Q4 2022 Sprinklr Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to Sprinklers fourth quarter and full year fiscal 2022 earnings conference call.
At this time all participants are in a listen only mode.
After the Speakers' remarks, there will be a question and answer session.
Limit your questions to one so we'll have time to go through all the questions.
Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today Ms.
Mr. Eric Sgro Senior Vice President Finance for introductory remarks. Please go ahead Eric.
Thank you Diego and welcome everyone keeps sprinklers fourth quarter and full year 2022 results financial call. Joining us today are Roger Thomas Sprinklers, founder and CEO and many sarin Chief Financial Officer.
We issued our earnings release, a short time ago filing the associated 8-K, with the SEC and we've made that.
Available on the Investor Relations section of our website, along with a supplementary investor presentation.
The call let me please turn it over to Roger.
Thank you, Eric and Hello, everyone. It is wonderful to speak with you all again before I get into the numbers I wanted to start by welcoming monesia.
Our new CFO to sprint, but I couldnt be more excited to have him and frankly his track record of scaling high growth Tech companies as we continued to position strengthened for the next chapter of scale growth and efficiency I know he's looking forward to getting to know all of you when each will take you through a detailed finance.
Will result in a few minutes, but I wanted to start with some of the highlights first and foremost I'm pleased to report another strong quarter that exceeded guidance on all metrics. At includes Q4 total revenue, which grew 30% year over year $235 7 million.
And subscription revenue, which climbed to $117 $7 million, which is an increase of 31% year over year coming off significant reacceleration that we drove over the past four quarters. This is now our second straight quarter delivering.
More than 30% in revenue growth with this with the strength of that execution, we finish FY 'twenty, two with $492 $4 million in total revenue, which is an increase of 27% year over year and that was primarily driven by four <unk>.
<unk> 27 $7 million in subscription revenue, which is up 26% year over year.
Not only have we re accelerated growth. We're also doing it at scale with nearly half a billion dollars in revenue for the year.
Combination that we believe reflects the durable multiyear growth.
Opportunity that we see for sprinkler and our ability to win in a massive customer experience management category that we believe is only getting started.
As you know we have four product suite for major customer facing functions, including customer care.
Research sales and marketing each of which have reached significant revenue scale for us and our leading solutions in their respective areas I wanted to start with an update on our suite for the CCAR space, which we call modern care.
We're incredibly excited about the growth we continue to see in this suite.
Included multiple Q4 deals near or above the million Mark in IRR phenomenon wins with new customers like land, Scott and room and expansions with big names like Uber and Honda.
Our customer care represents a huge opportunity for us with both the world's largest and most established companies like Samsung and L'oreal and a new class of emerging.
Enterprise brands like Robinhood and Hooper.
The recent it's very clear if you run customer care at an established global enterprise.
You've likely added one point solution after another over the years, but we now want to E Mail you and another one for boys. Another one for live chat how about one for social media and maybe a different one for community.
Customers are moving across these traditional and modern channels in real time seamlessly, but youre teams they can't.
Asking customers to share the same information over and over again, which is filed away in some siloed system, you're always reacting struggling to solve our customers' most basic issues with software that was built 20 years ago.
Meanwhile, the gap between the care you deliver and what modern customers expect.
Only widened driven by a new wave of new digital companies that are unencumbered by the legacy technology of the past.
Our CCAR solution wins with both groups the enterprises building care infrastructure from the ground up that one one platform that can do everything they need across channels.
And the enterprises.
I've been around for decades that need a bridge from the Paas infrastructure to the future.
Great customer care is often the foundation for great customer experience management and because of that.
It serves as a natural entry point for new customers and an office.
Expansion opportunities for existing customers, it's Franklin.
A great example of that and a company that continues to grow with us on a <unk> journey is Uber.
We started working with us back in 2014, using our social engagement and sales suite to publish brand content from hundreds of accounts across multiple countries and continents.
In 2018, as Uber saw exponential growth around the world. They added 600 more seats for community managers to handle the growing volume of customer inquiries.
<unk> then took it to the next level, adding our second suite for customer feedback and insights.
Our new rapid response team could proactively listen for critical safety and brand issues and use sprinklers advanced automation engine to triage the high priority ones.
Recently.
We went live with the third suite for customer care.
Ramping up to more than 1000 agents around the globe.
With sprinkler AI identify most important of the $4 million.
More than 4 million inbound messages Uber received every year sprinkler has already saved these agents thousands of hours since launch and is helping them respond to inquiries with an industry average industry, leading average response time of 145 minutes.
