Q4 2022 Yext Inc Earnings Call
Good day and welcome to the X fourth quarter fiscal 2022 earnings conference call.
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I would now like to turn the conference over to Jeff Houston Head of Investor Relations. Please go ahead.
Thank you Sarah and good afternoon, everyone welcome to <unk> fiscal fourth quarter 2022 conference call with me today are chairman, Mike well, Ras CEO , Howard Lerman, CFO , Steve cake bread, and Chief Accounting Officer, Darrell bought before we begin I'd like to remind everyone that this call may contain forward.
Looking statements.
Including statements about revenue non-GAAP net loss growth of our business, our management and governance plans gross margins operating margins net dollar based retention capital expenditures and other non historical statements. As further described in our press release. These forward looking statements are subject to certain risks uncertainties.
And assumptions.
Including those related to <unk> growth evolution of our industry, our product development and success, our management performance and general economic and business conditions.
Such as the impact of the COVID-19 pandemic.
We undertake no obligation to revise any statements to reflect changes that occur. After this call descriptions of these and other risks that could cause actual results to have a material difference from these forward looking statements are discussed in our reports filed with the SEC.
Included in our most recent quarterly and annual reports and our press release that was issued this afternoon.
During the call. We also refer to non-GAAP financial measures.
Reconciliations of the most comparable GAAP measures are also available in the press release, which is available at investors <unk> Dx Dotcom wood.
With that I would like to turn the call over to Howard Howard.
Thank you Jeff.
Since we founded this company in 2006, we've been focused on helping businesses and organizations around the world PV authoritative source of delivering their business information everywhere people search.
Starting with the power of listings, we created products that help companies build their companies and most recently with answers we help our clients leveraged the power of AI based search technology to provide perfect answers everywhere yes.
<unk> has become a powerful AI based search platform working with many of the world's most notable brands.
I am proud of how far we have come.
Today, it's time for me and yet.
To take the next step in our journey.
Mike Wallrath will succeed me as CEO .
Mike has been part of <unk> evolution since 2009, when he joined the board and since 2011, Mike has helped guide the company as chairman.
Before he joined the board Mike built an innovative technology company called right media that he saw PR, where he managed the team of more than 4000 people globally.
In addition to Wright media might help build other high growth software companies, including <unk>, which was acquired by <unk>.
He has a track record of creating value solid experience running complicated businesses at scale and Mike believes in our vision.
Mike can provide a fresh perspective on products solutions and successfully lead <unk> into the future.
With that I'll turn the call over to Mike to share some of his thoughts as he steps into the.
Thank you Howard when I joined the export in 2009, the company was a nation startup.
None of today's products existed.
I would like to acknowledge how far the company has come under Howard's leadership and I'd like to thank him for all that he has done to create the opportunity that we have today.
I believe <unk> has enormous potential and I look forward to playing an active role in the company's next phase of growth.
I'm stepping into this role with a deep understanding of the business, but I am sure. There is much for me to learn as I shift my focus to day to day operations.
<unk> has built a unique platform of products unrivaled by any of our competitors. The products are as relevant today as they have ever been as companies are finding it increasingly complex and difficult to manage their brands information with the proliferation of information sources available to their customers.
Yes that helps our customers solve real business problems through the entire online customer journey across our portfolio of products that enable our customers to control their brands truth.
I believe our long term market opportunity is massive and growing and we've only scratched the surface of our potential.
Still we were disappointed by our performance in fiscal year 'twenty two.
It has been a very challenging operating environment and Covid surges in Q2, and Q4 had particular impact we can now see that our go to market was far too inefficient. We did not experience the sustained recovery in sales productivity that we expected last year and it showed in our bookings results, which impact revenue in fiscal year 'twenty three.
There are several areas, where we can where we believe we can improve our performance.
First we have begun the work of streamlining our go to market with a unified customer and product approach.
In recent years, we launched exciting new products like cancers.
