Q2 2021 Pros Holdings Inc Earnings Call
Greetings and welcome to the Pros Holdings second quarter 2021 earnings conference call.
At this time all participants are in a listen only mode.
Question and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad and.
A reminder, this conference is being recorded I would now like to turn the conference over to Belinda over to put senior manager of Investor Relations.
Thank you operator, good afternoon, everyone and thank you for joining US our earnings press release, SEC filings and a replay of today's call can be found on the Investor Relations section of our website at pros Dot com.
Our prepared remarks will also be available on our website immediately following the call and will be replaced by the official transcript, which includes participant questions once available.
With me on today's call is Andres Reiner, President and Chief Executive Officer, and Stefan Schulz Chief Financial Officer.
Please note that some of the commentary today will include forward looking statements, including without limitation, those about our strategy future business prospects and market opportunities and our financial projections and.
Actual results could differ materially from such statements and are forecast in particular, there remains significant uncertainty around the duration and impact of COVID-19, given the increase in cases of the Delta variant. This means that results could change at any time and the contemplated impact of COVID-19 on the company's business results and outlook is the best estimate based on the <unk>.
Information available as of today.
For more information please refer to the risk factors described in our SEC filings pros assumes no obligation to update any forward looking statements to reflect future events or circumstances.
As a reminder, during the call we will discuss non-GAAP metrics reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent to which available without unreasonable effort are available and our earnings press release with that I'll turn the call over to you Andres.
Thank you Vin and then thank you everyone for joining us on today's call and I'm pleased to share that we executed strongly across all of our metrics last quarter.
Our performance is a testament to our incredible team and the value our solutions provide.
We achieved a major milestone with the recent launch of our next generation <unk> SaaS editions on the pros flat for.
This launch demonstrates our continuous innovation leadership and I wanted to start by taking us back to when we launch our cloud first initiative in 2015 for.
For cloud transition was not just about changing our financial model and so by creating the next generation of horse solutions or processes, and how we deliver it to accelerate market adoption and.
As a result, our subscription revenue grew over 40% annually between 2016 and 2019.
Now with our platform and the launch of our <unk> SaaS editions were making our solutions accessible to businesses of all sizes, where new SaaS editions are available on its impossible pricing selling and ecommerce paths spanning basic to very advance use cases.
Or prescriptive implementation packages ensure quick adoption of digital selling keep the ability for in a matter of weeks, enabling our customers to continually evolve their strategy to win in their markets.
This launch is part of the company wide initiatives to deliver and incredible customer experience at every step of their journey by fully embracing digital self serve mindset.
We've made it easier than ever for customers, who discovered the keep the ability of our platform compare packages by keep the ability same price you can get rapid time to value for more solutions.
The pros platform enables businesses to drive a harmonized and interconnected sales experience the meets buyers' expectation and speed transparency personalization inconsistency across every channel.
Our omni channel selling capabilities are resonating in the market last quarter, we welcome Minicourse and new customer and are proud to share that they're already live and of course, and Netherlands based producer and supplier of sustainable energy, serving millions of customers across Europe and.
And of course embark on a digital transformation journey to improve customer experience across all touch points and segments of their business and they selected our platform to enable their vision and acreage already using our smart see PQ solutions to powered bdcs selling and have plans to expand with price optum.
<unk> and cross B to C and b to be digital and traditional channels.
We also welcome Lafarge woke him and say new pros customer 1 of the largest suppliers of construction materials globally Lafarge Holcomb selected our platform to put AI at the center of their go to market strategy there.
It will leverage our AI powered price guidance and real time capabilities to optimize your pricing strategy mean increasingly dynamic and competitive market, allowing them to drive profitable revenue growth now I'll talk a little bit about what were seeing and their line space North America continue.
And to see positive momentum in the travel recovery with several U S carriers reported domestic leisure air travel has reached or even exceeded 2019 levels.
While we're seeing travel and other geographies start to improve the recent spread of the Delta variant is slowing down progress seem region psyche should Pacific and Europe.
While uncertainty and the timing of global recovery remains where travelers recovering airlines are reinvesting and digital transformation and pros platform for travel is top of mind.
