Q1 2022 Duck Creek Technologies Inc Earnings Call

January 6, 2022

Ladies and gentlemen, thank you standing by your concept of getting all the time again. Thank you for standing by your conference call, it's hard to get them all the time.

[music].

Thank you for standing by and welcome to the Duck Creek Technology's first quarter fiscal 2022 earnings conference call. At this time, all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

Ask a question at that time from club so I didn't want when your touch tone telephone.

That's the amount of today's conference call is being recorded.

I would like to turn the coffee house, Mr. Brian did you from ICR.

Good afternoon, and welcome to Duck Creek earnings Conference call for the first quarter of fiscal year 2022, which ended on November 30th.

On the call today is Mike Caskey Duck Creek, Chief Executive Officer, and vintage of Berry Duck Creek, Chief Financial Officer.

A complete disclosure of our results can be found in our press release issued today, which is.

Available on the Investor Relations section of our website.

Today's call is being recorded and a replay will be available following the conclusion of the call.

Statements made on this call may include forward looking statements regarding our financial results products customer demand operations the impact of COVID-19 on our business and other matters.

These statements are subject to risks uncertainties and assumptions and are based on management's current expectations as of today and may not be updated in the future.

Therefore, these statements should not be relied upon as representing our views as of any subsequent date.

You should not rely on forward looking statements as predictions of future events actual results and events may differ from any forward looking statements I imagine I'd make to that.

Additional information regarding the risks uncertainties and other factors that cause such differences appear in our press release and Duck Creek latest Form 10-K, and other subsequent reports filed by Duck Creek with the Securities and Exchange Commission.

We will also refer to certain non-GAAP financial measures to provide additional information to investors.

A reconciliation of non-GAAP to GAAP measures is provided in our press release with the primary differences being stock based compensation expenses amortization of intangibles change in fair value of contingent earn out liability and their related tax effects of these adjustments.

Let me turn the call over to Mike.

Thank you, Brian and good afternoon, everyone. Let me start by wishing all of you and your families. A happy new year, we are off to a great start to the year and I'm pleased to report that Duck Creek delivered on strong first quarter performance that reflects our continued success is the cloud platform of choice for the P&C insurance industry.

We're pleased with our ability to add new logos and drive greater adoption from our install base upon demand customers, which now exceeds 75 insurers let.

Let me start with a quick overview of our financial results for the first quarter, we reported total revenue of $73 4 million.

Up 25% year over year, and this was underpinned by our subscription revenue, which is our revenue derived from SaaS of $35 7 million.

Up 28% year over year.

Our annual recurring revenue or <unk> was $145 5 million, which resulted in 40% growth over the prior year.

And we were also profitable in the quarter with adjusted EBITDA of $7 8 million.

During the quarter, we signed more than 10, SaaS deals across new customers and with existing customers, who either expanded their usage of Duck Creek and demand were adopted new SaaS solutions from us.

This is a healthy mix of activity that reflects our powerful land and expand selling model and the continued investments we are making in our SaaS solutions.

Our success in the quarter is just the latest indication that insurers are embracing the superior scalability flexibility and time to value that a true cloud platform like Duck Creek on demand can provide to their businesses.

Insurers are operating in markets that are evolving rapidly and are more dynamic than ever before they.

They need core systems that enable them to innovate more quickly and enhance our overall customer experience. So that they can thrive in these market conditions we.

We are continuing to demonstrate success with insurers of all sizes, who have chosen duck Creek on demand, which highlights the value and competitive advantage that we provide to our customers.

In the first quarter, we signed an exciting new Duck Creek on demand deal with secure a leading north American P&C insurer with operations in 13 states.

<unk> will be deploying our Duck Creek policy rating billing claims and insights on demand solutions.

As well as several of our anywhere manage integrations to power. The next generation of its specialty lines business.

We were selected after a lengthy and rigorous technical evaluation, where secure evaluated several competing platforms.