These new products and the expansion of our market are exciting and healthy developments, but we have seen fragmentation in our interactions with customers and our ability to deliver premium service and support.
This impacts customer satisfaction and challenges our retention and up sell motions in hindsight. It is clear we were too focused on building sales capacity and not focused enough on other functions to drive productivity, particularly sales enablement training client success and services.
We believe that the first step in delivering a better customer experience as unifying our customer facing functions like marketing sales support and services with our product and engineering efforts.
Aligning these functions should increase our operational efficiency decreased the number of teams working separately and reduce redundancies.
This approach should help ensure our new products and features are tied directly to customer needs and that our go to market motion matches. The evolution of our products. We expect that it will also create accountability of the customer across the entire product and delivery lifecycle.
Today, we are centralizing these functions and our customer focus.
We also announced today the promotion of Mark Ferron, Gino to President and C O L.
Mark is now responsible for alignment and delivery of the full customer experience, including sales marketing client success product strategy and engineering.
Previously as the ex Chief strategy Officer, Mark was responsible for product management user experience product marketing customer insights and platform developer program.
He has been with the actions of 2015 and he has a deep understanding of what our customers need and how our teams can work together to increase their success.
I look forward to working with Mark and his talented team on continuing to improve our products and go to market approach.
The second immediate focus is on our approach to investing in the growth of our business. Historically, we have invested aggressively in anticipation of future growth. This works well when things go as planned but can also create inefficiency and contribute to organizational sprawl.
Going forward, we will continue to experiment, but major investments will follow clear evidence that we are gaining traction.
We are taking a more disciplined approach to all of our investments paying close attention to productivity and customer base metrics to sooner I understand what is working and where our dollars can be better deployed for.
For example, we have already reduced the number of quota carrying reps from approximately 225 at the end of the year to approximately 190 and our sales channels.
Going forward.
Our investment in growing our sales team will follow increases in productivity instead of lead them. We will also continue to look for opportunities to better utilize existing resources for maximum efficiency across the company.
As we see productivity improving we are fully prepared to add to our current team and to be clear, we will invest in what's working in a disciplined way.
Unfortunately, as chairman I've had the opportunity to get more involved in operations over the last few months and we are already making progress on our priorities. However, this process will take time I am grateful to have a talented focused and motivated team in place who are supportive and excited for change.
I'm, taking on this role in large part because of the exceptional team at Yexed and I'm excited to work with M. A C E O.
As for our finance organization I'd like to take this opportunity to thank Steve cake Red for his efforts here at Yexed.
Steve has been a great partner and he is leaving the company in great hands with the promotion of Daryl from Chief Accounting Officer the CFO .
Now I'll turn the call over to Steve.
Alright, thank you.
What I can't do yet in 2014, we were a private company a few hundred employees.
People in finance, a few products and a lot of enthusiasm today, we're a public company global base of employees and thousands of World class brands on our platform.
The company's enthusiasm remains and I'm thankful to have been part of this team.
I'm also grateful to have the opportunity to build a world class Finance organization ready to move the company forward.
I imagine the reigns over to Darryl bonds, who will exceed me as CFO Jos was one of my first hire said, yes, and somebody I'd hoped would succeed me when I eventually left.
He's worked alongside me and the management team at <unk> for years has a deep understanding of the company.
He's likely a familiar face to many of our analysts and investors as he's been heavily involved in investor relations over the years and I know that I'm, leaving the CFO .
Capable hands with that I'm going to turn the call over to Darryl and congratulate him on his promotion Daryl.
Thanks, Steve I appreciate the opportunity and have enjoyed working so closely with you over the last seven years I'm excited about my new role in the future of the X. The Steve mentioned I've met many of our investors and analysts in the past and I look forward to continuing the dialogue with you but for now let's begin with our Q4 and fiscal 'twenty two results.
Our fourth quarter revenue grew 9% year over year to $101 million.
Fiscal year 'twenty, two revenue grew 10% to 391 million.
