Q2 2022 Model N Inc Earnings Call
Good afternoon, and welcome to model and second quarter of fiscal 2022 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please.
Press Star Zero on your telephone keypad as a reminder, this conference is being recorded with that I would like to turn the call over to Carolyn Burke Investor Relations.
Good afternoon, welcome to modeling second quarter fiscal 2022 earnings call.
This is Caroline bass Investor Relations for model N.
With me on the call today are Jason blessing model N's, Chief Executive Officer, and John Ederer, Chief Financial Officer.
Our earnings press release was issued at the close of market and is posted on our website.
The primary purpose of todays call is to provide you with information regarding our second quarter of fiscal 2022 performance and offer a financial outlook for third quarter and fiscal year ending September 32022.
Commentary made on this call may include forward looking statements.
These forward looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date.
We disclaim any obligation to update any forward looking statements or outlook.
Actual results may differ materially please refer to the risk factors in our most recent 10-Q filed with the SEC.
In addition, during today's call, we will discuss non-GAAP financial measures.
These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from GAAP results.
Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in the earnings press release issued today, which is available on our website I encourage you to visit to visit our Investor Relations website at Investor Doc model N Dot com to access our second quarter press release periodic SEC reports and the webcast replay of this.
Carl.
Finally, unless otherwise stated all financial comparisons in this call will be made to our fiscal year 2020 one results.
And with that let me turn the call over to Jason.
Thanks, Carolyn and good afternoon, everyone and thank you for joining our call today.
Our second quarter results outperformed across the board exceeding all key guidance metrics, including total revenue subscription revenue professional services revenue and adjusted EBITDA.
We also had another very strong bookings quarter, which when combined with our Q1 performance positions us well for a strong second half.
As previously discussed we are targeting to exit our fiscal year at a 20% SaaS AAR growth rate as we anticipate this key metric to accelerate in the second half of the year.
As you will hear when John gives guidance. We are confident that we are in fact on track to hit this important milestone.
In Q2, we closed SaaS transitions with two of the largest pharma companies in the world.
As we have shared on our recent calls we expect 2022 to be a pivotal year in SaaS transitions as the conversion of remaining on premise customers to the cloud accelerates.
I am also pleased to share that were ahead of our first half internal plan for SaaS transitions, which is one of the growth levers driving upside this year.
Even more importantly, we are seeing a meaningful amount of our bookings this year coming from non SaaS transition deals, which bodes well for our future.
Given the success, we're seeing with SaaS transitions. We also continue to see our maintenance decline at an accelerating rate compared to recent levels.
Declining maintenance is a seminal event in any on premise to SaaS transition story and we view this as a very positive trend as modeling completes its evolution to a SaaS business model.
Next I'd like to share some quarterly business highlights.
During the quarter, we signed SaaS transitions with two of the largest pharma companies in the world Sandoz and Pfizer.
Sandoz one of the largest generic drug manufacturers in the World is a subsidiary of Novartis, who you may recall started their SaaS transition last year.
The positive momentum on the Novartis project influence the decision to start the Sandoz project and we are very excited to partner with both companies on their digital transformation.
The decision to launch Sam doses SaaS transition was based on a rigorous business case the outlined the following benefits to.
To take advantage of model n's latest analytics to improve contracting strategy and overall profitability.
Always beyond the current most secure version of model and with the latest compliance updates.
And to adopt the industry's best in class revenue management solution to support future growth, while allowing sandoz to be nimble in today's dynamic regulatory environment.
The Sandoz and Novartis teams had been longtime partners with model N and I am thrilled about our exciting future together and being personally involved in these projects.
I am equally as excited to kick off Pfizer SaaS transition. Another longtime customer that is also going through a digital transformation to further improve patient outcomes.
Once their SaaS transition is complete Pfizer will also benefit from improved system security and performance lower total cost of ownership and access to the latest innovation in compliance updates.
And speaking of innovation, we have been working very closely with Pfizer to build a new product to address the growing number of states that are implementing unique requirements around drug launches and price transparency.
Im pleased to announce that advisor is already live on version one of the product and partnering with US on the next version that will come out later this year.
State price transparency management is a great example of how we leverage our technical and industry expertise to rapidly build and deploy a new product.
And we continue to see our pipeline grow for this new product as more and more states rollout new legislation.
On the high Tech front in the first half we saw strong execution, driven by new logos and great upsell activity by our customer success team Hy Tech has exceeded my expectations in the first half of this year.
Also a large portion of our high tech bookings in the first half was driven by our customers who are starting to invest in their infrastructure at a more healthy rate if.
If you recall, hi Tech had a bigger slow down during the pandemic than life Sciences did so I'm pleased to see momentum continuing to build in this important part of our business.
Turning to professional services our team continues to deliver substantially all of our projects on time on budget and at best in class margins.
This delivery excellence is also playing a key role in our sales cycles, given the multiple proof points, we have unpredictable rapid time to value for our customers.
I expect continued strength in our services business throughout this year as the team has built a substantial backlog.
We also have a healthy portfolio of projects in flight as our services teams continue to lead model and its transformation to a cloud company and help our customers with their own digital transformations.
We have also had several successful go lives recently and I thought I'd highlight one of them for you.
K O Corinne or KKR is a new logo, we signed within the last year. It is already live and receiving benefits for model N head.
