Q2 2021 Asana Inc Earnings Call
In the third quarter in a row of acceleration.
We're now at a $358 million GAAP revenue run rate for.
For customers spending over $5000 or more on an annualized basis, our revenue grew 97% year over year.
We added over 7000, net new paying customers continuing the strong pace from last quarter, putting our total number of customers over 107000.
The number of customers spending over $50000 on an annualized basis grew 111% year over year, which reflected an acceleration in our largest enterprise customers.
Your customer spending $50000 or more on an annualized basis and increased over 145% and our overall dollar based net retention rate increased over 118%.
Based on our outlook for the rest of the year, we're raising full year guidance by 6% to a range of $357 million to $359 million.
Representing 57% to 58% growth for the year.
Q3 guidance represents 58% to 60% growth.
There are several drivers for the business.
First customers are adopting sort of everywhere.
We're seeing record top of the funnel volume demand around the globe and rapid expansion within our customer base.
Second we're seeing continued momentum in the enterprise.
We're closing larger deals and expanding seats across departments and geographies quickly and large organizations.
Our largest customers are recognizing the increasing value and scalability of our unique work graph data model.
This is reflected in our over $50000 customer cohort growth and the expansion in the base.
Investments in our product strategy and the Warcraft are paying off and this is just the beginning.
Third customer adoption and retention is as good or better than it has ever been.
Our focus is to build great customer experiences with human centered design principles and help customers experienced the best version of a sona right away, which drives our adoption and revenue.
As a result, our end guest scores the highest we've seen to date are adoption metrics are strong and our retention rates are at record levels.
As everyone is probably well aware, we're currently experiencing one of the biggest workplace transformation and history.
Even after a year of surprising changes the situation remains fluid.
It can be difficult to achieve organizational wide clarity under normal circumstances and for the past 18 months. This challenge has hit an entirely new level.
The reality of the moment is that increased workloads and tuning emails messages meetings and video calls or barriers to productivity.
According to our annual survey called the non mute work limited employee bandwidth has meant that over a quarter deadlines are missed.
A key driver is the lack of clarity caused by unclear processes.
Large enterprises in particular blaze and the inability to successfully pivot as needed can add up to a significant drain on resources revenue and profitability.
While the symptoms around these types of pains of evolve the root causes have been with us for a long time.
Through it all <unk> mission to helping entity thrive by enabling the world's teams to work together effortlessly has remained constant.
Our product roadmap continues to be strong and with our sort of Warcraft. We are uniquely equipped to help companies find the best path to reach their goals and the shifts as needed along the way.
We build products that give clarity to individuals teams and executives.
In the first half of the year, we announced the Sana partners, which featured over 200 technology partners the channel partner network and seven new languages.
Hassan is now available in 13 languages spoken by $6.0 billion people across the globe.
We also launched universal reporting, giving real time actionable insights and continued progress across the entire organization enabled by the <unk>.
In June we added a suite of new features designed to help individuals achieve greater focus in 12.
These include video messaging and partnership with Vimeo.
Supercharged my tasks.
On a desktop app and our clockwise smart calendar system integration.
I'm also excited about our deep integration with zoom.
You can create a new zoom meeting enjoying it right from insight on a task.
<unk> zoom teams can quickly create a sona task so detailed action items don't get lost.
Once the meeting is over to recording and transcript can be added to the sauna and action items assigned owners.
So everyone has a record of what was discussed and what needs to be action.
Sana presume leads to better meetings with clear agendas and actionable next steps.
On October 20th at our enterprise event called scale, we'll be unveiling a suite of new features to help large organizations orchestrate work across departments and geographies to achieve their goals.
And finally, we remain on track to launch our entirely new take on workflows at the end of our fiscal year.
Before I hand, it over to Chris I also want to highlight that last week <unk> was officially listed on long term stock exchange.
In conjunction with that we launched our first consolidated step towards ESG reporting by providing our first ESG factsheet on the Investor Relations website.
Enabling the world's teams to work together effortlessly as an expansive mission and requires commitment to our long term strategies for.
We're continuing to build structures to execute on these long term strategies and align with partners such as the <unk> with common values.
