Q3 2022 E2open Parent Holdings Inc Earnings Call
Our applicable law.
And with that we'll begin by turning the call over to our CEO Michael <unk>.
Thank you Adam and thank you all for taking time to join us for our third quarter fiscal 'twenty two earnings call.
As the world and major companies continue to grapple with supply chain challenges.
<unk> clients are increasingly recognizing the benefits of our supply chain operating platform, which saw the primary supply chain problem the world's enterprises face.
Which is the ability to operate their business as one end to end process on one collective network.
We have much to be proud of this quarter.
Net to our impressive third quarter results shortly.
I'm extremely proud that has.
Is emerging as the leader in end to end supply chain solutions.
And then we add so much value to our clients in these challenging times.
Last quarter, a record number of the S&P 500, 342 to be exact mentioned supply chain during their earnings calls I suspect a record maybe broken again this quarter.
But early indications are that 2021 holiday sales outperform 2020 by a healthy margin the cracks and many company supply chains have been exposed.
No secret that supply outages or backlogs labor shortages and escalating costs are causing companies to reevaluate and identify this.
And their supply demand and logistics networks.
With a generally find is that the system architecture was simply not bill for how they operate today.
The underlying technology manage their supply chain is mostly stat and certainly not agile.
It's mostly on premise using customized legacy solutions, they're very siloed and disconnected internally.
In a disconnected from our supplier partner base, they rely on to make and sell products.
Most importantly, they lack complete timely and accurate data they need to efficiently run their business.
There is a tremendous opportunity to increase efficiencies on a global scale.
Improving efficiency.
These manifest itself to lower cost of goods.
And lowering the cost of daily living for everyone is our primary mission.
We're having great new logo momentum.
<unk> sales success in both the number of transactions and size of transactions.
In part because the C suite of these companies our clients recognize the bubble and need to solve the supply chain problems holistically.
While I'm not pleased that many supply chains are under stress I am happy that either open operates a global supply chain operating platform that has the most functionality and has the largest fully integrated network.
This is exactly how large enterprises solve their priority a complex supply chain problems.
We operate at scale as the end to end platform that connects to our clients that are supply demand and logistics networks.
Our network suppliers the data our clients need to operate more efficiently improve their gross margins, which in the long run produces lower prices for everyone.
When we spoke to investors over the last year. We described it open as a unique company.
That is extremely durable and resilient in revenue.
With multiple resilient growth levers.
We have built this business to an address an extremely large tam.
To focus on the largest and best clients in the world.
And to create a differentiated platform built upon extraordinary large and unique network.
Our focus is on organic subscription growth because it is an extremely powerful lever.
<unk> orders, given our World class unit economics, and a very long term nature of our subscription contracts.
When we win new subscriptions safer.
They produce well over our average gross margins on a contribution margin basis.
We intend to keep them for a very long time.
Years for decades.
We are highly cash generative company with the compounding algorithm.
Humans at scale.
With highly durable revenue.
World Class unit economics.
World Class translation to free cash flow.
We're growing at double digits.
And that growth rate.
Is increasing as we scale the business part of it.
In addition.
We have significant upside from a proven ability to acquire and integrate additional solutions to grow our platform.
We have such high conviction in this profile.
This is exactly what we have consistently done over the past seven years.
Seven years ago.
You know one of them was seven times smaller <unk>.
Losing money.
And now Brian .
In each of the past seven years, our company became a larger.
Grew faster and became more profitable.
Jeremy will provide greater detail of our financial and operational gearing that enables us performance and why we believe this profile will continue well into the future.
In the third quarter, our organic subscription revenue growth was over 11%.
We are now 67% larger infrastructure revenue than we were last Q3.
While our subscription growth rate was 4%.
Our organic growth rate is accelerating and we are much larger than we were one year ago.
This is not unexpected.
This is the plan.
And we expect to execute this very plan for the foreseeable future.
Our confidence that fiscal 2023.