Sure ultimately selected Duck Creek for several reasons. The first was the strength of the Duck Creek platform and most notably our low code configuration and open API architecture.

Secure recognize that our platform was best positioned to increase their time to value and streamline their overall operations.

The second was the ability of secures team to leverage our platform to access our insure tech partner ecosystem, which now includes 65 partners to improve how secure are configured its products and expand into new markets.

Finally, as our CIO noted secure viewed Duck Creek as a true partner not just a vendor. This is exactly the type of relationship we strive to build with each of our customers and we're excited to be partnering with secure on their digital transformation.

We also made significant progress on our efforts to build out our international presence, which includes multiple new customer wins and expanding our ecosystem.

While still very early the success, we had in the first quarter is an important validation of the opportunity outside of the United States in.

In the quarter, we signed two deals with international customers first Eddie Ona, a UK based startup insure tech provider that will be launching a unique motor insurance offering in 2022 recently signed an agreement with us to deploy their new innovative usage based product and Duck Creek Ondemand policy billing and claims.

Eddie Ona needed a true cloud partner that it could count on to scale with its growth ambitions and helped deliver on their mission to provide a compelling end to end digital experience for their customers. We believe this is a great example of how Duck Creek can play an important role empowering the tremendous innovation, we are seeing across the insurance ecosystem.

We also signed an important win in Australia with Argyle insurance, a newly established innovative small commercial carrier who is focused on redefining how insurance is simplified and streamlined for small medium enterprises.

Overall, we've been pleased with the early success, we are having in the Australian market, which is why we recently announced a number of product investments for Australia <unk>.

<unk> localized workers' compensation packages and it claims benefit calculator for new South Wales, Australia's largest state.

Eddie Ona and Argyle are positive early examples of the progress we are making internationally, even as we continue to deal with the impact of the pandemic. We are incredibly excited about the long term opportunity outside of the United States and wins like these are important for establishing the Duck Creek brand and referenced a bowl customers in local markets.

As I mentioned on our last earnings call. We will continue to invest in our international capabilities in fiscal 2022, with a particular focus on large global carriers and important part of building out our international presence our partnerships that expand the value we can deliver.

To that end, we're pleased to announce multiple partnerships that enhance our capabilities in specific markets. For example, we recently signed an agreement with experience that will directly integrate their eye cash dataset into Duck Creek on demand to better serve the UK insurance market. This will provide insurance with prebuilt consumer.

The integrations that they can use to improve their operational efficiency and user experience.

We also recently signed a collaborative agreement with today as an organization in charge of offering value added services to insurers and Vanessa The association for insurance companies operating in the Spanish market.

This agreement will facilitate the integration of Duck Creek solutions into the Spanish market and allows Spanish insurers to design test and deploy new products faster than ever before.

The alliances with experience and today there are great. Examples of the type of local relationships. We are looking to build as we continue to develop our international go to market efforts.

In addition to these new wins, we also expanded our engagements with several existing customers, including core specialty builders mutual distinguished partners and Great American insurance among others.

And now to focus on customer success, we had several notable product deployments in the quarter as well, including distinguished partners, where they are able to go live with their commercial property program in 14 States and approximately 150 days from the inception of the project.

Great American insurance, a highly respected tier one insurer known for their innovative and specialty commercial products deployed their package policy on Duck Creek on demand in all 50 states and.

And finally axis insurance, who brought a new insurance offering to market for home based businesses comprised of four key coverage lines professional liability cyber crime and contents and they deployed the solution to their brokers in under five months.

We also continue to invest and enhance our leading SaaS solutions on an ongoing basis and at helping our customers continued to be more agile efficient and make smarter decisions through data intelligence.

Here are just a few highlights of our product updates this past quarter, we enhanced our policy and billing user experience platform to incorporate to new capabilities.

First mobile native presentation. This provides a more consistent experience for end users across various form factors, allowing chairs to reuse Duck Creek and customized page designs across multiple channels and devices.

