Q2 2021 Citrix Systems Inc Earnings Call
Cloud please pickup your handset before pressing the keys to withdraw your question. Please press Star then 2.
And this time, we will pause momentarily to assemble the roster.
And so when you first question comes from Raimo <unk> with Barclays.
Hey, Thanks for taking my question.
David can you kind of a link.
The the comments from the first quarter to the second quarter and all so if I do remember correctly and in Q1, we talked about term.
Customer signing at the shorter duration and et cetera, So and and you were hoping that that would improve and now second quarter sounds slightly differently. So it is.
Is there like a change and the story is the same story and just.
And I identified the issues better. Thank you very much but a little bit more clarity and thank you.
Sure Raimo.
Actually 2 different issues in Q1, and just to remind everybody. We had a lot of very special business continuity type license, it's very short term in.
Things that we put together back in the early stage of the pandemic that had impacted overall duration and these were really just unique ability to try and serve customers.
Duration is not not a factor in Q2 duration has come back to normal levels as we anticipated no change you tend to see slightly longer.
Nature, Shannon and SaaS contracts and areas like that but certainly along our lines of expectation.
And you step back and think about Q2.
And in context for just a minute. There's 3 main focus areas around go to market and the first is accurately forecasting the totals and the mix of different license types, obviously, they have a different impact financial.
<unk> second is migrating the installed base to cloud and the third is driving net new business bookings.
With mix, we've consistently come in much higher with the SaaS mix, both in Q2 and and our forward guidance installed base migration as you see in the letter has been really positive we've really stepped up the pace over the last 9 months or so more than 2.
Where we were this time a year ago customers are seeing a lot of value and this migration and our co sell with Hyperscale and particularly like Microsoft for example is up sharply.
However, new business bookings was really the challenge and 2 and I think we believe that the root cause of that is a combination of really 3 things primarily the complexity.
Actually that is existed with trying to balance all of these different moving parts there.
Mixed messaging and priorities inside the feel that that has caused whether it's <unk>.
Duration as you mentioned migrations, new products et cetera, I think it is confusing and it's just frankly inefficient, we are behind where I'd like to be and overall quota carrying capacity just due to.
Laxity investments and other areas of go to market as well as the pace of our hiring process and the third is and we just haven't done enough in my opinion to really enable our traditional channel partners to participate in the SaaS transition of the company I think they're focused too much on fulfillment and and inconsistent alignment with the field.
So that's why we listed those 4 things that we're doing.
And really focus on.
Reorganizing and prioritizing the sales team increasing direct quota carriers.
<unk> leverage and prioritizing SaaS and happy to go into more detail about any any of those 4.
Yes, Andy.
And.
And listen to you David those issues kind of.
Doing the kind of evolved over time is this like is this kind of the announcements at the end of discussions day, a little bit the culmination of kind.
A realization that under management team that something needs to change.
Great well I think that's fair I think that we obviously are coming off a record year and in 2020.
And across many of the metrics of the business you know Covid has certainly been a secular tailwind to the types of solutions that we sell and when you rattle off all the different transition metrics I mean, we're not we're doing extremely well on that part we've just had problems with really managing and accurately forecasting a lot of these.
New business areas and so that's what we're focused on taking actions before to really align not just to drive a lot more consistency, which has to be and outcome, but also really focus on where customers are going over the long term and embracing that model.
Okay. Thank you good luck.
Yes.
Thank you.
And the next question comes from Mark Modeler worth a monster.
Thank you very much.
David This quarter total <unk> ex right grew 13% can you give us some more color on the moving parts that are driving your 10% total AOR growth guidance.
Yes markets. It's a good question and that's 1 of the reasons why we keep focusing on SaaS IRR and totally wrong, because I think it looks through all of this noise with the business model transition and gives a better picture for what's going on what's driving that is the workspace in general.
Just to give a couple of statistics there workspace.
Cash in particular and consumption based bookings up sharply on a year over year basis.
A mix, we don't talk about bookings by product much but I'll tell you a on a mixed basis. It's about 70% of workspace is now coming via SaaS up from 50 or less a year ago, So we're pushing and that transition.
And part of the complexity that we're calling out right. Now is I think that the teams have tried too hard to guide this mix, 1 way or another versus really embracing and how quickly it should be moving.
And so I'm happy with that and then the second piece of it that's really driving and of course as the installed base migration I just mentioned that on Ramos question, but.
But we are running 2 to 3 ex the rate that we were a year ago.