See an increased growth rate over fiscal 2022 is borne by the highly visible nature of our subscription revenue.
Which accounts for nearly 80% of our total revenue.
The pipeline of qualified opportunities continues to grow.
Even though we're realizing record bookings.
Our close rates continue to improve.
Allow me to provide some detail regarding our Q3 performance.
I'm continually impressed by our team.
Amidst the challenges of integrating our largest acquisition debate.
We've had an exceptional third quarter.
Outperforming our plan and other key internal metrics.
In Q3, we could really integrated our entire go to market organization with the Blue Jay team during the first months.
All of our integration.
We now sell contract and deliver our solutions as one integrated company.
We added over 1000, we've seen numbers it would be difficult to overstate the significance and speed of this integration.
We're pleased to report that we ended the third quarter with strong results and position us well for the balance of fiscal 2022, and very well for our fiscal 2023.
In the third quarter, we generated 147 million and total non-GAAP revenue.
In addition, we generated strong adjusted EBITDA results for the quarter of nearly $46 million.
The organic growth rate of our subscription revenue for Q3 was 11, 2%.
And the overall organic growth rate for the quarter was 13, 8%.
Our focus is on subscription revenue growth.
When we announced the bluejay transaction, we guided to a company.
Combined.
Brew at a rate of 10%.
The full year of eat opened in Q3, and Q4 are blue Jay on an apples to apples basis for the same measurement period.
Given our performance in Q3, we are increasing our full year total revenue guidance and expect our full year organic revenue growth to now exceed 10%.
Jarrod will provide more details on this later in the call.
Yeah.
We also articulated four growth levers executed that we expect to materialize and expand our growth rate in fiscal 2023.
We are performing ahead of schedule and the translation of that execution is evidenced by our better than expected revenue performance.
I will provide some more details for each of these four growth areas.
New logo performance.
We continue to ramp the sales and marketing teams assigned to new logo acquisition in both the U S and in Europe . We are pleased with the activity of this team in fact, Q1 Q2 and again in Q3, we experienced an increase as a percentage of total bookings contributed by new logo wins.
In FY 'twenty, one roughly 15% of new bookings were from new logos.
And this percentage has increased each quarter and is now roughly 30%.
New logos are important not only for our current year performance, but because so many times they start small and they scale large and we have the ability to expand those relationships over a subsequent three to five years.
Create new strategic partnerships.
Our partnership strategy is continuing in this quarter, we went live with our first two joint clients for the Maersk Neo Nab solution.
We're quickly scaling of this operation and expect meaningful contribution from this program next year.
And just this week we added another partnership this one with a company called pay cargo, where we expanded our capability in a containerized ocean freight booking platform to now include the actual payment of the transportation service and related fees.
This expands our presence in the payments part of our logistics market.
And we expect this revenue stream to increase in size over the next three years.
Data and analytics.
Our partnership with Dnb continues to develop with US which is our strategy to monetize the over 300000 connected parties in our network.
This quarter, we made significant progress in go to market enablement and new product innovation.
We enabled the dnb sales team with a technical functional and go to market training to accelerate the monetization of our network and we do this through their vast customer base.
While still in early days, we believe this relationship has high potential to bring tremendous value to our clients as well as increase our organic subscription growth rate.
Optimized pricing and packaging.
Earlier in the year, we described our work to develop and launch new pricing models to simplify the buying process for our customers and respond to the increasing demand.
Our solutions that span multiple product families.
The combined impact of these changes has contributed to an increase of 150% of average transaction value for contracts that are over $100000 in annual subscription.
This is a comparison between this year's Q3 in last year's Q3 on a pro forma basis.
<unk> contract renewal uplift from price scale and scope was 28% year to date through Q3.
Versus 14% for the same period last year.
One Big reason, we're so excited about adding blue Jays for a platform does that this measure for <unk> on a year to date basis through Q3 with only 4%.
I won't repeat that.