Please to share that last quarter, we welcome another north American carrier to the pros family why new airline selected pros arm and damage to leverage or advanced demand forecasting and fair optimization capabilities to provide their customers as superior buying experience, while fueling revenue growth and recovery.
For women Hawaiian Airlines is proof that even in times of unprecedented change revenue management is more important than ever S and distribution landscape evolves in airlines look to power more digital self serve experiences.
We're advance AI and adapt to new data patterns quickly, even if they're dramatically different from historical data patterns do produce winning on first unique constantly changing environment, even where no historical data is present like in the case of startup Airlines Breeze Airways, where he I generate.
Incredible value by using self learning algorithms debt auto calibrate be some real time data I'm proud to share that last quarter. British Airways went live with army Saint Charles and less than 5 months Breeze is already leveraging our solution to execute on their growth strategy huge.
Congratulations to Breeze on this incredible milestone and we're proud to have them SA customer Marceau thrilled to welcome and Nacco Lafarge, welcome and Hawaiian Airlines, among others as new customers and look for it to partnering with them on their digital selling journeys and.
Approach innovation is at the core of our DNA and before I close I'd like to sharing an update on how we're innovating on the future of work.
Our strategy is to leverage a hybrid model, where we take the best of both in person and virtual work to create a new environment that prioritizes productivity over location. Additionally, instead of and a lot and amount of personal time off we've empowered our U S employees to take time, they need away from work at.
Their discretion, while delivering to our customers and business goals with our trusted time off program. We believe that trust and transparency are key to fostering employee engagement and driving our culture of innovation Ford where continued focus on creating an environment, where every employee can grom reach your food.
And chose what will continue to attract the best talent and the world to pros.
In closing thank you to our global team for continuing to make pros and incredible company.
Thank you to our customers partners and shareholders for your ongoing support of pros with that I'd like to turn the call over to Stefan to cover financial performance and outlook.
Yeah.
Thanks, Andreas and good afternoon, everyone.
As Andres mentioned the launch of the pros platform with our next generation SaaS additions marks a huge milestone for pros.
Our market, leading SaaS additions and prescriptive services package further facilitate a land and expand selling motion by enabling customers to choose where they want to start and then getting them value from our solutions faster.
Our commercial offerings for our latest SaaS additions have been designed for speed with simplified commercial terms and pricing.
However, this is so much more than a commercial approach. This is the first step towards our strategic objective of being the easiest software company to do business with.
Every department at Pros came together and preparation for this launch all with the goal of delivering the best experience possible throughout the customer journey.
I'm proud of what our team has accomplished so far and we will continue to build upon this announcement.
Now moving to our results.
We delivered a strong Q2, driven by subscription revenue growth as well as improved adjusted EBITDA and free cash flow.
Subscription revenue and the second quarter was a record $44.2 million up 4% year over year and exceeded the high end of our guidance.
Our second quarter recurring revenue was 85% of our total revenue.
Our gross revenue retention rate for the trailing 12 months was approximately 88%.
And as a reminder, we disclose gross revenue retention rate not net revenue retention rate.
Gross revenue retention does not include bookings from expansions, which can mask real churn.
Our gross revenue retention of 88% is lower than our historical rate due mostly to concessions stemming from COVID-19 that affected our travel related customers.
Adjusting for the unique COVID-19 related impacts that occurred and the second half of 2020.
Our trailing 12 month revenue retention rate would have been approximately 92% over the last 12 months.
Our retention rates are improving in 2020, 1 and we anticipate ending the year at approximately 93%.
Our non-GAAP subscription gross margins were 71%, which are up sequentially from 69% last quarter and down year over year.
The year over year decline in subscription margins is primarily due to the revenue impact from some of our travel customers who were significantly impacted by Covid.
While we were able to reduce some of our costs the impact on revenue did affect our subscription margins.
We do not expect this revenue impact to improve over the next 2 quarters and therefore expect subscription margins to remain relatively constant and the second half of 'twenty 'twenty 1.
Our expense lowering initiatives from Twenty-twenty did carry forward into 2020, 1 where total expenses declined by 3% and the quarter and 6% and the first half of the year.
Because of these savings are overall profitability improved compared to last year.
