Q1 2022 ON24 Inc Earnings Call
[music].
Good afternoon and welcome please.
Please note that the life and interactively.
Today's call may be accessed via the Investor Relations section of the company's website at <unk>.
Www dot investors.
Before dotcom.
Completion of the prepared remarks, we will open the call for questions. Please note that this call is being recorded.
This time I would like to turn the conference over to Lauren Sloane Investor Relations for them 24. Please go ahead.
Thank you Hello, and good afternoon, everyone welcome to our 24th first quarter of 2022 earnings conference call on.
On the call with me today are sure Armstrong.
Yeah 24, it's Steve.
Steve <unk> Chief Financial Officer on 24.
Before we begin I would like to remind everyone that some information provided during this call will include forward looking statements regarding future events and financial performance.
<unk> guidance for the second quarter and fiscal year 2022.
These forward statements are subject to known and unknown risks and uncertainty.
I'm 24 questions that these statements are not guarantees of future performance.
All forward looking statements made today reflect our current expectations.
And we undertake no obligation to update any statements to reflect events that occur after this call.
Please refer to the company's periodic SEC filings and today's financial press release for factors that could cause our actual results.
Materially from any forward looking statements.
We'd also like to point out that on today's call. We will report both GAAP and.
non-GAAP result.
We use these non-GAAP financial measures to evaluate our ongoing operation for internal planning and forecasting purposes non.
non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP.
The reconciliation of these non-GAAP financial measures.
Refer to todays press release.
I will now turn the call over to draw truck go ahead.
Thank you and welcome everyone on 24 hours.
Quarter 2022 financial results Conference call. We appreciate you joining us.
On today's call I'll review, our Q1 results highlights.
Highlight progress on our planet.
Wanted to priorities and share how we are evolving our platform for a post pandemic world to help unify digital engagement and <unk>.
Sports and data for enterprises across the globe.
Our team is laser focused on the strategic priorities that I laid out last quarter and we believe that the new products. We have brought to market in the last two quarters will be instrumental in increasing new business acquisition and improving customer retention.
Let me begin with providing high level results from the first quarter.
For the first quarter, we reported total revenue of 40 815 million.
Subscription and other platform revenue was $43 5 million and professional services revenue was $5 million.
Ending var was $167 7 million.
Presenting an increase of 3% year over year.
As a reminder.
Ultimately <unk>, 90% in Q1 2021 from the year before and over the last three years.
Jaguar is 38%.
We believe <unk> has reached a draw consistent with our previous communication and expect to see improvement in net new <unk> in Q2 and throughout the year.
As a reminder, the Q1 renewal cohort comprised a significant portion of large do renewables and we saw a handful of customers rationalize large expansion that took place during COVID-19 that are up for renewal for the first time.
Repeat customer cohort, which now comprises the largest portion of our business continues to be stable with the churn from non renewing customers similar to pre COVID-19 levels.
The top 25 customer contracts up for renewal in the quarter, we did not lose any customer that was with us prior to Q1 2020.
Our net our growth rate or this group of customers over two years, ending Q1 2022.
Over 70%.
Looking past Q1.
Dissipate John within the first time customer cohort should improve as we move past the last of these COVID-19 influence cohorts.
On the other hand, as the Ukraine, Russia War unfolded, we saw softness in new bookings within our EMEA region, driven by the heightened macro uncertainty.
EMEA has been an important growth vector for us representing a little under 40% of our revenue in 2021 and outpacing the growth of our overall business in 2021.
While we do not have any direct exposure to Russia or Ukraine, we believe it is prudent.
But the current level of macro uncertainty, particularly in EMEA, we continued throughout the year.
In addition, we are still in a period where customers, especially.
They are post endemic digital budgets.
As a result.
<unk> the full year.
<unk> outlook to reflect the potential impact to our business.
Steve will discuss this in more detail.
Despite this uncertainty we believe we continue to have a strong market position and continue to land new customers and expand with existing customers showcasing that our digital engagement platform, particularly the first party data generates is becoming a key driver to the success of an organization is revenue growth.
Strategy.
Attendee engagement as measured by length of attendance number of canceled interactions reached another record high in Q1.
Looking ahead to the remainder of 2022 and beyond our strategic growth agenda is focused on evolving our digital engagement platform for a post pandemic world.