With our ESG reporting we endeavor to provide the same clarity and transparency that our product offers.
We are committed to expanding our reporting in the coming year.
Find more information about this on the Investor Relations website.
Lastly, I am proud to highlight that we've been recognized by fortune and great places to work as one of the best small and medium workplaces for 2021, marking the fifth year for <unk> in the list of top 10 rankings.
And now I'll hand, it off to Chris.
Thanks Dustin.
We accelerated revenue growth again to 72% year on year in Q2.
Some highlights from the quarter's business performance include the following.
First we posted strong customer growth again this quarter, adding another 7000 net new customers and we now have over 107000 paying customers.
We continue to see record top of funnel growth. We also completed the additional language rollout for the year and now have 13 languages in total.
Second we continue to see strong expansion within our existing customer base, particularly with our larger customers. The net retention rate for customers spending $50000 or more with us annually increased over 145% and third we're seeing our investments paying off in enterprise driving continued enterprise momentum.
The number of customer spending $50000 or more annually grew 111% to 598 in the quarter our.
Our value proposition is clearly resonating with our customers.
In fact, IDC recently released an independent study of the business value of <unk> and the research demonstrates the substantial impact of dishonour has on an organization's ability to focus on higher value work and customer delivery.
Participants in the study reported higher employee productivity lower effectiveness and more on time work and ultimately higher customer satisfaction.
Some of the highlights from our recent study by IDC include.
224%, one year return on investment, 33% less time spent on email and 42% faster execution of business processes.
The IDC study validates what some of our existing larger customers already now.
Last quarter, we shared our largest customer deployment expanded to 50000 feet.
This quarter, we saw another fortune 50 company expand their deployment to more than 25000 seats.
This further illustrates the scalability that the Warcraft enabled and shows our value proposition is resonating with some of the biggest enterprises in the world.
We had some spectacular customer wins this quarter, including mass media and entertainment conglomerate Viacom CBS.
Additional customer highlights from the quarter include the following.
So jitsu the eighth largest service provider in the world expanded their use of <unk> in Q2 founded.
<unk> founded 1935, they are undergoing a companywide digital transformation Hassan is being used across the transformation office designers marketing business planning and business systems project teams to gain more visibility and clarity into their cross functional working processes. So they can execute and make business decisions faster just eat.
Take away, a leading global online food delivery marketplace.
<unk> expanded the use of the <unk> enterprise solution in Q2 with a multiyear agreement that enabled all employees to manage the work in the us on our platform.
<unk> is being leveraged heavily across operations building out their logistics network global marketing campaigns.
Client services and streamlining their integration of recent acquisitions.
Adjusted chose <unk>, because they needed a platform that can help them drive their strategic objectives forward expanding supply chain rapidly deploying marketing brand campaigns and elevating the customer experience.
Cohesively as a software company that delivers next generation data management to thousands of businesses across the globe.
Just as <unk> is focused on simplifying data management the company turned to <unk> to simplify their work streams and processes cohesively determined Astana was the best platform to help them increase transparency into work happening across the organization to drive operational efficiencies and help them scale.
In Q2, they chose to standardize on <unk> enterprise solution is now heavily used across their engineering marketing.
Operations customer success and leadership teams.
These are just a few of our Q2 customer wins, but as you can see organizations of all sizes across industries and regions are adopting our work management platform to increase productivity and coordinate their work and provide real time clarity and alignment across their teams and organizations.
As we look forward to the second half of the air and beyond we're continuing to focus our business on three major growth drivers.
Acquiring new customers expanding.
Expanding our existing customer base and maintaining our enterprise momentum.
As we saw for the results of the playbook is working for us.
Going forward, it's all about adoption and scale. We're just at the beginning of this journey.
And with that I'll turn it over to Tim to go through our financial results.
Thank you, Chris and thank you everyone for joining US today, we're very excited to report another great quarter with strong results across the board.
Q2 revenue growth accelerated into the quarter to $94.0 million up 72% year over year.
We now have over 107000 paying customers at the end of Q2.
This represents a 31% year over year increase.