Adjusted EBITDA loss was $4.7 million as compared to $5.7 million last year.
For the trailing 12 months, our calculated billings decreased 4% year over year as expected, but the quarterly calculated billings in the first 2 quarters of this year have improved year over year.
As we looked for the remainder of this year, we anticipate calculated billings to be relatively flat year over year, and the third quarter, but strong year over year calculated billings growth in the fourth quarter and full year.
Okay.
Free cash flow burn in Q2 was $5.7 million and improvement of 76% over last year and was driven by a combination of operating expense efficiencies and strong customer collections.
We exited the second quarter with $318.3 million of cash and investments and continue to have access to an additional $50 million through our unused line of credit.
We ended the quarter with 56 quota carrying personnel, which is in line with our expectations as previously.
As we discussed we expect to exit the year with 60 or more quota carrying personnel.
Before turning to guidance I would like to discuss the impact of Covid on our reported financial results.
During 2020, we experienced headwinds to new bookings customer contract restructurings customer bankruptcies and project delays as a result of COVID-19.
These headwinds had implications to our business for the first half of this year and will likely continue to impact us for the rest of this year.
The recent spike in cases due to the Delta variant has led to delays and the expected business recovery of many airlines around the world.
Despite these headwinds we continue to expect our subscription revenue to grow and the third quarter and the full year, but the growth rate will be a little lower than our subscription bookings as the revenue recognition lags the subscription bookings.
Turning now to guidance base.
Based on our performance during the first half we are raising our annual ear are adjusted EBITDA and free cash flow outlook and.
And providing Q3 guidance as follows.
We expect Q3 subscription revenue to be and the range of 44 million to $44.5 billion and.
And total revenue to be and the range of 61.7 million to $62.7 million.
We expect third quarter, adjusted EBITDA loss between $9 million and $10 million and.
And lastly, with an estimated non-GAAP tax rate of 22%, we anticipate third quarter non-GAAP loss per share of between 21 and 23 cents per share based on an estimated 44.4 million shares outstanding.
For the year, we expect subscription revenue to be and the range of $176.5 million to $179.5 million and total revenue to be in the range of 250.5 million to $253.5 million.
Adjusted EBITDA loss of between $32 million and $35 million and free cash flow burn of between $34 million and $38 million.
We are also expecting and ending a or our range between $212 million to $217 million.
We've enjoyed a significant improvement to our free cash flow results and the first half of 2021 which gives us confidence to raise our guidance for the full year.
As we look to the second half of 2021, we anticipate and overall free cash flow burn where the third quarter reflects a larger burn and we experienced during the first half of 'twenty 'twenty 1.
And a fourth quarter that is a little below breakeven.
In closing I would like to thank our amazing employees and customers for their continued passion and support.
We're looking forward to the second half of 'twenty 'twenty 1.
And we also thank you for your support of Pros and we look forward to speaking with you at our upcoming events.
I'll now turn the call back over to the operator for questions operator.
Thank you.
And this time will be conducting a question and answer session. If you'd like to ask a question. Please press star 1 on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star 2 if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the starkey.
Our first question comes from Rob Oliver with Baird. Please proceed with your question.
Great. Good afternoon, guys. Thank you very much for taking my question I appreciate it.
2 questions for me 1 for you Andres and then 1 Stefan for you on.
Andres just.
You know it sounds like the U S is definitely better than and the flight data is definitely showing that you also mentioned the delta very and introducing.
Some uncertainty on some delays. So I was just wondering if you could maybe talk a little bit more about the conversations you're having with customers around kind of those 2 variables and then steffan I know you talk talked about how and how that played out and and the guidance, but specifically to the subscription revenue growth, which was better than expected this quarter.
Just curious what the driver was there I assume it was a little early to and maybe see an impact from new platform was it more conversions are was it.
Straight up ETP strength any color there would be great. Thank you guys very much.
Perfect I'll start overall with that momentum. So we saw a pretty pretty strong on the beta. Besides obviously, we talked about North America in travel and I would say travel it's what we expected to this point.
And I would say the key travel is square.