It opens contract renewal uplift from pricing scale and scope, it's 28% year to date through Q3 versus 14% last year.
That same measure for Boulanger alone was 4%.
As we've said the more times as I'm sure you care to hear.
Acquisitions increased our subscription growth rate.
We simply have more solutions and more clients are solid.
All four of our growth levers are on track and delivering results more quickly than we had thought.
Since we're a subscription based company these initiatives, while being executed this year and have begun to increase revenue. They will mostly show up as incremental revenue in our fiscal 2023.
In terms of other highlights.
Added another platform transactions in Q3.
It was new to the call a platform transaction is one where the client has aligned with us to a large multi product implementation that will be deployed over time generally years.
In addition.
On the product front, we launched launched global logistics orchestration.
This network based solution has generated strong demand.
Is it enables our customers to orchestrate materials and finished products across all of their network carriers across all modes.
Are most of those moves is in.
Initiated by internal logistics teams or third party logistics teams or both.
Our performance in the quarter was exceptional.
We not only completed our largest transactions be fully integrated our go to market organization within the first 30 days of the acquisition.
Despite the natural noise and distraction of this rapid integration.
We had a record Q3 for new contract bookings.
Our qualified pipeline route.
And we produced an organic growth rate of 13, 8% overall, but most importantly, it's 11, 2%.
For our subscription revenue.
That revenue comes a world class gross margins.
Based on these highlights and how we see our business momentum continuing.
We continue to believe our growth rate in FY 'twenty three will be in excess of our total growth rate for our current FY 'twenty two.
The growth rate, we see for fiscal 'twenty three is underpinned by very strong bookings and pipeline growth.
And the usual on pipeline returning to pre COVID-19 levels.
We have increasing conviction that our growth rate will be greater next year.
And it was this year.
Even though it will be over 60% are larger.
In summary, our third quarter was exceptional.
We are excited about the multiple growth opportunities in front of us.
We remain focused on executing our initiatives.
With that I'll turn it over to Jarrett to provide more detail regarding our financial results Jarrett.
Thank you.
As Michael mentioned, we continue to be pleased with our performance this year and delivered another solid quarter.
Today I'll begin by expanding on Michaels comments on our long term financial model, specifically, how the growth drivers. He previously noted provide us the ability to continue to deliver tremendous shareholder value.
I'll, then give an update on the Bluejay integration review, our fiscal third quarter results and revisit our full year financial outlook.
We will start with the long term financial model.
We believe the following profile is sustainable for the foreseeable future.
Either open as a company that will grow faster as it continues to scale.
It opens organic subscription growth rate is now over 11% and we expect that growth rate to increase in fiscal 'twenty three.
And subscription revenue is expected to continue to be nearly 80% of our total revenue.
And we'll produce world class gross margins.
Ara opened as a company that produces mid to high Thirty's EBITDA margins with the realization of acquisition synergies.
It opened is highly cash generative due to its low capital intensity at 5% to 6% and EDA open will further accelerate its scale competitive differentiation growth rate and profitability through continued strategic mergers and acquisitions.
Revenue growth is a powerful tool to drive compounding shareholder value based on our financial and operational profile.
We have both a high percentage of our revenue from subscriptions with the largest customers in the world and where we cherish very long term customer relationships our.
Our top 100 customers have nearly a 15 year average tenure.
Our highly stable revenue base converts to world class gross margins, which can expand slightly as we accelerate our revenue growth.
With our go to market organized around clients rather than products, we have a very efficient sales and marketing organization, which leads to a rich conversion of gross margin to adjusted EBITDA, even though we invest a greater percentage of our revenue and our product than many of our competitors.
We are highly cash generative with low capital requirements, mainly oriented around the hardware and software are related to our data centers.
A majority of which we operate through Colo arrangements in concert with public cloud usage.
The high degree of cash generation from our operations will be used to further increase the growth rate of our best price and acquire additional strategically and financially accretive asset.
