Q1 2022 Alteryx Inc Earnings Call
Greetings and welcome to all the tricks first quarter 2022 earnings conference calls.
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<unk> and answer session will follow the formal presentation.
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I would now like to turn the conference over to your host Ryan Goodman.
Investor Relations self tracks over to you Sir.
Thank you operator, good afternoon, and thank you for joining us today for <unk> first quarter 2022 earnings Conference call I'm, Ryan Goodman, <unk> head of Investor Relations with me on the call today are Mark Anderson, Chief Executive Officer, and Kevin Rubin, Chief Financial Officer.
Additionally, Paula Hansen, our president and Chief revenue Officer, and Suresh Vitol, our chief product officer will be joining us for the question and answer session. After our prepared remarks.
This afternoon, we issued a press release announcing our results for the first quarter ended March 31 2022.
I would like a copy of the release you can access it online on our Investor Relations website.
During this call we will make forward looking statements related to our business, including statements about our financial guidance for the second quarter and full year 2022 <unk>.
These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainties some of which are beyond our control our actual results could differ materially from expectations reflected in any forward looking statements for a discussion of the material risks and other important factors that could affect.
Our actual results. Please refer to our SEC filings available on the SEC's website, and our Investor Relations website as well as the risks and other important factors discussed in today's earnings release. Additionally, non-GAAP financial measures will be discussed on today's call are.
<unk> of these measures to their most directly comparable GAAP financial measures can be found in today's earnings release.
With that I'd like to turn the call over to Chief Executive Officer, Mark Anderson Mark.
Thank you Ryan it's great to have you on the team.
Thank all of you for joining us on the call today.
Q1 was an outstanding quarter across the board for ultra and a terrific start to 2022.
Key financial metrics, all exceeded the high end of our guidance range driven by increased traction with large enterprise customers.
This reflects both global digital transformation tailwind coupled with contributions from our enterprise go to market initiatives.
As of Q1 nearly half of the global 2000 are now ultra its customers.
We had an exciting quarter on the cloud front.
With our new product launches and game changing acquisition of Tri factor.
Our entire cloud portfolio is now available as part of our new unified Ultra <unk> analytics cloud platform.
And last but not least we strengthened our leadership bench, we promoted Paul Hudson The President earlier this year welcomed Keith peers, as our new Chief marketing Officer.
And recently added Lucas Moody as our new Chief Information Security Officer.
We are committed to our vision of democratizing data analytics for all and our highly differentiated low code No code end to end analytics platform continues to resonate with our customers and prospects.
Our strong results further bolster my confidence in both our go to market strategy and our innovation path ahead.
I'll begin with some financial highlights followed by an update on our product innovation momentum and go to market strategic initiatives.
Annual recurring revenue or <unk> of $684 million grew 33% year over year, reflecting the fourth consecutive quarter of accelerated year over year growth.
Revenue of $158 million grew 33% year over year, a reflection of strong underlying tailwind from our large customer cohorts.
We had a record Q1 in terms of number of $1 billion HCV deals double that of Q1 last year.
And is a great early proof point with policy enhanced go to market motion.
I'm delighted to share that we secured another eight figure TCP win with a fortune 100 financial services organization that more than doubled its contract value as it expands its ultra excuse to new teams and global markets.
We expect more to come as we continue to win with large enterprises across a wider range of persona than ever before.
Simply put the results were fantastic and I'm, so proud of the entire Altra organization.
Earlier I highlighted a couple of key additions to the leadership team.
And we have seen parallel trends of strengthening the team throughout the organization the.
The best leaders attract top talent.
We're benefiting from a virtuous cycle of high quality team expansion with employee retention rates at the highest level in over a year. We also welcomed over 200 employees from Tri factor, whose deep industry skills continues to strengthen our cloud capabilities.
I'm confident that with the right leadership team in place and a rapidly expanding pool of skilled talent.
The company is well positioned to capitalize on the attractive market opportunity ahead of us.
And that data analytics market opportunity is massive according to IDC.
$65 billion in annual spend today and that is projected to exceed $110 billion by 2025.
This is a market defined in large part by spend on disparate and Siloed legacy data engineering and analytic tools.
In Q1, we benefited from a continued increase in customer demand for a more comprehensive unified analytics platform.
In addition, a separate study we commissioned with IDC indicated that a significant volume of data analytics is still happening primarily in spreadsheets.
This study highlighted that across nearly 80 million advanced spreadsheet users over 60 billion hours per year are wasted an unsuccessful or repetitive data analytic efforts.
Meanwhile, we are beginning to see enterprise digital transformation at a global scale.
Which is creating incremental opportunities across a range of new persona, including data engineers business analyst.
And often the visiting business executives themselves.
Large enterprise companies are embracing digital transformation and are in the early stages of their journey you become data centric organizations.
This generational shift towards data literacy is creating urgency for companies to upskill their workforces to embrace data extract insights and unlock new opportunities to drive growth and create value.
These dynamics create three key opportunities for altra with respect to the addressable market.
One we can gain share and a tangible $65 billion market that is ripe for modernization.
Two we can expand the addressable market by empowering spreadsheet users with our low code no code analytics platform.
And three we can meet the incremental demand of new persona is emerging with this underlying wave of digital transformation.
This aligns perfectly with our vision of democratizing analytics for all.