Earlier this year, we highlighted a big win with one of the world's largest banks that signal our arrival in the <unk> space.
Where we beat out some of the industry's bigger players thanks to our digital first AI powered approach.
And we replaced 10 plus points solutions there.
And enabled over 15000 agents to serve customers across channels that include it voice email live chat Whatsapp, social media and text message in.
In Q4, we continued that momentum with another big seek ashwin.
And then Scott one of the worlds fastest e-commerce brands that originated in India.
As Len Scott has grown so too has the number of cases coming in across channels from voice to live chat to social with sprinkler. The company will replace four point solutions all at once.
<unk> thousand agents across the U S middle East and Asia to improve agent productivity and to deliver more proactive customer care.
Yeah.
A second place customers frequently start their journey with sprinkler is our product suite for customer feedback and insights, which we call modern research.
We saw that trend continue in Q4 with large deals from new customers like Columbia, sportswear and BW Alpine F. One team and significant expansions with customers like Albertsons and Twitter.
Listening to customers is the perfect place for you to start looking.
We're looking to deliver exceptional customer experiences and the alpine F. One team is a great example of that the iconic racing team will implement three of our four product suite to start with and beginning with the ability to listen to fans around the world in more than 50 different languages there.
A real differentiator for our solutions. However is the AI that powers, it which will enable them to turn those unstructured conversations into insights.
That they can act on they will also be able to create more personalized marketing content from the insights they get while simultaneously engaging with 10 times more fans across channels in real time.
Social engagement and sales is the third suite that customers often land with it and this quarter was no different as we closed multiple large deals and secured amazing new logos like Jaguar land Rover, Hawaiian Airlines, and Doc Martens and expanded with other.
Global brands like Pepsi and Roche.
Dr. Martin This is a great example of our customers land with US in this case with two product suites following its IPO last year.
The iconic European brand.
They entered a new key stage of growth.
And as they look forward to becoming a digital first direct to consumer company with global reach they partnered with us to support that growth.
To drive efficiency visibility and collaboration across their customer facing teams, bringing them onto one platform and replace the multiple point solutions in the process with more than 9 million followers across Instagram Facebook ticked up and take the Doc Martens will use sprinkler to listen to it.
Customers and inform how and where they connect with them.
They will also be able to engage the community more effectively managing brand content across channels.
Benchmarking its performance against other best in class brands.
We continued to see strong growth in our fourth product suite for marketing and advertising as well expanding with customers like lululemon.
<unk> Bank and U S. Marine Corp has one of the leading banks in the UK TSB is a great example of a company that's already unified <unk> across all four of our product suite and continues to grow with us when they first joined US in 2019, TSB started with three of our four suites to put.
<unk> brand content across channels benchmark against competitors and to do customer service on Twitter and Facebook messenger.
2020, TSB added a full suite for marketing and advertising, enabling internal teams and agency partners to coordinate campaigns across channels and easily measured the impact of their work in Q4, TSB expanded their use of a modern marketing and advertising even further and.
Tripled their social engagement and sales seat, enabling more teams to benefit from the unified <unk> platform that we provide.
Our unmatched pace of innovation is at the core of our ability to win in each of these customer facing functions.
Last year alone, we rolled out <unk>.
Proximately 1600, new features and enhancements and products, including sprinkler voice to reduce call volume with a radically different contact center model and sprinkler AI studio to empower users to create and customize AI models without <unk>.
Moving to write code.
As you know we also launched our first two self service products something that we are very excited about in the long run modern research light and modern care light, which makes it easier for companies that arent, yet sprinkler customers to try our platform, especially as we expand our footprint to our second vector of.
Growth, which is focused on companies with $100 million to $1 billion in annual revenue.
Just in a few months after launching our care light in beta we are already closing new customers in the second vector.
One of our first is the <unk> space Telco group MTO, which was looking for an easy to use omnichannel platform for its care team.
He founded and sprinkler, Caroline which enabled mtel to go live on day, one with seamless integration and with no hardware or software installation.
Moving to our care light solution Mtl's agents have been able to stop responding natively and handle thousands of tickets across five different channels, including E Mail Whatsapp live chat Facebook and Instagram and again all on one platform, we continue to be Super excited.
About the early response, we're seeing with these light products and the positive impact we're seeing on demand generation.
As you heard in the examples I just shared we're seeing two clear trends and we're seeing it again and again.
The first thing we see is that every customer facing functions from.
Care to research to sales to marketing.
The exact same problem.
You should talk to some of our customers and talk to any brand to realize what the problem is point solution chaos. Every one of these teams has its own disjointed set of tools some newer some older.