You know open is a business that will compound annually given its extraordinary cash generation.
This financial profile is sustainable for the foreseeable future.
Okay.
The opportunity to continue our acquisition strategy is it merits and will provide another important avenue to increase value to our shareholders.
We fully integrate the businesses we acquire.
The acquired products become embedded into our platform quickly. This provides us with more products to sell to more customers.
Our go to market teams are fully integrated typically in the first quarter or less than that.
Back office teams, our one team after the integration.
We have a proven track record of successfully integrating acquisitions.
With Blue JP on the 12th acquisition over the past six years, we've over achieved our acquisition synergies on each individual acquisition and in total and in each case, the combined business accelerated its growth rate beyond what it was prior to the acquisition.
Let's move on to an update on the Bluejay integration, we are deep into the execution phase of our integration of Bluejay solutions that closed on September one 2021.
Total synergies related to the recent bluejay combination are projected to be $25 billion annually.
We expect to action between 60, and 70% of the run rate savings by the end of this fiscal year.
Realized synergies are expected to be between 20% to 25% in the first six months of the transaction, finishing our fiscal 2022.
And represent the portion of those actions synergies that have been recognized in earnings during that period.
Period presented.
We anticipate this metric moves to nearly 90% for fiscal 'twenty to 'twenty three with the remaining balance coming in 2024.
Now I'll talk about our results on a non-GAAP basis, we show a reconciliation to GAAP measures in the press release, which is available in the Investor Relations section of our website.
Two opened in Dot com.
We generated total revenue in the fiscal third quarter of $147 4 million, reflecting a total revenue growth rate of 13, 8% on a pro forma basis.
Broken down by reporting category subscription revenue was $117 4 million, reflecting a subscription revenue growth rate of 11, 2% on a pro forma basis.
As Michael mentioned, our average subscription contract values continue to rise and the contribution from our new logo efforts are beginning to impact our subscription revenue.
Professional services revenue was $30 million during the quarter, reflecting our professional services revenue growth rate of 25, 5% on a pro forma basis.
The principal non-GAAP adjustments to revenue in the period are related to the amortization of the fair value adjustment to deferred revenue, resulting from the business combination in February 2021.
The increase in subscription revenue was mainly due to new organic sales in prior periods across our customer portfolio.
The increase in services revenue reflects a return to normal for our business as the prior year quarter was still impacted by delayed delivery of services due to the COVID-19 pandemic.
Continuing down the income statement, our gross profit was $103 4 million in the fiscal third quarter, reflecting a 15, 4% increase in gross profit on a pro forma basis.
Our services margin during the quarter was positively impacted by certain onetime services revenue transactions.
We expect our normalized services margin to be in the mid 30.
The increase in gross profit was primarily related to new subscription sales from the prior year.
With the return to normal of our services business and these one time services revenues.
Gross margin was 71% for the third quarter of fiscal 2022 compared to 69, 2% in the comparable period in fiscal 2021.
Our adjusted EBITDA was $45 9 million on a pro forma basis. The adjusted EBITDA margin decreased to 31, 1% for the third quarter of fiscal 2022.
As compared to EBITDA margin of 34, 9%.
During third quarter of fiscal 2021 on a pro forma basis.
For like comparison of the two periods on a normalized basis adjusted EBITDA would have grown by 15% from a normalized 32, 6%.
Our current period of 35, 2%.
For the third quarter 2021.
Normalized adjusted EBITDA margin is 32, six when adding back the public company costs that are embedded in our current fiscal third quarter, but we're not borne by the business in the prior year.
The normalized adjusted EBITDA for our current third quarter was 35, 2%.
When the integration costs and a true up of our corporate incentive expense are considered.
Our annual bonus program, which the board the majority of our employees participate it's highly oriented towards achieving organic revenue growth and new sales, which drive tremendous shareholder value. We are over performing in both these areas. As a result, we added an additional accrual during the third quarter to cover all three quarters of the year.