Unearned revenue increased 16% year over year to $223 million.
And annual recurring revenue or <unk> was $390 million at the end of Q4 up 10% year over year.
Our trailing 12 month net dollar based retention, which excludes our small business customers was 98%.
Our trailing 12 month net dollar based retention for direct which also excludes small business as well as our third party reseller customers was 99%.
We've seen improvements in gross retention in the past couple of quarters, and we believe our renewed focus on customer Centricity will drive greater renewal rate and Upsells, which should improve net dollar based retention keeping in mind. This is a trailing 12 month number.
Separately, the total number of the X direct customers, excluding SMB and third party reseller customers increased 15% year over year and is over 2700.
Our direct X SNB and reseller customers with AOR over 100000 with 605 at the end of Q4 up 10% year over year.
Turning to non-GAAP results, which are reconciled to GAAP in our press release.
Q4 gross margin was 77, 1% this quarter compared to 78, 4% in the year ago quarter, we continue to be in the range of our long term non-GAAP gross margin target of 75% to 80%.
Fiscal year 'twenty, two gross margin was 76, 6% compared to 77, 3% a year ago.
Sales and marketing as a percentage of revenue declined from 54% in the fourth quarter of last year to 51% as of Q4 of fiscal 'twenty two for the full year. It also declined from 55% in fiscal 'twenty, 1% to 52% in fiscal 'twenty two on an annual basis, we expect that this metric will continue.
<unk> to improve.
G&A as a percentage of revenue increased from 15% in the year ago quarter to 17% in the fourth quarter.
22, G&A as a percentage of revenue improved marginally over fiscal year 'twenty, one and we expect to drive continued efficiencies and G&A going forward.
Q4, operating expenses were $8 8 million or 80% of revenue compared to 73 million or 79% in the year ago quarter.
Fiscal year 'twenty, two operating expenses were $315 9 million or 81% of revenue that compared to $296 million or 83% of revenue a year ago.
Our Q4 net loss was $4 1 million compared to net income of 94000 in the year ago quarter, and our Q4 net loss per share of <unk> <unk> compared to breakeven last year.
Fiscal 'twenty two net loss was $20 million compared to 22 million in fiscal 'twenty one.
Cash and cash equivalents were $261 million at the end of fiscal 'twenty. Two this is compared to $230 million at the end of fiscal 'twenty. One we intend to maintain a strong balance sheet and cash position going forward.
Net cash flow from operations for Q4 was $29 1 million compared to $24 9 million in the year ago quarter.
For the fiscal year net cash flow from operations was $21 8 million compared to $1 2 million for fiscal year 'twenty one.
The increase in cash flow generation was primarily related to the previously mentioned operating expense improvements.
We have generated positive operating cash flow and three of the last four fiscal years and expect to continue generating annual positive operating cash flow in fiscal 'twenty, three and going forward.
Capex was $1 1 million in the fourth quarter compared to $11 2 million million in the quarter ended January 21.
Capex for fiscal 'twenty, two was $13 4 million compared to $65 1 million in fiscal 'twenty one.
As we have returned to a normalized annual capex run rate.
Turning to our outlook, we expect Q1 revenue to be between $96 3 million and $97 3 million.
We expect non-GAAP net loss per share between seven and eight times, assuming a weighted average basic share count of approximately 131 9 million shares.
For the full year fiscal 'twenty, three we expect revenue of $403 3 million to $407 3 million.
Our non-GAAP loss per share is expected to be between 17 and 19 sets. This assumes a basic weighted average share count of approximately $134 3 million shares.
Operator, we are ready to open it up for Q&A.
Yeah.
Thank you we will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speaker phone please pick up your handset before pressing the keys.
Jay Your question. Please press Star then two.
At this time, we will pause momentarily to assemble a roster.
Our first question comes from Arjun <unk> with William Blair. Please go ahead.
