Q1 2022 Varonis Systems Inc Earnings Call
Greetings and welcome to the Verona systems incorporated first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this call.
Is being recorded it is now my pleasure to introduce your host James The Russia, Vice President of Investor Relations. Thank you James you may begin.
Thank you operator good afternoon. Thank you for joining us today to review <unk> first quarter 2022 financial results.
With me on the call today are Yoki fight Olson, Chief Executive Officer, and Guy Melamed, Chief Financial Officer, and Chief operating officer of Barona. After preliminary remarks, we will open the call to a question and answer session.
During this call we may make statements related to our business that would be considered forward looking statements under federal securities laws, including projections of future operating results for our second quarter and full year ending December 31 2022.
Due to a number of factors actual results may differ materially from those set forth in such statements.
These factors are set forth in the earnings press release issued today under the section captioned forward looking statements and these and other important risk factors are described more fully in our reports filed with the Securities Exchange Commission.
We encourage all investors to read our SEC filings.
These statements reflect our views only as of today and should not be relied upon as representing our views as of any subsequent date.
<unk> expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements made herein.
Additionally, non-GAAP financial measures will be discussed on this conference call.
Reconciliations to the most directly comparable GAAP financial measures is also available in our first quarter 2022 earnings press release, which can be found at www Dot Barone's Dot com in the Investor Relations section Lastly, please note that an updated investor presentation as well as the webcast of today's call are available on our website and the <unk>.
Oster relations section with that I'd like to turn the call over to our Chief Executive Officer Yoki vital yockey.
Thank you Jamie and good afternoon, everyone. Thanks for joining us today driven by 32%.
Our growth in the record quarterly operating cash flow 2020 is off to a solid start for homes.
Even with the steps we have taken stemming from duo in the Ukraine.
Which guy will discuss in more detail.
As always our employees customers partners and all of those impacted by the rule and we are hoping for a peaceful resolution soon.
Our mission of protecting sensitive data has never been more important as we continue to see if fed escape that become more dangerous to date as a result, our pipeline is healthy and the demand environment is strong and will discuss these trends and how we are well positioned to capitalize on that.
So that jumping.
<unk> been saying for many quarters, we believe that the current environment underscores the need for our platform.
Remind you voiced addresses three premium use cases.
My view is increasingly interconnected these out data protection.
Our response and privacy and compliance.
Given the current threat landscape I want to focus to date, when I was 30 fiction capabilities data growth.
Dependent some critical data and the increased profitability of storing data has led to first active continuing to refine and sharpen their strategies.
And a cyber attacks continue to increase in frequency and sophistication and severity.
They need food companies around the world people take their sensitive data only becomes more urgent.
Between stayed active and commercial groups.
The attacks are in the headlines on a constant basis.
And the target is always sensitive data as a result, well data first approach continues to resonate validating most of strategy and what we have to be saying for many years.
So the perimeter is essential but easing Tina.
Our risk assessment show that once perimeter defenses are bypass critical data stores.
<unk> opened two tuck ins and inside of an insider as can be the biggest.
And so any systemic count Oh person.
Can be potential attack victim.
And all it takes is one companies need to assume a tuck in bleach at least one victim.
They haven't done so already and once they're attacking that we'd go straight for critical data stone.
To maximize the profit specifically, we see them established remote control exploit any weakness they can find go after accounting for these higher level akshay.
Does it come to steal data unfortunately, unless the longitude in place our stock is really can't do any of these things once the items that you see.
We say that every cybersecurity leader and company should assume bleach.
It's not a question of east, but when they will be compromised.
But do you have some bleach the first step is to finish the blast radius all the data that's in the Tokyo could still.
If one employee or vector is compromised and then make the blast radius as small as possible. It's smaller blast radius makes the tuck ins Joe Paul.
And geez detective controls more chances to catch them.
To overcome this.
Yeah.
Oh, unparallel ability to reduce the blast radius to take inventory of sensitive data to ensure that only the right people have access into put gulfport will detect even cost controls in place to keep it locked down is why customers continue to describe our platform is a must have.
Before I turn the call to Guy I want to discuss some key customers.
The first quarter.
A multinational media conglomerate. One is 75000 employees became if he was the only customer in Q1.
He had massive amount of sensitive information in Microsoft 365, no way to accurately classify either towards at least can understand who is using it.