We've increasingly seen customers migrating to citrix cloud and and areas like the co sell that I referenced just a minute ago is really helping drive that so I think we're getting better and better alignment on that motion and so those are the primary drivers behind the.
13% total air our growth for the business.
Okay and for the for the full year itself.
Are you basically expecting that the re org is going to slow things a little bit nearer term as everyone moves into the new motion.
Yes, we called that out and our guidance. If you if you look at the detail and our letter.
We're assuming that total IRR could slow down closer to 10% exiting the year and we want to be careful that we are contemplating potential disruptions that that always come with.
Our go to market changes and things like this and and not trying to get out in front of it but being very thoughtful about our guidance for Q4.
And that makes sense I appreciate it thank you.
Thanks Mark.
Thank you and the next question comes from Brent Thill with Jefferies.
David you and sales re org can you frame the extent.
The change that you're making is this 30% of the sales force here.
Change and round is at 70% can you can you just give us a sense of the magnitude.
Of that of that shift.
Yeah, we're not we're not necessarily changing the sales force I mean, we've got we've got a lot of good sellers I think what we're doing is we're more adding.
Adding and the areas that I think really matter.
For example, you know discrete quota carriers versus non quota carrying.
Doing more to make sure. We've got alignment you know theres been in my opinion kind of a mixed message out and the field and that includes both our direct sellers and our channel in terms of what our priorities are how we're balancing this transition and that's causing.
And that's just causing execution as well as forecasting and accuracies and so a lot of this is about how do we land.
New customers very cleanly and how do we do that with our with our channel how do we have people prioritizing SaaS.
Is the primary motion how do we make sure that incentives lineup.
And when the field for example, and and the channel to support that removing some of these what I call complexity issues. So don't think of it as a wholesale.
Change as much as just eliminating some of the things that are slowing us down and just getting much much better alignment.
You mentioned the Microsoft.
Microsoft relationship, but there has been a tremendous amount of questions with.
<unk> launched and the Impac.
Can you just speak to what.
And what you think that means to the business long term and.
And how does that impact and Microsoft relationship.
Yeah. So let me backup per minute and talk about Microsoft just at a high level and then.
And specifically about when 365, so I think as everybody knows for the better part of 30 years, we have consistently embraced the Microsoft platform and extended it as part of our solutions and that's really what's built this long term partnership and which we both benefit.
And of course, we're always working to make sure we're educating the market and we stay aligned.
If you look online I mean, and and and look at what we're doing together, you're going to see and increasing volume up a lot of joint collateral focused on joint migrations, how citrix plus a b D. For example, together is the lowest total cost of ownership as compared to like native Abd while at the same time improving.
Moving experience and security for customers.
Called out our co sell that we do I mean, it's up well over 100% year on year and we're now at the top or near the top of their co sales deal registration process and and so.
And of course and number of other things from a product strategy standpoint. So.
And we're working together on an.
And industry 6.5 and looking at ways, where we will potentially integrate and do more together, we'll talk more about that after these products are actually released into the market later in the quarter et cetera, and general a lot of what we do is look at this in terms of where we leverage integration points and Thats us.
A statement across.
Ross workspace across networking et cetera, and.
Primarily it will be focused on those simple turnkey data use cases and will work to integrate that as a let's call it and easy to integrate workload alongside what our customers are already doing with hybrid.
On premise other third party solutions.
And on Windsor etcetera. So that's the way, we think about it and general terms.
Thanks, David.
Thank you and the next question comes from Tom <unk> with UBS.
Thanks, and I'll ask 1 for David and 1 for Ireland, So David you've you've.
<unk> and.
And the.
Financial metrics changes today, largely internal sales execution, but I'm just wondering if you could comment on what maybe external demand factors you saw in the June quarter that may have contributed to the new business challenges did you see.
Greater.
<unk> appetite from your customer base to move away from on premise deployments and does it feel that maybe the workspace product is getting.
Fairly highly penetrated was it a little bit of competition, maybe anything other than maybe internal sales execution and then for Arlen you you did indicate that.
Operating cash flow and 21 would be below the levels of 2020.
But for the first half operating cash flows down a full 50%. So you might sort of get street estimates all over the map and in terms of interpreting what down means are you able to frame. It for US for instance, do you think that.
Greater ash flow this year for Citrix could at least be above the 2019 level of 785 are much appreciate it.
And so Karl let me take the first part of the question when you step back and look at the market I mean, we've had a relatively isolated set of issues that we think of just.
