Q1 2022 Qualtrics International Inc Earnings Call
Ladies and gentlemen, thank you standing by your conference call will begin momentarily again, thank you for standing by the conference call should begin momentarily. Thank you.
[music].
Okay.
Thank you for standing by and welcome to the quality mix first quarter fiscal year 2020 earnings conference call. At this time, all participants are in listen only mode.
After the speaker's presentation, there will be a question and answer session.
I ask a question at that time. Please press Star then one on your touch tone telephone.
As a reminder, today's conference call is being recorded.
I would now turn the call certainly hope this is Stephen will kind of S. P&L and Investor Relations. Please go ahead Sir.
Thank you and welcome to <unk> first quarter fiscal year 2022 earnings conference call.
On the call, we have big Terrapin, CEO , Chris <unk>, President and Rob Bachman CFO .
<unk> prepared remarks, we will open the lineup to answer your questions. Our results press release and a replay of today's call can be found on <unk> Investor Relations website.
During today's call, we will make statements that represent our expectations and beliefs concerning future events that may be considered forward looking under federal Securities Law. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date.
We disclaim any obligation to update any forward looking statements or outlook. These statements.
Are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
Further discussion of the material risks and other important factors that could affect our financial results. Please refer to our filings with the SEC, including our annual report on Form 10-K for the fiscal year ended December 31, 2021, and our quarterly report on Form 10-Q for the quarter ended March 31 2022.
That will be filed with SEC.
With that I will turn it over to <expletive> .
Well, thanks, Steven and thank you all for joining us today.
Before we get to the numbers im going to take a moment just to talk about how saddened we are about the invasion of Ukraine.
And the conflict there.
Our team in Poland has been incredible first responders, helping refugees evacuate and <unk>.
Immensely proud of the work the whole company is done.
To support relief efforts, both in terms of philanthropy.
And product innovation in a matter of days our team stood up new solutions on our axon platform that are already being used by 'twenty five regional Red Cross teams and other agencies and.
And because of this work.
Nearly 20000 refugees.
Connected with shelter.
Support and medicine.
Our Hearts go out to everyone that's affected by the war.
And we're going to keep working with them to support them.
Now, let's turn to the quarter.
So as you can see in the numbers Q1 was another outstanding quarter. This is our biggest Q1 in the history of the company.
And it builds on robust growth in FY 'twenty one.
Revenue for the quarter was $336 million, representing 41% year over year growth and subscription revenue was $281 million up 50% year over year.
I am particularly pleased.
That we have delivered another quarter of positive operating margin, while continuing to invest in our growth we have significant momentum and we're raising our Q2 revenue guidance to $345 million at the midpoint of the range, representing 38% year over year growth.
Our Q1 net retention rate.
It was 128% matching our all time high from last quarter.
And we now have more than 2000 customers spending more than $100000 annually.
Which is a 41% jump since last year.
This all highlights the critical need for experienced management is the category that we pioneered and we continue to lead every CEO that I speak with house customer and employee experiences and their top priorities. They are trying to figure out how to find.
To keep customers and then retain their best employees.
And we give them the ultimate advantage by.
By helping them build deep personal relationships with contracts they can uncovered unmet needs and build the products services and experiences that people want.
And we help them do that with empathy.
Speed and.
Scale.
In our two decades as a company.
We've seen that.
In uncertain times experience management is more important than ever in fact happy customer spend 37% more than unhappy customers.
Any engaged employee who trust their manager has 60% more likely to stay in their job for the long term.
Okay Chipotle.
Which has more than 90000 employees, who are navigating dine in and pickup options third party drivers and mobile App users.
In Q1.
He chose <unk> employee experience management to deliver a more seamless hiring and onboarding process.
And to drive better employee retention and as a result, their teams will deliver better customer experiences and increase loyalty.
Only call tricks to manage the full lifecycle of a customer and employee experiences on a single platform with our <unk> operating system and a central element that brings us to light his experience.
Which captures every form of feedback and brings an operational data from CRM CDP and HRS systems.
And we now have more than $5 billion experience on the <unk> operating system and every new innovation that we deliver strengthen the power of experience I D.
We were busy in Q1, we launched new innovations across our platform. We made important investments in our category leadership, we integrated Clearbridge has operations engineering and sales teams into <unk> and we launched the XM discover which is an incredibly powerful new layer of our platform we.
Now have the only platform that enables companies to proactively engage.
Find out how it's going and then tune in and discover all of the other things that people are saying in the contact center on social media on review sites and.
Dozens of other places.
And we're seeing significant momentum with new and existing customers.
Kroger is a great example.
The pandemic Kroger led the way in connecting with their shoppers through new digital initiatives and they use contracts.
Prove their experiences.
In Q1.
<unk> XM discover.
Get a single view of all customer feedback, both structured and unstructured to understand what's important to customers based upon what they're saying on social media.
And this is just another way that.
Kroger's deepening their relationships and we're proud to be able to partner with them.
We also significantly expanded and XM discover deal with one of the world's largest communication companies.