After proving that we could provide visibility for the data Microsoft 365, It help remediate cuticle open access issue. They purchased seven Voronezh licenses and we are already discussing additional licenses that they filed it.
Well take the data on Prem and in AWS.
Same time.
Do you need to get our existing customers to double digit number of licenses is clear.
And the team had another strong quarter closing significant extension due.
One of the largest companies in the world significantly broadened.
One is deployment in Q1.
Or would you need a perpetual customer with a more tactical view or data protection they needed a classification and alerting across multiple on Prem and cloud environment there.
The ability to clean up scale in these key data from acquisition and automation to help them maintain secure state today utilize more than 20 vantage licenses and we are discussing how long you'll be a cloud offering.
Yeah.
Stemming from the beta in AWS.
These are just two examples of how.
We are helping our customers solve the biggest data protection challenges, which has been our mission since we founded the only thing 2000 control.
We are focused on continued execution and capitalizing on the enormous market opportunity before.
We are excited for another strong year with that let me turn the call over to Guy Guy.
Thanks, Jackie good afternoon, everyone. Thank you for joining us today.
Our first quarter results were solid highlighted by 32% year over year growth and a R to $404 $5 million and by record quarterly operating cash flow of $24 $5 million.
Total revenue growth of 29% was at the high end of our guidance range and our first quarter operating margin improved versus last year. Despite the 350 basis point FX headwind, we discussed on our last earnings call before I discuss results I want to briefly comment on the impact to our first quarter perf.
<unk> by the Russia, Ukraine more historically, Russia has represented only about 1% of our business.
As a result of the sanctions imposed by the U S and other countries the write off of that business in Q1 impacted by approximately $3 million.
For the full year, we are assuming zero contribution from the region and consequently, the impact of our original revenue and a our expectations will be in the $4 million to $5 million range.
The sanction write down is the current reality, we see a strong demand environment and therefore, we are reaffirming our original full year guidance for both <unk> and revenue.
Highlighted by the examples Yoki just discussed we continued to see strong adoption trends from new customers as well as healthy expansion from existing customers, who are eager to consume even more of the ROE in this platform.
Let me give you a few data points that support the higher customer lifetime value, we see today, which in turn positions us for sustainable future growth.
March 31, 2022, 74% of our customers with 500 or more employees purchased four or more licenses up from 66% a year ago and 55% two years ago.
And even more powerful is that 42% of those customers purchased six or more licenses up from 32% a year ago and twice the 21% in Q1 of 2020.
Our new customers are trending toward more and more grown as licenses, leading the way to double digit purchasing.
Clear validation of our strategic transition and the greater value we provide.
And as companies around the world taken increasingly strategic approach to securing their sensitive data both on Prem and in the cloud we expect to see a continued increase in customer lifetime value.
Turning now to our first quarter results in more detail.
Total revenues grew 29% to $96 $3 million. This includes subscription revenues of $69 million, which grew 53% year over year.
Maintenance and services revenues were $27 $3 million with renewal rates again over 90%.
Looking at the business geographically North America revenues grew 31% to $69 $1 million or 72% of total revenue in.
In EMEA revenues grew 20% to $24 $2 million or 25% of total revenues.
Rest of World revenues grew 67% to $2 $9 million or 3% of total revenue.
Turning back to the income statement I'll be discussing non-GAAP results going forward.
Profit for the first quarter was $82 $4 million.
Being a gross margin of 85, 6% compared to 85, 4% in the first quarter of 2020 one.
Operating expenses in the first quarter totaled $93 million.
As a result first quarter operating loss was $7 9 million or an operating margin of negative eight 2%. This compares to operating loss of $6 3 million or an operating margin of negative eight 4% in the same period last year.
The strength of our model continues to prove itself as we were able to show year over year leverage even with a 350 basis points of FX headwind that I mentioned earlier.
During the quarter, we had financial expense of approximately $858000, primarily due to interest expense on our convertible notes.
Net loss for the first quarter of 'twenty, 'twenty, two with $10.2 million or a loss of nine cents per basic and diluted share compared to net loss of $7 7 million or a loss of eight per basic and diluted share for the first quarter of 2021.
This is based on $108 2 million and $100 2 million basic and diluted shares outstanding for Q1 2022 in Q1, 2021 respectively.
As of March 31st 2022, we had approximately $804 million in cash cash equivalents in marketable securities and as I mentioned for the three months ended March 31, 2022, we generated a record $24 $5 million of cash from operations compared to $24 million.