Year to date period for fiscal 2022.
Yeah.
Despite the additional bonus accrual we expect to maintain our current guidance for EBITDA that I'll describe next.
Now I'd like to finish by providing our non-GAAP guidance for the remainder of fiscal year 2020 two.
For the full fiscal year 2022, we're raising our revenue guidance. We now expect total non-GAAP revenue to range from 474 million to 476 million, representing a 10, 2% growth rate at the midpoint of that guidance.
For a comparison, when we announced the bluejay transaction, we guided to a nine 6% pro forma growth rate for the year. We then raised our growth rate to 10% and now the 10, 2%.
Evidenced that our organic growth rate is accelerating.
Adjusted EBITDA is expected to be between $161 million to 163 million as I mentioned earlier, our full year earnings will be impacted by our bonus incentive program and includes duplicative costs related to the bluejay acquisition that have not been removed from our operating results, excluding the bonus adjustment and the full year.
Our normalized adjusted EBITDA margin will be 35, 2% at the midpoint of our guidance.
Our non-GAAP gross profit margin is expected to be in the range of 70% to 72%.
Finally, I want to mention that we intend to provide guidance for our fiscal year 2023, when we communicate our fourth quarter financial results.
In summary, either opened posted its fourth consecutive strong quarter as a public company.
<unk> continues to grow for our solutions and products, we remain focused on executing our growth strategies to capitalize on the vast market opportunity that lies in front of us.
With that we would not like to take your questions. Adam we're ready to begin the Q&A session. After a brief pause.
Okay.
Alright. Thanks, Jared Please just give us a moment to turn our cameras on and get situated.
And again, if you have any questions to ask please cheramie directly to be placed into the queue or use the racing and function.
Okay.
Our first question today will come from Taylor Mcguinness with UBS tailored your line should be open.
Yeah, hi, thanks, so much for taking my question.
First one is just on the revenue guide Yeah, Hi, just on the revenue guide. So I think when we based on what you guys have disclosed in the past the new full year guide it looks like the <unk> guide implies growth of 12% and the high end inclusive of Blue Jay.
You know just slightly below the 14% that you guys. Just posted this past quarter. So can you potentially provide more color on the assumptions and embedded in that guidance.
That compares you know on an organic basis versus blue.
Blue Jay and maybe some of the mix between subscription and professional services, knowing that you're coming up against I think a tougher comp on the professional services side.
Yes, I think you've hit it right on the head Taylor as we as we go into Q4, we're getting into.
Not easy compare of Covid year versus non Covid here.
Certainly a part of what is driving the.
Rejection in total at the $4 74 to $4 76.
Fourth quarter also has from a professional services perspective, a significant amount of holiday and it given that.
It is inclusive of the Christmas and new year holiday, but then also we have a large portion of Rps team that operates out of Asia is also impacted.
In late January and February with the Chinese new year. So both of those are kind of what's driving our Q4 that'll be a little slightly lower growth rate when compared to Q3.
Got it that makes a lot of sense and then my next question is just on you know in the prepared remarks, he spoke about new bookings being 30% of the mix and an average.
Enterprise new logo contract side more than doubling so can you just talk about what drove that and how much of that was maybe coming from blue Jay and if there was any like cross sell in there and then as we think about the guide next yard like the I guess high level guide next year and for growth to accelerate and it sounds like that coming from the bookings strength, maybe you could.
Just talk about what gives you comfort there and some of the things that you've seen more recently.
Well thanks for your question and in terms of the cross sell we have a very little bit it's a little bit.
Closed the transaction on September <unk>. So you wouldn't actually see expect to see much we had a little bit.
In terms of the bookings growth in terms of new logos I think thats just more evidence of the team's kicking in.
And that's kicking in faster and we've talked about last time than we had thought so really pleased with how thats how thats going it also is because we're getting a little bit higher in the organization.