Global demand for data analytics is ramping and we have strategically aligned the company's product innovation and go to market motion to meet this meteoric opportunity.
It begins with our flagship designer solution, which is long established ultra acts as a leader in the data analytics industry.
Our unique offering of rich enterprise analytic capabilities with a low code no code user interface continues to be a key driver of our success.
For our customers the operational efficiencies that designer provides are transformational.
Time, and again, our customers leverage our solutions to optimize processes that take multiple hours, if not days into workflows that execute in a matter of minutes.
And the fact that we can empower a business analyst that has no coding expertise with these capabilities is career changing for our users.
We take great pride in the level of engagement and enthusiasm across our user community of well over 300000 users.
As we look to the future we are committed to providing true end to end analytics capabilities.
This begins with the expansion of our product offerings to include new cloud based solutions.
Q1, we launched our cloud offerings in North America designer cloud all sorts of machine learning and ultra ex auto insights and of course, we completed the acquisition of Tri factor.
Which both expands our data engineering capabilities and enhances our ability to drive meaningful workloads into and within cloud data warehouses.
On that note our journey to unifying analytic apps on the Tri factor platform is progressing very well, we expect to have some milestone updates to share soon.
Yeah.
As we are now equipped with a comprehensive breadth of cloud based offerings. We are excited to have recently launched ultra <unk> analytics cloud platform.
Platform approach will enable customers to access our complete cloud offering portfolio through one unified solution suite.
We believe this consistent user experience across our portfolio of solutions will Foster cross team enterprise collaboration as new personas embraced data analytics.
In addition to providing access to our complete suite of offerings in a single interface should nurture multi product engagement and accelerate our customers' ability to upskill their broader workforce.
While still early on we're pleased with the customer interest and initial pipe Gen.
In fact, we already have one of our larger global 2000 customers on track to implement multiple cloud solutions this quarter.
Demand is ramping and we have a highly differentiated expanded product offering is resonating with our customers.
With that in mind, it's important to complement our innovation strategy with a targeted scalable go to market motion.
The first key initiative here is amplifying our sales focus on larger enterprise companies building.
Building off a solid foundation of enterprise business, we've significantly expanded and focused our enterprise sales team over the past year.
As these sales reps ramp we find ourselves engaged with customers at a more executive level and across a broader range of user personas. This top down strategy complements our land and expand motion of seating smaller wins to expand over time.
Only we are now seeing fields of opportunities across entire organizations.
We're seeing success with this strategy in landing new large scale wins as well as with favorable expansion trends within the customer base.
In terms of new global 2000 wins, we had a strong quarter, including several marquee companies such as Aes Boston properties.
Recall investec as Voya investment among others.
Factor Global 2000 penetration expand it by roughly six points year over year to 45% in Q1.
In Q1 lots of Hudson, a German based digital lottery provider selected ultra to empower its marketing team with enhanced customer analytics and visibility.
The ease of use depth of analytic capabilities and flexibility to integrate with other enterprise workflows were key drivers of this win.
We are so excited for Lotto Hudson as they begin their journey with ultra designer and server.
We're also seeing success with our enterprise motion finding that expansion with a global 2000 net expansion rate once again at 128% this quarter.
Another positive customer journey example is with Optus one of the largest telecommunication providers in Australia.
<unk> has broadened its implementation of ultra solutions across multiple departments in recent years.
And is now powering its network team with rich insights that they planned for <unk> infrastructure deployment.
Office has done some amazing work in driving efficiencies with all tricks.
It also optimizing customer facing experiences with tangible results.
The second key initiative in scaling our go to market strategy has been partnerships, we've a thriving ecosystem of partners across solution providers distributors and global systems integrators, as well as with technology and OEM partnerships.
Earlier this year, we announced an updated partner program that further empowers this community to effectively bring ultra solutions to the global markets and elevate user engagement.
We had a great partner led new logo win with a multibillion dollar Canadian based information management company.
And working with one of our global Elite GSI partners.
This customer is implementing designer within its tax organization to unlock significant efficiencies in terms of time and cost savings.
And more often than not are larger partners or customers customers themselves.
One one of our sizable partners expanded its own Ultra X 1000, plus license implementation to include new predictive capabilities and greater capacity.
What are the endorsement of it is to see our partners more deeply embraced the <unk> platform to drive efficiencies within their own businesses as well as for their customers.
Before passing the call over to Kevin I'd like to take a moment to address the unconscionable war being waged on Ukraine and its citizens.
Our focus is on the safety and wellbeing of our employees.
We have approximately 40 employees based in Ukraine and we.
We have actively worked with many on relocation.
And while we do not anticipate a meaningful impact to either revenue or operational workflow.
We are humbled by the courage and commitment shown by our colleagues and their families.
We will continue to support their needs through this difficult time.
In closing, we delivered an outstanding first quarter and we're off to a solid start for FY 'twenty two.
I firmly believe this is just the beginning we have a massive market opportunity that is very much in need of democratized analytics for all.
An expanded portfolio of solutions that are now unified in a single cloud based platform.
And we have a scalable enterprise focused global go to market motion.
I'm so proud of what the team has accomplished and I'm energized and excited by what's to come.
With that I'll turn the call over to Kevin.
Thanks, Mark Cuban.
Q1 was a strong financial quarter across the board with key growth and profitability metrics exceeding our expectations entering the quarter.