Cash with our overall execution when we when we do research looking at our competitive analysis, when law and Theres been no material changes on that front.
Sales cycles have been generally consistent with where they are in the past and overall opportunity pipelines are where they need to be from our.
To be.
And empower numbers, it's just.
And the execution items that we have highlighted there if you look at the workspace, it's definitely not an issue of it being overly penetrated. These markets are actually accelerating you know you can look at some of the industry analysts at that point to market growth rates and Citrix grew sharply.
And to hit our workspace technologies last year, we are the market leader in this area and we will be growing this year as well.
And earlier answer to Rimose question, I think 1 other things that will be really helpful. For everyone is providing more of an IRR byproduct.
And at some point and the future. So that we can get a cleaner look.
<unk> installed these business model changes to be able to look at the underlying growth rates and.
We're hoping to do that at our upcoming analyst meeting just so that we can normalize all of these business model shifts and give everybody a true picture, but similar to the way I answered <unk> question whats driving our SaaS AOR growth right now organically to accelerate.
And 3 quarters in a row as workspace and whats really driving the totally RR and the low low teens as workspace and so I don't anticipate that mix change and materially over the balance of the year, but I do expect though is our accuracy of whether it's forecasting or execution to improve throughout the second quarter.
I mean from second half.
Got it thank you David.
So Carla [noise] excuse.
Excuse me on a on cash flow look we feel very good about the long term durability and growth and our cash flow and.
As you know there are a number of moving parts and hit any quarter and and this quarter, we had some payments around cloud hyperscale and infrastructure.
We had some changes and from payments around taxes, we had some impact from our accruals and our bonuses. So theres a bunch of moving parts, we're going to provide some more detail around how we're thinking about the transition as we go through our analyst day at the end of the third quarter and we'll provide you. Some additional insights about how to think about that and really think through some modeling.
And we'll take it Larry about the long term benefits and where we're going with the transition and the durability of that transition.
Okay terrific look forward to that.
Thank you and the next.
Question comes from Sanjay Singh with Morgan Stanley.
Thank you for taking the question I think a high level question David wondering.
1 of the things and there's still frankly, a little confused at all just given that we've seen a number of transitions cloud gaming systems and software and typically if you're going to Miss revenue because your cloud business is accelerating.
And your mix is higher than expected.
Good.
And so going back to the motivation for the sales restructuring is it because that's the revenue was underperforming or is it more because.
You see that.
And that the SaaS bookings mix should be higher with the SaaS and our mix should be even greater than it was if you could sort of comment.
And 1.
On the other pieces.
Yeah Sanjay it's it's a good question I think in general.
Definitely been under forecasting mix for some time I mean, we've seen this for a few quarters now where we're coming in higher and higher and SaaS and Youre right that is a good thing because that reduces volatility.
And long term and it creates a much higher uplift for economic value created the changes that we're talking about it. We just think that there is more of a volume.
Question, just and our overall bookings volume the complexity around that the accuracy of our forecasting and things that we believe can be further streamline.
And optimized and so you know that's the that's really the Genesis of a lot of these changes and we're talking about the other 1 is.
Think just recognizing where customers are going and how they are buying software and this general trend towards much more of a land and expand consumption based.
Line.
Different buying centers and and we want to make sure that we're aligned to where that's going in the future as well and and then lastly, it's when I reference quota carrying capacity, it's 1 of those areas, where it's behind where I'd like it to be and.
And these don't impact.
Short term much but it really gives you a much better flexibility and.
The opportunities long term and so reallocating resources and the way we're spending on go to market is and is an important 1 because that just gives us a much broader reach.
Understood David if I could just sneak 1 more in related to that topic as we think about the migration portion of the transition.
And growth and getting the customer base to the cloud the underlying unit economics, and we did talk about at the end of 2019 and.
And then in terms of uplift and it's sort of a lifetime value of that cloud transition is there anything about that transition or the unit economics and that transition has that changed at any and in any.
Particular way versus what we talked about at the end of 2019.
No I don't think so I think we're still seeing that that uplift that we had called out from a.
From a maintenance stream up to SaaS stream, what we are seeing though is as we're moving into more and more large deals strategic we're seeing more opportunities.
And just a transition like for like but to actually.
Address incremental use cases and expand the user base within those accounts and that's obviously the goal long term.
And then further beyond that it's how do we layer in some of these new innovations that we've brought to market over the course of the last few.
Quarters, everything from analytics and Internet access secure workspace access and all of these other new solutions, which are still pretty nascent.
But we will be increasingly important as we go into subsequent quarters and years.