Generated in the same period last year.
We ended the first quarter with 2127 employees, an increase of 62 net new employees from the end of 2021 as we continue to invest across the company to support the overall growth of the business.
Moving to our guidance.
As mentioned, we are reaffirming our full year guidance for both <unk> and revenue.
I also want to remind everyone. There are 2022 full year operating margin guidance reflects the 200 basis points headwind related to our hedging program for our FX exposure to the new Israeli shekel.
On a constant currency basis, the midpoint of our guidance shows expansion of approximately 140 basis points year over year.
In the second quarter of 2022, the impact is a 300 basis point headwind and on a constant currency basis. The midpoint shows expansion of approximately 225 basis points year over year.
For the second quarter of 2022 we expect total revenues of $110 5 million to $112 million representing growth of 25% to 27% I would point out this excludes approximately $1 million of revenues from Russia, which we've previously.
Expected.
non-GAAP operating income of breakeven to $1 million and non-GAAP net loss per basic and diluted share in the range of two sense. The one thing.
This assumes $109 7 million basic and diluted shares outstanding.
For the full year 2022 we expect a R. R. A 484 million to 489 million representing year over year growth of 25% to 26%.
Total revenues of 485 million to $490 million, representing growth of 24% to 26% non-GAAP operating income of 27 million to $30 million and non-GAAP net income per diluted share in the range of 16 to 18 said this assumes 112.
Seven 3 million diluted shares outstanding.
In summary.
We intend to capitalize on the strong demand environment, we see which will enable us to further expand our market leadership as we execute on our long term strategy to drive top line growth margin expansion and cash flow generation. Thanks.
Thanks for joining us today and with that we would be happy to take questions operator.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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In the interest of time, we ask that participants limit themselves to one question.
One moment, please while we poll for questions.
Thank you. Our first question comes from Matt Hedberg with RBC capital markets. Please proceed with your question.
Hi, guys. Thanks for taking my questions.
So I appreciate the color on Russia.
Just wanted to ask just maybe just to double click on that a little bit it sounds like Europe . Overall was strong I just wanted to make sure that excluding Russia. There was no other sort of eastern Europe exposure that you thought was also at risk and then if I could just squeeze in just a quick follow up but you didn't really talk about D. A cloud this quarter and I know there are some early traction in <unk>.
Curious if that had any positive uplift on one two results. Thanks guys.
Hi, Matt.
What do we see you know a.
Strong pipeline in Europe .
<unk> customers and prospect engagement, we have very good teams there.
Good partners there.
Just overall, we believe that the long term market opportunity is big you know yes.
Everything is related to wash out you know, but in general I'll walk and generate some uncertainty but also in our case. It's also it can be a catalyst to elevated cyber security time very hard to predict how it is going to play out but for the long term, we don't see any changes in the opportunity in <unk>.
We see a very healthy pipeline.
Well regarding <unk> regarding the cloud, we're very happy with what we see in primarily extremely excited with the building that we just released on Salesforce Dot com.
So we think that all the D. A cloud licenses can be very successful, but if you look at just helpful to think about just the magnitude of this business or the database security color and you had so many applications, but connected to EDC.
Collaboration in a in this platform in a very very complex permission structure. So we believe what we have done we leased 65 and the income data is very relevant there.
And the cadence of us.
Oh God I was walking in according to plan and we just a major release, we just believe that over time the child can be.
A big very important business for us.
Thank you. Our next question comes from Joseph Gallo with Jefferies. Please proceed with your question Hey.
Hey, guys really appreciate the question has there been any change in the competitive landscape, especially now that you are selling cloud and then just any sense of discounting in the quarter and then can you just speak to the familiarity of yourselves force and the channel with cloud.
Yes, so in terms of the competitive landscape nothing changed.
And regarding a regarding D. A cloud it's just the same thing like the auto volumes platform when you're talking about big data sets in the infrastructure of the taste the closer proximity to the data set.
You know we.
Really the only the only complete solution in the marketplace you'd say you know the way that the talks that he's all functionality, which is very similar to everything that voice is doing you should really powered to follow would make when we show them a time to market with.
The purchased so far with the acquisition of <unk>.
Apologize.
So you know you need it's like 365 that it is a business that is exploding for the teams need to understand the platform, but we support central's you'd be seeing the cloud These league openings to be in there, but it is a lot of.
Similarity and then the overall von <unk> functionality.