A R. R of $684 million grew 33% year over year above the high end of our guided range.
Net new <unk> more than doubled year over year with increased average <unk> per customer contributing to the upside as we are benefiting from increased traction with larger customers.
Revenue of $158 million also exceeded the high end of our guided range with growth acceleration in both domestic and international regions.
And non-GAAP operating loss of $30 million was better than guided with much of the revenue upside falling through to profitability.
Call. This is the first quarter, reflecting trifecta costs.
Underlying these strong results are a positive tail wins with large enterprise customers.
In Q1 customers with $100000 or greater and are are delivered continued acceleration in year over year are our growth to nearly 40%.
This strength is driven in part by robust new logo wins with larger enterprise customers over the past six months, we have expanded our customer base with over 500, net new customers and roughly a quarter of those new customers are within the global 2000.
Over the last 12 months, we've added approximately the same number of $1 million or our customers that we added in all of 2019 in 2020 combined.
This favorable mix of new customer adds provides us significant incremental upsell opportunities within our lowest churn customer cohort.
Building upon this momentum we continue to reinforce our investments in customer success to drive net retention durability with this expanded customer base.
A great example of this is with one of our largest banking organizations in Europe . This long time customer of altering has leveraged hundreds of designer licenses in servers across multiple departments, including finance regulatory treasury to name a few.
As they continue to broaden their engagement with all tricks. We are now providing inspiration sessions with a partner to train coach and attract new users to the platform.
Our commitment to the customer was once again validated in Q1 with our net expansion rate coming in at 119% consistent now for three consecutive quarters and with our global 2000 net expansion rate of 128%.
We are also seeing favorable customer response to our L. A offerings in terms of both upsell momentum and multi product adoption for.
For example, a leading provider of branded payment solutions quadrupled its alter its implementation in Q1 and also put into place in the L. A to explore new predictive capabilities and use cases.
As a reminder, our L. A offerings include additional license flexibility to encourage speed of deployment.
Over one third of our L. A wins from the second half of 2021 are already leveraging the additional license flexibility provided by the sales motion.
This is a positive growth driver for the business plus provides us a higher level of visibility on near term upsell momentum.
As our sales strategy to focus on larger enterprise customers takes hold average <unk> per customer demonstrates how we are consistently growing within this important cohort.
In Q1, we achieved a record high average <unk> per customer of $83000.
This is a metric that has been growing for several quarters and accelerated four points year over year in Q1.
Yeah.
We are pleased with the growth trajectory of the business and given the size of the market opportunity continue to invest for durable growth in the years ahead, but these investments will be made with discipline as we appreciate the importance of optimizing the underlying profitability of the model case.
Case in point, we exceeded the high end of our revenue outlook by $11 million and came in at $17 million better than the high end of our profitability outlook, meaning we captured more than 100% of the Q1 top line beat at the operating profit level.
This provides us additional resources to redeploy into the business over the remainder of the year to fuel long term durable growth.
At the same time in Q1, we were able to elevate investments in customer success accelerate our velocity of sales rep hiring and continue our pace of rapid innovation in both cloud and our flagship flagship solutions.
Looking ahead, we have multiple profitability levers in place, particularly with sales and marketing.
We had great success in attracting new enterprise sales talent with our biggest hiring quarter ever.
We brought on many well tenured sales reps with a wealth of sales experience coming from Fortune 500, and multibillion dollar software companies.
As these reps ramp we expect positive tailwind with sales rep efficiency in the second half of the year as our mix of ramped sales reps increases.
The strong enterprise momentum is also a positive for long term margin trajectory given the high renewal rates with lower CAC associated with the potential upsell.
And as we scale the business over time, we expect to continue to a lack of unlock efficiencies of scale across the operating expense items.
And of course, as we integrate trifecta as part of our natural sales motion, we'd expect related revenue contributions to offset the corresponding expenses that are now fully reflected in our non-GAAP profitability.
With this backdrop of robust AOR growth ramping enterprise traction favorable profitability trends in incremental drivers ahead, let's turn to the outlook.
For Q2, 2022 we expect <unk> to be in the range of 718 million to $721 million representing year over year growth of 31% to 32%.
Given our growing contributions from international customers and the G. O current geopolitical environment, we've incorporated an element of currency prudence in our outlook.
We expect GAAP revenue to be in the range of 159 million to $162 million representing year over year growth of 32% to 35%.
We expect our non-GAAP operating loss to be in the range of $50 million to $47 million. This reflects the cost of our full first full quarter of trifecta, where.
Returning to our offices and our annual users user conference in May.
We expect non-GAAP net loss per share of 61 to 58 cents. This assumes 68 2 million weighted average shares outstanding.
For the full year 2022 we are increasing our range to $812 million to $822 million representing year over year growth of 27% to 29%. This is up from the prior growth range of 26% to 28%.
We are increasing our GAAP revenue range to $730 million to $740 million representing year over year growth of 36% to 38%. This is up from the prior growth range of 32% to 34%.
We expect non-GAAP operating loss to be in the range of 40 million to $30 million an improvement from our prior outlook for a loss of 50 million to $40 million driven by the incremental coupon efficiencies.
We expect non-GAAP loss per share to be in the range of 56 to 46 cents an improvement from our outlook from a loss of 68 to 58 cents.
This assumes 68.3 million basic shares outstanding and an effective tax rate of 20%.