Happy to have a Hawaiian airlines Joyner family of Airlines and what we see debt. The airlines are rebounding day or investing in new investing and or technology and and that's great to see so overall I would tell you as we look at.
At the back half from travel we think it's going to continue to be impacted as we expected. So we're not expecting a big rebound in travel and the back half I would say that's more likely to happen next year.
Given the.
And the Delta variant.
But overall, we feel from the <unk> side.
Overall, and then momentum continues on its improved.
Yeah, and Rob this is stuff and as it relates to the second quarter subscription revenue.
Pretty much.
And where we thought we would maybe slightly better.
2 reasons for that 1 is Andres pointed out it's the BTB bookings that showed strength and the first half.
But we also benefited and and we knew this going into the quarter. We benefited from the recognition of some term licenses that were renewed and the order.
I think as you look at the second quarter, and then compare that to the third quarter. When you look at our guidance Youll see that debt that growth rate kind of flattens out a little bit from what you saw from Q on Q2, and the reason for that really is the timing of the term license recognition that we saw on the second quarter.
Great. Thanks again guys.
Thank you.
Thank you. Our next question comes from Scott Berg with Needham. Please proceed with your questions.
Hey, guys. This is Josh on for Scott.
Congrats on the strong quarter.
Curious what are you seeing on the sales pipeline from travel customers today are deals more like the United deal, which was for the ancillary.
Products and travel services.
Or is it more like a expanding.
Expanding the core origination and destination modules.
Yeah, Josh that's a great question and I would say, we see a lot of on.
Demand and a lot of interest both in our next generation R M solutions, which Hawaiian actually was for our aim.
Solutions, but we also are seen and a lot of demand around digital retail dynamic offers.
And therefore digital retail platform.
Our areas of being trade. So I would say a lot of airlines as we see them coming back I think they are going to continue to innovate around for digitization of their sales motion. So everything from obviously the passenger bookings group bookings their contracts.
And and dose cargo.
Another area that we're seeing interest.
But I would say it's including.
Next generation our M solution, and we've continued to innovate significantly Iran around our R. M suite.
And those innovations are really critical in this market, especially with the volatility of the market.
Okay, Great and then just as a follow up if you look at the Q3 subscription revenue guidance with what you just mentioned is flat quarter over quarter.
What what is the what's the thought process there and is there any impact from.
The <unk> I think it's the $18 million and loss travel subscription revenue over the last year is that picking up here because of the delta variant or is that assumed to be flatter and how should we think about that thank you.
Yeah, so the $18 million that we talked about last year, having impacted us from from the result from from Covid.
Its still out there and that really hasn't changed so that that amount of money is still about the same and and and as Andre said, a little earlier I think because of the delta variant any recovery of that.
It's probably in the next year not not so much.
This year and I think as you look at the Q3 number from a subscription guide perspective.
You know the Inc.
If you normalize for that term license impact that we saw on the second quarter you'd see a nice growth trend from Q1 to Q2 to Q3 and I'll also say this I think.
Because of some of the things that we're seeing in the and the marketplace from a macro perspective, we are assuming some of the migrations that we had originally assumed would take place and Q3 are likely now to be more of a Q4 type of an event and so youll see some of that.
Maintenance transition that you would have normally seen in Q3, now probably take place and Q4, where maintenance dipped a little more on subscription comes up as we do those migration. So that's another part of the equation. That's that's driving the Q3 guidance.
Thanks, guys.
Thank you.
Thank you. Our next question comes from the whole Chatzky with Northland Capital. Please proceed with your question.
Yeah. Thank you and a nice performance on the subscription I'm looking at billings. It looks like it took a big sequential downtick, albeit it was up about 18% year over year.
And it doesn't seem like it's typically down 30 plus percent Q over Q, So what why was that debt.
Outperformance on the billings on a Q over Q basis.
Yeah. So.
Oh, we actually were.
And we're pretty much in line with what we were thinking actually maybe even slightly ahead of where we were thinking as we as we set course for the year.
As you can probably imagine most of the billing data is pretty much determined from renewals and so we have a pretty good idea of how the calculated billings are going to play out for the full year.
And we really thought we were going to be fairly consistent with what we saw on growth from Q1, and Q2 actually to your point, we actually outperformed a little bit as we look at Q3, we're thinking that that's going to be relatively.
