the customer goes all in and are there things that you're specifically doing the lessons learned that the.
Can help accelerate that learning.
Well I've seen the really does for them was kind of being multi.
The Bull Aha moments. The first 1 is the when you see the first thing.
From what we're running and I've seen the people in operations doing this for many of those say whoa I don't have to do this.
Again and that the has.
The pause, let all of war and Michelin, but in terms of the expanding.
I think the Aha moment is about realization. This technology is truly horizontal it doesn't depend on the particular the application.
Hello.
It really uses the existing workforce. This is the key aspects of all of our technology. It produces.
Huge returns on investment because it'll be uses of the menu of existing work for the customer.
Customers have university towns of 1 of the into building. It on this this all day.
Some of the operations.
So this aha moment led to.
The strategic.
The live.
Sponsorship of enterprise wide automation in the first 1 of this magnitude I've seen starting with 2017 for.
These are all of those they seem be suit 1 of our major 1 of our biggest customers.
It started the big initiative.
The live World.
Going forward for the entire bank on.
They have what you read on the reimbursement in the tune of half for many of them.
For even for US and we are seeing more and more customers are thinking enterprise automation on the scale. They want applied materials. It's another discussed on 1 we I remember a great discussion with the with the C O for the head of operations.
I know that we ought to lead to.
All told me what do we want to grow all of the we wanted to build the completely automate the for men's department.
Did it.
Got it that's Super helpful. And then just maybe just 1 more on the competitive side, if somebody asked earlier about Microsoft.
Many of them, but the 1 that I always get and I'm sort of curious on your perspective as you know the platform vendors you know the service styles of the sales forces of the world as they implement additional need of our P. A R of low code no code capabilities. So how does that impact the market versus you know more of a above the sort of of a.
A player like yourself that can play across multiple clouds of that'd be a hyperscale orders or.
Or the platform vendors.
But I think by its nature of automation. It is more of an agnostic horizontal type of technology for a particular application van book will build automation the most important.
Importantly addresses the need they see on the fluff for and they naturally will the will be less focused on the other platforms, we being independent or really being the same level of attention to made sure business of obligation plus.
The other forms.
This is actually what our customers are requiring from us many customers are really afraid of vendor of blockchain and this is the additional note in the station and the investment that will basically completely temperature.
Within the business plus for <unk>.
When you actually elevates your processes above the business applications you can achieve much.
But the flexibility in adopting cloud in migrating from 1 version of the plot for 2 of the object.
2 of them. This is what our customers really are demanding the hour.
The 500 customers that we have are a testament, we have more than 65 per cent of fortune 500 customers and this is a constant theme.
Automation is.
And no stick to the business application platform.
Thank you we've reached the end of our question and answer session I'd like to turn the floor back over to Daniel for any further of closing comments.
Thank you before we conclude I'd like to highlight.
A good friend on the valuable Board member.
The government goes on who has decided to retire from the board.
Tom joined US almost 4 years ago and it has been on absolute on the work we have a person of such energy on the humble character.
Really.
8 of them for his time with us.
I also want to thank the you ipass team for their hard work and dedication to our customers and our mission of onlooking human potential through automation, we live our values of being humble bold in malls and fast every day and I'm very.
Things are very fluid for all the they do.
We look forward to speaking with many of you through all of the court for thank you.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day.
Thank you for your participation today.