We added data visualization, which presents data and new information on visual ways, allowing a user's attention to be drawn to important key areas of our pagers screen.

And Duck Creek claims we launched a series of updates that will help improve overall systems integration operations and speed deployments. Some examples include first international enhancements.

Series of in depth enhancements that improves configuration to support multiple geographies on a single platform such as managing tax N V. A tea time zone and localize embedded logic.

Second our claims migration service or product type solution that enables carriers to quickly and efficiently migrate data from multiple legacy in existing systems into our Duck Creek on demand environment, which dramatically reduces conversion time frames and improve data quality and.

Third our enhanced open Apis, we added over 200, new Restful API store claim solution, which expands the openness of our platform. Our new API is can also provide programmatic ways to integrate both development and operations architecture with a carrier's customized Dev ops processes.

Finally, we also launched Duck Creek, Ondemand consumer access offering which extends Duck Creek core functionality to the consumer channel providing tools in a secure infrastructure that allows carriers to exposed applications to policyholders and anonymous shoppers without the need to deploy redundant solutions or infrastructure.

As we look ahead to the remainder of the year. We are focused on executing on the incredible opportunity in front of US we continue to see significant growth in our pipeline with both new and existing customers across all tiers. As we mentioned last quarter, we are particularly focused on some important tier one accounts, we have seen some great success.

As in recent quarters, we are very encouraged by the strategic conversations we're having with these carriers and the progress they are making in developing long term digital transformation roadmaps.

Before I turn the call over to Danny I, just want to reiterate that we're pleased with the start to the fiscal 2022, and we are incredibly optimistic about the future for Duck Creek.

Or interest in Duck Creek on demand continues to grow as insurers fully appreciate how we can improve their operational performance across multiple dimensions, while providing significant financial benefits were in the early stages of the P&C insurance industry moving to the cloud and Duck Creek is in a terrific position to be a primary beneficiary as insurers continue.

To look first to the cloud for solutions as they embark upon their technology strategies I'd.

I'd like to finish by thanking all of our employees partners and our customers for the incredible work they do each and everyday to modernize the insurance industry and position Duck Creek to fully capitalize on this incredible opportunity.

With that let me turn the call over to Danny to walk you through the numbers Vinny over to you.

Thanks, Mike Today, I'll review, our first quarter fiscal 2022 results in detail and provide guidance for the second quarter and full year of fiscal 2022.

Total revenue in the first quarter was $73 $4 million up 25% from the prior year period within total revenue subscription revenue, which is comprised solely of subscriptions for our SaaS products was $35 7 million up 28% year over year in Q1 subscriptions represented 81 <unk>.

<unk> of our software revenue and 49% of our total revenue.

Revenues from on premise software licenses of $1 9 million and maintenance of $6 3 million or 11% of total revenue. We expect these line items to continue decreasing as a percentage of revenue given the strong growth in our subscription revenue.

Services revenue was $29 $5 million up 26% year over year, driven by continued high demand for implementation services and strong utilization rates.

SaaS AOR, which we calculate by annualized recurring script subscription revenue recognized in the last month of the period was $145 $5 million as of November 32021 up 40% from the prior year.

As a reminder, SaaS errors a snapshot in time of subscription contracts that are generating revenue during the last month of the period and can be impacted by timing.

SaaS net dollar retention as of November 30 of 2021 was approximately 122%. This was another strong result, which reflects our continued success upselling and cross selling our customer base.

We continue to believe that a SaaS dollar net retention rate in the 110% to 120% range is a good long term target for our business.

Now, let's review the income statement in more detail. These metrics are non-GAAP, unless otherwise noted and we provided a reconciliation of GAAP to non-GAAP financials in our earnings press release.

First on a GAAP basis, our gross profit for the quarter was $42 5 million and we had income from operations of $1 $9 million.

We had net income in the quarter of 692000 or <unk> <unk> per share based on weighted average basic shares outstanding of $134 2 million.