Who recognize the value of having all of their experience data on a single platform with Quadrex.
And employee experience.
Can you workplace safety and wellbeing solution every company is trying to balance workloads.
And then take care of their people were giving them an inside view of their employee mental and physical health.
To mitigate burnout retained their best employees and to reopen safely.
And in customer experience.
We released the new digital experience metrics, which uses scientific methodology than industry benchmarks.
Experienced improvements directly to financial impact right within the product.
Our growth continues to be fueled by our relentless focus on customer success and this is a critical time to extend our category leadership, and we continue to invest with discipline and attractive market opportunities in Q1.
We grew our workforce of approximately 10% hiring more than 500 full time employees, including top software engineers and scientists.
In an incredibly tight labor market.
Internationally.
We expanded or formed new relationships with iconic brands, including NTT Docomo Han die.
<unk> group.
Mizuno and the Royal Mail.
We also expanded our London office to better serve our rapidly growing customer base throughout Europe , and we launched the centre for Exxon innovation in Asia, with S&P and the Singapore Economic development Board.
To extend our innovation and leadership in the region.
We continue to make great inroads in industries, and particularly in healthcare in Q1.
We formed a new relationship with Providence.
Chose quadrex to understand their patient satisfaction with the price of their healthcare services, the billing experience and cash collection at their 52 hospitals and more than 1000 clinics, using quadrex customer rexam and XM discover across.
Their contact center.
Digital and in person channels Providence will improve their patient financial experiences and increase the value they receive.
One of the ways that we scale the power of our platform.
Through our ecosystem, which has never been stronger.
We're deepening our relationships with key partners, including E y.
Which recently launched an experienced management practice built on contracts.
In Q1, they chose to deploy axon discover internally across the organization.
This investment.
Build on the success that they're seeing with corporates and it enhances their ability to deliver even better outcomes for their clients.
In Infosys.
Another great partner launched a new corporate center of excellence to help buyers around the world improve employee experiences with.
And HR.
Now before I close I'd like to invite all of you to watch X four.
On our new streaming service <unk> plus.
Which launches on April 27.
We've got a phenomenal lineup of speakers with Michelle Obama.
Wetherspoons and executives from the worlds leading experienced brands.
I want to congratulate our employees.
Our partners and our customers for another outstanding quarter, and with that I'll hand, it over to Rob.
Thanks <unk>. Good afternoon, everyone Q1 was another outstanding quarter across the board during a time of economic and geopolitical uncertainty. It is our fifth quarter in a row of robust growth as a public company.
As <expletive> said total revenue was $335 6 million in the first quarter up 41% year over year subscription revenue in the first quarter was 288 billion.
50% year over year professional services and other revenue was $54 8 million for the first quarter, representing 6% growth year over year.
Our remaining performance obligations, representing all future revenue under contract ended the quarter at one $706 7 billion up 48% year over year. This metric includes both new and renewal software contracts along with our professional services business.
Current remaining performance obligations, which is all future revenue under contract that is expected to be recognized as revenue in the next 12 months was $1 <unk> 2 billion.
Up 52% year over year.
We delivered strong expansion across our customer base as our dollar based net retention rate remained at 128% for the second quarter in a row customers spending more than $100000 in annual recurring revenue grew 41% year over year to 2060 customers.
Turning to margins our Q1 non-GAAP gross margin was 76, 7% consistent with the prior quarter.
Our non-GAAP operating profit for the first quarter was $4 1 million, resulting in a non-GAAP operating margin of one 2% compared to two 8% in Q1 of 2021.
<unk> system with our plan, we returned to more in person meetings and our colleagues began to travel more frequently for business in Q1. The increase in travel contributed to an approximately 200 basis point reduction in operating margins compared to the prior year period. Additionally, we were pleased to achieve a seasonally higher percentage of our annual hiring.
During Q1, allowing these new employees to have a significant impact in the current year.
Operating cash flow for Q1 was $23 1 million compared to negative $70 1 million.
In the year ago period free cash flow in the quarter was $9 9 million <unk>.
Compared to negative $81 2 million in Q1 of 2021 due to significantly lower cash payouts relating to equity.
Equity based awards $2 $7 million of cash outflows in Q1 was related to the cash settlement of stock based payment liabilities compared to $72 million in the year ago period.
As a reminder, free cash flow may fluctuate on a quarterly basis due to the timing of cash collections and we believe it's best to assess our cash flow performance over a longer term.
During Q1, we paid $209 million of cash for taxes related to net share settlement of equity awards in the quarter. This amount will fluctuate quarter to quarter, depending on if we sell to cover or use cash to cover the taxes related to divesting of equity awards.
<unk> related to equity awards peaked in Q1 due to the one year anniversary of our IPO, which triggered a one year vesting cliff that exist in the majority of our outstanding equity Awards.
We ended the quarter in a strong cash position with approximately $836 $4 million in cash and cash equivalents.
Moving now to our Q2 and fiscal year 2020 to business outlook. We expect total revenue for the second quarter to be $344 million to $346 million Rep.