But none of it built to work together inevitably the leaders of these functions will look to replace these point solutions and unify the functions Tech start tech stack with the modern suite that delivers the experience that today's consumers expect and when they do many of them are turning to sprinkler.
The second thing we see is that once one customer facing function comes onto sprinkler, whether its brand business unit.
Team.
And they put the foundation of governance in automation and analytics and AI that comes with an enterprise unified platform like ours.
The other functions and other teams in other markets and other business units tend to follow.
That's when the true power of platform comes to life in a way that no point solution can ever demonstrate.
When we founded sprinkler in 2009, we knew that the world is.
Centrally need one platform to unify the edge of the front office, where your customer meets your brand. So we build.
For that future from the start with the single codebase, So everything and everyone can work together to listen to engage and reach customers on any channels that they prefer.
The channels that exist today and any that is going to eventually come in the next months and years, you've heard me say this before.
Enterprises don't start with unified CX M.
Arrive it today as I meet with more and more C suite executives than ever it's clear that the vision, we had more than a decade ago is increasingly becoming a reality.
With the world's largest enterprises, bringing multiple customer facing teams and functions together on sprinkler to unify customer experience management with that let me turn it over to Manish.
Thank you Rajiv and good afternoon, everyone.
It is great to be here today, and I'm excited to be at sprinkler.
Looking forward to working with all of you over the coming days and weeks.
As you heard from Rajiv, we delivered another strong quarter across the board and we're pleased with our ability to once again exceed expectations across all key financial metrics.
During the fourth quarter total revenue was $135 7 million.
30% of year over year and above our previously announced guidance range of $129 million to $131 million.
This was driven by subscription revenues of $117 7 million, which grew 31% year over year and were also above our previously announced guidance range of $113 million to $115 million.
Q4 marked the fourth consecutive quarter of accelerating revenue growth for our subscription business.
Turning to gross margins for the fourth quarter on a non-GAAP basis. Our subscription gross margins include further to 80% as we begin to drive efficiencies in our cloud operations, leading to a total non-GAAP gross margin of 71%.
Before we review operating expenses.
I would like to make you aware that during the fourth quarter of FY 'twenty two subsequent to the guidance. We provided on December nine we identified certain immaterial corrections. These relate to the capitalization of cost to obtain customer contract dating back to the initial adoption of ASC 606 in FY 'twenty.
The net impact of these changes is to capitalize additional expenses each year and amortize these costs over the life of the customer.
Additional details are outlined in our Form 10-K that will be filed in the coming days.
It is important to note that this immaterial corrections to prior period has no impact to our previously reported revenues revenue growth rates gross margins cash flow or cash position.
The net effect is a decrease to opex of $3 2 million in FY 'twenty, one and a decrease of $2 6 million for Q4 Q1.
Through Q3 of FY 'twenty two.
We have included a slide in the current investor presentation on our Investor Relations website to clearly identify these changes and the impact to FY 'twenty, one and FY 'twenty two.
Furthermore, the guidance that I will be discussing shortly reflects the impact of these changes.
In terms of our operating expenses, we continue to invest in sales and marketing as well as research and development to support our extensive product set and go to market initiatives.
During the fourth quarter total non-GAAP operating expenses increased 57% over the prior year to $108 2 million, representing 18% of revenues up from 66% of revenues during the same period last year.
This investment was partly a catch up investment from the prior year, when we had curtailed incremental investments given the unknown impact from Covid as well as investing for future growth given the strong demand environment for our products as evidenced in our subscription revenue growth numbers.
non-GAAP operating loss was 11 5 million or five cents per share.
Recall, our previously announced guidance range was an operating loss of 21 million to $23 million or 8% to nine cents per share.
The benefit in Q4 from the immaterial collection was approximately $1 five per share.
As a reminder, these numbers do not include the one time litigation settlement of $12 million, which was accrued for in the fourth quarter, but was paid here in Q1 FY 'twenty three.
In terms of cash flow, we used $18 million in free cash flow during the fourth quarter compared to $10 4 million in the same period last year underscoring. The continued investments we are making in the business.
I'm also happy to report that our subscription revenue base net dollar expansion in the fourth quarter was 120%. This metric has grown consistently for every quarter in FY 'twenty, two and demonstrates our ability to upsell and cross sell our extensive product set two.
Our installed base of mid and large enterprise customers.
I would now like to dive into the billing stop they can provide you additional insights from my perspective.
Calculated billings for the fourth quarter with $186 2 million, which was an increase of 28% year over year.