Turning to our non-GAAP results gross margin in the quarter was $44 1 million or 61% compared to 61, 6% in the first quarter of fiscal 2021.

Subscription margin in the quarter was 63, 3% as we've noted each quarter there can be quarterly variation due to timing of when revenue recognition begins for certain contracts and the timing of expenses at various stages of new deployment.

As indicated previously we were benefiting from favorable timing in fiscal 2021 and expected gross margins to move back into the mid sixties in fiscal 2022.

While we have experienced increased hosting costs and supported significant growth of written premium running on our platform. We do expect the remaining quarters of fiscal 2022 to show improvement in subscription gross margins.

Professional service margin of 48% in the quarter was notably strong and well above our target range driven by robust demand and high utilization rates are.

Our services margin in Q1 was higher than we wanted and we're committed to bringing them down throughout fiscal 2022 to more sustainable levels. Our goal is to bring down several points through the fiscal year and longer term into the high thirties.

Seasonally Q2 has been historically below Q1 in both revenue and gross margin terms and we expect that trend to continue this fiscal year.

Turning to operating expenses, R&D costs were $12 $7 million or 17% of revenue.

Down year over year as a percentage of revenue R&D expense growth of 14% compared to Q1 of fiscal 2021 was a bit below targeted levels based on the timing of new hires. We currently expect R&D spend as a percent of revenue to increase slightly through the remainder of the fiscal year, but still remains slightly lower than fiscal 2002.

'twenty one for the full fiscal year.

We continue to balance the scale benefits of our R&D organization with increasing investments in our products and SaaS platform.

Sales and marketing expenses were $10 $7 million or 15% of revenue consistent with the prior year as a percent of revenue.

Expense growth from the prior year reflects continued expansion of our go to market Resourcing in both U S and international markets, while travel related costs continued to run below normal levels due to COVID-19 impacts.

G&A expense was $13 7 million or 19% of revenue down from 22% of revenue in the prior year period as noted previously G&A as our most leverages will cost area and is declining as a percent of revenue in line with our expectations.

Adjusted EBITDA for the first quarter was $7 $8 million, which was ahead of our guidance due to the better than expected revenue and lower expenses I just referenced adjusted EBITA margin was 11% for the quarter up from 6% in the prior year period.

This represents our <unk> consecutive quarter of adjusted EBITDA profitability, which we believe is an important indication of our ability to generate high levels of subscription revenue growth on a profitable basis.

non-GAAP net income per share for the quarter was four <unk> based on approximately $135 7 million fully diluted weighted average shares outstanding.

Turning to the balance sheet and cash flow, we ended the quarter with $348 million in cash cash equivalents and short term investments and we remain debt free.

Free cash flow was negative $25 $5 million in the quarter compared to negative $22 9 million in the prior year period.

As a reminder, the first quarter is typically our low point for cash flow in the year due to the timing of working capital.

And now I'd like to finish with guidance beginning with the second fiscal quarter.

We expect total revenue of 71.5 to $73 $5 million subscription revenue of 37 million to $38 million adjusted gross margins are projected at 57% to 58%. We expect adjusted EBITDA of one five to $2 5 million and our non-GAAP.

<unk> net income is expected to range from 500000 to $1 5 million, whereas zero to one cent per fully diluted share.

For full year fiscal 2022, we are increasing our guidance to total revenue of 298 to 304 million subscription.

Subscription revenue of 152, five to $155 5 million.

Adjusted gross margins are projected at 58% to 59%.

We expect adjusted EBITDA of $19 million to $21 million and our non-GAAP net income is expected to range from 11 million to $13 million or eight to 10 cents per fully diluted share.

To wrap up we got off to a strong start in the first quarter, we're seeing strong demand activity from new prospects and existing customers, who are embracing the opportunity for better business performance from running their business on Duck Creek on demand, we remain confident in our ability to continue generating strong levels of growth and increasing profitability.

In the years to come.

And with that we'd like to open up the call to Q&A operator.