Hi, Yeah. This is Chris on for origin I used to firstly I wanted to touch on was the customer catalog it was flat quarter over quarter from <unk>.
You know with that in mind and kind of your revenue guidance for next year.
Are you seeing significant churn in any portion of the customer base I mean, how should we think about kind of how some of those dynamics play out.
Hey, Chris This is Daryl thanks for the question no we've seen.
Some really positive.
Gross retention over the last couple of quarters I think last quarter. We mentioned, we've seen gross retention start to come back to historical levels and we saw that again. So we're really really encouraged by the signs that we're seeing in gross retention, we've made a bunch of.
Improvements in that area over the past few quarters and as Mike mentioned in his remarks, you know we continue to focus on customer Centricity and it will certainly be an area of focus going forward.
Yeah, It's Mike.
So one of the things we've looked at closely over the last couple of months as our historical here So as Joe mentioned.
It is.
Historically, we were in the mid to high Eighty's and even low nineties with gross retention, we saw that dropped to a low in the low eighties during fiscal 'twenty, one and we saw in the second half of fiscal 'twenty two our gross retention recover into the into the mid to high 80. So we're not at all satisfied with that number but the trend is actually in the room.
Direction in what it reinforces for me is that you know our focus on customer Centricity is what's going to what's going to get us back to where we were.
Got it yeah that makes sense and so with the.
There's obviously, a pretty big shift in kind of the management team.
Just broadly speaking what are the biggest priorities going.
Going into 2022 .
Yeah.
So it's Mike I'll take that one.
No.
It's a there's a lot of change.
Unfortunately, everybody who's around the table has been here and so I think that's a really great lens on the business.
There's a lot of work to do as well.
Some of the focuses that I outlined for you.
In my comments are already underway. This is the unification of the go to market and the focus on efficiency and then go to market with our products and engineering teams.
And you know when I when I talk about our approach to investments it all comes back to.
Really the cadence of that and being.
Being more disciplined about making sure that when we were making these types of investments. We have data that tells us that that were ready to expand functions.
And so you know as I get.
This is bill.
This is early here, but as I get deeper and deeper into the business. Those are the types of things we're gonna be focusing.
Okay, well, thank you for taking my questions.
Our next question comes from David Kahn with <unk> Securities. Please go ahead.
Yeah.
Yeah. Thanks, Thanks, a lot a quick question. So if I just look at the guidance for the full year.
Revenue growth.
In the low single digits sequential decline just for Q1 I'm wondering.
What's causing the sequential decline I think this is the first we've seen.
Is it coming more from the listings business or have you lost any momentum in the antenna side and then what gives you the confidence that you can still deliver on our full year growth.
Question I had is the change.
The changes to the team.
You have got into medical movie have already made on the on the sales head count so.
The household.
Is this a change in terms of reducing the head count and where are you more focused now and the people that you have.
Sometimes.
Yeah.
David This is Darryl.
Yeah, I'll handle the question a little bit out of order, but.
Your first question was.
It was about the guide and I think we.
Certainly had a tough fiscal 'twenty two as Mike had mentioned in the script and obviously the bookings in Q4 significantly impact the revenue that we're going to see in fiscal 'twenty three so you're seeing some of that dynamic there.
Question around the quarter to quarter sequential decline.
Keep in mind, we recognize revenue daily overtime and Q4 I believe has 91 days Q1 has 88 days. So that few days equates to a female a few million dollars of revenue. So that that's why we're seeing that in terms of momentum.
Answers is continuing to grow incredibly well, we are still seeing triple digit growth rate. So we feel really encouraged by the product.
As Mike mentioned, our primary focus is going to be on sales productivity and continuing to drive improvements there.
In terms of confidence for the for the guide you know where when we when we put together the guide we wanted to be thoughtful and and you know theres a lot of macro uncertainty out there, but we're basing the guide on the visibility that we have today into the business and we feel it's achievable target.