Flat to what we saw last year, and and Q4 were expected and see it as significantly increase over last year and that's how we're seeing it play itself out I will say that while we have good visibility to how it's generally going to play out.
There are some things that occur quarter to quarter that do affect timing. So our billing that may have gone out last year at the end of Q2 May go out for sure at the beginning of Q3 are those things do happen, but overall when we step back and look at you know the the calculated billings performance year to date. This year, we're very happy and pretty much on track with where we wanted to be.
And we feel that way, it's going to be the same the same is going to be true as we exit this year as well.
Okay great.
And last quarter and you guys talk about how pipeline was improving pretty significantly are you still seeing that trend.
And I will call on pipeline yeah.
We're still continuing to see even sequential pipeline grow and.
And overall I would tell you that.
And from a pipeline coverage, we're continuing to have very strong pipeline coverage so for all.
And on the funnel, we feel very good.
And obviously very focused on debt <unk> industry.
But absolutely.
Okay, and then finally, a Y for predicting a higher retention rate at the end of calendar 'twenty 1 than historical levels.
And I didn't quite get the question is would you mind repeating it again.
I believe you said in your.
Prepared remarks that you're expecting to be around 93% gross retention rate, but it and the calendar 'twenty, 1 and it sounded like that was about 100 basis points higher than historical levels.
So why that projected improvement.
Yeah. So you know.
And when we go back to 2019 at our.
Our renewal rate was right at 93% and.
And where we felt and we felt like this.
Throughout 2020, as well that once we got through the depths of what Covid was doing to the airline industry debt.
Our retention rates would would recover to where they had been prior to COVID-19 and and just prior to Covid, we were right at 93% and so.
We're pretty much right on track with what we were hoping to do and.
I think as I sit here today and talk to you about what we're projecting I can I can give you a fairly confident and the answer to it because we have very good visibility not just true to what happened and the first half, but we also have good visibility to what would be likely to renew in Q3, because most of those events.
And have either occurred or they're nearing occurrence and so we have a real good visibility to that through 3 quarters of the year and feel very good about our 93% rate I'll say this just as a plug to the team that manages that our customer success team has done an amazing job both through the Covid time win from customers we're dealing with.
And some unique circumstances to today as we get through a lot of that from a renewal standpoint.
They are executing quite well.
Great. Thank you very much.
Thank you.
Thank you. Our next question comes from Tom Roderick with Stifel. Please proceed with your question.
Hi, it's Max out on us on.
And for Tom Thanks for taking my questions.
And I just want to start thinking about the new launch of the <unk> SaaS additions and the platform combined with the new Chief Marketing Officer has there been any major changes to the go to market with all of that and.
And if theres going to be like a transition of current customers over to that new platform or if its mostly just for new customers.
Hey, Max Great Great question, No I would tell you that from from Maine organization.
<unk> is doing a great job. She is shown on the organization and she helped with the launch but I would tell you. The platform launch is something that we began working on in 2015, so for our customer sell all leverage this next generation.
<unk> for them and they want required to migrate so they get to leverage a lot and these capabilities that we built into the platform, but we are excited about the platform is now because they can pose civil and allows customers to start smaller.
And be able to expand keep ability.
And crossed their maturity. So so we're really excited about the capabilities, but I would tell you. This is an evolution of the last for years as we've migrated to the cloud to continue to embed more and more and keep the belief in our cloud platform. So I think we are very excited about.
On the capability and in house now any company of any size and leverage the power of the best in class AI platform on the planet. So.
Got it got it that's helpful. And then thinking about I think you said you're already at 56 quota carrying reps with a target a loose target of 60 at the end of the year and last quarter, you mentioned, increasing spending maybe a little sooner than expected or those.
Plans still in line and even with maybe a little more uncertainty than before with Delta and some hesitancy around the economy is opening back up or is there going to be more of a.
Tailored approach to the spending as we look into the rest of the year and the beginning of next year.
That's a great question, Matt what I would tell you, it's not where we're very bullish about the opportunity and <unk> you would imagine most of the investment we're making.