Representing 38% growth year over year at the midpoint within this we expect subscription revenue to be in the range of $291 million to $293 million, representing 43% growth year over year at the midpoint.
We expect non-GAAP operating margin in the range of one 5% to two 5% and non-GAAP net loss per share of one penny to net profit per share of one penny assuming 585 million weighted shares outstanding.
For fiscal year 2022, we expect total revenue in the range of $1 $42 8 billion to $1 43 2 billion.
And subscription revenue in the range of $1 $2 2 billion to $1 $2 6 billion.
At the midpoint of the ranges. This represents a subscription revenue growth of 38% year over year, and total revenue growth of 33% year over year, respectively.
We expect non-GAAP operating margin in the range of 1% to 3%, we expect our non-GAAP net income per share between zero cents and <unk>, assuming 595 million weighted shares outstanding.
As we scale our revenue beyond $1 billion, we will continue to be disciplined in how we invest for growth while working toward our long term financial targets of over 20% operating margin in over 25% free cash flow margin.
With that Chris.
Chris and I are happy to take your questions.
Thank you again, ladies and gentlemen, if you like to ask a question. Please press Star then one on your Touchstone telephone again to ask a question. Please press Star then one.
One moment for our first question.
Our first question comes from Brian Peterson of Raymond James Your line is open.
Hi, gentlemen, congrats on the quarter. So just wanted to start out with the MLR dynamics that was been strong 128 again. This quarter can you help us kind of dissect that a little bit in terms of cross sell upsell and maybe what products are really resonating on top of the base.
Sure I'll start here. This is dead and then I'll ask Robert Chris to just jump in and add more color. Let me look first of all I think it's important to step back and just look at the power of the technology and how we built it.
With very rich application suite, one that actually is highly relevant to many different budget centers inside of a company.
But also there is the speed at which we are able to innovate on the system and how that translates into new value and use cases that customers can turn on quickly and thats. The core of how we operate this business you're landing, enabling new use cases, and you're expanding and that importantly contributes to help.
We think about long term durable growth at scale.
And that's partly what's reflected in the context behind our number but I'm going to let Rob and Chris added to this yes, I won't add much to it what I would say and this is Rob it continues to be balanced and something that we watch closely and that balances is something that we obviously appreciate and like to see.
And then as you've heard us talk about in the past, we continue to see consolidation as our customers.
Look at the variety of point solutions that exist within the technology in their spend they find that they can consolidate onto call tricks and gain more value by having all of that data in the same place and running off of the power of our experienced manager operating system.
Okay.
Understood Rob maybe a follow up just on Europe , I know that's been a big conversation point for investors, It's an investment area for you guys.
What have you guys seen internationally, particularly in Europe and has there been any impact from the conflict in Ukraine. Thanks, guys.
First off this is Ed ill start off Chris comment a little more on this one.
I mean, just like you guys. We've all been watching what's been happening in Europe , and I've got to tell you first off and foremost Im gang proud of our team and the way that we've been operating across the company and in particular in Europe to be able to serve our customers.
And still be able to create high performance as we're going through it and I think frankly, the company has naturally advantaged, especially in times of uncertainty to be able to create highly relevant product and capability that helps people to navigate their markets right, whether it's navigating in plush inflation weather.
It is navigating.
The war for talent.
And part of the idea of experienced management as we help organizations get closer to the customers and the workforce that they are dependent on and we will be able to run their businesses and that's an important part is something that we've been out for 20 years, and we've only got better and better at in the way that we ended up delivering that's an important part of it.
But I'll, let Chris expand here, a little bit more specifically relative to any other color on Europe in particular.
Yes, so first of all really encouraged by the stability of our business as reflected in our overall performance and the guidance. We gave in this type of uncertainty in terms of the performance that we experienced in the quarter from a go to market perspective.
There was a few customers in Europe , who we.
We're hesitant to pull the trigger on some deals and delayed into the following quarter.
Fully reflected in the results and our guidance that we're providing and overall just please globally with the results that we had this quarter and the stability of the business roughly about 20% of our business is in Europe overall.
And as far as the question about Russia, and Ukraine less than 1% of our business.
That specific area. So relatively small I think the biggest thing here is that we continue to see long term growth.
All over the international front I think we're just in early days of what we see as potential given the relatively smaller percentage of our overall business that is international today.
That's why you see us investing hence my remarks earlier as well about what we're doing on the international front and will be accomplished in Q1.
Good to hear thank you.
Thank you. Our next question Counsel, Keith Weiss of Morgan Stanley . Your line is open.
Hi, Thanks, so much this is elizabeth quarter on for Keith Weiss, Congratulations on a really strong quarter.
I have to touch on the vertical strategy in the past you guys have talked about going after the public and health care sectors and wanted to get update on where do you see the biggest opportunity next and how we should think about the benefits to the P&L, then fertilization strategy, whether it's higher asp's for customers or lower retention.
Color that would be helpful. Thank you.
First and foremost and Elizabeth Thank you.
Good to hear you.
First and foremost.
I think it's really really important that the way that we've designed this company and the way that we've defined our technology.