C suite take more care of their supply chain and that really plays to our strength because we have a very broad functional footprint and more and more of the C. Suite is getting involved in and saying Hey, you should look at maybe larger transactions taking on more functional areas. When you open.
I think thats driving both new logos and our size, where it's getting higher and we are doing a larger transaction sizes. So that's all really going well in terms of the mix.
Well Jay was not growing as fast as us previously.
But I think as we get into the next two or three quarters and will be able to drive cross sell up sell so that gives us a lot of confidence in terms of next year's growth rate, it's really a function of this year's bookings in our pipeline. So we're looking at a lot and our pipelines growing and qualified deal. So those three things really give us a tremendous amount of confidence and conviction.
About what we talked about which is growing faster next year than this year.
Ann Taylor I'd, just add to that when you. When you think about that growth think about the subscription revenue growth.
Because your point is very spot on the services revenue growth will slow part because of the easy compare to the year impacted.
With services from Covid, but then also as we implement the partner strategy and build a greater ecosystem of people that'll be helping us implement our software.
Awesome perfect. Thanks, so much thanks, Bill Thanks Tyler.
Yeah.
And our next question comes from Mark Shapiro.
With loop capital.
Mark Mark How're you doing.
Okay.
I think it might be on mute mark.
Yeah.
Oh.
There you go.
Okay, great well, thanks for taking my question nice job on the subscription subscription revenue number.
Michael just starting off with you.
If you could give us some more details or acquire additional details around the <unk>.
I think on the call.
So it sounds like that partnership takes the company into the supply chain finance.
Yes.
It's not big cargo and take cargo has opinions function that we will be embedding on our ocean bookings platform. So as we've talked about previously you open books about 26, 27% of the world's Ocean freight every every single day.
So it's a key part of our global infrastructure.
We're going to be adding this over the next several quarters and what that means is company.
Companies cannot only book there.
On our platform, but they can also facilitate the transaction payments world as well.
Yes, we have a long talk about.
Think about how we can tie the third leg of the stool in terms of supply chain and physical supply chain digital supply chain financial supply chain.
And this is kind of another step in this area. We do some of this today and this is expanding this.
The material so we couldn't be happier and super excited about.
About the opportunity to kind of add this functionality to them.
And like all of our partnerships.
They add a rev share on top so as they grow we grow.
Great.
Product wise, where did you see particular strength in the quarter.
Yes, I'm not surprisingly, we see a lot of strength in logistics and how logistics visibility comes across all parts of the supply chain. So what's unique about our platform is that we understand orders and we can link orders directly to where our container or a truck or or or.
He is Italian.
Italian differentiated and that's what the product <unk>.
<unk>, we talked about earlier it really comes into play so that's a key differentiator for us and we can do it in a unique way because a we have a network and b, we have a very broad functional capabilities. So that that area is certainly very strong and then demand sensing is always strong for us as a growth area for us and always has been.
Great.
Our call correctly, you hired a new CMO in the quarter I was wondering if you can just give us a little bit of an update.
I'll be brief on on what we can expect on the marketing front.
Yes.
As we've said.
Entering the public markets. We know we're at the stage now where we have to be.
More forthright in our marketing efforts, Gary joined US on September one I believe.
Fantastic marketer and she's building, a female and laying out our plan so you'll see some things coming down the pike.
But we're super excited about kind of building our company to the next phase and it's all part of the plan.
So those are all really excited about the opportunity.
Great. Thank you that's all for me.
Thanks, Bob.
Okay.
Our next question comes from Andrew Owen of Bank of America, Andrew Your line should be open.
Yeah.
And you might okay did I manage time, you'll find some yeah hi, Andrew.
Sure.
Hey, just before I go into my question I just wanted to clarify the first question sort of a sequential slowdown next quarter.
In the fourth quarter.
Just don't quite understand you know you cited a bunch of sort of seasonal seasonal factors, but one of these factors be presence a year ago.
Like Christmas.