And I'll hand, it off to Mike to add yeah, I'd be I'd be happy to so with respect to the guidance specifically and you know what they are referenced in Q4 and also in Q2, we saw really significant disruption in our business I think.
It's worth noting that for as an example in AR in Q4, 50% or over 50% of our in person events were canceled because of the omicron searches in.
That's unfortunately, an important part of our sales motion so can we get better at.
At designing our sales motion so that it's more efficient during disruptions like that absolutely we can but.
But it's also it's the fact that those those things are are disruptive to us.
In terms of the sales head count.
You know I would say.
The it hasnt been surgical we've done so far it has been built around a focus on productivity and where we think we can be productive and to me productivity is one of the most important indicators of the health of our overall go to market and so.
I'd like to see how we're doing with productivity before we get into capacity modeling and increasing R. R.
Quota carrying in and making sure that we have the right number to handle the a.
The amount of demand that's out there.
Maybe just to follow up on that if I may so.
I guess that's.
What are the resort reopening phase of the economy.
It kind of relates to.
Covid and.
Shouldn't that then kind.
Kind of allow you to kind of.
Benefit from and how much are you baking in.
From that second is just hit on the recent development and training and in Europe .
Grain and if you're seeing any impact from that.
Sure. So so on the on the reopening I mean, you know I think I think it's interesting to note that we sat here.
A year ago, and we you know as a company really felt like the you know the reopening tailwind, we're coming and so you know.
We're certainly being cautious in how we build our plan and how we ultimately that affects our guide.
We'd certainly like to see those those Dell wins.
As we go into this year.
The as far as the Ukraine impact goes we have no no exposure direct exposure to Russia or Ukraine.
And so far we haven't seen that have any any impact on our business.
Thank you.
Our next question comes from Ryan Macdonald with Needham. Please go ahead.
Hi, Thanks for taking my questions, maybe the first one for Michael.
As we start to think about this I guess slower growth period in going into calendar year 'twenty two here.
How should we think about perhaps as you work through the year and some of these changes about sort of a more balanced approach to growth and profitability in and obviously you know.
Within whats built into the guide today, obviously, a little bit lower.
In terms of EPS and perhaps the street was expecting you know are there any I guess charges or or or sort of one time costs that you have to incur early in the year that is maybe preventing you from being able to ramp margins more quickly.
So thanks Ryan.
I'll leave the accounting questions to Daryl, which will be a practicing that youll get used to with me.
When it comes to but I do think you you hit on an important point, which is you know change change management at a company.
Of our size it does take time, and it's not as easy as flipping switches and so although we have already begun to become more efficient.
That those changes do take time to get through the system and.
While we are committed to those changes we also want to make sure that that will.
We're making the right changes and that there there are surgical.
And that we're not doing things that impact the core of our business, which is incredibly healthy.
When it when it comes to efficiency I mean, one of the things that you're hearing from US is that we expect to be sustained.
Sustained positive operating cash flow basis and to me that's one of the most important metric.
The metrics in our business as if were producing operating cash flow then that gives us a lot more flexibility than if we're if we're burning cash, which we do not expect to.
Yes.
Yeah, and Ryan just to.
The capture your question about the one time expenses, though there'll be some but not.
Incredibly meaningful in.
In Q1, one thing that we are going to focus on is a lot of operational efficiencies and continuing to look at where we're spending how we're spending and reallocating as needed.
Well you know throughout the year, we're going to probably look at R&D and may spend a little bit more there as we have an opportunity to improve the product to make them easier for customers to use and that's going to be an area, where we'll continue to focus as well we mentioned in the past that we've made some investments in customer success and customer support will continue to look.
At that area as an opportunity to you.
Three better customer experiences to help continue to drive retention improvements and the one thing that we've been talking about for quite some time and have demonstrated some pretty good success is continuing to drive efficiencies on the sales and marketing line and we expect to continue to do that.
Excellent is helpful and maybe just as a follow up as we think about the go to market strategy, you've talked about the unification of that strategy is already.