Scales horizontally.
And it has the ability to make an effect and an impact across many different industries. I mean, we are tuned into helping companies understand consumers, helping companies understand their workforce and also business at the end up serving and that's an important technology design point is also an important design point.
Our go to market systems that we have in this company. We are building a platform. That's designed for scale and there is an ecosystem. That's building around it now that said when it comes to specific industries. They create unique points of extending on that value and getting deep and rich specific to the markets that we're playing in health care is one of.
Several examples that were in we tie into very specific business problems in those industries.
Urgent things that companies are looking organizations are looking to solve and then we can tie and also because of the nature of our platform with systems that operate in those industries. As an example, the integration we have with Health Records management platforms in health care and the way that we end up tying in with the patient lifecycle.
And then how that nicely tunes into much more authentically june's into the way that the patients experience evolves in fact before personally been becomes a patient.
And the way that providers ended up interacting with their customers and frankly, the health and well being of the provider as well.
So these factors are multi dimensional the beauty of everything I. Just described is you're building on the corn kernel that scales horizontal it's a really important part because look I've been around and if youre bidding building our business only to be able to operate on a specific industry level you will have a very hard time scaling across multiple industry.
And that will negatively reflecting the growth of the company. We've designed for the opposite we wanted to be able to scale horizontally, but also give us the option to go into more deeply and vertically Chris.
Alright, great.
Great.
And then just a quick follow up on the margin side.
Margin came on the lower side of the guidance.
And I just wanted to see if there were any drivers to call out that limited the margin upside despite revenue coming in above the range that you mentioned some of the bigger head count, but any other drivers.
Where are there.
Yes.
Great question I appreciate it consistent with what I shared in the prepared remarks, we saw about 200 basis point from the travel does that return something that we are very pleased to see as we move into this world that is a hybrid world going forward focused on both digital experiences and in person experiences so that opportunity <unk>.
With customers is something that we were pleased to see return and then as we've talked about in the past, we're making important investments as we continue to integrate declare bridge business and move forward and then also still seeing some margin pressure from the purchase price accounting.
<unk> Clearbridge.
Yes. This is Chris Yes. This is Chris the one thing I'd just add to that is as we make these investments that we've made this year in travel and integration work.
Feeling really good about the return on those investments and opportunity for it to provide us leverage as we go into 2023 and beyond and see tremendous opportunity there to get leverage out of our business model and to be able to continue.
Continued to have return on that investment in our go to market.
But the other thing I'll highlight figure a last comment on this one is it's the.
One of the company to go after attractive markets and make sure we're well positioned that we are investing in the right way, but at the same time. We also have a track record for growing and with discipline being nimble, making pivots were necessary because our interest is long term durable growth and doing that in a way. We're also creating good margins.
Part of that so that's part of the philosophy and what we hold ourselves accountable to.
Great. Thank you so much.
Thank you our next.
Next question comes from Brent <unk> of Piper Sandler Your line is open.
Good afternoon.
Global risk factors are clearly increasing here zig and.
Really wanted to better understand how the experience management area holds up.
In that environment.
There are more challenges can you help us understand how you are positioning the business. How we should think about this this category in an increasingly risky environment are you going to lean in on new products is it really about consolidating competing products just help us understand how youre thinking about NAV.
Getting an environment that clearly is very different than it was a year ago.
Sure first off I'm going to highlight something Thats really important. This is a company quarters is a company that's been around for two decades.
And we've seen many different cycles.
And dropped those cycles and this is a company that has been a consistently growing performer.
That has the discipline to understand how to engage in different markets, but also happens to be responsible for a technology that helps to be able to capture and understand where all the different human variables that are in play as uncertainty goes through its ebbs and flows right. We're obviously in a market today, where we all see inflate.
Inflation, we see.
Geopolitical situations, we see a war for talent. Many other factors right macroeconomic microeconomic, depending upon where you are what makes our technology special and the solutions that we build on them.
We help companies to get closer to the markets that they serve in a much more timely way be able to make the proper pivots decisions.
Pricing package.
Packaging reorientation, how they serve their customers, which markets are going after where they may need to go and go after other markets and opportunities where <unk> got an opportunity to get wallet share expansion.
That is the core of experienced management is to get closer and put in a deeper lens around how you end up building relationships with the people and stakeholders that you serve why this is such an important category and it's why this technology is so well positioned given the different ebbs and flows that we are seeing in the.
And it is why Ceos and other leaders and companies are coming to culprits and Theyre, saying look we want to run our companies differently, but timing of the decisions that we're making are so vitally important that we've got to be able to operate our companies from an outside in perspective, and make decisions, where we're calling our shots more effectively time in time.
In time again. This is an extremely important part of how you think about the role of our technology. The way that we've been building our platform now as a company and the way that we run the company internally look our discipline is be highly focused on customers.
First around how we operate with customers and part of that philosophy.
Also means that we're going after where we see the attractive market opportunities, but we also have a discipline of being nimble you know one of the core values of this company is being scrappy.