Our customers are changing how they use our platform and we are changing our platform to address the needs of our customers.
We've launched two new products in the last few quarters, which significantly expands our platform.
While it is early in the product lifecycle, you've already closed a number of these deals and are seeing one of the fastest ramp of new products pipeline for these products.
We also completed a tuck in acquisition of <unk>, which will allow us to integrate additional video capability across our platform and we have added two new seasoned board members, who have deep operational expertise and will help guide us on our go to market execution.
We believe that his organization has rapidly accelerated the digital transformation over the past few years almost every aspect of the go to market motion from sales demand generation to partner enablement has shifted to a digital engagement strategy.
But as each function may use disparate tools.
Varying levels of reliability.
Can resolve the issues with accessibility and compliance.
Consistent Brian and levels of engagement and generate limited to zero of course party insights.
This may result in the bottom of fracture digital experiences.
Even more problematic. These brachet experiences, maybe siloed and disconnect, resulting fracture data that we believe is challenging for anyone in the business to us.
Our vision is to help businesses unify their sales and marketing digital engagement and first party data.
With a platform that powers, all digital experiences like always on personalized or hybrid.
Their go to market functions, one unified platform for demand generation field marketing customer advisory boards product marketing and partner enablement.
Yes.
Our annual user conference on 24 experience is scheduled for tomorrow.
It will gather thousands of our customers prospects and partners across the globe.
We will showcase the evolution of our platform and highlight the successful standup customers, including close to 70, who nominated themselves for the onshore reports experience awards.
The winners are companies like home depot Humana.
Very eager.
Hey, guys systems SAP.
Hey, top desk and then vimeo.
Who are using <unk> for experiences to transform their sales and marketing.
On our Q4 call we laid out four key priorities for 2022.
One enhancing customer success and improving retention across our platform.
So driving an aggressive product roadmap for a post pandemic world.
Three.
It has been our enterprise sales motion that multi product deals.
Four strengthening our partner ecosystem and integrations, gaining operational leverage and further enterprise penetration and adoption.
Now I'll share the progress we've made against each priority during Q1.
Beginning with customer success.
Brief customer success, we've increased our coverage ratios and brought on new senior talent.
Our Onboarding program has been completely revamped and we've added new offerings to further shorten our customers' time to value.
Also improve the availability of data integration services and are building out a solution consulting teams, who can help our prospects and customers architect a comprehensive implementation of multiple products on our platform.
These efforts are beginning to bear fruit and we expect that our overall retention rate should improve in the quarters ahead.
Now, let me discuss progress on our aggressive product roadmap for a post pandemic world.
And listening to our customers, we heard a consistent pain point.
Need for a new type of live experience solution in the market that had all the branded audience engagement and first party data of our flagship live experience product on 24 elite, but also enabled the audience to participate alive two way video to video discussions.
That's why we recently launched our newest product on 24 columns that joins our portfolio of experience products and unified engagement and data.
This is an ideal experienced executive engagement roundtable discussions export led trainings and professional advisory groups.
We are already seeing promising traction platforms with our customer base, including our Q1 expansion deal with one of the nation's largest healthcare and insurance providers.
Originally landed this customer back in 2020.
They came to us with their top down initiatives to build a unified digital engagement strategy for the enterprise customers and individual members.
Since then we have grown our footprint within this customer spending a total of seven business divisions and power. The entire go to market digital engagement strategy from the lead Gen sales calls to their member enrollment and wellness programs.
In Q1, we added a new business division in 100 gig plus deal that includes the entire suite of on 2004 experiences forums elite Breakouts go live target and engagement hub growing the account by five times any IRR over two years.
Our <unk> product, which we recently launched delivers the audience and participation of forums, but at a larger scale for multi session multi day virtual conferences.
We have closed a number of deals and expect it to ramp in the coming quarters.
In addition to our new site experience products forums and go lives.
Turning to enhance our always on and personalized experience capabilities.
Last month, we announced the acquisition of video software solution video, which will put video content creation. The hands of every salesperson and marketer could drive greater personalization and keep their own 20 per carton working for them longer and in new ways.
<unk> will be integrated with our engagement have been target products and deepens the value of having a unified engagement and first party data.