In summary, Q1 was an excellent start to the year. We are pleased to see the early benefits of our strategic investments in go to market and product contributing to the strong results. The market opportunity is massive and rapidly expanding with new personas and use cases, and all tricks is uniquely positioned to meet this increasing global.
Demand with our platform of leading on premise and cloud based analytics solutions.
Before handing the call to the operator I'd also like to note that we have an investor day coming up on May 17th as part of our 2020 to inspire user conference in Denver.
We will further discuss all tricks market opportunity sales strategy and platform innovation path with a live customer panel for those joining in person.
As a CFO that leverages our solutions across my entire organization I am intimately aware of the efficiencies cost savings and user empowerment our solutions provide.
With our first in person user conference in two years I am so excited to provide our investor community with the opportunity to experience it firsthand.
With that thank you all for joining us today, and I'll turn the call back to the operator for Q&A.
Thank you.
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One moment, please why do we pull for questions.
As a reminder, we ask that.
You please limit to one question.
We have our first question from the lineup Tyler Radke with Citi. Please go ahead.
Hey, Thanks for taking the question maybe a question for Mark or Paul There. There was a lot of discussion around some of your large customer expansion. This quarter. It sounded like the Elo program. You know it is off to a good start I'm curious what do you how much is the tri factor.
Acquisition, and just kind of as you know new vision on cloud, helping drive those expansions and in those conversations and you know what are your messaging to customers in terms of timeline for for the eventual conversion onto the tray pack, the backend and and and also.
You know what are you, saying just in terms of you know moving to a usage based model overtime. Thanks.
Hey, Tyler Thanks, a lot for the question.
You nailed it in your and your quick recap.
You know I really I think it's really seeing the benefit.
The go to market improvements that Paul has made in the last really in the last year. It was.
Really strong execution across the board are elevating the discussions with customers senior executives and just driving bigger deals with a much stronger enterprise traction I think the.
Enhanced portfolio it gives us more to talk about but I I would say that the.
You know the business with Tri factor is still very much rounding error at this point.
We've been really clear with our customers and we'll continue to do so at our upcoming inspire conference.
By giving.
Kind of a pretty granular roadmap for how we're going to deliver.
Cloud down the road.
Yeah, Tyler I would just add to that that would be definitely anticipated that the delays, we're gonna be well received in the market because the customer feedback when they were looking for ease of expansion predictable pricing in a way that to sort of manage at bringing more I use.
Areas into that all checks platforming and the L. A does that very nicely and we're really excited with the results that we've seen we shared a couple of those in the prepared remarks about a over a third of the customers are already bursting into extra capacity and expansion of users with us as an outcome of this E L. A vehicle.
And now as we look forward, we'll be having the tri factor solution as well as the entire analytics cloud platform available to our customers and then E. L. A capacity as well. So it will just layer on really nicely town to just yeah like Hon. Scott, that's being really well received by our customers and driving.
Is that expansion.
Great. Thanks, so much.
Next time.
Thank you we have next question from the lineup Fran Breslin with Piper Sandler. Please go ahead.
Hi, all this is Hanna Rudolph on for Brent today. Thanks for taking my question just a few for you call that you've been at Altra expert just about a year now as you reflect back I was wondering what your biggest learning has been and what are your key priorities are for the remainder of the year and then alongside that I guess, how is the sales integration going postpaid.
Packet integration or acquisition and what is left to be done there. Thanks.
Thanks, Hannah Great question, So yeah, I'm coming up on one year here and on the 17th and and.
Even more bullish than I was on day, one because of the opportunity that our customers see west with all track I mean, clearly the biggest learning is that the opportunity to democratize analytics across the enterprise is the answer for enterprises today that want to become data driven and are looking to add.
And you know build differentiation in their markets and leverage their data to do that.
And as powerful as at the last couple of decades I've been in filling out data science teams and so forth that everyone's realizing that that capability is in short demand and that the only answer is to democratize analytics across the enterprise from knowledge workers to a business analyst data engineers.
And business owners alike. So we're really convinced that are all trick analytics platform and cloud platforms or the paths to democratizing analytics and then we married that up with investments in customer success and partnerships to help our customers with you being able to add to roll this out.
Out and deliver business outcomes across virtually every function in the enterprise as we look forward, we're really engaged in a lot of cloud conversations with customers right now and they are definitely wanting to understand as they continue their expansion with all check where the cloud platform.
And to that end as they plan out their journeys to the cloud they're looking for a business partner like all checks to help them.
Again three of that so I think that the future is bright for us with our customers and we're just going to continue investing in the global 2000 continue investing.
And partnering with our customers around customer success and help them unlock the innovation and that Suresh and team are building around our analytics cloud portfolio.
Thanks Anna.
Thank you.
Thank you we have next question from the line of Derrick Wood with Cowen and company. Please go ahead.
Oh, great. Thanks, Congrats on a strong quarter.
Kevin maybe I'll throw one at you.
You guys talked about this push the transition from three years to one year contracts and.
Expect a decent kind of ASP uplift as you cycle through that so could you talk about.
How big of a renewal year 2022 is how effective.
You think you could be in kind of making this you know contract structure change in and then you know given that it sounds like you've got a growing mix from from the enterprise, which which carries higher net revenue retention rates. How are you thinking about the direction of NR or through the year.
Yeah, Thanks, Eric I appreciate the questions.