Tacos, right and tacos the last of those.
Letters as apps being scrapping means being resourceful being.
Creative and operating in a world of constraints in being able to pivot and make the adjustments and go after nailing the opportunities as we see them in the market, but also learning quickly and.
And reestablishing position wherever and Thats, an important philosophy now everything I, just said about the internal part of that would be difficult to do.
We didn't have a technology system that accommodate that look if we are a company that was stitching together a whole bunch of different technology stacks forget it.
We are a company that as really important philosophy around.
Single platform the operating system.
Building applications on top of that we shared data across the different components of applications. It enables our customers to move quickly, but it also enables our engineers to build new solutions like the ones I mentioned in the remarks that are very relevant in a timely way given where the market is headed and today look not any one market is all the same.
We see different things happening in Europe , we see different things happen in the US. Some are common some are different and so that's a really important factor of how the technology helps us to actually accommodate a lot of the philosophies and values, we have and how we're running the company. So hopefully that gives you additional color and context on how we think about these things.
Thank you. Our next question comes from Mark Murphy of Jpmorgan. Your line is open.
Yes. Thank you very much so I'm wondering how pronounced was the trend of customers unplugging other products and consolidating onto <unk> in Q1 and just.
As they do that are they viewing <unk> as the main system of record for customer data kind of over and above.
CDP is in CRM systems, and then I have a quick follow up.
Yes.
One of the unique advantages that we have is companies can move off of point solutions like social media monitoring in place solutions as an example.
Like.
Call Center.
Analytics system, that's truly not in analytics, but they've been trying to analyze but theyre not developed and designed for scale and so we make it very easy for companies to be able to bring their data over to our platform.
We can assimilate those programs and systems on our platform, but more importantly, like the telecom vendor that I'd mentioned in our remarks, helping them to bring all of that data together and so to the heart of your question. We are seeing a continued trend of companies standardizing on our system. That's an important part now the other part a good question.
As around things like <unk> and other platforms I mean, one of the other attributes of our technology is that it's an ecosystem platform. So we make it very easy for companies to connect the data that they have.
Let's say, it's inside of a CRM, let's say, it's instead of in HRS system, Let's say, it's inside of one of 80 different CDP that are in the market. We support 19 of the more relevant ones today.
<unk>.
Bringing that data and to populate that information inside of our experience idea, which you've got 5 billion plus profiles in and then augmenting it with a very rich hurdle of new information around human factors, which they can't do windows other.
So we're not competing with those systems, we're complementing them and we're gracefully coming in connecting and we light up a whole new value set of capability for companies, which speed the rate at which companies can end up adopting our system and that partly reflects in the way that you see not only new logos coming onto our system also supports the.
Our rates, but you also see.
Understood I'm sorry go ahead.
I was going to add.
Q1, we integrated <unk> into our platform and the people there and.
As we did that and added a layer of XM discover into our platform that just further this trend that we saw in terms of consolidation as we're now able to couple the.
Couple of things with the platform organizations out there that have historically been using the Clearbridge technology now have an opportunity to consolidate on the cortex platform and vice versa, and so I'd say that if anything has accelerated the trend we're seeing on consolidation as we continue to innovate and.
Enhanced our leadership and part of that is also tapping into new budget pools.
If I can recall center.
Okay. Okay understood. Thank you for that color.
Question I had was.
Youre delivering solid results.
Despite the comment about a few customers in Europe , I think you said delaying into the following quarter, but is it safe to assume that that was isolated to just a few customers in Europe or.
Is there any sign of any sporadic hesitancy in North America for instance, because I think the guidance seems to convey pretty good business confidence out there.
Yes to the question.
The overall kind of macro factors, we've seen to date has been relatively isolated it has not really changed our annual outlook. We reflected anything that we've seen into our current view of the overall overall business overall and we didn't see those organizations necessarily moving away from the technology, we didn't lose any of those deal.
They just kind of got delayed into the following quarters and not seeing anything spreading systematically at this point and what we have seen is is adequately reflected in our guidance.
Now there is going to highlight really importantly is that our scale, we're very happy to be guiding to 38% subscription.
Subscription growth year over year, right and that just indicated what were seeing for growth what we're seeing for demand.
It kind of reflects also how we look at the different markets that we're in.
And that's really important because there's fewer and fewer companies that at the scale are actually being able to prove out the ability to perform and we factor in these different dynamics, but with all that said and put it into the picture.
It reflects the guidance that we're providing.
Excellent. Thank you.
Thank you.
Question comes from Terry Tillman of choice Securities. Your line is open.
Yes, Thank you, Chris and Rob and our strong results for the first quarter two questions I guess the first question is.
Based on.
Kind of where we are with Clearbridge I know, we're not going to get updates every quarter like pinpoint what it contributed but you do have a very large go to market team and so how would you rate how theyre doing in terms of getting exposed to this technology and starting to cross sell and up sell the solution just kind of a report card.
What are you surprised by positively what could you be doing better with and then I had a follow up.
Yes in order to be very very pleased with what we've seen in terms of how the go to market teams are coming together.