Calculated billings for the full year FY 'twenty.
$535 4 million up 33% versus the prior year.
Additionally, billings in the second half of FY 'twenty, two what up 30% versus the first half further demonstrating the strong momentum we are witnessing in our business.
There are two distinct trends in our billings that investors need to be mindful off firstly, there is a seasonality within our billings with Q4 being the highest billings quarter of the year, given the cyclical nature of demand inherent across the technology industry.
Similarly, Q3 is our lowest billings quarter, driven by the timing of renewal activity. This billing pattern has remained consistent over the last several years.
Secondly, we maintain a high degree of short term billings in our business Approx.
Approximately 75% off contract on a dollar basis are billed annually with the remainder being a mix of monthly quarterly or semiannually given unique customer requirements in this regard.
To be clear, we do enter into multiyear contracts with our customers with contract terms ranging from one to three years, which is consistent with other enterprise software companies. However, the billing cadence for these contracts varies and often times with their duration that is less than 12 months.
This creates a dynamic whereby billings growth is more volatile than revenue growth.
During the pandemic, we worked constructively with our customers to accommodate their needs further exacerbating this bill and dynamic.
Turning to a quick summary of financial results for the full year FY 'twenty two.
Total revenue was $492 4 million up 27% year over year, whereas subscription revenue was $427 7 million up 26% for the full year.
As stated earlier calculated billings for the full year were $535 4 million up 33% year over year.
Billings growth in FY 'twenty, two was higher than revenue growth in the year, but this was largely a result of the lower billings, we experienced in FY 'twenty, one driven by the pandemic, making the FY 'twenty two billings growth seem larger than comparison as.
As we revert to a more normalized demand environment with aggregate billings duration expected to remain below 12 months, we anticipate there to be a delta between revenue growth and billings growth with annual billings growth lagging revenue growth by approximately 5% assuming all else stays the same.
For the full year FY 'twenty, two total non-GAAP operating expenses increased 55% over FY 'twenty, one representing 78% of revenues up from 64% of revenues during FY 'twenty one.
As outlined earlier this incremental investment during FY 'twenty two should be viewed in light of the strong demand environment, we are experiencing as well as the continued investments to broaden our product portfolio and work with customers on their digital transformation project.
non-GAAP .
Operating loss for the full year was $35 5 million equating to a net loss per share of <unk> 24.
As you recall, our previously announced guidance range for the full year was an operating loss of $48 million to $50 million or $30 31 per share.
In terms of cash flow, we used $45 3 million in free cash flow for the full year with 33 million used in operating the business $6 1 million in capital expenditures and an additional $6 3 million in R&D costs that were capitalized in the balance sheet. We ended the year with 500.
Third $32 4 million in cash and short term investments.
As of the end of FY 'twenty, two total remaining performance obligations or RPM, which represents revenue from committed customer contract that has not yet been recognized was $586 4 million up 36% compared to the same period.
Last year.
And CRP was $409 2 million up 30% year over year.
We continue to believe that subscription revenue subscription revenue growth <unk> and ARPA growth represents the best metrics to evaluate the underlying health of the business.
Our billings can fluctuate significantly relative to revenue based on the timing of invoicing cadence of renewals and the duration of customer contracts.
And finally, we now have 82 customers contributing $1 million or more in subscription revenue over the last year, which is a 26% increase year over year.
This momentum speaks to the strategic value that our platform creates for the world's largest and most valuable brands. As a reminder, we calculate this customer count using $1 million in recognized revenue from these customers for the duration of the year as opposed to IRR.
Regarding our customer count we ended the fiscal year with 1166 customers going forward, we will be disclosing this customer count metric on an annual basis only.
Moving now to our Q1 and full year fiscal 2023 guidance and business outlook.
We believe that companies will continue their digital transformation journey and the move towards unified CX and will continue to take shape given that we are projecting meaningful growth for our fiscal 2023 guidance.
Starting with the first quarter of FY 'twenty three we expect total revenue for the first quarter to be in the range of $140 million to $142 million, representing 27% growth year over year at the midpoint.
Within this we expect subscription revenues to be in the range of $123 million to $125 million, representing 28% growth year over year at the midpoint.
We expect our non-GAAP operating loss in the range of 14 million to $16 million and a non-GAAP net loss per share of six to seven.
Assuming 260 million weighted average shares outstanding.
For the full year fiscal 2023, which ends on January 31, 'twenty three we are providing the following initial guidance.
We expect subscription revenues to be in the range of $536 million to $544 million, representing 26% growth year over year at the midpoint.