We believe that our new products, along with our <unk> acquisition provide us new use cases and buying centers to address and further evolve our platform for a post pandemic world by extending <unk> footprint and additional sales and marketing use cases.
As the digital experiences expand across use cases, they are becoming more interconnected.
This is important as the more experiences that customers can create and engage their audience with more force for some data they are able to collect the right insight and value prop in fact with a portfolio of six digital.
<unk> solutions, each have over 20 engagement and conversion tools within them.
The ability to generate and take action on your first party data is even greater.
Now.
Let me discuss our progress in driving multi product deals and bundling within the enterprise.
Over the past months, we've been enabling our reps on a multi product sales motion and better integrating our solution consultants.
So deals to architect a holistic digital strategy for our customers.
We are seeing early success with this motion.
The number of customers with two or more products is currently in the mid thirties and im optimistic that will be.
You will see an increase in this metric, especially with the recent launch of our two new products.
Let me share just two of the multi product wins.
One of the world's leading semiconductor and software providers, while seeking a better way to engage their audience of highly technical buyers.
In Q1, the team put together an end to end strategy for this customer.
And closed a multi product deal, including 124 elite breakouts and engagement.
The customer is now able to deliver ongoing educational content with the high value customers and bring them together as a community.
All of the data is captured about 120 for intelligence and on 24 connect.
Providing the customer with vital signs and they can use to drive upsell and cross sell opportunities.
Another multi product win was with a leading HR and payroll services company, who was concerned with declining rates of engagement and demand for their top strategic accounts.
To re imagine their digital experiences with greater interactivity and personalization the customer purchased all 24 elite and target to build high touch high value content journeys for their prospects.
With 124 intelligence and connect they're able to understand the accounts with buying intent and surface those inside immediately to their sales teams.
We believe that landing with multiple products allows us to access elevated levels of an organization and demonstrates the power of a unified digital engagement strategy.
Our multi product solutions are not just for the enterprise.
In Q1, we saw a wave of fast growth SaaS companies in the upper end of our commercial business come on board here at three <unk>.
<unk> plus wins.
One of our wins was with a leading product analytics software company, who after the recent IPO needed an upgrade from an even management point solution to a true digital engagement strategy.
The purchase of <unk>.
That engagement up and are using us to run their field marketing events and ongoing demand generation programs.
Another win came from a unicorn SaaS platform for employee experience, who wanted to consolidate all of their go to market engagement on a single platform with like always on and personalized experiences.
We now powered their demand Gen product marketing marketing operations and field marketing teams with our integrated solution that includes Onboarding for elite.
Breakouts engagement hub and target.
Finally, we added an emerging productivity platform, who came to us to help supercharge the lead generation as the move to the next growth stage.
Our ability to deliver ongoing webinar experiences combined with interactive discussions and captured all of the data along the way is why they chose onshore equal elite and breakouts.
These customers grow we believe the need for our platform will too.
We have seen our customers continue to make long term commitments to us as a percent IRR in multiyear agreements ended Q1 at the highest level ever and sequentially up from Q4 2021.
Finally, we are strengthening our partner ecosystem and integrations further differentiating our platform and allowing us to gain operational leverage.
With the launch of the <unk> partner network earlier. This year, we are creating an ecosystem of leading solutions and technology partners and formalizing, how we integrate co market and co sell together.
We believe this ecosystem will broaden our reach and extend our product and service offerings and drive leverage in our go to market model.
As I previously mentioned our goal is to grow partner influence bookings over time towards 20% or higher contribution.
Over the past quarter, we have been enabling our partners on the onshore equal platform building more integrations and driving pipeline in March we held our momentum partner summit, where we had over several thousand people registered across partners customers and prospects.
This quarter, we reached.
Suddenly develop the more advanced integration with top spot that enables customers to fully leverage the first party engagement data generated from 124, and providing more ways for sales and marketing to take action from our data.
One of our Q1 wins with a Boston based biotech company highlights the potential of our partner network integrations.
This customer is introducing a new drug to market and needed to rapidly build out their physical force engagement strategy to engage and influence healthcare professionals with a cornerstone.
SaaS qualified leads because their sales team and showcase the advanced research and thought leadership content to the industry.
Our deep integration with beef.
Rob them to 144 and resulted in a multi year multi product deal over 100 K.
This thing of entre equal elite.