We've had the teams on site together building relationships working well together one comment from that I received just within the last week from.
The CEO of Clearbridge, whether it's <unk> now anyone who was saying we're not working together and passenger together has been that we've come together well I'd say, it's all on track with what we expect.
<unk>.
Happened and and so far so good and we're seeing a greater amount of pipeline built.
Help us to go execute and take these solutions to our broadcast I'm going to say like really importantly here is it's not separate companies and a lot of times when people bring companies together.
Time for a year, we met fast quick specific.
<unk> on our customers.
There is no word called Clearbridge anymore, it's called XM discover XM discover as a powerful element of our overall platform and expand our market opportunity and to your point about the sales organization.
These are some of the world's best conversational analytics contact center customer care solution specialists and they are now connected in with the larger quadric sales organization and it works both ways there are opportunities for actually expanding and the <unk> team who has been serving many many customers.
<unk> are also able to now bring in the power and the value of the conversation of analytics system, the power and the value of the social media monitoring part of that system and.
And several other solutions that we're building.
And around employee experience and others.
So that helps you gives you a kind of context, but the most important part of it is it's one company and it's one product solution set that we are delivering to the marketplace and it's part of the philosophy of how we expect to execute and operate in.
That's fair.
Part of the playbook that we're expecting to sign up to as we were bringing the two companies together.
That's great Thanks, and I promise I won't say clearbridge again, it'll be discover.
Just a follow up question.
The markets were obviously turbulent in November and December and then continue through this year I don't think Youll got much play on this November 15 press release related to the partnership with AWS I think there was a lot in there.
I would love it if you could unpack a little bit more maybe because part of this is taking your platform technologies importing at the AWS, they're becoming an incremental customer on the <unk> side, I think and I'm just curious if they can become an influencer on helping win business in the market just anything more you can share about what it looked like a pretty important press release back then.
It is noteworthy and very important I mean here you have.
Deep world leaders, and what leading and running our company based upon customer experience looks like.
And the big culprit.
Right and this is really important because.
Actively shows a lot of other companies.
The potential pathway could be for them in other industries, a lot of people look up to deal with it.
The way that Amazon has been running the company from the beginning is being customer experience centered.
That's really one part of that announcement that we made the other part of it is as you know as well we are innovating on AWS stack and if you think about other customers who are also doing so.
It's absolutely introduces.
Both.
Platform and commercial synergies that they have.
As well as in some places patient solutions that are both on the same platform plug or active <unk>.
<unk> <unk>.
Data can flow between the platforms. For example, so yes, everything that you said plus a little more.
Thank you.
Okay.
Thank you. Our next question comes from Gabriela Borges Goldman.
Goldman Sachs. Your line is open.
Great.
Thank you for taking our question I'd love to follow up on this call around a little bit.
So Chris.
<unk> talked a little bit more about how discovery price.
Customers in the pipeline.
How did the deal sizes typically break out do you see for example half the deal on days.
What does that mix look like and how do you think of at the time.
So I'll answer the first part let Chris answer the second part pricing is pretty straightforward.
It's a natural extension of the platform pricing that we have.
For customers. So there is both a.
Our product utility based license as well as a consumption based license that actually ends up existing based upon number of conversations and response.
But conversations or data flows that run through the system, how to think about that in a simplistic way.
But I'll, let Chris answer the second part yes.
Related to the relative size it really does depend upon the use case, if you think about a call center centric solution, where youre analyzing hunter.
Hundreds of thousands or millions of calls that can be a significant engagement along along there or a industry, which is heavy in terms of online reviews or are there other channels like that can be heavy on there and as you know and as we've shared.
The industry trend is to have more and more unstructured data and unstructured feedback and that's the power and why we're so excited about having the.
<unk> discovered layer added to it given the trends that we're facing and the reality is either technology or of <unk> also helps us analyze both the unstructured data as well as the structured data that you get through our layer of the platform. So it really does kind of all come together as they've mentioned as an overall solution that we are integrating seamlessly to give.
What they need across the board. So they can analyze all experienced data and take action in real time now let me elaborate on that really because maybe not everybody on the call understands XM discover and this is an incredibly powerful New addition.
And that's because we're helping companies to tune in to any form of unstructured feedback that's coming through a company such as support conversations.
It Department.
Okay.
Call Center interactions, both on the employee and the customer side.
<unk> social media posts review sites and other sources and then what we do is we help companies not just pull that data together.
Al into all of these different channels of information, but we analyze it in a highly sophisticated way theres over 150 different industry models that we end up applying that data through and then we automate manual and time intensive processes that people typically have that go through especially in things like call centers.
Order to be able to improve the efficiency and then save key customers improved loyalty deepen their relationships and so these themes.
Partly what are also adding to some of the momentum that we have in the company both in net new logos as well as existing customers that were seeing and some of which I've mentioned in the remarks.
Thank you Gabrielle and that color is helpful. Chris one follow up for you on Europe .
So you saw that was isolated to a few customers delaying.
April how is the trend.
Got any better.