They are relatively the same but we always have the cadence you know they need to do we need they need to learn how to sell it you're always doing anything we say with a POC, but we are very bullish feel really excited about the opportunity.
And regarding kind of the discount levels are discount levels have been holding very nicely, especially when you look at the number of license additional number of licenses, we've been selling with the move to subscription.
The amount of additional licenses, we've been sending as significant we recently introduced bundles that are.
In an attempt to simplify the selling process and we have a.
Silver gold and platinum bundles that are part of our offering now they're basically seven licenses 13 licenses in 15 licenses and they appear as one line item, we as I said, we recently introduced them.
And we hope that this will provide some simplicity in as part of the selling process, but overall as we look at the discounts right now they've been holding very very firm.
Thank you. Our next question comes from Fatima <unk> with Citi. Please proceed with your question.
Hey, good afternoon, and thank you for taking my questions and that this one's for you on Russia I really appreciate the quantification of yeah.
Impact there as you wind down that business, but I was hoping you could help me with the math and you talked about an aggregate four to 5 million dollar headwind on the topline, but $3 million of that was basically realized as a headwind in the first quarter. So I guess my question is why so front end loaded.
For that write down and how should we think about that I guess the linearity.
On a full year basis for the remainder of the year for both E. R. R as well as total revenue. Thank you.
So just like I said in the prepared remarks, Russia has an immaterial impact, but it still has an impact on our kpis. So if you think about it in a simplistic way the impact is 1% to our both our revenue and a R. R.
Like like I said, there's approximately $3 million of headwind, but.
But when you think about the full year in 2022, we expect approximately $4 million to $5 million headwind for both <unk> and revenue as.
As we were really assuming zero contribution from that region going forward.
So when you think about kind of the impact the majority of the impact is happening in Q1, but obviously when you look at the comparable numbers in Q2 throughout Q4, you'll have that impact as well.
Thank you. Our next question comes from Joel Fishbein with Truth. Please proceed with your question.
Hi, Thank you can you just comment guy on on hiring plans going into 'twenty. Two I know in Q1, it looks like you're on plan, but love to hear what the plans are going into the remainder of the year and where most of those resources will be allocated thanks.
So very similar to what we've done last year and the majority of our hires are coming in in both the sales and marketing department in the R&D Department I'm very balanced and in our plans to increase both our footprints of additional engineers, there and sales capacity.
You know, we're very focused on both managing top line growth and profitability. So we want to do it at the right pace and so far we're very focused on executing according to plan.
Thank you. Our next question comes from Andrew Nowinski with Wells Fargo. Please proceed with your question.
Alright. Thank you I just had a question on that's really really good new logo growth.
So I was wondering if you could talk about just what you saw in terms of the year over year growth in new logos in Q1, and then if you look at your net new E. R. R.
In Q1, you know what it looks like it was down year over year, and if you add back that $3 million.
Basically flat so I'm wondering if.
If you could just provide any more color on the net new air are as it relates to new logos as well.
Thanks.
So I'll start kind of with a with a second question. When you when you factor in that $3 million headwind.
Headwind coming from Russia that really changes the picture in terms of the net new <unk> contribution.
And that has to be taken into consideration.
Can you just remind me what was the first question.
I'm just wondering if you could provide any color on your new logo growth I know a lot of customers are adding existing customers are adding more licenses, but I'm wondering how your new logo growth spurt in Q1.
Absolutely so youre right in the fact that the majority of our revenue still comes from the base. We have we have.
What to sell to the base and you can see that in terms of the number of licenses.
That we have both the four or more licenses in the six or more licenses, we definitely have a lot more to sell but when you look at the at the new logo contribution we had a positive growth of new customers, but even more importantly, it's the size of those customers that we're bringing and we're focusing on the larger enterprises, we have done very.
Well on focusing on those and we continue to focus on on customers that can generate significantly higher customer lifetime value.
Also important to understand it's just a big platform and below.
Most of the products are relevant to all of the customers and this is just the evolution of the business. It's a complete platform play this is a really land and expand.
The key you ski says and thankfully when customers are buying both of the patent they are buying more and more and this is just this is how it works.
Thank you. Our next question comes from Matt Saltzman with Morgan Stanley . Please proceed with your question.
Hey, guys. This is Matt Saltzman for Morgan Stanley I'm Southern in for Hamzah Firewall Tonight.
So thanks for taking the question.