US engagement up and target to deliver an ongoing and differentiated set of first party insights directly to the system that their sales reps use.
Before handing the call over to Steve.
I wanted to take a moment to welcome our two new board members.
The only thing I'll add brings 40 years of enterprise software experience and his guidance will be instrumental as we continue to transform our sales operation to scale, our go to market opportunity.
Aurora is a fintech and marketing pioneer and brings over 25 years of experience in leading product marketing and leadership across technology financial services and consumer goods industries.
I'm, particularly excited by the new additions to our board and the guidance. They will provide as we evolve our platform to drive ongoing continuous engagement across the customer life cycle.
I'd also like to thank colder start forest tenure on our board and his contributions to our company over the years.
With that I'll hand, it over to our CFO , Steve <unk> to walk you through our Q1 results in more detail and provide our outlook.
Thank you Charlotte and good afternoon, everyone.
I'm going to start with our first quarter 2022 results and will then discuss our outlook for the second quarter and full year 2022.
Total revenue for the first quarter was $48 5 million, representing a decrease of 3% year over year.
Subscription and other platform revenue was $43 5 million, an increase of 1% year over year.
Professional services revenue was $5 million, a decrease of 30% year over year, and representing approximately 10% of total revenue compared to 14% in the year ago period.
This decrease is in line with our expectations, we provided last quarter.
Moving onto IRR.
<unk> represents the annualized value of all subscription contracts at the end of the period and excludes professional services and Overages.
<unk> was $167 7 million, an increase of 3% year over year.
As discussed on our last call.
Handful of customers, who previously signed large expansions throughout COVID-19 were up for renewal for the first time in Q1 and adjusted their contracts for their post pandemic needs.
The rationalization that took place was roughly in line with our previous expectations.
Of course, the latter part of the quarter, we experienced softness in new bookings, particularly within EMEA driven by the macroeconomic environment, which resulted in net new <unk> below our expectations for the quarter.
This will have a ripple impact throughout the rest of the year.
We have seen our customers continue to make long term commitments to us as a percentage of our IRR and multiyear agreements ended Q1 at the highest level ever and sequentially up from Q4 2021.
Turning to customer metrics.
Customer count increased by 23 from Q4 of last year to 2145, driven by new logo acquisition strength in the mid market segment in a quarter, which has historically been seasonally softer for us.
We ended the quarter with 367 customers contributing a $100000 or more.
Presenting an increase of 13% year over year.
Before turning to expense items and profitability I would like to point out that I will be discussing non-GAAP results going forward or.
Our non-GAAP results exclude stock based compensation as well as certain other items.
Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP results can be found within our earnings release gross.
In the quarter was $36 6 million, representing a gross margin of 75%, which is a 4% decrease in the gross margin percentage year over year.
We are investing in our public cloud infrastructure capabilities and growing our customer success teams to drive improved retention.
Turning to operating expenses.
Sales and marketing expense in Q1 was $25 5 million compared to $22 2 million in Q1 last year.
This represents 53% of total revenue compared to 44% in the same period last year.
R&D expense in Q1 was $8 7 million compared to $7 2 million in Q1 last year.
This represents 18% of total revenue compared to 14% in the same period last year.
We have been ramping our investment in R&D as we expand our platform and bring new products to the market.
G&A expense in Q1 was $8 1 million compared to $7 5 million in Q1 last year.
This represents 17% of total revenue compared to 15% in the same period last year.
Our G&A expenses have increased due to the costs associated with being a publicly traded company.
Over time, we expect G&A expense to scale and decrease as a percentage of our revenue.
Operating loss for Q1 was $5 7 million.
A negative 11, 7% operating margin compared to operating income of $2 8 million and an operating margin of positive five 5% during the same period last year.
Net loss in Q1 was $6 million.
Or <unk> 13 per share based on approximately $47 6 million basic and diluted shares outstanding.
This compares to net income of $2 2 million or <unk> <unk> per diluted share in Q1 last year using approximately $42 2 million diluted shares outstanding.
Turning to the balance sheet and cash flow.
We ended the quarter with $359 million in cash cash equivalents and marketable securities.
Cash used in operations in Q1 was $6 8 million compared to cash flow from operations of $3 7 million in Q1 last year.
Free cash flow was negative $7 8 million in Q1 compared to positive $3 2 million in Q1 last year.