We have 12806 customers spending 5000 or more on an annualized basis up 61% year over year.
And growth in our larger customers is even stronger we now have 598 customers spending 50000 or more on an annualized basis, which accelerated again this quarter to 111% year over year.
As a reminder, we define customer spending 5000 or more than 50000 or more based on annualized GAAP revenues in a given quarter revenue from customers spending 5000, Omar represented 66% of our revenues in Q2 compared to <unk>, 58% in the year ago quarter.
This segment of our business grew 97% year over year.
Our overall dollar based net retention rate increased to over 118%.
As a reminder, our dollar based net retention rate is a trailing four quarter average calculation.
Among customer spending 5000 or more our dollar based net retention rate increased to over 125%.
And among customer spending 50000 or more our dollar based net retention rate increased to over 145%.
Before turning to expense items and profitability I would like to point out that I will be discussing non-GAAP results and the balance of my remarks.
Gross margins came in at 89% up from 87% in the year ago quarter.
Research and development was $42.0 million or 41% of revenue.
We continue to invest heavily to fuel innovation at a high velocity.
Sales and marketing was $61.0 million or 65% of revenue.
Reflecting the investment in both our self serve and direct sales motion.
G&A was $27.0 million or 26% of revenue.
Operating loss was $44.0 million and our operating loss margin was 43%.
Net loss was $47.0 million and a loss per share was 23.
I will note that we converted our outstanding convertible debt during the quarter.
This resulted in an increase in shares outstanding of $17 million.
Moving onto the balance sheet and cash flow.
Cash and marketable securities, including long term investments at the end of Q2 were approximately $382 million. Our RP O is $172.0 million up 100% from prior year our.
Our free cash flow is defined as net cash from operating activities less cash used in property and equipment and capitalized software costs.
Excluding nonrecurring items, such as our direct listing fees and expenses and the build out of our San Francisco office.
In Q2 free cash flow was negative $12.0 million.
We are very proud of our achievements and the business momentum.
Now moving to our Q3 and fiscal year 'twenty two outlook for.
For fiscal year 'twenty, two we expect revenues of $93 million to $94 million representing growth rates of 58% to 60% year over year.
We expect non-GAAP loss from operations of 49 million to $47 million and we expect a loss per share of <unk> 27 to 26.
Assuming basic and dilutive weighted average shares outstanding of approximately $184 million.
Looking out to the full fiscal year 'twenty, two we are raising our previous guidance and now expect revenue to be in the range of 357 million to $359 million, representing a growth rate of 57% to 58% year over year.
Given the large opportunity ahead, we will continue to invest for growth to maintain our leadership position.
We expect full year non-GAAP operating margins to improve from fiscal year 'twenty one.
Longer term, we believe that we can execute on our growth strategy and that our best in class gross margins and strong unit economics, we will provide the leverage and flexibility to invest into the enormous market opportunity.
We believe this investment will provide durable and sustainable growth as we pursue this large market opportunity with the best in class product.
Before turning it over to the operator for questions I will turn it back to Dusty for some additional comments.
Thanks, Tim as you May have seen we announced that and remind me joined US as of today is our new COO and head of business I.
I am thrilled to have an on the team her background as a customer centric operations executive will be indispensable as we continue building our enterprise offerings and worked to help all of our customers succeed in achieving their missions.
And has been serving on the Hassan aboard for the last two years. So she is co created the strategy that youll now be helping to lead that.
I couldnt be happier to have that kind of continuity between two great executives.
After helping us achieve six years of very rapid growth, including two independent cycles of accelerating growth rate and tremendous success throughout the organization, Chris will be enjoying a well earned retirement.
Chris. Thank you so much for all of your contributions to get us onto the stage.
Thanks Dustin.
It has been the privilege of my career to be a member of the <unk> team since 2015, and I'm incredibly proud of the company's success to date and the significant growth opportunities ahead for the company.
The two things I'm, most proud of we built over the past six years, our world class team.
Want to thank everyone had to sign up for their support over the last six years and our amazing customer base.
We're enabling to spend more time on their missions.