As we've mentioned this is a difficult year for pursuing margin expansion, you've got a number of external factors, whether it be FX competitive hiring environment wage inflation really you name. It yet your operating income guidance has gone up so I'm just curious.
Kind of how youre thinking about balancing profitability and flexing some of that operating leverage and asking that and that's in line with.
The growth with the growth opportunities that you're seeing on the cloud side and just net new customer adds.
Yes.
So you're absolutely right.
In terms of our focus on profitability and that really hasnt changed compared to the way we run the business over the last.
Many years, we're very focused on growing topline growth.
But we are very conscious and focused on bringing some of it to the bottom line. If you look at the things that we can control on a constant currency basis. The fact that we ended Q1 with basically 370 basis points of margin improvement I am kind of shows you that we are able to manage through the wage inflation through the other facts.
Or is that or are part of you know.
Part of what we need to deal with but I think.
There's a lot of leverage in our model, especially with our ability to expand within our existing customer base and the fact that we can continue to sell more and more licenses. The fact that we're keeping our discount levels.
Very from a way and when you look at that expansion and when you look at the expansion in the past you know exiting the transition.
Moving from perpetual to subscription and the way we manage the business to date and the way we plan to continue to manage the business is focusing on the top line and the bottom line with where those margin expansion.
Thank you. Our next question is from Chad Bennett with Craig Hallum. Please proceed with your question.
Great. Thanks for taking my question so.
Guy could you provide.
In the $4 million to $5 million headwind from from the Russia exposure in air or.
If we were to look at that from a revenue standpoint can you provide a rough estimate of maintenance versus subscription.
So maintenance is about half.
Right.
And then.
You know just circling back on and the EMEA.
Question before.
You know in the end.
Okay.
The Russia impact there but.
I mean by my math, you know your EMEA business.
She had a pretty decent growth deceleration I think was probably the weakest growth quarter in five so I guess I want a little more detail into you know I don't care, if it's eastern Europe Western Europe .
Your confidence level that that that business performed to expectation from our bookings and billings standpoint in the quarter and that you know you you're going to see some growth acceleration from here in EMEA throughout the year.
But youre absolutely right when and when you look at EMEA and just for clarity purposes, Russia is part of EMEA and when you look at that those numbers EMEA grew at 20% in Q1, but on top of the Russia impact we had close to 400 basis points of currency headwind versus last year.
So when we look at the pipeline and when we look at the conversations and when we look at the activity. We feel very good about our ability to continue to grow kind of the European business and when you put all of this together, both the Russia and the currency headwind it paints a very different picture.
Thank you. Our next question comes from Jason <unk> with William Blair. Please proceed with your question.
Hey, guys.
This is Billy fits and Anton on for Jason Ader Yoki for you first any anecdotes from customers as you rollout D. A cloud or any feedback from customers. After the newer features for Salesforce you announced in the quarter.
And then I'd also.
Sorry.
And I'd also ask.
Any feedback on kind of the effectiveness.
A free risk assessment.
Oh.
Same thing is though a lot of platforms. It's the same features but now definitely we just did a release of the new functions for Salesforce.
We see a lot of momentum in the pipeline customers.
Just getting a lot of value.
It's it's much more than just the platform themselves I think that one of the more they more stationary trends after the.
Covid is that the endpoints are like access points and so tremendous adoption of SaaS applications that they're really dysfunction data reports.
This is whether you have the digital information of organization and the data on claim is not going anywhere. So the combination between the on Prem data and SaaS application is very strong in some of these certifications are just no you know what.
Like sensible. So there's just so much critical data and geared towards collaboration so let me just give visibility and.
A data oriented LLC Tuesday, just a massive massive value.
This is the biggest blind spots for most organizations just thinking about you know salesforce the shoe size of the revenues in the eastern.
Total base.
Take even a fraction of it and think that this is just a it can be a security business. This is the eastern.
Can be a massive business so for each and every platform home.
Open reported terrorism Gita data that he's open to do all of them G drive in Bulks and vast mis configuration opt out that open the whole SaaS to stay true to the whole world. We believe that it's just.
<unk> increased the Tam massively most of our customer base using these SaaS platform that we do so much.
The meat on the bone there is so much innovation ahead of us that we can really be this feature set.
A lot of clarity based on the everything we have done on claim and 365. So we just believe that its a massive opportunity and.
Okay.
Thank you. Our next question comes from <unk> Kalia with Barclays. Please proceed with your question.