And we expect total revenues to be in the range of $607 million to $615 million, representing 24% growth year over year at the midpoint.
As a reminder, we have an easier compare in Q1 of this year from a revenue growth perspective, and the comparisons get more challenging in subsequent quarters, given the strong and accelerating growth. We have demonstrated over the last four quarters. We also anticipate the billing cadence to follow the same pattern as demonstrated.
With the recent fiscal year 'twenty results.
For the full year, we expect a non-GAAP operating loss in the range of $44 million to $48 million equating to a non-GAAP net loss per share of 'twenty to 'twenty, two assuming 260 million weighted average shares outstanding.
In the driving the net loss per share an incremental $7 million in tax provisions for FY 'twenty three needs to be added to the non-GAAP operating loss to range just provided with a de minimis amount accrued in Q1, and then building throughout the year.
non-GAAP operating loss, our client above and is inclusive of the benefit of a couple million dollars related to the immaterial correction referenced earlier.
As we scale the business and continue to demonstrate meaningful year over year growth, we are endeavoring to become more efficient.
We estimate the quarterly non-GAAP operating losses to improve materially in the second half of FY 'twenty three.
In terms of free cash flow, while we intend to keep investing for growth given the market opportunity in front of us we expect to get to a free cash flow breakeven level during FY 'twenty four.
In summary, let me leave you with a few key takeaways from my perspective from my early tenure here at sprinkler.
I would like to start by thanking everyone at the company for delivering a strong Q4 and a great start to fiscal year 'twenty, three and for helping create a durable multiyear growth opportunity for the company.
I have been very encouraged by all the people that I've met at sprinkler, the breadth of our technology platforms and a remarkable customer base. We are building a track record of successful execution with the opportunity for consistent sustainable revenue growth, coupled with prudent operating discipline across the.
<unk>.
We are excited to be on this journey with you and with that let's open it up for questions.
Operator.
Thank you and at this time, we will conduct a question and answer session.
And please limit yourselves to one question each time, you put yourself in the question queue.
To ask a question press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You May press the star key followed by the number two if you would like to remove your question from the queue.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Our first question comes from Mark Murphy with Jpmorgan. Please go ahead.
Yes, thank you very much and congratulations on a very strong finish.
This fiscal year.
Rajiv I'm wondering what you're sensing in terms of business confidence from.
Marketers and social media teams, especially in Europe .
The result in the guidance is.
Quite strong you're calling for.
A solid year of growth.
Are the geopolitical events and the macroeconomic factors starting to cross their minds at all.
As they think about their budget or.
Do you sense relatively smooth pipeline building in Europe , and kind of good business confidence overall for this category.
Okay.
Thank you Mark good to talk to you again.
We are actually sensing.
The renewed confidence in the offering that we bring to the table I just got back from.
Weak in Europe , where we met with over 75 customers.
What was interesting was almost all of them.
Use that we're using our customer feedback and insights product writer modern research product had configure dashboards to understand the impact of the what's.
What's going on in Ukraine in ratio to their business. Let me give you two specific stories, one customer I met with just told us that the previous week.
<unk> discovered online conversations about their logo looking like like the Russian Army symbol and it was picked up by sprinklers volumetric triggers.
Reflecting negative sentiment picking up.
And in 72 hours they saw that conversations go from tens to hundreds to thousands and tens of thousands and because they were watching it grow in that same 72 hours. They were able to make a business decision and remove their logo and replace it with Texas All digital properties and then <unk>.
Subsequently solve those conversations decline.
I thought there was fascinating we know another customer I visited basically was explaining how they discovered the logo look like or the Ukrainian flag colors and that was frankly, attracting a different set of conversations and they made the decision of engaging in responding and putting out there.
Their point of view on it all based on strategic insights that we were delivering from the voice of the world.
And another bank that I know of basically was planning to this year was going to make a decision and take us pounce on it and discovered that using sprinkler.
The other competitors of his did make.
Their stance is public and negatively affected.
Super encouraged by businesses, making decisions I mean, obviously, because the sprinkler but.
Making decisions that are based on the voice of the world and voice of the customer. So that's just the stock businesses are moving digital direct to consumer is a huge deal and we serve exiting from conversational commerce.
Digital customer care I think the world is moving in our direction.
Well those are wonderful anecdotes I. Thank you for sharing that and I will limit it to one question to comply with your instructions here. Thank you.
Thank you Mark.
Thank you. Our next question comes from Raimo <unk> with Barclays. Please state your question.
Hey, this is Frank on for Raimo, Congrats to a strong into the year here.