From a go to market perspective is on <unk> side and and.
And I think as we talked about continuing to see strength in our pipeline top and the final. So as we're seeing that demand come in the top end of the funnel.
And it gives us confidence.
10 years to expand our quota carrying personnel and re.
And it is set up 2022, so I would say you should expect us to get to the 60, plus and not not hold back on.
And I would tell you look from the Delta area and on the travel side, while we see caution there.
We were not expecting and big upside in the back half I would say the big pressure and the back half would be more from day. The transactions that are based on volume that we were not getting a C, but not from my sales.
Bookings, we were expecting and very little in travel and that that would impact very little this year.
Got it thanks, that's it for me thanks.
Thanks.
Our next question comes from stands on <unk> with Morgan Stanley. Please proceed with your question.
Hey, guys. Thank you for taking my questions.
Maybe.
First 1 for me and so if you think about customers right and customers and prospects right. They they typically buy well ahead of potential demand.
M spikes and when you kind of put that in context of usually and.
Unimplemented and froze and he can take you can take a couple of months for.
For a smaller company for a smaller organization.
<unk> and <unk>.
So a fairly extensive implementation if it's a longer 1.
The bigger customer.
So if we think that you know hey, vaccination rates start to improve the world starts to normalize a little bit more.
And the back half of this year.
Wouldn't you think that the time for these customers decides to transact is now are those prospect.
And that's a great question, Stan I think look we've seen it and North American and I would tell you. It's a good example.
We saw with United with Breeze.
And with Hawaiian now more recently.
To me in the airline industry once they see light and they start to see at least leisure travel open up they start to see.
You know there is demand.
Sales to at least 40%, 50% of 2019 I think that's when they start to invest and that's what we saw in North America.
Is there that potential on the back half absolutely. There is I would tell you from me in terms of from a sales perspective, there's still a lot of activity and travel and so I don't want anybody to think that that airlines are not active they are active.
They are looking at opportunities for me is when they decide to move forward.
And a lot of that is then they seem they more stability and the market and I would tell you that you know obviously Asia, it's been right now mostly impacted Asia.
Europe.
But we expect that.
Start opening up in the back half.
Yeah.
Got it and then on the on the the expectation for Q4 billings.
On to uptake is is there something something mechanical and their.
And that's driving that or is it just more of a return to kind of on a pre COVID-19 seasonality, where you have just bigger Q4s.
Like for like you used to have.
Yeah, So, yes, and you're exactly right I mean seasonally Q4 is typically a strong billing quarter for us and so we expect to see that occur you know we did have some anomalies that took place and the last call. It a year or 2 where we had some timing things, but I think more importantly, COVID-19 at and.
Impact on on what those billings might look like we see far less of that and so to your point, we do see more of a return to normalcy as we exit this year.
Got it alright, thanks, guys.
Thank you.
Our next question comes from Chad Bennett with Craig Hallum. Please proceed with your question.
Great. Thanks for taking my questions. So.
Either Stefan or Andres could you just give us a sense, you know and sort of halfway through the year and you're giving a full year outlook.
Whether it's from a subscription and recurring revenue standpoint kind of roughly how.
How much of the business do you expect from travel versus B to B when and.
When we get to year end here and on a look back basis.
Yeah, I mean I think is.
As Andres has said we are.
And we're seeing most of our our growth that's being driven this year coming from the <unk> side I mean, we've talked about some of the wins we've had on the travel side and obviously a lot of that has been and the United States, where we've seen relative strength compared to other regions and the world.
Chad, we haven't really broken out the <unk>.
Exact split and the last we talked about it was a 50.545 beta beat of travel I would say.
Clearly that has shifted more to BBB.
Since Covid has occurred but now what I will say is.
As I step back and look at the first half to your point and I look at all the different metrics.
We're pretty much right, where we thought we would be when I looked at how we set ourselves up for the first half versus the second half.
Pretty much across all metrics, we're right, where we wanted to be the only metric we're off on happens to be free cash flow. We're way ahead of that Patrick.
We feel very well positioned as we go to the second half of this year knowing that we had this launch of our platform and knowing that we're going to put some more.
Wood behind that arrow from a from a sales and marketing perspective.