Free cash flow margin was negative 16% in Q1 compared to positive 6% in Q1 last year.
In Q1, we repurchased 964895 shares at a weighted average price of $14 81 per share.
<unk> 14 3 billion.
As of the end of Q1, we have utilized $21 5 million under the share repurchase program with $28 $5 million remaining out of the $50 million authorized under the share repurchase program.
Now turning to guidance.
Before providing our outlook I'd like to share a few observations.
We believe the current macroeconomic backdrop is uncertain, particularly in EMEA, where organizations are continuing to assess their post pandemic digital budgets, which may continue throughout the year.
Additionally, the decline in net new <unk> in Q1 was greater than we originally expected.
Therefore, we will have an impact on revenue in subsequent quarters revenue performance.
With these factors in mind, we are introducing our Q2 guidance and updating our fiscal 2022 revenue guidance.
For Q2, we expect total revenue in the range of $47 million to $48 million.
Professional services is expected to represent approximately 10% to 11% of total revenue representing a year over year percentage decline in the low thirties.
We expect a non-GAAP operating loss in the range of 8 million to $7 million and a non-GAAP net loss per share of <unk> 17 to <unk> 15 per share based on $47 6 million basic and diluted shares outstanding.
Moving to the full year.
We expect total revenue in the range of $191 million to $195 million.
Federal services revenue is expected to be approximately low double digits as a percentage of total revenue.
Presenting a year over year percentage decline of low to mid twenties.
We expect that Q1 marked the trough in the business and expect to show progress in net new <unk> throughout the year.
For Q2, we expect flat to very modest growth from our Q1 ending ALR.
We are maintaining our previous bottom line guidance and expect non-GAAP operating loss in the range of 30 million to $27 million and a non-GAAP net loss per share of <unk> 64 cents per share to <unk> 58 per share using $48 1 million basic and diluted shares outstanding.
Also I would like to note that the guidance I've provided incorporates the impact of the acquisition of video, which we announced last month.
As we have previously noted the acquisition of <unk> will not have a material impact on our 2022 financial statements. Our cash balance was funded with cash on hand.
With that I will open the call up for questions operator.
Thank you, ladies and gentlemen, if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
Sure that the mute function of your telephone is switched off to allow your signal to reach our equipment.
Star one to ask a question.
Our first question today comes from origin, Matt Yeah.
Perfect.
Thank you Steven.
Wanted to just start with one I know, Steve you mentioned that the error.
Decline in Q1 was slightly larger than expected I'm wondering if you can maybe give us a view of linearity in the quarter I know, there's the differences between the seasoned cohorts in the first time renewal cohorts, but as you look at January versus March in the macro environment are there any differences that you can paint in terms of performance as the.
As the quarter progressed.
Over the last over the last three months.
Yes.
Sure.
Okay.
Let me, let me take that and then Steve and Karen can jump in so from a linearity point of view.
There are two parts of this one is the new <unk> and second is the churn DLR. When you look at the churn our Gen. I think what we had guided was.
That we saw of rationalization.
A handful of larger accounts.
Early.
That was going to hit us early in the quarter and that.
That happened in line with expectations.
And then the than the months gotten better.
As we have projected so just overall gross retention was roughly in line with our expectation with the wood.
And being in January .
In terms of new business, I think new new business generally follows the linearity of January being slower.
Then February and then March being a lot larger what we saw was we.
<unk>.
Did not see as much of a pickup in March as we expected we had several.
<unk>.
Large deals that we saw that got pause and some got delayed and especially in EMEA.
EMEA has been it was it.
It was an important growth vector for us last year.
We had several large deals.
Deborah progressing there I'll give you an example also.
Although a large chemical manufacturing company we.
We had a large six figure deals that were working there and then as the material cost and the price of gas went up the pause that deal. So that's what we saw so from a linearity point of view March was not as strong from a new business perspective, Steve.
Okay.
Yeah.
And just to add a little flavor, we did actually go over the high end of our.
Guide on revenue than it did beat the bottom line, but a sharp mentioned there are.
Did come in a little lighter than expected in EMEA was the largest contributor to the.
Does that factor.
Yeah, a little flavor on EMEA and.
In 2021, EMEA was 18% of our revenue and it was.