Yes, I would say it's.
Relatively consistent but it continues to present in terms of what we're seeing overall in terms of the market dynamic in Europe , where there is a degree of hesitancy.
Amongst some customers at the same time, we have seen stability overall in our business as reflected by the fact that coffee is never more relevant in uncertain times and so with that it's been I think that's one of the drivers behind why its been relatively isolated in terms of where we've seen it because.
Experienced management is never more relevant when customers are facing uncertain. You know what's interesting about this is they may go from one part of our product and then they have the option to go to another product area like leveraging for example design Xmr core ask them to be able to go and do research on the part of the market and understand how to better position themselves and then they may go back to another part.
Our product suite, so that that helps notwithstanding the comments that Chris just made a bit ago.
Understood. Thank you.
Thank you. Our next question comes from <unk> Shah with Deutsche Bank. Your line is open.
Great. Thanks for taking my question, Chris That's another question that was brought up.
<unk> continue to adopt <unk> can you maybe elaborate on how usage of cortex changes when customers go through this transformation are there certain products that become more prioritized and maybe others that maybe become a little bit less prioritizing at customers to ingest segment and actually all of the data that they've not asked.
Well look I'm going to pop up to a larger important theme and that is that.
<unk>.
There's very few industries out there that are not in a race to become more digitally connected with the business or the end customer.
They end up interacting with.
And often misses for convenience factors, it's for efficiency factors, but a very important parallel theme that's taking place.
To be more directly connected from a relationship standpoint with that end customer.
And this is where qual tricks is beautifully designed when we get brought in and people will end up interlacing the use of <unk>.
To start to collect and pull in information that the customers telling you that your you have to ask them for and then be able to start to populate the experience idea with really important human factors like.
Personas and segments.
Are going to be influential around how you navigate your business.
But you have to pay attention to.
Then very powerfully you can start to orchestrate the way that you operate your business. So for example, you might need to engage differently through the customer care lifecycle or you might need to do a better job with the products or features that you are recommending to someone and so these are dynamics and capability that we can provide in a scale.
Fashion.
There's a lot of one off point solutions that you can spend a lot of engineering money on to go and sit something together and Youll notice that the businesses that are doing that are fairly low growth and they're not very interesting businesses. What we're doing is we're helping companies to actually breakthrough this idea to bring it all together one data system.
Secondly, create a workflow to create automation where semi automation.
More efficiently and more urgently connect with people in a more personalised way you step up if you look at that Big picture at the end of the day. What we're doing is we're helping to build much more deeper personalized relationships with companies between who they are as an organization and the stakeholder that Theyre survey, which can be the end customer it could be the patient where it can be a business.
Right and so if you think about the other systems of record like CRM or CDP or some marketing automation system. Those are important right. They play their role, but what happens as we integrate with them and then we hope to orchestrate the way that those systems, both published data into our platform and then the way that they end up.
<unk> behavior.
That is much more closely tailing or enabling an outcome business outcome it might be not just finding and keeping our customer but building your business with a customer as an example, so that is all these things come together the big trend is the role of digital and how relevant we are to it.
Super helpful and just a quick follow up for Rob.
On the guidance just given that you've seen some of the European impact persist into two Q why not embed additional conservatism into the guide or is it just that you guys may confidence in the impact becoming fairly isolated.
Yeah, Here's what I would comment on the guidance.
As we've done historically, our philosophy is consistent here, we are tuning into the factors both the macro and the company level factors and we set our guidance.
At a level that we're comfortable with so it's taken into account and I think that's why you hear the tone that we're talking about and where we're taking this business the relevance of bellatrix.
In times of uncertainty is.
Youre seeing that come to that look I mean at the end of day I'm going to keep repeating this is really important.
Mindset of building a business for long term durable growth at scale.
That is how we're operating and look reality is you've got to pay attention to a lot of different factors in the market. We are fortunate to have the technology system that actually helps us with that but at the end of the day, we're not thinking this.
Quarter to quarter and that's important.
So thinking two three years out and the type of company, we want which is reflected in the closing remarks that Rob made at the end of the type of economics that we want in this business as we grow it.
Super helpful. Thanks for the color.
Thank you. Our next question comes from Matthew.
Evercore ISI your line is open.
Yes, thanks, very much and congrats on a quarter.
I'm wondering if you could talk about or maybe Chris might want to chime in here too as well, but can you just talk about sort of the partner engagement, you've seen maybe year to date, thus far in and how youre kind of thinking about partners helping to influence.
Deal or selection or deals, especially when we get up into some of your bigger customers, where there might be more organizational change required to take on the technology.
Yeah, Great question, Kirk and thanks, Thanks for asking so first off.
I can't overemphasize, how important it is that we have a platform built for a open platform ecosystem and what that does in the type of innovation that is enabled and frankly, new value use cases, and that's really important because sometimes people talk about partner ecosystem and they think of one class.
The partner you might think of.
Our systems integration company and go Hey, we have a partner ecosystem ours is multi dimensional it's extremely important one dimension is we have companies who build solutions on our system, who are practitioners and they are experts in their cramps that usually is.