I've worked closely with and during her time on the board and as a very strategic thinker and has a deep understanding of <unk> business.
I couldnt be more excited to pass the baton to end and of course I'll be here to ensure a smooth transition until the end of the fiscal year.
Thanks, So much Christian Duston, one Chris and Thats been approached me about the idea of joining as part of the executive team is honored and proud having been a customer myself and our board member and had the chance to see what an incredible team an opportunity we have.
His leadership has helped us scale, a fast growing business and a remarkable team and my goal is to continue the momentum.
<unk> is clearly working and I'm very excited for this opportunity.
It is addressing one of the most pervasive across the organization it's been the comp issue in all of my comments.
Yes.
Over the last EMEA and the market is enormous.
At the beginning of the adoption curve and already there is tremendous momentum, especially Amazon Azure.
I'm going to be hosting our enterprise event in October and I look forward to seeing all of EMEA.
Wonderful, thanks, everyone and with that operator, we'll turn it over to questions.
To ask a question simply press star one on your telephone keypad again that is star one to ask a question. Our first question comes from Brent <unk> with Piper Sandler. Please go ahead.
Good afternoon, and thanks for taking the question here Dustin maybe we'll start with you historically <unk> has been deployed as more of a departmental solution I think what I find interesting here is the pace of enterprise expansions youre seeing kind of broader deployments at just Eat's cohesively Fujitsu you talked about the 25.
1000 seat deployment at a fortune 50.
My question here, what's resonating most with enterprise customers that are looking here to go wall to wall. Why now is it the hybrid work reality or are there other reasons why youre starting to see much broader adoption here. Thanks.
Yes.
Well really I think that the problems that we're solving and creating clarity and alignment for customers are really part of a much longer term trends.
The need for clarity really preexist.
Covid and the pandemic and work from home by many years, but certainly those things have accentuated the pain and brought more awareness to the problem space that we're solving but I think a lot of what is generating the momentum in the enterprise and seeing in our product strategy.
Off and be able to deliver on creating a great workflows.
These organizations and then Theyre seeing the success at our existing customer deployments. They are seeing that success within.
Smaller deployments they might have in their own company and wanting to replicate that and expand that really quickly. So anything you want add Chris Yes, maybe I'll just add a couple more customer examples just to sort of give you the customer perspective, so I talked about just eat and <unk> in my prepared remarks, <unk> data to simplify and streamline their processes and projects companywide.
So they can really get clarity and transparency of scale. So they expanded their use of <unk> enterprise is the standard tool to do that another one I didn't mention in the remarks is gorilla gorilla is.
Jeremy grocery delivery company, that's expanding really quickly they are the fastest growing unicorn in Europe and to support their rapid growth and scaling needs.
We did a three year MLA for us on a wall to wall with them. This prior quarter, two or this past quarter to coordinate all the projects and processes and work across the business.
And I really interesting use case, that's pretty typical and I think our sweet spot for us.
He is creating standard processes for rapidly launching their services into new cities and countries to move faster and sustain the rapid growth and I think any sort of cross functional use case like launches of any kind is a killer use case that we're seeing drive a lot of the broad adoption.
I'll, certainly happening faster than I would've expected great.
Great to see thank you.
Your next question is from Steve Enders with.
With Keybanc.
Hi, great. Thanks for thanks for taking the question here I just wanted to touch on the expanding that retention that you saw in the quarter here just wanted to get a better sense for what's what's driving that.
Is there any kind of change in the mix between.
New seeds and plant up sells and I guess kind of more broadly is something about the demand environment, that's bringing more people to.
To expand quicker or is there something about your reps and your customer success teams that are beginning to drive synthetics.
From a metric standpoint, it's definitely twofold I would say, we're seeing increased expansion on a cohort basis, and we're seeing improved adoption on a cohort basis. So both of those have really.
Helped in terms of the net expansion rate improving over the last.
Kind of over this past quarter. So we're really encouraged by the results and all the trends are.
Going in the right direction.
Yes, I might just add this is Chris I might just add.
On top of what Tim said like.
The business imperative right now is <unk>.