One of the faster growing parts of the business I think in 'twenty 'twenty. It was 16% of our total revenue in Q1.
<unk> was 17% of our revenue so we definitely saw it.
<unk> from the macro issues that.
We're seeing out there in the world.
As we mentioned, we do expect that Q1 will be the trough in the IRR, we do expect to see improvements in.
The following quarters, we would expect to see better gross retention going forward and additionally, with the launch of the new products, we would expect to see stronger expansion.
Upsell and.
In any business.
Yeah.
Perfect. Thank you and then one more if I can just on as you know.
We open here and perhaps return to in person events and <unk>.
In person meetings can you just give us a sense for.
What your customers are asking for from in person and hybrid solutions, and maybe where you are and being able to deliver on that with some of your <unk>.
Our capabilities across the in person and hybrid landscape.
Yes.
And so that origin.
First of all what we have seen on our platform is extremely compelling.
The attendance and engagement on our platform as measured by the length of attendance.
The engagement tool interactions reached a record high in Q1.
The longest tender.
<unk> spent four people on the platform. So we didn't see really any physical fatigue on our platform because we saw more engagement from the attendees who are there now.
I just wanted to be clear about one thing a virtual conference.
Tends to be generally more one off events is less than 10% of our business.
As we have evolved our platform for the.
For the post pandemic world the two new products that we launch on 'twenty CRO forums on 24 go lives.
Our focus really is to build this sales and marketing digital engagement platform that helps our customers capture first party data drive continual pipeline and engage with prospects. So whether they are doing a webinar series are they're doing customer advisory boards or theyre doing round payables or they're doing well.
Hybrid.
Virtual events are partner enablement, our focus as we have all the piece parts. We have all the interconnected experiences all of them, Brian First party data that's the solution based on getting from our customers that we have provided for them our solutions for the most part our hydro enabled.
I understood perfect. Thank you.
Okay.
Our next question comes from Scott Berg of Needham.
Great. This is Jon <unk> on for Scott Berg. Thank you guys for taking my questions.
First just looking at the revenue guide.
Operating guide, just curious where you're taking out.
Hello.
In the model do you think it's more of a permanent re orientation of the cost structure or maybe.
Temporary reductions related to the macro headwinds.
Yes. This is Steve let me.
Talk about the puts and takes on the revenue guidance, which as you were breaking up a little bit there, but I think that's what you were asking me so the midpoint of the revised guidance.
195, I'm, sorry $193 million.
The midpoint of 202, which we provided previously so it was a $9 million reduction.
On the top line.
First the macro economic backdrop in March did become more uncertain, especially in EMEA and this may continue throughout the year and at this point, we are assuming that it will.
As a result, we are expecting to see lower EMEA revenue this year.
I made some comments earlier about.
As a percentage of our revenue, but just to recap in 2020 months EMEA was 18% of our revenue and it had been trending higher in Q1. It was dropped to 17% and were expecting softness in EMEA for the remainder of this year. So if it were to drop to say, 16% of revenue this year from the 18% and had been 2021.
That would equate to a 2% reduction in our revenue or approximately $4 million less than annual revenue went up.
$200 million run rate.
The overall lower revenue to attach services to the commentary on services provided in the prepared remarks.
You can assume a $2 million or so the reduction in the revenue guide would come out of the services line now the remainder of the reduction would be from a more cautious outlook. We are taking as we get more visibility into near term post pandemic digital budgets and we're also factoring in a little bit of additional macro risk on.
On the churn into the revenue guidance, we provided.
Let me also add.
John Let me ask the question if I may.
I think one of the things that you mentioned was it is this transitory up.
We believe that what we are seeing is transitory.
We've been preparing the company for.
We'll spend that make normalization, we believe on the churn side.
You will be in a large part of our focus for the last four quarters that we have hit the trough going forward, we expect that that will improve.
The gross retention.
Of our.
Ofer.
Existing customer cohort, which is the largest it has been in line. We have had some downs over there, but we believe that as that is under control similar to the first time renewal cohort is smaller and we are seeing we expect to see better retention. There. So as we look at our business. We look at it from a gross retention net retention.
New business point of view, so if gross retention improves with the new products. We expect net retention to improve and then of course of course, new business and finally, one other comment I want to make.
We have all 24 has done well.