With with pricing and the proportion of renewals that we have in 'twenty, two maybe relative to 'twenty. One we certainly have a much larger population of renewals coming up this year on a relative basis and keep in mind that you know the largest population of renewals are in the second half of the year.
Which also provides us with a lot of visibility into how we think about H two as well. So that's kind of one from a pricing perspective.
We took a pretty significant effort last year to really.
Solidified pricing for one year contracts and take away the heavy discounting on multi year and we saw that play out pretty well for us through the back half of 'twenty, one and I would say that you know pricing has been pretty stable into into the first quarter of 'twenty, two and I would expect to consider to continue to see stability in price.
<unk> is as we go forward in the year, but we still have customers that are electing three year contracts and you know we're happy to have that.
That conversation with them as they.
Continue their deployment. So I think that you know as we think about contract duration, we obviously have seen it.
Stabilize quite a bit here, the last two or three quarters and I am hopeful that we'll see that going forward.
Derek I'm missing one last part of your question.
Yeah. It was just the direction of net revenue retention, yeah, especially given the what seems to be kind of a rising becks from enterprise.
So that's exactly right and I think as you see us continue to focus on that customer segment in the global 2000 as a customer segment is generating 128% of net retention as we continue to kind of roll out and invest in customer success. We think that that's also a driver of stronger net retention.
So you know very pleased that we've seen the 119 across the total customer base stable now for three consecutive quarters and I think if you. If you look at what we've been able to achieve within the global 2000, I think that gives you a sense for how this can trend over time.
Well done thank you.
Thanks Victor.
Thank you we have next question from the line of it take coupon with Oppenheimer. Please go ahead.
Hey, guys nice quarter, Mark I guess, a couple for me that are tied together on the product side.
Clearly you're getting much more traction with large customers. That's great and then maybe you could talk about the landing.
It clearly in the past we used to be people landed with couple of designers in what way are you lending differently now with large customers and maybe you can just talk about just in the context of volume, but also from a product or are you lending differently.
With them with product and then the second question on the portfolio you know going through your website right now.
When you go through the product list is quite long and extensive and frankly confusing I guess my question is do you see an opportunity here, perhaps over the next year or two simplify consolidate bundled all of this a little bit better to make it a little bit easier for customers to land bigger.
And not just kind of start picking and choosing multiple multiple products and going through that.
Trying to figure out, what's right and wrong make it easier for them, putting it a much more package better together.
Yeah. Thanks, a lot for the question.
For sure there's a lot more focus on landing with large enterprises and often times, if we do a good job articulating our proposition of value, we'll land with a larger deal I think in the past we've had different tools that that allowed the sales teams to go to sell to users I think by broadening our focus.
To include executives of lines of business soldiers.
And then kind of coaching and developing the team to think big are these digital transformation projects, they're not they're not departmental their company wide and they require a different sort of sales motion in a different discipline that Paul has really brought home in spades for us the tool that has been really success.
So for US as Paul had mentioned earlier is our enterprise license agreement, which kind of remove the shackles from customers focusing on on a hard ceiling of number of users that they can use and allows them to burst upwards of 50%.
To kind of like flip the script and allow them to go faster because we're finding customers now you really are buying into the notion of upskilling and up leveling their people to become more citizen data scientists in terms of the product side I take your your your informed point of view.
Seriously, you're a smart guy and I've always appreciated your point of view.
We are we're definitely we definitely streamlined our product line over the last few years and I think as we go forward, you'll see the platform that we're building in the cloud.
We'll we'll avail.
A whole a whole host of applications that customers will be able to hit up and Suresh is right here beside me he's building out that platform and driving the integration with the Tri factor maybe he can give you a bit more color yeah. Besides haynesville things with less and then as we think about the product portfolio and the announcing the all kicks off.
The cloud is the unified analytics platform, where our customers can enjoy the benefits of.
Does that a cloud type of fact, Oh objects machine learning and auto insights and one kind of product experience, what's kind of critically important for us and that's where with aspiring to go with the delivery of a lot of customers will continue to enjoy the benefits of designer and solar.
As they think about running are.
All three fund their desktop.
Sad to see conversion of those two models of deployment.
Thank you good luck guys.
Thanks for your time.
Thank you.
We have next question from the line of Sandeep Singh with Morgan Stanley . Please go ahead.
Yeah. Thank you for taking the question and congrats on a strong start to the year I guess I'm Gonna go ahead and ask the macro question, because it's sort of been top of mind Hum all throughout earnings season, and so just from your perspective, I guess, we could sort of look at it two ways, one sort of coming out of Covid and budgets getting in a in a better place for analytics more broadly.
And then to sort of the concerns around potentially Europe and potential.
Since the recession and in North America, and North America. When you talk to your sort of large enterprise customers. What are they telling you about spending and altera X in their digital transformation budgets more broadly and how that sort of embedded into your a framework for guidance for this year.
Yeah. Thanks, Sanjay certainly we're painfully aware of what's going on in the macro environment.
I do think though however.
Whether it's number one or number two.
We constantly hear from executives that functionally and digitally transforming everything about your business is as a priority and it's really starting to.
Drive that priority through into budget cycles and allow.
Solutions like all tricks and services like our partners can deliver around <unk> two.
To make it above the red line on that CFO spreadsheet that gets prioritized and spent every quarter. So.