Thank you again, ladies and gentlemen, I'd like to ask a question. Please press Star then one on your Touchtone telephone again to ask a question. Please press Star then one.

First question causes to keep clear of Barclays. Your line is open.

Okay, Great, Hey, Mike, Hey, Vinnie happy new year, and thanks for taking my questions here.

Happy new year.

Hey, Mike maybe just starting with you you touched on this a little bit in the prepared remarks, but maybe if you just go one level deeper can you just maybe qualitatively qualitatively talk about the number of opportunities youre seeing and maybe how when rates have trended through the quarter I think Lee.

Last quarter's result, maybe drove some investor questions on whether other competitors were getting more competitive.

In SaaS opportunities, how do you sort of think about those things with another quarter under your belt here.

Yes. Thanks.

I would say that we have a healthy number of opportunities in the pipeline in fact, our pipeline continues to strengthen quarter over quarter. So we're pleased to see that.

And in terms of our win rates, we're not going to talk specifically about win rates, but I'll say that.

Going through the past two quarters, we don't see them has changed in any material manner. So.

I think we're set up very well as we start the fiscal year as I stated in the prepared remarks and in terms of our competitive positioning I think we're really pleased with where we're at in fact, we've had several exciting wins.

Last quarter and this quarter that we know that those opportunities were very very well vetted against our competition and we got feedback.

Really positive feedback on our platform really our superior low code platform and our differentiator with our SaaS solution and I think our win at secure is one great example of that they did a very intensive evaluation process and looked at many vendors across the landscape.

We're really pleased with the outcome as I said in the opening remarks.

Got it got it that makes a ton of sense.

Maybe for my follow up for you.

I was wondering if you could just talk a little bit about just the pace of implementations.

Clearly the pipeline here sounds good in the coming quarters, but you spoke about the seasonality of revenue and gross margin here in Q2, I know, we don't talk about about AOR, specifically, but is there anything that you could give us just in terms of how to think about are sort of trending in Q2 or kind of through the rest of the year qualitatively of course.

Yeah sure Hey.

So the thing I'd say is in fiscal 'twenty, one we kind of had unusual trend and aeromar growth, where the second quarter was our largest sequential growth quarter and the third was our lowest.

I think last year was the aberration. If you look back to say fiscal 'twenty. The second quarter was our lowest sequential AOR growth quarter of the year and that's more typical and there isn't that more typical is really tied to seasonality Q1.

Is not a generally not our strongest bookings quarter, even though Q2 is generally a strong bookings quarter and we expect it to be again this year most of that doesn't make it into ore during the quarter. So I think just qualitatively you could expect to see kind of a return to more normalized trends, where Q2 won't be.

Our strongest.

Our growth quarter.

Sequentially, and I think youll see more like the.

The trend of two years ago, where Q2 is a bit lower in Q3 is a bit higher.

Got it but that's going to be probably helpful. But in fact, that's going to come off what we expect to be a really strong Q2 bookings quarter, which would translate into more AOR growth in the second half of the year.

Yes, absolutely very helpful guys. Thanks very much.

Thanks.

Your next question comes from Laboratory at William Blair. Your line is open.

Hey, James.

Happy new year and congrats.

Solid quarter, there I guess, Mike I wanted to touch on.

Cyber security here a little bit.

When we talk to carriers does this kind of focus on cyber.

Sort of.

Trying to figure out how to do it how to price that you're seeing some of the kind of emerging players like as native cloud prevalent fiber Cuban others coming up there. How are you guys seeing that market evolve and how do you think about that market in terms of partnering acquiring I'd love to get some sense of that especially as we cyber and ransomware and everything becomes.

More critical.

Yes, Thanks Yvonne.

Obviously, you're asking the question because cyber is one of the faster growing product lines in the industry for good reason, there's a lot of carriers that need to provide protection. What we do see out there, though is how carriers go after cyber and how they price it.

<unk> greatly in the industry.