Good times and uncertain times, because when the times get uncertain companies are looking for a cost effective way to drive pipeline and engagement. So.
So that's why we believe that we are in a time that is transitory and we our focus is to get back to pre COVID-19 levels of growth in due time.
Great. Thank you Gerrard you mentioned cut.
Customers are changing how they're using the platform I'm wondering.
It's a little bit more and maybe provide some color on how some of your newer products are resonating.
Thank you.
John you are breaking up a little so I I think I think your question was that your customers are changing how they're using the platform in all your well how you're evolving that.
Yep.
Yeah, Yeah correct.
With your new product.
Yes.
For the longest time, we had the live experiences.
With web.
Elite lap on the engagement hub.
They took all of that content.
You know always on and then we had the personalized product. When we also had a managed services virtual conference product and everything feeling.
First person data, but as we as we listen to our customers.
During.
During Covid I mean.
<unk> got our engagement level for sports and data that helps them drive revenue, but they were calling us out for hey, we need this we need all your branding we need all the customization all your engagement tools, all the compliance and others, but we also need more collaboration in the Black Swan, we need we need people talking to each other as opposed to being more control.
That's why we launched on 24 forums.
And.
The product is just has just come out of the oven and we've had one of the fastest growth in pipeline for that for that product are similarly, when we had the managed service we had the virtual conference product, which was more managed services and required services up.
Our customers are telling us Hey show us we need a simpler product self service for these virtual events that we can do road shows.
Simple self service product, that's what we added with only 24 go lives and again our focus is John is our focus is to consolidate all of the different sales and marketing use cases for customers Webinar series virtual events.
Advisory Board round tables partner enablement one platform.
Company can have with the right branding that drives their first person engagement data.
Again based on hearing from our customers. That's why we have made those advancements and maybe on top of this will allow us to add a lot more video capability into our platform and that's why we made that acquisition.
Great. Thank you everyone.
Our next question comes from <unk> Hari of Baird.
Hey.
Thanks for taking my question shorter than scheme.
Fortunately for my Bad CRO.
A follow up to the earlier questions.
If possible could you please Greg Tom the topline guide or just kind of parse it out a bit to elaborate on the underlying factors in terms of relative impact. So you provided a good level of detail regarding Europe and how much of it was due to rationalization.
With a significant portion of large scale renewables because kind of more in line, but can you also comment on the general lengthening of the enterprise sales cycle dynamic that you mentioned last time or is it still something.
But just kind of playing a role here.
So I think you talked about two things the sales cycle it was the.
What was the second question. The first question seem to be what we are seeing in terms of rationalization and other so let me provide a high level.
Uh huh.
High level feedback.
As we previously had talked about I mean, we talked about Q1 being the trough the rationalization from the handful of larger accounts was in line with our expectation expectations shrinking okay similar.
Similarly, the gross redemption was roughly in line with expectations, that's why we use them.
And going forward, yes, there may be plus and minus but I expect that gross redemption should roughly be in line with what we are thinking about we believe that <unk> seen the worst of that.
Worst of that now when we talk about Aero was weaker it was predominantly that we saw in March that some of these deals got pause, especially in EMEA. Okay. Now we did expect post pandemic budgets normalization, we talked about this in the past.
But you know the macro backdrop became more uncertain.
Especially in EMEA and the reason this is even more important.
EMEA was our fastest growing area in 2021.
If you'll recall, we talked about investments is amazing in Germany and southern Europe .
We saw good traction last year and in technology life Sciences and manufacturing now.
That's where we saw some deal the deals pause that being said we do.
We're making significant improvements in our.
It's about 22 initiatives you talked about improving our customer success function the launch of new products and the partner enablement category. Now you asked another question in terms of sales cycle.
I think sales cycles in Q1, our shrink was consistent with what we saw in Q4 I think Q4 Q3 is when we saw some lengthening of the sales cycle I think Q4. It normalize. So I think we were happy with what we saw in terms of sales cycle.
Three to six months, our sales cycle generally shorter.
The higher in the enterprise.
We do expect that as we bring in more products as we go higher in the organization.
That the enterprise sales cycle mid Nelson.
But at least in Q1, we did not see that but even if the sales cycle in the enterprise Simpsons a little.
It will be for larger deals and.