I appreciate the thoughts David and looking forward to the analyst day.
Thank you.
Thank.
He is not and last question comes from correct Mortara and with Evercore ISI.
Thanks, very much David you mentioned execution and a couple of times, but on the other hand, you did have a good quarter workspaces and accelerating on a subscription basis. So can you just maybe give US. An example of what you're talking about and execution. It sounds like at the end of the deal there is just too much.
Variability around either the construction of the deal from a financial perspective, maybe the debt the kind of data you're getting into the channel isn't as accurate as you'd like I mean, it sounds like there's a number of things going on but could you just maybe unpack that a little bit more because on 1 hand, it seems like it's not a demand issue. It seems like its more I don't know if it's more structural or just like youre.
Not having as much confidence and what and the pipeline and frankly going into the end of the quarter in terms of how that's going to spit out financial results. So I just wanted to share or maybe piece apart the demand element versus things that are.
We refined the better because it sounds like it's more of a refinement of the processes versus the demand issue.
Kirk let me unpack, there's just a little bit I mean, when we talk about execution and that's obviously an inside out statements against our own expectations and where we believe.
And we're doing we're doing well and so the way that'll manifest itself within a couple of areas..1 of them is just accuracy and in terms of forecasting and that could be everything from the toe.
Total <unk> to the mix of license types, 2 products and others and other areas and that has been unfortunately much less accurate recently than we would like and so then you diagnose what is causing that.
The root causes are just mixed messaging and both our direct and our indirect channels where what.
Yeah, prioritized and are we prioritizing duration of re prioritizing products or different license types and those types of things are what cause.
Unnecessary complexity and unnecessary volatility and so we're using this really is an opportunity to address not only that but some of the other areas that I called out which are really focused.
What do we have a medium and long term and I think overall just stem to drive better alignment when I call out the channel I mean, I think 1 thing and in my mind is important and I think the channel right now today and when I say channel I mean more of our traditional vars and bad. So I think there are overly focused on fulfillment.
And there's been and inconsistent alignment.
And where they are operating and are supporting cast or they're actually driving net new demand and servicing customers and <unk>.
<unk> like that are really important because complexity and to slow down and it makes it harder to do business within Citrix and all of those things impact our overall accuracy and so that's what we're trying to drive towards.
And 1 of the reasons why we are pushing to a higher and higher mix of SaaS is that allows us to.
Effectively not let our own internal execution and impact the external financials, but it's also the way we generate much higher lifetime economic value for.
And for Citrix investors and customer interest.
If I could just sneak in 1 follow up you've mentioned, you're not you'd like to see more capacity from a quota bearing rep perspective.
Does that mean are you guys going to accelerate hiring and the back half of the year to try to get those people on board and and hopefully ramped up and ready to go for calendar 'twenty 2.
We are curve I mean, it's.
And and incremental expense I wouldn't look at it that way as much as a reallocation of some of the dollars that are that are that are being spent right now and areas and I think have yielded a lower result.
And that's great. Thanks, Thanks, Dave.
Thank you and our next question comes from Matt Hedberg with RBC capital markets.
It's not you guys are great. Thanks, David.
A lot of a lot of what you guys were talking about this morning is it sounds like it's it's a disappointment with the new business process and I guess I'm wondering.
If you could talk a bit more about the retention and the conversion of some of the customers that took advantage of some of these bespoke license lesser obviously youre, having a lot of success.
And Seth IRR, it's accelerating here, but overall I guess are you on plan.
Sort of the conversion of these bespoke license and are you happy with the retention thus far.
Yeah, Matt the bespoke licenses, if you were talking about some of that short term business continuity.
Item from.
From the early part of last year.
And that's largely run its course I mean, most of that was it was either focused on temporary capacity that was used and the early part of the pandemic or things that have moved into permanent capacity already and just expanded the overall base and and so if I step back and I look at the you mentioned retention.
<unk> and whatnot.
The renewal rates is 1 way to look at that and we haven't called those out specifically since and analyst meeting, but those have been trending positive for the last several quarters. So we're you know, we're probably right around as high as they've ever been and our history and that's SaaS as well as maintenance the overall conversion of.
The installed base as I said I think we've really got a.
Emotion, there that is resonating with customers the products and the product maturing the product resiliency is is where we need it to be and then the co sell with Microsoft and the other Hyperscale is doing really well and so that's why that pace is up 2 or 3 ex from.
A year ago, and I expect that installed base migration to continue you'll see that when we call out certain metrics like pay.