Would you remind us of the rollout cadence or any early feedback youre getting around the light offerings and how is this baked into the guidance specifically for FY 'twenty three thank you.
Thank you Frank.
We are not factoring.
A major.
Revenue from the light offering in our models as I mentioned before in previous quarters.
The ability for us to make our platform in a self service very low touch.
Zero day, one day on being getting up and running it's a strategic multiyear.
Plan for us.
So we are very early the results are very encouraging we're watching clients get onboard by them selves setup I saw a client that had set up over 100 automation rules by themselves.
Up and running so we know we're moving in the right direction. We know we are simplifying what is a fairly massive piece of technology in the front office and but they're all experiment for us for now and the numbers are and factored in.
Great. Thank you.
Thank you Frank.
The next question comes from Elizabeth supporter with Morgan Stanley . Please go ahead.
Great. Thank you so much and congrats on the strong quarter I had a question on the MLR improvement understanding it's a 12 month metric. So theres, some COVID-19 quarters, probably falling off sale, how should we think about the cadence of expansion do we start to normalize at this 120 or King cross sell opportunity really tolerate further as customers expand into March.
Okay.
Yeah.
Absolutely great question.
We have four product suites with a lot of functionality underneath it if you look at our average.
Revenue per customer per product suite, that's going to you're going to see that range from.
Just below a 100 to 150.
You look at.
The largest customer in each one of those suites that peak as you will see a very very different number you will see that our largest customer in marketing and advertising piece is close to north of $6 million, our largest customer and care paces.
Close to $4 million, our largest customer in research basis, close to $8 million and our largest customer engagement pieces over $5 million.
So it's super obvious to us that we've got the Sips and show Tam just within our customer base and our first set of Victor one clients as we call. It 10000 of dose. So we know the Tam stake, we know that our customers expanding.
It's our ability to deliver we've taken the approach of land and expand in a very soft way, so we'd love to land with one product through our value and expand into other business units extend into other market in.
In short what Im seeing is.
We anticipate continuing to stabilize and grow on our expansion rate and we think there's a lot of opportunity right there.
Great. Thank you so much.
Our next question comes from Michael <unk> with Keybanc. Please state your question.
Great. Thank you very much and wonderful quarter Rajiv can you drill down you did some didn't suffer somewhat.
Paired remarks, but a little bit more on <unk>.
Can you talk about whether you are.
I don't know if you mentioned actually replacing other dedicated.
Call Center and see cash vendors.
And what some of the revenue uplift is coming from that and Conversely finish.
If there is any headwind to gross profit gross margin profitability.
Absolutely Michael we are.
This is this is an exciting opportunity for US you probably picked up from our focus in the last several quarters that we see cash the market's expanding 15% year over year.
In aggregate.
As a great growing opportunity.
What we're finding is our new set of clients that are coming to us are in fact, replacing traditional care vendors and it might be.
Point solution care vendors like a live chat care vendor I'm, not going to name them or a regional voice vendor.
And but what we are finding and in the case of land Scott There was a point solution that the <unk>.
Inbound voice care team was using it as a separate voice.
Voice solution that the outbound sales team was using and not to mention the other point solutions that digital teams are using and all of those are getting replaced with with the sprinkler platform actually what was exciting for me.
As with land Scott they insisted on implementing sprinkler voice force before they they rolled out the digital and social capabilities, which we are very.
Which is our original bread and butter. So we think it's very early we have a couple of deployments that are fairly at scaling the 15000 agent deployment.
And so.
We're going in with a lot of caution as you know this is a.
An industry that is very old right. It's been around for 40 50 years.
And Theres a lot of nuances from a margin perspective, no that we're not getting into the deep stack right, where we're not we're not doing the the core voice part we connect to services like Amazon connect or Twilio or others in our value creation happens on the application layer where.
It should be very obvious to all of you that there is not one other care vendor that has the listening capabilities. We do so when you turn on sprinkler care Youre, turning on sprinkler listening with it which means your tickets start slowing in before you publish a one 800 number.
That's fascinating and core differentiator.
Second core differentiator is the fact that your omni channel by design.
The route that quarter of the architecture, it's not like we acquired different point solutions stitch them together with DUI no one else to the best of our knowledge is billed.
Solid foundation of cannot let gnostic customer care and number three is par deep AI capability.
As a buzzword I hate myself, we're using it but we've span seven to eight years with hundreds of consultants every single day training, our AI models and over 100 languages.
And we're using the same UI to voice to voice.