Growing so organizations are now preparing for the new normal and they want capabilities to coordinate work no matter, where they are employees or so that the.
The need for this is rising and we made all of the support that adoption over the last year and we're just starting to see it.
Some of the fruits of that and I think you also mentioned in terms of sort of ACB going up, but we've really seen strong seat growth as well and it's really related to that bottoms up adoption by some of the new products that <unk> introduced.
Quarter.
Kristina ratio reporting.
And some of the new video messaging.
Alrighty I guess, how are you kind of seeing the adoption curve so far.
Within the customer.
Our base to.
To date.
Yes, we've seen a lot of excitement, especially around universal reporting. So we're actually just diving into some stats in the past few weeks and our largest customers and each of them, we see hundreds of dashboards being being created and shared.
And we're also hearing a lot of feedback from our sales team that customers are excited when they're on prospect calls that's coming up in a large number of the back of the sales conversations.
Okay, great. Thanks for taking my questions.
Your next question is from Brent Thill with Jefferies.
Good afternoon, Dustin just back to the large enterprise deployments I think.
Thinking about large scale building out networks I'm curious.
When you think about the scale of some of these larger deployments that you have today can you.
Just provide a little more color about.
Where you are starting to reach in terms of seat deployments and complexity and maybe just help us better understand.
How that's how that's building out over the next one to two years.
Yes, so it's really a variety of things we're really excited about the 25000 seat deployment and that's on top of what we announced last quarter with a 50000 seat deployment both of those are fortune 50 companies.
Also have a number of examples of other customers that are in the many thousands.
And we're starting to see and when they are at that scale, we do tend to see it as an entire division or maybe parts of multiple multiple divisions and then additionally, with customers that are more in the thousands of seats range. We're starting to see more sort of wall to wall deployments are really seeing customers adopt a sona for.
Work management across all of their employees, so really excited about that for <unk>.
And Thats when you really start to see the sort of the magic of the unique Warcraft out a model, where they're able to engage in cross functional workflows and leveraged the flexibility to have everyone aligned around the shared source of truth.
I think that covered the first part of your question was there was there a second part.
Maybe for Tim just coming off the highest growth in five quarters I know, you've always said to us don't look at billings under 90% Billings and then coming into a 59% midpoint guidance for next quarter. I think many investors are just asking is there something that we should think about just lapping these big these big comps.
Pushing or is there something specific to next quarter that.
Just curious how you would frame trying to guide relative to what you've been putting up.
Yes, I think I think the we're coming off I would say the first half were a bit of a more of an easy comp for us.
And essentially we still have about a third of our customer or revenue base is still on monthly on a monthly SKU.
The billing.
Got necessarily the best indicator of our growth, but we're really encouraged by both legs.
Calculated billings in the <unk> growing so substantial having really.
The momentum that we're seeing on the enterprise side that contracts and deals are getting larger some customers or even do a multiyear deals with us. So I think those are all really encouraging side around the.
The enterprise side of the business.
Great. Thank you.
Your next question is from Rishi Galeria with RBC capital markets.
Hey, thanks.
<unk> on for Rishi. Thanks for taking the question nice to see continued leverage on the sales and marketing line, but think about the kind of top line outperformance you had in the quarter and accelerating revenue can you talk about.
Are you revising your expectations on the quota carrying sales capacity hires and then maybe more broadly just talk about the competitive market for talent acquisition and sales capacity.
Yes.
Say, we're really encouraged by the performance of the sales team and the sales.
All the sales reps that we've hired and thats been with us.
We're not making any changes right now, but I think what we're seeing is kind of the demand in the market continues to be strong the conversations are becoming more strategic and.
And thats the types of deals are being a much more complex and thoughtful over a longer period of time. So I think those are just like Paul really encouraging signs and then Chris maybe some more color on what you just asked.
Sales capacity hiring so we are aggressively hiring around the world on the sales and go to market teams to ensure global coverage for demand.
One bit of news Thats, New is we're opening our new Chicago office. This year to serve the untapped demand in the United States and then the other thing I would add is.