Paid subscribers on Citrix cloud that's another good metric I think that was up more than 50% year on year. So that's part of the transition those things are going really really well and.
And we're 1 of the just reminding everybody what we're calling out here is optimizing more and the kind of new business execution side.
So we can stop having as much volatility of total results as we've had over the last couple of quarters.
No that makes a lot of sense, it's good to hear the comment on renewal rates, but that's super encouraging and I guess.
And.
What other questions on specific changes from a go to market perspective, I guess.
And you think about these these dials that you can turn here how much of it is just better alignment from from marketing or is it is it is it sales comp plans need to change a bit more and just maybe just because you guys. Obviously have a long history.
History.
Well oiled a sales machine.
Or do you think are some of the most important aspects.
And again, I guess I'm thinking more on sort of the insight out looking piece as opposed to the channel and I was supposed to the channel.
And then Matt its really all of the above I think alignment is is an overused term, but it's super accurate.
There has been a and it's just driving simplicity and removing some of the some of the variability that creates complexity and just.
Just imagine if you're a sales individual right now and you're tasked with managing duration and different products and license model types and conversion of the installed base.
It's just a lot and so we need to remove some of those moving parts and make sure that there's a simpler go to market model I think that that helps a lot and then just make sure. Those teams have all of the support that they need operationally to execute as quickly as possible. So I mean, I think of it as refinement as much as anything else but.
All those.
Those things you called out whether it's incentives or programs or.
Individual sales strategies, those just need to be better aligned and they have been up to this point.
Got it thanks, a lot of sense. Thanks, David.
Thank you and then ask.
Question comes from Charlie <unk> with Bank of America.
Hi, guys.
My question is along the lines over the last few questions I wanted to talk about legacy.
What are the trends and legacy and the reason why im asking is because we see kind of renewed life with other companies and data centers, whether it's a 5 that had seen like 13% and 17% growth and legacy hardware.
Appliances, and the last 2 quarters and I'm just wondering what are the trends with the legacy part.
And what's the outlook for that.
Yeah, Kyle I think it's.
It's dependent upon what you mean by legacy necessarily but I mean, if you mean hardware for example, I mean, we have.
And I think as everybody knows its been been driving more and more and more of our app delivery and security products to kind of be hardware agnostic and less and less reliance on specialty.
The hardware and so youre seeing that coming out of subscriptions I think and the a DNS business, which is the proxy for for.
For networking.
The second quarter increased I think 66% year on year and subscription and software represented just under half of that total. So that's the direction that we've seen there I think and in general and take a big step back I mean.
And what's going on and the market as you know last year, the first 2 or 3 quarters was.
And really focused on somewhat transactional COVID-19 related projects and whatnot and over the last few quarters people are refocusing on longer term strategic more transformational type projects and 1 of the reasons why our installed base migration has picked up so much.
And we expect.
That to continue and so I think the type of project is becoming more and more strategic and not sure. If that's what's driving legacy necessarily but certainly where we're taking those products as cloud delivered platforms.
Implicit ease of deployment.
Underlying.
Implicitly and modernization of infrastructure and a lot of those things just drive them to the cloud remove moving parts and then help them just have a more complete view of their infrastructure right. So many companies had gone or are going through the same transition.
And generally we see great success.
Some great growth on that part of the business. The business is transitioning might be too small, but but if for some companies, but the growth rates are pretty high and the question is now looking backwards what went wrong in your preparation for the change that results in lower than expected growth rates, meaning what.
And usually you have done differently in order to address to better address the go to market or the positioning with customers I think the main reason why I'm asking this is that the question here is is it about the execution or is it about lack of demand, meaning something that these wrong fundamentally with demand and not just.
Execution, and that's where I think all the questions are coming about.
Yeah. That's a fair question I mean, if I step back and you you talk about our growth rates and could they have been faster and hindsight, yes. I think we had tried too hard to manage the business model transition between the pace of SaaS adoption and our short term.
Term financial metrics and these are goals that are obviously somewhat and Congress and going forward as we've talked about a lot. This morning, and and some of the changes we're making is is more lean into it.
Brace the SaaS move more rapidly and then just drive lower complexity internally, we clearly haven't always gotten this right and I think its cost.
Cause more volatility than it should have but if you take a big step back and you talk about growth rates and.
1 of the reasons why we keep focusing everyone on <unk> because it is the right proxy to look at how the business model transition is going and our SaaS <unk> growth has accelerated for the third quarter and a row.