<unk> detects and sentiment analysis and intend detection all the things that we've done really well in digital we are bringing that to voice and translating all of that into reducing call center wait times, reducing call center capacity needs and time to respond in the time to resolve.
And the most important thing is.
We take the noise out was just talking to a customer that had 400000 inbound requests out of which the sprinkler AI model identified the 10000, they should be engaging with that given day.
That before and after for this customer was like ROI on arrival.
Thank you.
Thank you.
Our next question comes from <unk> <unk> with William Blair. Please state your question.
Perfect. Thank you and congrats on a strong close to the year.
We're actually in your in your prepared remarks, I think you went through where customers are landing most frequently and.
Where they expand into after that can you just give us a sense for how the landing point.
Our platform has changed for customers over the years.
Develop new capabilities and innovated across your suite and how frequently are customers now landing with multiple suite, where they say hey, I want to take advantage of the entire sprinkler platform or at least multiple a couple different product suites.
And if I might <unk> strategy across multiple domains.
Hey, urgent care to talk to you again.
We are.
Actually increasingly seeing our landing spots open up and it has a lot more across the board than it ever was and you remember you and I have talked over the years and it used to be our sales and engagement research and now we're seeing customers start with us for care and customers start with us for marketing and advertising.
And I think we are increasingly seen seeing is an acceptance that they all need to come together. So that's the first trend and honestly.
<unk> is pretty and platform, it's very simple to understand right everybody selling everybody's marketing everybody is doing customer care everyone's trying to understand what customers want and get feedback in real time without doing surveys.
We just provided in a unified way and that's the key difference so we're seeing that.
The deflection from pointed landing spots too diffused across our platform and products suite Interestingly, what we're also seeing is.
The emergence of a new crop of next generation companies like the rooms in the land Scotts or the Robin Hood.
<unk> of the World, who are fearlessly coming in and saying Hey listen.
I don't want to I wanted to just clean up.
Scott is a great example, where they said I don't want inbound and outbound.
Colliding with each other and think about their business where people buy their glass.
<unk> like every twice every four years.
Three times.
They're calling into get a order field.
Have a question and you've got outbound people trying to reach this in person and get them to buy again and they were all getting in each other's way and.
Think about the market. They serve you know someone's trying to reach you on Whatsapp and then you want to get them on the phone.
Ask a question quickly or.
So ask them to try out something.
It was just getting in all over the place and you've got a cofounder of the company going.
One of them. This is where my business is going to go direct to consumer next generation I, just cant afford to bring to Franklin stack up the past.
And so we're seeing pad creative companies to seamlessly start with two three sometimes all four of our suite.
Very helpful. Thank you Roger.
Thank you.
Our next question comes from Tyler Radke with Citi. Please go ahead.
Yes, thanks for taking the question, maybe I'll turn it throw a question over to Manish.
If youre still on the line there.
Congrats on the first earnings call here in a good quarter.
Just a couple.
Kind of housekeeping question so first.
Could you talk about the current ARPA growth in the quarter I apologize if I might have missed that and then secondly, maybe just help us understand.
You took a look at the business and set guidance.
For the year, what are the areas that may have changed from our.
Guidance philosophy perspective relative to your <unk>.
Predecessor.
How are you just kind of thinking about.
The inputs and level of conservatism in your guide thanks.
Thank you for the question and thank you for asking me a question I was getting bored over here so really appreciate it.
Sure.
So I think the first question RPM growth was 36%. So that is part of the prepared remarks, I think that number was $589 4 million.
CERP growth. The current portion was 30% and I believe that number is $409 2 million.
In terms of guidance philosophy, I don't think much has different except as I was saying in my prepared remarks, several things have happened during the course of FY 'twenty two.
Firstly, we have invested significantly both in our go to market initiatives product development and all of that is beginning to bear fruit business is now a scaled business I mean at the midpoint of the range that I provided for the full year were $611 million, so definitely hitting a scale perspective.
And achieving growth in that perspective.
The other thing we are obviously very well aware is given the investments you've made in FY 'twenty, two and we are going to be more efficient as we go through the art of this particular year. So we are looking for operating losses to improve materially during the second half.
I also said.
As you then stress that out another year, we're looking to be free cash flow neutral in FY 'twenty four.
So I think maybe that probably is a little bit material input as you build out your models.
Because we do believe the investments we've made are beginning to bear fruit and we can look to be more efficient as we keep up this pace of growth.
Thank you.
Thank you.
Our next question comes from Parker Lane with Stifel. Please go ahead.