Bringing solutions that look at the topology or look at the inside of a carrier their customer and what's going to happen others. Just look at the overall landscape. So they are bringing a variety in a vast variety of technology to go evaluate ciber.

So our strategy to date is first.

A lot of cyber that you do see as an add on coverage not a standalone product.

So we do support the ISO add on coverages right out of the box. So I think that helps so we can attach ciber to other products.

And then secondly in terms of technology.

<unk> been partnering with leading ensure tech some of them that you've mentioned.

To make sure that we can integrate out of the box and bring some of those solutions to bear because there isn't a one size fits all for carriers and we want to make sure that we're very well positioned to adapt to the way that they're going to view cyber.

And that's been our approach to date.

We're always actively looking for new companies to go acquire or partner with and we're going to continue to do that to make sure we perform well with cyber insurance.

Gotcha Gotcha, and then and then one more sort of more near term one or both of you guys.

There's obviously this labor shortage.

And it's in every industry, but I wonder as you think about implementations, which despite the low code environment you have still require if people because this process change and everything else and between a shortage at say your partners et cetera, whomever and then potentially a shortage at your customers in terms of head count and then potentially even your service.

Group, which is running ultra hot right now.

As you can see gross margin, but and then you'll have to hire salespeople and you have to hire R&D because youre doing innovation is there any sort of risk as you guys see this playing out for slower implementations or you're not being able to hire enough sales head count or R&D head Count for example, like what you did in new South Wales like how should we think about what this labor environment means.

You and then for your customers and implementation I'd love to get a sense of how you would think about that strategically.

I was kind of a leader of the firm.

Yeah and.

Obviously with the great resignation and a lot of.

I'm going to say higher attrition that I can say broadly in the industry across the technology industry everyone's paying attention to it.

I will say that I'm pleased with where Duck Creek is that we've invested quite heavily in.

Our employee engagement and our culture.

Dimensions, and I think we've handled the pandemic very well and that's resulted in us having more favorable retention rates I think others are seeing in as technology companies. So I think that's helping but to your point, it's still a watch item for us is vinny.

I have spoke about even on prior earnings calls you know keeping up with hiring and getting people on boarded is something I think we're doing well we're growing in our head count.

Quite a bit.

We are falling a little bit short of some of those expectations now it's nothing alarming levels.

And we're working well with our partners, but I would say, it's a watch item for us and right now we're not seeing a material impact on it you can have an impact on any given project as you try to shift some resources around our work with different partners, but I think the way we're really addressing it is continuing to work with our leading systems integrator.

Or is that are out there we've added a new one with hex aware.

This quarter, we're now up to 20, and I think we have an enormous amount of capacity through that ecosystem, and that's helping us quite a bit as well.

That's super helpful. Thanks, taking my questions guys really appreciate the color.

Thank you. Our next question comes from Richie Deloria of RBC. Your line is open.

Hey, guys. Thanks, so much for taking my questions I.

Good to see.

Some upside in the numbers, maybe I wanted to drill into that first I. Appreciate all the commentary on what Youre seeing with your with your customers, but if we rewind the tape back three months.

You kind of gave us the outlook clearly came out ahead of it what would you maybe I attribute the upside in the quarter and the better outlook to was it better execution was at a better improving environment and anything else you could pinpoint on that that'd be helpful. And then I have a follow up.

<unk> I'll start with that and.

Then he wants to add I'll, just say that I think this quarter is lined up with our expectations and what we stated coming out of the quarter.

We continue to see some great activity with tier ones and many opportunities through the pipeline.

We closed some nice deals in the quarter as we talked about and I think it sets us up very well for the year.

I don't know if you wanted to add yes. The one thing the one thing I'd point out is like I think.

Where we had indicated we would be coming out on the subscriptions, we beat by a little bit.

We're feeling good about the sales pipeline and where we stand but actually in Q1 that the larger revenue outperformance was in the services where demand has really been fairly off the charts in our utilization rates are running really high.

So I do think on the services side bounce back off a little bit a bit in Q2.