Thank the up leveling of the team that Paul has continued to do in the solid training that we've got.
It gives us access to the right kind of people that are making those decisions.
I think you know I think governments and enterprises need to Upskill people to do a better job of running.
We're running a business we're running our government.
Okay.
That makes that makes perfect sense. Thank you so much mark for the thoughts there what do we think about sort of you know the nature of investment I think last year. The team is really focused on getting the right people. The right roles. Paul we're working on like pricing and packaging and go to market. How does this sort of.
<unk> focused change in 2022 versus 21, it gets sort of lay out the areas of investment to drive the continued growth of the business.
Yeah. Thanks. Thanks for the question. So you know as we talked about last quarter going into the year.
Areas of investment continue to be.
Within the go to market in particular building out the global organization. The global teams I would like to call out that we've continued to invest prudently. If you will and customer success as we continue to put resources around our largest customers to ensure that.
They're getting value and continuing to identify areas to expand with the acquisition of Tri factor in and you know the.
The cloud efforts, we're continuing to put investments into product engineering and that that's a key area of focus and then where you know obviously as you saw from the performance of Q1, we were able to meet handsomely on the bottom line and that's you know that's important to us as we think about the year going forward.
Great Congrats on Q on that.
Hey, Thanks, a lot. Thank you appreciate it sounds it.
Thank you we have next question from the line of my exit costs with Needham and company. Please go ahead.
Hey, guys. Thanks for taking the questions here I did have a couple on the guide for Kevin, but I just wanted to get a better understanding of how you guys are looking at the guidance for the remainder of the year and really Theres two pieces to that first on the E. R or so you guys beat your guide at the midpoint by about.
$7 million and raised our full year by $7 million at the midpoint.
And just curious.
What you're seeing.
In the year that like why not raise above that.
And then the second question again coming to the guide, but on the operating profit I know we spoke to the fact that you guys beat handsomely on the bottom line you beat your midpoint in Q1 by almost $19 million, but when we think about full year guide the mid points moving up just $10 million. So what are some of the puts and takes when we're thinking about that.
And how it has changed now as we think about the remainder of calendar 'twenty two.
Yeah. Thanks, Mike all gets some commentary and if anybody else has there they're happy to jump in.
You know as I mentioned in one of the prior questions. We do have the benefit of pretty good visibility into the back half both in terms of new bookings as well as the renewals in the end and just the size and nature of that renewal base.
We executed well in Q1, we're going into Q2 with with a lot of momentum the team is executing well.
Mark mentioned, we have strong visibility into the pipe and so you know we are feeling confident now having said that we did apply some prudent elements of or excuse me. We did incorporate some elements of prudency if you will.
The guy to.
Could take into consideration what's going on in the macro backdrop, but it's also just just to be clear we recognize the importance of putting out guidance that we have confidence that on the bottom line you know as I as I mentioned, we are carrying forward the revenue beat into the guide for the full year, but there is opportunity for us.
You know to continue to be very disciplined in where we invest in the year to continue to drive growth.
Thanks for that and then I know we were talking about the operating profit as well with the guidance you guys laid out for Q2 and if there's upside we saw in Q1.
Can you help us think about the cadence of Opex or gross margins, we're looking to the second half of the year now.
Just because I think that the Q2 operating profit was lower than maybe what we had been expecting and I'm trying to get a sense I know that you have a couple of things in Q2 like the dish.
I guess the the user conference that's coming up in May, but just want to make sure I'm thinking about that properly as well.
No that's exactly right. So we do we do typically have some seasonally higher expenses in Q2. So certainly you called out the costs associated with our inspire conference. We also have incremental costs that we've incurred for return to office. So you know Q2 is seasonally higher we do expect the back.
Half of the year to settle into more normalized range. So as you're thinking about operating expenses I would put those layers.
Thanks, a lot Mike.
Thank you thank.
Thank you. Thank you we have next question from the line of come elements Iraq with William Blair. Please go ahead.
Hey, Thanks for taking my question and congrats on the strong quarter.
Your sales and marketing head count was up I think 30% at the end of last year and it sounds like that hiring strength continued into 'twenty two.
Can you update us on how the new reps have ramped relative to your initial expectations. How the areas of investment focus may have changed over the past year and how should we think about the sustainable rate.
Our sales head count growth going forward.
Yeah, maybe I'll start off Camilla and thanks for the congrats and then hand, it over to Paul <unk>, Our President and C. R O, but listen I think we put together a really strong foundation to drive execution to large enterprises large governments around the world.
And I really start to see the benefits from the sort of tail winds of.
Digital transformation, that's that's impacting all so.
I couldnt be prouder of the job that Paula has done to you know not.
Help prop up the team that we have here and continue to make them the best and brightest, but two to attract many more that are coming from outside of ultra axle.
Thanks, Mark and thanks Camille for the question, we have definitely been really focused on hiring I think we've talked about at the last couple of quarters, how he's put a and operating cadence in place much like our forecasting cadence around hiring why we are really really focused on this I mean, we have been really pleased with a record high.
Hearing I think if you look over the last couple of quarters and we are definitely you know that set at our highest levels of hiring in sales and marketing and we have seen consistent and you know productivity that that that is aligned with our expectations of those individuals as they come on board and as we continue to.
Infuse them with the enablement that we've built over the last year you know we're bullish on the impact that that increased debt capacity can deliver as we go into second half.