Yeah, Hi, guys. Thanks for taking the question Rajeev. One wondering if you could comment on whether or not you've seen a change in the persona of the person, bringing sprinkler and with the launch of light are you seeing more and more like a line of business users that wouldn't historically have found sprinkler is accessible pushing for their companies to adopt the solution. Thank you.
Yes.
Thank you for the question Parker, we are seeing.
Again, we've got hundreds of people trying out there.
The light products and they are usually practitioners who is.
Segment of our prospects that we typically don't land softwood trade. We typically go to decision makers of the C suite.
What we're finding in the indications where they convert though there is so much excitement there internally, bringing senior people and I'll give you. The example at Mtel wear and also know that our light products. It's early right. So we as you know we co innovate.
With our customers, which has been a major differentiator for as we've talked to them. All the time ask them, what they need and turnaround in a very agile fashion rolled it out almost like consumer software companies do.
And so in the case of NPL.
They were excited about what the product could do they were excited about how agile innovative we wear and the next thing we know we are talking to the CIO.
Who then proceeds to say look I want to bring sister companies in but these are smaller teams.
<unk> folks that traditionally like our sales folks would not have pursued and try to close.
So it's very early to draw any conclusions, but we're seeing access to practitioners grow we are also seeing.
Which is very refreshing for me as I talk to customers, we're seeing customers move from one company to the other.
And Josh.
First thing they do is bring sprinkler and so that that's that's something that's creating some groundswell for us as well.
As we have sub service so it's not like they've got to go convince management. They can go try it out and show someone how good sprinkler is with their new company.
Thank you.
Thank you. Your next question comes from Michael <unk> with Wells Fargo. Please go ahead.
Hi, This is Michael Berg on for Michael Congrats on a great quarter, guys and welcome to diminish.
Just a quick one for me I noticed that you added $2 million plus customers in the quarter, which is the lowest.
<unk> this year and even going back to last year is there anything to point to on the upfront because every other metric looks pretty strong and billings for <unk>.
In our Apio acceleration.
<unk>.
Proving anything to point to on the large customer product.
And Michael as Rajeev, let me speak from initiatives, New I'm sure you'll add.
This look those are metrics, while we disclose those are metrics that the company is not super aligned and obsessed about and you'll see that monoecious, bringing a very different focus and discipline to billings.
Like we've never had before so you'll see us get more control over what that number should be.
Can tell you there is no change in the quarter in terms of customers growing with US now at eight 4 million, one where we get.
Get them add it also remember it.
It's revenue, it's trailing and so <unk>.
Directionally there is no change in the business I can tell you that and you know.
Well the numbers that we're seeing the trend that we always see.
Yeah, and just to add to that.
I think this is what I reiterated in my prepared remarks, as well I think the metric the way we have defined it is actually a fairly high bar because most of the subscription companies talked about customers doing $1 million in Anr. So you could sign them on the last day of the quarter as long as they're a big customer they would make the grade.
The way we've defined it is $1 million in subscription revenues for the year.
That is a much higher bar to clear and again.
Just been here two months, so we're going to do a deep dive on a number of other metrics and as the arc of the year progresses, we will try to provide more clarity around some of these metrics.
I just wanted to point this out that this is a fairly high bar that we've set for ourselves.
Yeah.
Understood. Thank you very much and congrats again.
Thank you.
Thank you and there are no further questions at this time I'll turn the call back to Roger Thomas for closing remarks. Thank you.
Well I want to thank you all for participating and taking the time, we as you can see a pretty excited about the quarter very proud of the team that came through for us.
You heard from anyhow in the last two we were pretty focused on making the investments, especially coming after COVID-19 .
We were cash flow positive the year before that so you are seeing is the business that went from being conservative during COVID-19 to correcting that in the last year.
Thrilled about the expectations that we're setting internally and externally of being more efficient as we continue to grow at scale.
Before we said that.
The rise in growth of this industry is inevitable.
And it's validated every time, we speak to customers who.
<unk> talked to a large global brand household brands CPG company that has 60 60 customer facing brands that operate in.
40% to 120 countries, each running marketing and care and the surge in sales in every one of those markets and each one of those teams using different point solutions for different channels right.
<unk> and where the customer need the brand at the very edge when they see an AD or call the call center or speak to a sales guy.
I can attest it was with a much smaller company. It's painful. So we know that this is going to get resolved. We know that we've invested 12 years into creating an architecture and a full product suite on a unified platform and.
And we think we have another let's say a year or two of code to write to.
For the full picture emerges. So we're very encouraged by where we are and we think the best is yet to come.
Thank you. Thank you all think about evening.
And with that that concludes today's conference you may disconnect at this time and have a good evening.