Yes, so but also that's correct Andrew but also in the in the quarter a year ago, we were still getting back up to the full capacity of our service delivery organization from the projects that are just kind of slowed down and the lack of bookings in the first part of the year.
Q4 is closer to normal than Q3 was.
Which makes the year over year growth rate it won't be 25, 5% on the services line, which will drag to the total growth rate quarter to quarter down if that makes sense.
Yeah. This is Scott will cover the key for US is subscription revenue growth and we expect as I said as we can think about going into next year that that number is growing.
The services revenue will always be there it's important part of our business what our key focus though is on subscription revenue growth, that's where we get the most leverage.
And that has the most long term effects of our subscription contracts last a very long time. So that's our key focus is in that area.
Just I just want to clarify so no not in all my questions. So based.
Based on your commentary regarding the fact that logistics is outperforming.
Ias driving their growth was better than we were expecting and I think blue Jay was expected to be in the mid single digit range. You did highlight that logistics were better. So is it fair to say that.
Blue Jay is the source of outperformance.
That's what.
I wouldn't say that I'd say that.
I'd say that.
Are quite money. It opens was building briefly and that continues.
Think of that you know that.
Their performance is a little bit better, but I wouldn't I wouldn't say, it's because of the blue Jay acquisition I.
I'd say, it's a mix, but I wouldn't put the growth there I mean, we've been growing our pipeline and closing revenue in the first two quarters and a great clip than that.
Shows up more as the quarters go on.
Gotcha Okay.
With when we when we raised guidance at closing of the Blue Jay acquisition, we kind of showed a view of where both businesses were in both businesses, where we're outperforming what we really thought that each one of them individually with you earlier in the year right at the time of the business combination.
Gotcha no. Thanks, so much and any updates you can share on pricing initiatives and how you'll be approaching in renewals in 'twenty two that have below average price. Yes. We are we continue I mean, we saw a tremendous uplift at places like kind of quoted some some.
Statistics and when we think about renewals, we get increased subscription from three areas price.
<unk> and scale scope as more product scale as more of the same product and then obviously price.
And we saw a very large uplift as we went into this year and we expect that to continue the big opportunity for us though is.
The blue Jay contracts committed historically have been around 4% and were much higher than that.
Really simple all they deliver they have is price, which is great. But we have now we have six others have other product families to offer their customers. So we expect that to be a huge source of.
Incremental growth on top of their renewals so it will be.
Our program being executed which is doing very well on top of the.
The renewals, we get from <unk> and that's what we're most excited about that's really why acquisitions are powerful for us they help us grow faster and we can become more profitable at the same time.
Yeah, John I'll squeeze one more in.
When all your salespeople deeply embedded at large clients. So how are the conversations around 22 budgets in opportunities going versus a year ago. I mean, you sort of alluded to the fact that things are looking up but just maybe a little bit more granularity.
No I mean, the pipeline continues to grow that's where it shows up for US right. So before you have a signed contract do you have an opportunity to pipeline, we measure that really carefully and.
We're seeing our transaction size is increasing and we're seeing our pipeline growing in our yield on pipeline and we measure. It every quarter. The same way as returning is really darn close to where it was pre COVID-19 . So there's a lot of interest in supply chain, we're getting higher and organizations, that's showing up in pipeline showing up a number of deals in certain sizes.
So that's what's driving our revenue growth exceeding 11% this quarter and as we said we expect next year.
Be growing faster than we are this year.
And Andrew I'm not sure.
Great.
Ed.
That's an important point Andrew because we're also.
Clothes, winning more deals than ever before to reduce the pipeline each quarter and yet quarter over quarter, it's sequentially getting bigger and bigger even though we're taking more out of it is.
New business.
Sounds great. Thanks, so much thank you Edward Alright, Thanks, Andrew.
And that was our final question today, So that concludes our call. This afternoon.
Thank you everybody for attending thank you yeah. Thanks, everybody.
Yeah.