And we feel very good about how we've executed so far and how we're going to be executing towards the back half of this year and.
And I will tell you that to further what Andre said most of that is going to be on the heels of BBB.
Right and then as much as we have a crystal ball of these states just from a from on Rpm's standpoint Stephan.
And from from where C. R. P O ended and in the June quarter, and and maybe even and overall our Po should we expect our P O to improve sequentially September quarter to December quarter from where we ended the June quarter.
Yes, I would say I will give you probably a little more of a general metric I would definitely say by the end of this year you should see that.
So yes, I mean, we've been seeing a nice trend on <unk> from.
Both on the short term and on the and the total we saw it starting to grow again and the first quarter and grew a little.
A little stronger and the second quarter, we expect that trend to continue throughout the rest of the year.
Q3 may be a little.
And maybe a little flattish, but by the end of the year, we expect it to be up.
Got it alright, thanks, Bob and I appreciate it thank you.
Our next question comes from Jackson Ader with Jpmorgan. Please proceed with your question.
Great. Thank you Steffen.
And stuff and just following up on the <unk>.
On the split I appreciate that.
Vast majority of growth is expected to come from <unk> and travel, but I'm just curious.
Thanks.
Whether it's on a subscription basis or an IRR basis are you expecting trouble revenue to be to grow at all in 2021.
No no no I would say if we were to look at it that way.
Not expect it to grow.
Okay Alright perfect.
Perfect and then.
And how we're migrations in the quarter and our.
It.
Does the does the Delta Varian have any kind of impact on migrations at all or is that separate.
Yeah, I would I would say that scenario debt.
We may be a little behind as it relates to what we were thinking about for the for the full year.
We see a number of opportunities for those and actually we have some insight that we expect to occur in the fourth quarter of this year actually towards the end of the third quarter beginning of the fourth quarter. So I would say were slightly behind and that metric primarily for the reasons you just outlined.
But we see those absolutely coming to fruition and I would also say this the recent platform announcement that we just did.
Ben.
I think and very much and attention grabber for a lot of a lot of our customers on the on Prem version of our solutions and I do expect to see more customers.
Look to migrate as they take advantage of the platform announcement, we just made.
Right Okay.
And should be an accelerant.
And the platform should be.
Absolutely, yes, absolutely.
Alright awesome. Thanks, guys.
Thank you.
Our final question comes from Jason <unk> with Keybanc capital markets. Please proceed with your question.
Hi, This is actually Devon on for Jason Thanks for taking my questions.
Just wanted to double click on the <unk> strength, Youre seeing and second quarter any color you can provide on what verticals, you're seeing that particular strength and can you share and you sort of details on the profile and size are these new customers that you are at it.
Yes, so we're continuing to see a lot of strength and manufacturing high Tech and.
T D.
<unk> stopped for markets.
I would say traditional or <unk> markets in terms of size I think it spreads from larger organizations and we.
And we talked about.
Some of those examples in the script like Lafarge, Holcim and we talked about and Nacco is another example.
But overall I would say variance size from.
From <unk>.
Under a $1 billion and revenue to 2 well multibillion and revenue.
Great that's helpful and then.
And just a quick follow up on just want to ask if you can share and you sort of I guess incremental details on your partnership with United last quarter any sort of progress you can that you can share on that.
Yes, I'd say its progressing very well I think we're very much on track.
And I think the relationship is continuing to strengthen.
Overall very pleased I would say it's.
It's a really incredible partnership on both sides and I think they're doing a phenomenal job.
And I think our team is well on the implementation and I, Thank God and.
Things are progressing very well.
Great. Thank you so much.
Thank you.
Thank you ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Bill Linda over to put for closing remark.
Thank you for listening to today's call. We look forward to speaking with you at conferences and events. This quarter, we will be attending the Oppenheimer annual technology Internet and Communications conference on August 10th the Keybanc Technology leadership Forum on August 11th and the Jefferies Virtual software conference.
On September 15th if you have any questions. Following today's call. Please contact us at IR at pros Dot com, Thank you and goodbye.
This concludes today's conference and you may disconnect your lines at this time.
You for your participation and have a wonderful evening.