<unk> underway and you're working towards that as you think about the product set between listings and pages and answers. The answers suite that continues to evolve do you still feel that there's a strong sort of synergy and cross sell motion between the two and if not is there or are you looking at sort of is there any product rationalization, we should expect that as a part of the changes.
Thanks.
So so so my point of view on that is.
We.
Across the product family, we're still seeing that kind of non listing products are still growing about 30%. So.
You know, we do see strength in that in that business. Obviously listings is the biggest part of our product set.
Upsell Cross sell motion is one of the most important parts of our go to market I think it's one of the biggest opportunities for us when we talk about.
Hi.
One of the ways that we will know that we're doing a better job with our customers as we'll be seeing higher gross retention and higher upsell.
And it's certainly one of the things that impacted us in fiscal year 'twenty two on the new bookings side. So.
I'm a I'm a firm believer in my I've spent most of my career building solutions that start with the customer and they start with solving the customers' problems and I don't see a single product in our portfolio that doesn't solve the salt with very large customer problem, we have to do a better job of coordinating our our motion when it comes to showing our customers the.
Solutions to their problems and and servicing them when we do get.
When we do get those deals.
Excellent thanks for taking my questions.
Our next question comes from John Baugh with J P. Morgan. Please go ahead.
Oh, great. Thank you for taking my questions.
I just wanted to take a step back and maybe if you can talk about what surprised you in the quarter in terms of Q4 bookings, but it seems like the all round numbers came up at least for the lock what we were thinking.
Talk about what surprised you why did why was it not that great and.
Maybe talk about the core business core business was coming back up I think last quarter. It was growing about 5%.
Come from like 1% growth in key for all of last year.
How has that did that take a step back in Q4, essentially but that kind of impacted bookings. The other thing associated to that is I think you see reps you said up to 25 I think the year before you enter into 50 was there a higher seals attrition that you saw.
Ending the year at.
Was that a result.
That impacted kind of bookings help us understand what impacted bookings.
Yes, so there there's oh, good I'll go first and I.
I think there you know when you when you talk about Q4, and we saw this to some extent in Q2 as well.
I think we told you in Q3 that we were going to be doing theres going to be a lot of focus on customer facing events and getting back to our to our customers and as I mentioned before we between.
December and January we lost more than half of those events simply because we couldn't do them. So you know the surprise for us in Q4 was how disruptive the the the motion in the world was by the Omicron surges.
Again, I'll say it again, we should we should get better at selling through those sorts of disruptions, but certainly when we.
When we exited Q3, we didn't expect to see that that kind of disruption in it it absolutely affected bookings.
Oh and I'm sorry, your other your other question was about sales attrition I think.
Yeah.
You know what when in shifting from a capacity driven model to a productivity driven model.
This is a this is a little bit of a different focus for us and so you will see natural attrition and an organization that are where you have fewer sales reps who are achieving their quota.
In this case, we are we wanted to make sure that we were addressing productivity proactively and so that that big MPC from 225 to 190 currently that that was more action on our side.
Yeah.
It was more a more forced and voluntary is what you're saying.
It was it was proactive on yes.
Right. Okay got it so let me get back into queue. Thanks.
Our next question comes from Rohit Kulkarni with <unk> partners. Please go ahead.
Oh, Hey, thanks for taking my questions good luck over and Steven and congrats Mike and vital so just double clicking on this kind of fragmented product can see his comment.
Mike maybe you can oh can I expand onto.
Last year, it would be kind of hurt the a lot around lead with answers and that's going to be the leading product although listings remains predominantly the largest.
Dry wood off all the economics, so well, but perhaps maybe you take a step back how long do you thinking next 12 months.
With regards to go to market and also increasingly be what are you hearing around.
Kind of where did he go lives all use cases, gaining more traction and that's to be some of the salespeople who are being directed to.
Go after specific vertical use cases.