And it really shows up in the numbers as it usually does you know I think we talked about the record number of million dollar ACD wins and in Q1, we saw us getting close to 50% of the Chi to K <unk> are now ultra X customers and.
You know just over the past 12 months, we said we added roughly the same number of million dollar customers that we did in the last two years.
Yeah, it's incredible to see that.
It's helpful. And then just as a quick follow up has the ramp of the cloud portfolio led to any changes in the competitive environment are you seeing anyone new on head to head deals and how does that cloud product impacting win rates.
Yeah, the the cloud.
Platform has been a really exciting opportunity for us with our customers and it expanded the audiences that we can speak to you and you know it and in particular has opened up our conversations with I T with the CIO as we're talking about expansion across the enterprise and they're wanting to understand how to do.
That easily you know how to operate and their cloud environment, how to deliver and the different analytic capabilities to the different types of persona across the enterprise so were having the conversation with with all our customers.
And I think you know that the reception has been really positive in terms of seeing all drink says that as the partner for them as they navigate their journey to the cloud.
Thanks, good to hear thanks again, Paul Thanks Camille.
Thank you we have next question from the line at line of Joel Fishbein with tourists. Please go ahead.
Hi, all congratulations on a on a great quarter.
One for Mark and Paula and then just a quick follow up for Kevin.
Mark Paula just can you give us an update on the snowflake partnership and how that maybe helping to drive some deals and Kevin just.
Curious if you believe like you're in a good position now to potentially give us a longer term guide at analyst day.
Oh, that's coming up in a couple of weeks.
Hey, Joel Thanks for that listen the Snowflake partnership I think is going really well, we're really proud of the work that the technical teams Thunder Suresh has done to build really meaningful integration.
Not just from our perspective, or snowflakes perspective, but more importantly from customers' perspectives.
And it's really driving.
Field level engagement.
Teams getting together at Starbucks.
Taking about strategies to jointly prosecute on opportunity and.
When when both sides of the equation here, both all tricks and stuff like.
Are getting value Oh, it's.
Always great for customers.
I don't know if you want to add anything to that yeah, I think you're spot on it's been by far one of our strongest partnerships and we're only getting started with them and they obviously are really focused on consumption and the feedback that they provided is that theyre, saying I'll check surely drive consumption because of that pushed down capability that we have.
And as more and more customers are building out cloud data warehouses and want to harness the power of all of that data sitting in that in the warehouse that theyre turning to opex for that analytic capability. So I'm really pleased with the partnership with Snowflake, just getting started there and anticipate continued.
And our joint customers.
And just quickly on your question with respect to the long term model, we do intend to have it to have a conversation as part of the analyst day at inspire a in a couple of weeks at our long term model as well.
Thank you so much collateral. Thank you. Thank you.
Thank you we have next question from the line up pension Ambarella with J P. Morgan. Please go ahead.
Oh, Great Hey, guys. Congrats on the quarter. Thanks for taking my questions can I.
Can you go one click deeper on the macro question, maybe touch upon the demand environment in the various theatres that you're seeing especially in Europe are you seeing any kind of change in tone in.
And the customer conversations any.
Any kind of higher level of scrutiny sign offs required any color would be helpful. And secondly, Kevin is it possible to parse out but you are in terms of the inorganic contribution from traffic that hyper Ana and is there any change in your assumption for the year.
Well thanks for the question and congrats a pendulum great to hear from you.
On the macro side of things listen I think what we saw in Q4 and really in Q3 last year was the Americas team.
It really kind of achieved escape velocity and in my experience having gone through this a few times before usually Asia Pac Japan and EMEA.
Are anywhere from nine to 18 months behind that in terms of experiencing the same kind of kind of execution escape velocity, you'll Paul has hired two really good senior leaders to run Asia Pac, Japan and in EMEA and like I said in my prepared comments you know good talent.
Always begets and has good talent follow it.
So so we've seen really good really good demand coming from all areas of the globe. That's one of the great things about what we do is it matters to every single vertical government every vertical in the enterprise spectrum.
And companies need to run more efficiently and better and human beings want to upskill themselves to be more strategic.
To their to their businesses.
Yes, Tien tsin I would agree with that and you know very similar conversations happening globally right now nothing and you know, particularly unique to EMEA and N. A P. J and we're just really excited about the strength of the leadership across our three important geographic.
Like theaters, and and you know seeing yet seen that adopt capitalization of analytics conversation ringing true across industries and across geographies.
Yeah. Thanks pendulum just quickly about your question are there haven't been any changes to the assumptions that we laid out going into the year. So we do expect trifecta to contribute about $20 million in IRR. This year, we're not planning to break it out just given the small size, but there are no changes in assumptions.
Got it thank you.
Thanks pendulum. Thank you.
We have next question from the line of Chase Donovan with Raymond James. Please go ahead.
Yeah.
Thanks for taking the question I know in 2021, there was a big focus on the channel program and you guys made several key announcements and key channel partners I'm curious to hear how you are seeing those channel partnerships ramp here in 2022, and how do you think about adding new partners, particularly to support your new cloud capabilities.
Yeah, Jason Thanks for the question I'll start off and then pass it over to Paula Yes, listen I think this is a massive market its a $65 billion total addressable market. According to IDC in and they see it growing to 110 billion in 'twenty by 2025. So we can prosecute this by yourself no no one company is gonna be able.