Beyond how big the market opportunity is and how fast we're growing and our differentiation is helping us to attract talent that we're seeing is one of the best places to work in tech and we see that as a real real strength and opportunity to help us keep growing quickly.
Got you Thats helpful.
Then one more for us on on guidance it looks like <unk> guidance implied kind of implies a bit of a deceleration. There can you just talk about your assumptions on the full year guide.
I think I think we're really encouraged by the momentum that we've seen in the business kind of the both on the top of the funnel.
Customer growth and see grow as well as ACD asps grow.
What I would say is we've already increased guidance $20 million.
And really encouraged by the momentum we're seeing in the business.
So thanks.
Thanks, everyone and congrats on the quarter.
Thanks.
Your next question is from Pat <unk> with JMP.
Great. Thank you.
Let me add my congratulations the momentum is reality.
Remarkable.
So and congratulations on the new role.
Im guessing that you took the opportunity to talk to a bunch of senior executives about the space and about that before taking the job.
And I would love to know what you heard.
And then maybe related to that what's your what's your sort of number one priority.
Right now.
Thanks, so much Pat Im so excited to be here and Youre right. The conversations I've had over especially in the last year.
Great. Thank you.
Importantly, and clarity and really knowing who's getting whacked by Wang in an environment, such rapid change and uncertainty has.
Sales at the top of their list of things that they have to fall and so having spent the last two years on <unk> and seeing the strength of the team and the strategy My priority. Israeli are just to continue to invest in the momentum that we have and the income.
Our team.
Okay, and how do you do that.
And as.
As Chris had mentioned we are continuing to make sure that we're bringing the best people and in ramping our sales and marketing teams in every geography, we've been really impressed with the progress with our TM.
So thats a top priority and then continuing to make sure our large deployments that we've been talking about.
Really successful and feeling that adoption I think that those are our key priorities for all of that.
Awesome, alright, well congratulations again.
Thank you.
Your next question is from Alex Zukin with Wolfe Research.
Hey, guys congrats on another great quarter.
I guess maybe for Andy.
The questions maybe in two parts you are clearly the net adds are fairly exceptional in the first half of the strongest in your history, but at the same time, you're also seeing great enterprise traction from your existing customers. So maybe first how should we think about the pace of net adds in the second half and beyond.
And also if you look at the bookings mix how are we thinking about or how are you thinking about the split of bookings from new versus existing customers.
And how does that kind of trend forward as you get some of these much larger.
Opportunities within your base.
Okay.
Yeah, Hey, Alex This is Tim just from a kind of a net ask perspective, obviously I think there's always going to be some quarterly fluctuations.
I may have mentioned it before on this call that generally in Q3.
40% of our business is outside of the U S and in August Europe is a little bit slower. So you can kind of expect a little bit of a slower month in terms of Europe from a customer perspective, but over the long term I think if you kind of look at our net adds on a customer basis, we've been we've been growing our customer base anywhere between 20% to 30% year over.
The year. So I think that's like a trend that we're focused on and want to continue to drive.
And then from a bookings perspective, what I would say is from new bookings generally we see anywhere between 40% to 45% and then expansion from existing customer is anywhere from 55% to 60% and thats.
That trend I would say we are seeing more.
The trend shifting towards more expansion as we get more larger deals.
It's really important for us to continue to add new customers and teams of all sizes, because we know once they adopt our net expansion rate as have you seen that led to over 118% as we get more teams adopt it in dose the dose rates tend to move up asset at their spend increases.
Perfect.
And your next question is from Andrew <unk> with Beringer.
Yes. Thanks for taking my question first I guess on international I know you addressed the mix outside the U S. I was just wondering.
How is that expansion plan trending.
You've launched that channel program earlier this year. So if you could elaborate on that and maybe provide us an update on how thats going.
Okay, Hey, this is Chris Thanks for your question so on the on the regional side.
We see strong growth across the global markets that we focus on the split hasn't really changed too much.
<unk> is now available in 13 languages. So they're all they're all live now and clearly that will.
That will drive growth in a lot of those new markets I think the combined net new languages bring us.
Tam collect 4 billion information workers worldwide, and the big wins and expansions, we talked about across the regions, where really where.