From a margin perspective, probably noticeably but we're just we're pleased with the with the momentum kind of across the board in Q1.

Got it that's helpful and then as any for you as we think about the sah.

SaaS gross margin line, obviously, there are some maybe one time benefits in the queue.

Q1 through Q3 of last year, just how should we be thinking about that line going forward can you remind us of some of the puts and takes of why it dropped and then maybe the glide path to get to that long term model you laid out at IPO of 70% to 72% SaaS gross margins.

Yes sure.

As you pointed out we knew we were benefiting from some timing of just how how product was going onto the platform last year and we werent sustainable in the high <unk>, where we're performing.

We did know we'd come back into the mid sixties.

And we did that dynamic has fueled partly by head count, but also by infrastructure costs and the infrastructure costs are hosting on the Azure platform.

And the hosting cost came in actually just a little bit higher than we expected as we're putting a lot of DWP on the system. So we do think Q1 kind of.

It will be the annual bottom of margin for the subscription line.

But I think that the kind of climb back out.

Is going to be gradual so I think we would see small increments to progress through the balance of this fiscal year. This full fiscal year should still come in in the mid sixties.

And then I think you'll see over the next few years, our progression up into the low seventies and we don't think the long term target has changed in terms of what the number is or when it's achievable, it's probably into the low 70% over the course of the next few years.

Wonderful. Thank you so much guys.

Sure.

Thank you. Our next question comes from Alex Zukin.

Wolfe Research your line is open.

Hey, guys. Thanks for taking the question.

Mike maybe just the first one for you.

Coming out of last quarter, we talked about.

Sales cycles, being a little longer because the kinds of value than the kinds of deals that youre negotiating with customers now are for even greater amounts of.

Value I wanted to ask given the really strong net retention rate you guys put up this quarter just to give us a sense for.

That selling environment, those selling cycles, particularly as we're kind of now in 'twenty two.

Another year removed hopefully from from what.

Definitely.

Likely extended sales cycle globally for many firms doing complex deals just would love to get your sense for kind of where we are at this point.

Yes, Thanks, Alex.

I would say when you referred back to last quarter's comments and the sales cycles. We made a comment on some of the tier one activity and some of that stretching out but I just want to say that we continue to see great activity with our tier one prospects and existing customers.

Obviously.

We always want to sign up a new tier one.

And then also selling back into our customer base is obviously.

Yielding favorable net dollar retention numbers for us, but we're excited about the strategic conversations that we're having with these carriers in their long term move to the cloud.

They're really looking at it maybe by a line of business or a product line basis.

But.

Anytime we can establish a new relationship with a tier one that's really strong for us.

And some of these opportunities are taking shape and we do expect some to occur in the second half of the year. So I think thats, good and I think it's unfolding as we indicated last quarter and.

And we're pleased with the results that we have right now.

Perfect and then Denny.

I want to.

Go back to the first question I think you gave some great color around the shape of net new <unk> in terms of how we should think about the modeling for the next two quarters I wanted to ask if you think about the.

The linearity of the.

The bookings both from last quarter, and maybe even what you talked to for next quarter as a percentage of the full year should we think about the seasonality.

Q1 to be closer to kind of the last two years in that low twenties percentage.

Or is there some.

Something given the linearity with what Mike just described around those sales cycles in the second half concentration is there something else that we should kind of keep in mind as we think our models for the year.

Well I think.

I don't want to state specific percentages, that's always hard to do.

I think our expectation is that this year from a bookings perspective first not from a not from when it makes it there arent perspective, but from a booking perspective perspective, I think we're going to return to our historical norm on a percentage basis, Q2, and Q4 being noticeably higher than Q1 and Q3.

And typically it would not be atypical for Q1 to be our lowest percent of the year in terms of percent of bookings and that is likely to hold up again this year.

What the exact number is I don't want to disclose right now, but we do think it will probably be on the.

Q1 2022 Duck Creek Technologies Inc Earnings Call

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