Those deals will have a higher retention profile.
Yeah.
Got it thanks, a lot sure it really helpful.
Just one other quick follow up on the multi product in new product adoption trends I know, it's early in the enterprise lifecycle as you mentioned.
You guys closed a number of these deals.
I have seen one of the fastest route as you said.
Regarding the new products pipeline.
And a couple of examples that I can share with the families and the employee experience.
You mentioned mid thirties, multi product mix compared to roughly 35% last quarter and an increase in mix going forward.
At a high level like where do you see this mix kind of going to India.
The near term and then in the medium to long term with all these new product rollout.
Schrag I just wanted to make one clarification I think that'd be multi product adoption was not mid twenties last quarter. It was it was it stayed about the same approximately the same so Joseph I just wanted to.
A clarification, if I heard that right.
You know I can't I can't immediately comment on what it will be in the immediate term, but I I am increasingly confident that as we as we consolidate the various sales and marketing engagement use cases, our target here is to get that number to 50% and greater sooner the better.
Because now we have six experiences that are feeling the first party engagement data shred. It and really this also allows us an opportunity to experiment a lot more with with price bundling within the enterprise. Okay. So that's what we are that's what we are very focused on right now our focus is to get that number to <unk>.
50% as soon as we can.
Yes.
As a reminder.
Under the Star one to ask a question.
Our next question comes from a Brent bracelet of Piper Sandler.
Hi, guys. This is Hannah Rudolph on for Brent today. Thank you for taking my question first one is just that youre seeing that positive feedback on the new products you've introduced the last few quarters I guess, how long until forums and go lives become meaningful drivers of revenue and what does that path look like.
And what was the last part of the Commonwealth.
I think first of all how long and how long did.
Enjoy the last four forums in go lives become meaningful drivers of revenue and what does that paas look like to get there.
Yeah.
So.
Yeah.
Just to provide a just to provide a perspective forums.
Just launched its currently in very well.
Got trials going going on and as you know go live we launched at the end of last year, but you know to get into kind of enterprise level of quality. It picks up it took us about 60 to 90 days.
It's it's early that's why we have not factored in.
Factored in these new products in our forecast, but my expectation is that within the next 90 days or so we should start seeing some level of lift from these products. It's a very important part of our execution I think and end up in about a couple of quarters, we should be able to.
To really start seeing some impact, but I do expect some incremental impact.
And.
In about a quarter or so.
Okay, Great that's helpful.
The only thing I also wanted to.
The other thing I also want to mention is it it's not only these products, but what it does allow us to really now basically if someone from our customers.
Sales and marketing digital engagement platform allows us to consolidate those sales and marketing use cases allows us to elevate the conversation more to a CMO and CIO level, even more so.
And I think that's the thing that is even more exciting to me.
Yeah, that's great that makes a lot of sense.
Then second question, we're now over a month into Q2, I guess can you talk about what youre seeing in terms of pipeline build and demand generation. So far this quarter.
Yes.
We are seeing.
Good additions to our pipeline, especially for the new products, but have you talked about there'll be but you've seen one of the fastest start.
And first of all you asked because on 24 X, which is our flagship.
Event user conference is happening tomorrow, and thousands of customers and partners and prospects and partners that have signed up for that.
I invite you to join that.
In Q1.
I can't provide specifics, but we did see some softness in a couple of segments in our pipeline and that's kind of reflected in our guidance.
Okay.
And that is that helpful.
Yes, yes that makes sense. Thank you.
As there are no further questions I would like turn the call back to <unk> for additional or closing remarks.
Ladies and gentlemen.
Macro economic backdrop has become more uncertain over the past quarter, we are making progress against our key priorities and focused on execution.
We believe that Q1 was the trough in the business and expect to see improvement throughout the year.
We are confident in our strategy to help organizations unify all their digital engagement and first party data and power all of their digital experiences like always on personalized or hybrid across their sales and marketing functions.
One unified platform for demand generation field marketing customer advisory boards product marketing and partner enablement.
Finally.
I invite all of you to join our customer conference beyond 24 experienced tomorrow. There you can learn more about our platform vision hear firsthand from our customers and see the exciting product innovation in action.
Thank you everyone for being on the call today.
Ladies and gentlemen that concludes today's conference call. We thank you for your participation you may now disconnect.
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