Awesome, Hey, guys. Thanks for taking my question here.
I'd I'd love to dig into the bundles that you talked about a little bit more so so maybe just a couple parts to this question on bundles.
Maybe the first one is what are some of the most differentiated products when you compare gold to silver and then compare gold platinum right you get a number of products I'm curious kind of what the products are that differentiate those and then can you just remind us when those bundles where made generally available anything.
That you think is particularly compelling on pricing just any any more on the bundles because that's interesting.
Okay.
So first of all when we thought about the bundles. It really came from the fact that we have so much to offer to our customers and we're seeing customers wanting to purchase more of the platform upfront we've seen that throughout the transition. So when you when you go back.
To kind of our selling perpetual we used to sell data advantage data alert data classification engine that that was kind of the security.
Sale and with the office 365 licenses in the automation engine and the fact that we have so many more licenses geared to work towards automation.
We just realized that.
There is more that the customers want to consume and it really depends on their platform. So you know when you think about the different bundles and who uses them and how they fit within the customer needs.
They would include some sort of office 365, if that customer has it.
They want to protect those platforms and it includes the automation engine. There is just more licenses.
Does that have that we can offer and when you think about the exact date that we introduced it we started that process a couple of quarters ago, but I can tell you.
And that really only last quarter. It was like the first real quarter that we were.
Making sure that they are fully available for our reps and making sure that they are fully.
In the no of having them available. So I'm only recently, we started pushing that I think it's for the benefit of our of our customers and also can simplify the selling process in terms of selling the platform and not selling additional functionality within within the platform.
Thank you. Our next question comes from Shaul Eyal with Cowen <unk> Company. Please proceed with your question.
Yeah.
Thank you good afternoon guys.
Yeah. Okay. Thank you were last quarter or the quarter before that I've asked about potential supply chain constraints I understand the business model.
See how well you've done this quarter.
The guidance for the year, absolutely encouraging in light of.
The write off out of Russia, but again I just wanted to revisit this question given that it is a hot topic.
Tech and software Atlanta, and I know you've got there.
Specifically at an appliance space name, but.
When we get some more color or maybe even a similar definitive no response likely as was the case last quarter over quarter before lunch. So what's the thinking along these lines.
Hi, Sean we don't see direct impact because if you want to you know to.
To install our own plant can be virtual machines and can install it in AWS azure or Google. So you know these machines are available to our customers and everything that related to be cloudy those touch solution. So we don't see a direct impact at this point.
Thank you. Our next question comes from Sabella, Firstly with F. P. M Securities. Please proceed with your question.
Yeah. So thank you very much. So my question is on the gross margin line. It declined by 400 basis points sequentially, which is a little bit steeper than last year and just just.
Talk to the factors, which drove that decline and whether you expect.
In the last three quarters of this year, the gross margin metric to decline year to year or to stabilize.
Well first of all I think when you look on a non-GAAP basis.
<unk> margins are basically flat year over year.
When we look at kind of the leverage we have in the model.
And I talked about that in one of my previous answers, we see a lot of leverage in the model and and obviously there is the regular seasonality within the year. So when you think about Q1, historically Q1 has been the lowest quarter of the year.
Our revenue perspective in Q4, historically has been the highest quarter of the year in terms of top line, where our expenses are relatively flat. Therefore, you have that seasonality.
On a sequential basis, but when you look year over year. The non-GAAP operating margin is relatively flat.
Thank you. Our next question is from Joshua Tilton with Wolfe Research. Please proceed with your question.
Yeah, Hi, guys. Thanks for taking my question.
Your your new subscription dollars were essentially flat on a year over year basis. So I'm just I'm. Just wondering is there anything from a bookings perspective outside of Russia worth highlighting in the quarter and how should we expect new subscription dollars to sort of trend for the remainder of the year.
So there is when you look at the new subscription one thing to point out is that we.
We added the perpetual line item because it's immaterial. This year. We added it is part of the subscription line item and that when you look at the year over year numbers, you just need to factor that in the subscription overall has been strong we feel very good about our pipeline and our ability to grow.
And overall feel very good about the business.
Thank you there are no further questions at this time I would like to turn the floor back over to James the Russell for any closing comments.
So thank you everyone for joining we look forward to speaking with you this quarter and please don't hesitate to reach out if we can be helpful. Thanks and have a good night.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Goodbye.
Okay.
Yes.
Okay.