Support E Commerce and whatnot. So as you think through over the next 12 months, what should we expect from Oh kind of a more unified protocol deals should we expect more of these vertical use cases or is there going to be a step back with regards to listings being the more.
You didn't product, we'd love to hear your big picture thoughts on that.
Yeah. So I'll give you my my Big picture thoughts on them, we'll be updating these quarterly as I get deeper into it but again, because I have been chairman and I've had an opportunity to be very engaged over the last few months I'm not coming into this conversation cold one of the things we still see is that our bigger deals are still answers led so.
I see nothing that says that the answers opportunity isn't as big as we thought it was and that.
And that we won't be.
Continuing to lead with answers, where we're it's part of it where it's the most important part of the customer solution.
You know another way that I would I would frame. This and again this is all sort of stuff I've dug in on us.
All of our products are.
Our are built around getting the right answer so while we you know we distinguish between listings and pages and answers as an example listings wasn't the original answers product. It was it was where were how do you make sure that your local.
Information.
Is correct everywhere, it's getting getting the right answers the customers right answers out there. So nothing about that has changed and nothing about my point of view on the opportunity has changed what we have to do is execute better and and that goes to.
You know by vertical is selling is a very useful way to think about this expertise matters understanding the customer matters more than ever and our new go to market motion.
You know when I talk about fragmentation.
What are the types of things I'm talking about the number of touch points that our customers feel so my wife will forgive me for sharing her customer experience, but she she runs a small restaurant group and.
When I asked her how her customer experience was going she said.
It's great we've had at least 15 customer touch points.
Which was.
I think as part of the challenge is that we have so many different groups touching the customer at times.
You know I think we lose track of of having a single dialog with the customer and so the organizational changes that we've already started to make her about centralizing those interfaces and making sure that climb.
Client success support.
Professional services customer service that they're all touching the customer in a way in a way that's very consistent and aligned with our and more closely aligned with our go to market.
So hopefully that makes sense, but that's really what we're what we're driving towards and that's how historically.
I've I've done this in the past with other SaaS.
SaaS type solutions.
Oh, Okay and just one.
Other question on Upsells and renewals any specific call out and how that has trended over the last 91.
One thing to do is with regards to China.
Any particularly callouts with regard.
Was up so it's more stronger it would be good order and he was.
And then they can all of your attention how did that trend.
Yeah, so what.
We've seen some some pretty pretty solid improvement in gross retention over the last Q3, and Q4, where we're really challenge and continue to be challenged is on the up sell and I think that sort of plays into a lot of what <unk> been talking about about sales productivity and continuing to refine the go to market approach.
Okay. Thanks.
Right.
I was only going to add that that you know I think when when you get the customer relationship.
Relationship right and when your customers are happier the ups the entire upsell I mean, this is simple basic stuff, but the the whole upsell motion gets a lot easier.
When you know if we're seeing challenges on the on the customer satisfaction or or success side of things then it makes it makes that conversation harder in.
While we have seen the renewals recover.
There are two historic levels, we are very focused on getting them back to or above where they've been historically.
Yeah.
Okay. Thank you.
Okay, and if you'd like to ask a question. Please press Star then one on.
Our next question comes from Dan <unk>.
Ski with Morgan Stanley . Please go ahead.
I guess, if Elizabeth on farmer Stan. Thank you so much for the question I wanted to double click on the go to market efficiency.
Given some of the comments last quarter about 50% improvement in sales productivity ramp goodbye.
Was there anything specific that changed over the last three months outside of just the reduction of in person at a time.
Yeah, So I.
I think what we saw was you know the the 50% increase in ramped Rep productivity. We obviously took a step back in Q4, there and it is.
It certainly had a lot to do with taking a look at what we're seeing on the productivity side of that we we have many reps who are highly successful and there was a model for success here, we have to get better at replicating it when I talk about unifying sales training and enablement and making sure that everyone's using the same motions. That's all part of part of that process and.
And so.
You know.
Yeah.
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