Psychology, they might be coming from the HR industry or they might be coming from customer experience industry. It's companies like Bain Mckinsey.
And many others like Korn ferry as an example.
But then there is another class of partners, which are software companies companies like service now can do like SAP.
Companies like Microsoft and companies like Adobe, Google right. That's a whole another category of over 275 different types of integrations that exist with our system and the applications and tools that our customers are using and that list is only growing a lot of those by the way are driven by customers. They want to use our platform they want to tie it in with the application.
<unk> systems and tools that they're already using today. Another parts of partner are companies, who are the solution builders.
They help create leverage for us they take on the delivery expertise, we partner with them hand in hand.
We stay closely engaged with them. They are companies who are also experts on strategy. They are experts on consulting.
I think is excellent example of this.
Accenture is another example of Deloitte as another example, <unk>.
WC is an excellent example of this.
And I mentioned infosys as well on the call and so these types of companies also the other ones I mentioned too are all playing their part in bringing their customers along and one of the unique advantages that we have because we have such an open platform.
Is that companies like these fine that they have existing applications of practices you might have a whole practice Thats for example focused on.
HRS as an example, and so that company will then bring in <unk> on top of that HRS system.
And they will create unique new value that expands the capability that opens up the door to experience on top of that system of engagement for system of record for the workflow system that that company might be using so that might turn out to be something that layers on top of what.
And Oracle HRS system, Hasbro SAP successfactors.
<unk> or <unk>.
For example, a salesforce CRM system implementation or a Microsoft dynamics system. So companies that are practices around those applications now bring in an experienced management layer in order to better understand the human factors and the experiences that are associated with the business or operating outcomes that are associated with those systems.
This then drives new inbound opportunity it drives expansion right and it partly contributes to the flywheel effects of how we run the business. So hopefully that gives you more color.
Yeah. That's helpful. And then if I just ask one follow up Chris you mentioned, obviously, a couple of those deals that slipped into the third quarter.
Yes, you guys can't control is the conversion there is theres a customer element to that but when you think about the pipeline building you've seen has anything changed I mean, it seems like you are at the very early days of this opportunity to ziggs comp earlier that sort of building long term business has pipeline generation changed at all for you from the beginning of the year because of the sort of GM.
Political or is that still on track with what you would've thought meant the conversion rate that obviously it might have a little bit more of a customer hesitation aspect to it.
Yeah, So always a LIFO lifeblood of our business is driving pipe generation and getting out there.
We recognize just the magnitude of this opportunity and our sales force is engaged ongoing in capturing this opportunity globally, and so kind of business as usual on that front in terms of a major focus on pipe generation. We're focused on it we know that the leading indicator of our future success and a lot of <unk>.
<unk> on driving pipeline and the new X and discover layer a lot of focus on driving pipeline and our employee experience category, given the relevance and importance.
And in current situation thats facing of of driving employee retention among what we are hearing about our customers' digital digital.
Transition that's going on a lot of focus on pipeline. There. So it's the lifeblood of organization we're focused on it.
We're on track our guidance reflects the progress we've made on pipeline and continuing to drive that well I'm going to say clearly macro trends in Europe .
For example, because of where they are what they are right.
But that doesn't change the fundamentals of how we ended up earning our way into the right opportunities going out to the right use cases. So those fundamentals are what they are we continue to operate on them, we do see sustained demand going into this quarter in the following quarters.
And like any quarter, we got our work to do let's just that's always been the case.
Sounds good thank you all very much.
Thank you. Our next question comes from origin Bettina of William Blair. Your line is open.
Thanks. This is Chris on for origin. So I wanted to build on the first part of the last question that.
You mentioned in the prepared remarks kind of the importance of the growing ecosystem. If I remember correctly you made around the time of the IPO that about 60% of your customers for using integrations.
Curious if you can give us an update on where that stands today and any color you can provide on how that might differ among your largest customers.
Yes, I don't have an update on what statistics have been shared before but what I will tell you is that we did publish publicly and maybe Chris Rob can you remind me the number of actions that have been executed on our system.
This last year. So that's the public statement that we provided.
Really important.
Part of how to think about.
The outcome that we're enabling companies to create off of our system that are results oriented such as number of insights that you ended up getting but it's actually having to do with the end result, so I think.
There was a we actually published this.
Last year, which is $1 5 billion actions in 2021, and the way you think about the actions is that effectively the workflow that.
Ends up being orchestrated through our system as a result of an insight that's been created on our platform that our customers and enabling both internally facing for their employees.
In conjunction with interacting with our customer.
This is an important statistic that we look at because.
It is not just saying Oh, we have X amount of integrations on the system, that's what's happening in the actual usage flow consumption impact.
Being generated through the platform and it's one of several statistics, but thats one of the ones that we look we do look at that we've shared.
Great. Thank you and congrats on the quarter.
Thank you.
Thank you I'm showing no further questions at this time, ladies and gentlemen. This does conclude today's conference. Thank you. All participating you may now disconnect have a great day.
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