The big wins, this quarter really spread across the regions and on the channel side.
There's sort of two focused investment areas. There. One is continued focus on our technology and integration partners.
And there.
A couple of new things to note.
We mentioned over the quarter that we announced this integration with Vimeo.
And I'm really excited about the deep integration were seeing theyre, bringing structure and accountability to meetings and zoom is also actually a fast growing customer and growing partner and then the channel side in the regions, where the program continues to grow quickly. We're seeing particular traction from our enterprise focused channel partners.
The channel network is across 75 countries, it's a growing and important part of our business is not yet material part of the business, but it's definitely bearing fruit and as an example, we closed one of our largest channel deals in Q2 in India.
That's helpful and then maybe on I've seen that a non current deferred inching up.
For the last few quarters. So just wondering should we be seeing more multiyear agreements coming through as you expand up market so to speak.
Yes, so elas and multi year contracts or more common as we are engaging with with larger enterprises more and more we don't we don't do all you can eat forever Elas, we work with customers to structure pricing that scales with the usage. So typically tiered by seat numbers.
We mentioned some of them I mentioned some of the customer examples of Elas.
And earnings and give you a little more color on one or two more.
That large global 50 company that Dustin talked about.
That was on top of rapid adoption and that's a two year global Elas.
And that's really driven by employee demand for a better tool to coordinate work its being used for hundreds of use cases, including roadmap planning content production marketing campaigns, new hire recruiting all those sorts of things and.
And a number of the other deals we talked about where two or three year elas as well. So yes that is becoming more common as we move up market.
Thank you.
Our next question is from Keith Weiss with Morgan Stanley.
Excellent. Thank you guys for taking my question and congratulations on.
Really nice quarter and it really outstanding first half of this fiscal year I wanted to dig in a little bit more on that customer count number.
I'm looking at that 12.806 in the spreadsheet that Catherine sent over.
<unk> hundred 34 from last quarter.
161% increase from what you guys added in the year ago period, and notes and Youre talking about sort of easier comps.
Notwithstanding a number right there.
Two questions on that one does that come solely from just expanded investment in the traditional kind of go to market channels or is there any change in go to market anything that really opened up for you guys to allow for for that customer count to increase and then two we've seen good results across a lot of your competitors as well.
It seems like the market is really hot right now overall for these types of solutions.
And some of this a release of pent up demand that came from last year, and we should be a little bit.
Gary about extending this type of stray too far into the future or do you think these trends are going to really prove durable over time.
In terms of how quickly.
Demand is coming to you guys. It within this marketplace. Thank you very much yeah sure that was a lot I want to make sure I. What was the first question to make sure I heard that correctly. So first question was more about distribution.
Significant changes in distribution.
That customer count to grow so much.
Yes, so I mean, our top of funnel strategy is is working really well as we mentioned we have record top of funnel and demand it's a blended.
Paid organic product led growth approach the thing that sort of net new or incremental to your question note recently as those new languages. So those new languages are opening and expanding us on up in new markets and we're definitely seeing.
Growth growth in terms of new customer logos in those in those new markets, whether it's new languages are.
We are driving it.
Yes, I would just add that.
Just to be straightforward I don't really see it as a pent up demand thing I think it's more about the category maturing in our product offering maturing so the value proposition is really resonating.
And this is really just the beginning.
So I think theres going to be a lot more big deals in our future and a lot more expansion I would also note just the way you frame that first question not all of the new customers in that greater than five K segment, our new land deals. Some of them are ones that started a smaller than that and moved across the line.
As part of our land and expand model and.
And so I think we're really just going to be building on that momentum and I just want to take a moment to reiterate.
The event that we are hosting on October 20th.
Then called scale.
That is all about.
The needs of these larger customers in the enterprise segment. So we're going to unveil a suite of new features designed to help large enterprises align their teams automate that cross teamwork and adapt more flexibly to that's really fluid business environment and mentioned earlier. She is going to be hosting that also have a little segment and our product team is.
Be demoing, new functionality, that's going to help executives.
With team alignment workflow and work insights.