Somewhere close to 9.
Million dollars growing at nearly 50% year on year, we have $3 billion and total AOR growing in the and the low teens and you know those are the leading indicators that we look at when we look at our where we expect the the overall business growth rate to eventually get to as we get through this transition so the real message.
<unk> today is where we are.
We're cleanly aligned on the execution issues that we have had and we're taking steps immediately to address those were focused on simplifying the overall business model and leaning into the transition so that it becomes faster to get through this and really emerge the other side and in a model that I think is easier.
To understand easier to predict and.
And just frankly easier to manage.
Thank you.
Thank you and then last question comes from Tyler Radke with Citi.
Yeah. Thanks for the question David Arlen.
Mechanically trying to.
And.
The mechanics of the revenues shortfall here in the quarter and and the outlook. Obviously, the SaaS number was was pretty strong.
But was this just new kind of.
And on Prem subscription business that came in at a lower duration.
<unk> come in and that was expected at a higher.
Duration, just just trying to understand the magnitude of it.
And just just given the revenue recognition dynamics. Thank you.
Yeah, the time and let me let me take that so yes, I think youre right that there was a higher mix of SaaS.
And I didn't mean to overall, but what we talk about today and when we talk about internally is just aggregate volume of new business and those are the things that we are focused on changing.
And I think it's really a result of all the areas that we've called out here.
The overall volume of getting deals closed.
SaaS anticipated.
And with the right mix is where the execution items stemmed from and that's why we have a line of sight into all of those things that can.
And Ken can fix this very quickly and that's what we're executing on but I think I would focus were focused on volume more so than mix we.
That we and the mix, but you know that.
That's not our primary our primary driver right now.
Right, So it's a volume but.
You know I guess it would be volume on.
Mathematically that the SaaS business kind of has more of a basel recognition and so.
Yes.
It would be volume on new business that wasn't necessarily SaaS to drive that difference.
Yeah, I mean, Tyler it's both I mean, when we say volume we mean that in general terms and then it's just exacerbated by by the mix when it comes to translation into recognize P&L and a given quarter.
Got it.
Great and then just 1 follow up.
As David and I know you've been at the company, while and seen it probably a fair number of <unk>.
And a sales re org and realignment and so like how long do you think this 1 last and I think in terms of the long term targets.
You talked about essentially.
Updating those and about 3 months from now do you feel like you'll have better visibility to do that at the time just given the scope of this transition. Thank you.
Sure I think the changes we are addressing are.
Immediate and some areas and immediate and driving.
Simplification and men and.
And accuracy and whatnot and I think.
As everybody sees we are contemplating some level of disruption and our and especially in Q3 from a guidance standpoint, we think that's just the prudent approach that we should be taking right now.
But a lot of this is more about not about.
<unk> sales rebuild share.
Simplifying the things that are causing too much complexity remove some moving parts and allow the teams to do what they do well a couple of areas are a little bit more medium and long term that I've called out increasing quota carrying capacity that doesn't impact to Q3, but that sets you up for.
<unk> 22, and beyond so that you just have greater flexibility in both growth and predictability. So I think it's a combination of both.
Short medium and long term.
But the most impactful frankly is just getting to that point, where we are.
And as much as possible, 100% SaaS.
<unk> and that will take some time because 1 of our 1 of our core Differentiators of course is being customer centric and being able to drive a hybrid model being able to allow them to maintain some level of on premise deployments.
<unk> deployment and we will continue to do that we're just doing it and.
And a different rate and pace.
20th of it that way. So I think we have contemplated the potential disruptions and in Q3, and Q4 and will emerge and the rest of this year with more accuracy and I think setup for a more rapid recovery as we go into the subsequent years.
Thank you.
Thank you and then.
A question and answer session and I'd like to return the call David Henshall for any closing comments.
Thanks, and thanks, everybody for joining US today, let me just leave you with a few closing thoughts consistent with the Q&A session and the transition of our installed base to the cloud has continued to gain momentum and accelerated again and the second.
Quarter, I think we are very rapidly and decisively addressing a lot of these execution related challenges, we experienced and the second quarter and we're taking immediate action, obviously and a fix them.
We intend to emerge as I've said, a couple of times with a simpler easier to understand structure that I think aligns objectives with more predictable.
<unk>.
Obviously, improving long term results and our pace through this transition really looks forward to speaking with everybody at our analyst meeting and again next quarter. Thank you very much.
Thank you the conference.
And so has now concluded thank you for attending today's presentation.
And at your lines.