To do that we've got to do it with all different kinds of partnerships both distribution.
As well as technology and OEM partnerships and so last year, we hired a great person to sort of build out the muscle.
Build out the organization to to to leverage these partnerships and consistently since Paul has been here she's she's been training our teams on how to work better and smarter with partners like we mentioned snowflake earlier, but theres a lot more technology and distribution partners behind that and Paul maybe some more color yeah. It tastes it well I mean this is.
A huge pillar of our growth strategy and we as you mentioned, we launched our partner program to be very intentional about the benefits that our partners can enjoy when building their businesses with us and and and uniquely identifying the needs of a GSI versus an ISC.
First as a solution provider and we have clearly top partners and all of those categories and we're continuing to recruit more.
And overall, we think that attach rate as partners to our business will grow as a percentage of our business as we go out and we're starting to see early indicators of that I'm just since the launch of the program. So I think you'll continue to see this as being a really significant at pillar of the strategy as we go forward.
And we'll talk a lot about that at inspire as well. So again another plug there for those of you that can join us to understand how how that the partnerships play out in the market in support of our customers.
Perfect. Thanks, Unlike according to join you guys in Denver.
Thanks, Jay Thanks, a lot guys.
Thank you. We have next question from line of Koji Ikeda with Bank of America. Please go ahead.
Hey, Mark Paul and Kevin Thanks for taking the questions. Just one for me you know really on the Oh on your commentary with the increased traction with the larger customers and I just wanted to kind of dig in there a little bit I mean does that really you know that that increased traction being driven by adoption of the legacy designer and server products or is there any sort of.
Adoption of designer cloud or maybe even tri factor, that's driving that increased traction with the larger customers.
From a bigger perspective.
Thinking about that increased traction I mean, what what's going on in the end market right now of the up market traction maybe something that's a little bit different in 'twenty two versus the years past.
Okay.
Yeah Tobey. Thank you for the question. So the answer is all of the above so the expansion and the growth that we see with our customers. You know does look like more designers and it does look like introduction of servers into the environment to drive broader automation and scheduling and sharing of work for us and it looks like the.
With the <unk> and the cloud products and the adoption of cloud products into the environment. So it's all of the above I mean I'll give you. An example, we made reference you know early in her prepared remarks about a large financial institution in the U S. You know doubled their demand with us and that is you know given both by does.
Our server expansion as well as their interest in Triferic day in there you know cloud data warehouse environment. They are interest in conversations around auto insights because they want to help their executive team better understand what's happening in the business and so it's it's all of the above.
And that's that's the beauty of our vision of a unified end to end platform and these contracts that we have is customers can go all in with us and be able to expand through a variety of different products.
Yeah, and I'll, just add on top of that Koji.
Pink I think.
We're broadcasting to a much broader set of personas now and we're marketing to lines of business are up and down their organizations.
And I think were driving more relevance.
This in this market I think there is massive vendor fatigue with over 400 companies all kind of sounding like to do about the same thing, but nobody does what we do and that's but we take the hardest part of the journey. The early part of the journey of getting going and.
And allowing customers to access more than 100 data sources and use more than 100 plus tools.
With relatively little training. So I think I think we're really trying to drive that relevance and we've got a very strong vision because our customers are on a journey to the cloud they're they're not the customers that we're focused on are aren't going to put all their eggs in one basket and they want to have a vision that makes sense and I think democracy democratizing analytics.
It was really doing that for them.
Thanks, guys. Thank you so much thanks Koji.
Thank you we take the last question from the line of Patrick Walsh events with JMP Securities. Please go ahead.
Thank you so much it might tick off a part I. Appreciate the question. How are you thinking about M&A at this point I saw you made some recent hires on the corporate development side. So just curious to get your thoughts there. Thank you so much and congrats.
Yeah, I'm, sorry, I missed it was it Jeremy.
Yeah, He's thinking Oh, okay, sorry about that well. Thanks for the question, Yes listen we are we did the biggest acquisition in the history of the company last quarter and and we're working really hard right now to.
To knit together are our innovations all the old tricks with an amazing team from Tri factor, we have built out a corporate development organization, we really didn't have one before.
And just hired a new leader in the last quarter or so and she's really off to a great start we've got ultra ventures, we're always looking at.
You know early stage innovators and companies give us really gives us a front row seat to the people and the and the tech that we think are going to matter in the future in terms of future M&A. We're just going to be you know kind of take our time and continue to look for opportunities that we think makes sense for our customers. It makes sense for the team.
It makes sense to our shareholders.
Just given the macro situation. These days, we want to be.
Prudent Tesco Woodside.
Yeah.
Super helpful. Thank you so much.
Thank you ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the call back to Mark Anderson CEO for closing remarks over to you Sir thank.
Thank you so much operator.
Like to say, thank you again to our customers our partners shareholders and our team here at old tricks. It was a great start to FY 'twenty. Two we are super excited about the opportunity. That's ahead of US we've got a great team in place the vision is crystal clear and we're executing better than ever.
I'd really like to encourage you to come and join us at our inspire event in Denver.
We're gonna have a special.
Investor Conference I'd Love to have you walk around the halls and talk to our people talk to our customers. We'll just see how happy they are with our vision and our execution, it's going to be great event, and really hope to see you there. Thanks again.
Thank you very much ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
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