As well as talk about some of the scale security and platform innovations that we're going to have a global CIO as Nike teams. So that's all about how we continue that growth into the future.
Okay. Thank you so much guys.
Our next question is from Mark Murphy with J P. Morgan.
Hi, good afternoon.
Afternoon. This is Matt coss on behalf of Mark Murphy.
Thanks for taking our questions.
In all of your sales and marketing activities.
Which areas do you think youre seeing the best ROI and conversion and are there any areas among sales marketing spending that lend themselves.
Or that might lend themselves to greater efficiency in the near term.
Hey, Matt This is Tim.
I would say we are top of the funnel has maintained has continued to be really strong and the thing that we looked at is obviously like the payback of our sales and marketing even if even when looking back at the last two quarters. Our payback has been in the mid teens and I would say we were testing different channels. All the time there are channels that are more efficient.
And then we put more money in to acquire more customers and there are channels that we test and sometimes they are less efficient and over time, we dialed back those channels, but on a blended basis. The unit economics continue to be strong and our payback has been in the mid teens over the last couple of quarters. So we feel really confident about the investments that we're making.
On the sales and marketing I would also just add that that's a very sort of acquisition focused answer but the other side of this is really about sales and expansion and our larger customers have expand faster they retain better and if that leads to those much higher net dollar retention rates. So.
145% for our customer spending 50000 or more.
And so when we can support those customers and make them more successful bachus directly translates to better efficiency on our sales and marketing efforts.
Okay. Thank you very much.
For our last question, we have Rob Oliver with Baird.
Great. Good afternoon. Thank you guys for taking my question.
Just one for you and then Chris I had a follow up for you as well so.
And I'm just curious as you guys really start to break into these much much larger enterprise seat opportunities in some cases.
A whole companies.
You guys laid out this framework around your product early on in.
Pyramid of clarity.
One of those things in your prepared remarks, you talked about individuals teams and executives. So just curious as to.
Assuming youre involved with some of these larger deals.
Are you starting to see that peer to peer or a bit of clarity for you guys extend up to the executive suite and some of these deployments where.
That's.
Even at the C level.
Theyre benefiting from Hassan I kind of driving some of that operational clarity that we know is happening at the knowledge worker level and then I had one follow up.
Yes, absolutely.
Particularly when were used wall to wall, that's always going to include the executives themselves, but even even when that's not true.
And yes, the clarity at the top of impairment from product perspective, I really think about that in terms of the universe of reporting functionality portfolios and goals and all of those have been resonating very well with senior senior leaders in these large customers. So I think that's a big part of our success.
Okay, great. Thanks, and then.
Chris just one for you and congrats on a well deserved retirement, but before I just had a question on.
The partner network, you talked about it a little bit in response to a previous question.
And it sounds like it is bearing fruit internationally, you mentioned the large deal in India.
Assuming that you guys are being a lot more countries now that.
Channel partners will matter there internationally can you just talk about how you guys are conceiving with channel partners here in North America as well.
Whether they are currently involved in some of these larger deployments and how you see that evolving over the next couple of years or maybe Thats also brand. Thank you guys very much.
Yes sure no great question and thank you for the congratulations so yeah. Our channel partner is very strategic as we talked about recently I would say that typically the focus is a little bit different in North America than international in international a lot of it is about coverage in new markets and reach where we don't have reps in that kind of thing in the U S.
We're seeing a lot more traction sometimes it's around new segments, where we don't have coverage that complement the team, but it's also about.
Services and <unk>.
Providing.
Total sort of mind share with the customer with the folks they want to work with on the on the deployment and services side and that's what's driving a lot of North American deal. So I think in the future we could probably add color on the involvement of partners. Some of these deals I would expect we'll be able to share that with you in the future.
Thanks again.
Thank you and with that I will turn now turn the call back over to Catherine <unk>.
Great. Thanks, very much operator, and thank you everyone for joining US today, please feel free to reach out and call. If you have any follow up questions as usual and we are looking forward to seeing you on the road or resumed this quarter. Thanks again.
This does conclude today's conference call. Thank you for your participation you may now disconnect.
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