Headquartered in London, KKR is a rapidly growing specialty pharmaceutical company with 16 locations in Western Europe .
And their implementation involved configuring, our global price management solution to handle 30 products sold in 41 countries using seven different price types.
With one centralized platform and a unified process KKR is realizing several benefits.
Model and allows them to assess the impact of pricing decisions throughout a drug's lifecycle and allows them to execute pricing strategies more effectively with global collaboration.
They can now also visualized trends related to pricing and approvals across their product portfolios through modeling analytics.
KKR is another great example of modeling winning a new logo and successfully guiding the customer through a rapid implementation.
Our business services team also continues to validate our investment thesis of increased Tam by adding new logos as well as executing on customer expansions.
Now that we've fully integrated the business services team, we are seeing continued growth in our pipeline and strong competitive wins.
I'd like to highlight one of the business services wins in the quarter at analytics.
Analytics is a pharmaceutical company based in Cambridge, Massachusetts that is dedicated to the development of innovative new therapies for neuro degenerative diseases.
This is a perfect example of our ability to attract a smaller pre commercial company with our business services offering.
<unk> was in the process of seeking FDA approval for a drug to treat ALS and selected model and business services for their revenue management and compliance needs.
Our solution will assist amalek with enrollment in and processing of government programs, including government pricing Medicaid Tricare and $3 40 D.
Amalek selected model N due to our deep expertise and track record of assisting emerging pharmaceutical manufacturers with successful product launches.
In March we held rainmaker, our 18th annual customer conference.
This event is a thought leadership and educational conference and brought together more than 700 executives and industry experts from around the world.
At Rainmaker I outlined our future vision of the company something we're calling modeling three point out.
This is the next evolution of model N that will allow us to meet the dynamic customer and industry needs and expand our solution portfolio around three core offerings that all complement each other.
Modeling three point those primary business will continue to be cloud deployed software and we will continue to look for ways to expand our footprint through building new offerings, M&A and potentially partnerships.
The second dimension of modeling three point out involves building a meaningful data and analytics offering.
This represents a compelling new opportunity for us and will be a strong complement to our software solutions.
I think we are uniquely positioned to provide sophisticated industry specific analytics because of our strong domain expertise and unique proprietary dataset gathered from years of transactional processing for our blue chip customer base.
The third and final dimension of model N. Three point out will be expert services expert services will grow into a portfolio of software enabled services that are designed to help customers address the unique complexities of their industries and be more effective at leveraging our software and data offerings.
Acquisition of Deloitte business services team was a signature acquisition to accelerate this part of the model and three point of vision.
It is our belief that model and three point out with a more strategic solution portfolio and an amazing engage team will have the ability to drive sustainable profitable growth and will represent a compelling differentiated investment over time.
Also at Rainmaker, we rolled out our annual state of revenue Research report.
This report surveyed over 300 senior executives with direct responsibility for revenue management at companies in life Sciences and high Tech.
The insight from this report can help investors understand some of the current trends that we're seeing in our vertical markets and why we believe we are well positioned for the future.
The key takeaways are that revenue leakage and compliance continues to be top of mind and these are the problems that model and solve.
In life Sciences, specifically, the headline is that regulatory compliance at state and federal levels as a concern for the vast majority of the executives.
In fact, nearly two thirds of pharmaceutical executives expect that managing compliance will get even more difficult in 2022.
In support of these findings and as we've outlined on our recent earnings calls our new state price transparency management solution is receiving a lot of interest from customers and prospects.
State price transparency management is the industry's first software solution that enables pharma companies to automate state price transparency compliance.
The full state of revenue report, which includes a significant amount of additional detail as well as replace from our rainmaker customer event are available on our website.
In closing I'm proud of how our team has performed in the first half of this year.
We are executing well across all growth levers, including SaaS transitions customer expansions, new logos and internationally.
I am also very proud of how our team continues to stay focused and execute in a very dynamic global environment.
This dedication and strong execution resulted in an excellent first half and puts us in a strong position to accelerate our growth and profitability as we exit 2022.
I'd now like to turn the call over to John to discuss our Q2 financial results and provide an update on guidance John .
Thank you, Jason and good afternoon to everyone on the call today.
Jason noted, we had a strong second quarter exceeding all of our guidance metrics.
Revenue upside was driven by both subscription and professional services, while our strength in adjusted EBITDA and non-GAAP EPS was driven by the strong revenue performance and continued good cost management.
Our strong bookings performance over the first half has improved our outlook for the year and you'll see that when we discuss our guidance later in the call.
Turning to the financial results for the second quarter.
Total revenue grew 11% to $53 3 million, which exceeded the top end of our guidance.
Subscription revenue increased to $38 2 million also exceeding the top end of our guidance range.
And we saw upside in professional services revenue, which grew by 23% year over year to $15 million.
Looking at profitability for the second quarter total non-GAAP gross profit was $31 9 billion or a gross margin of 60% versus 57% in Q2 last year.
non-GAAP subscription gross margin improved to 67% versus 66% in Q2 last year.
non-GAAP gross margin for professional services was very strong again in Q2, hitting 42% versus 29% a year ago. As this team continues to execute extremely well.
Operating expenses for Q2 were lower than expected due to the timing of some hiring and other investments and as a result, adjusted EBITDA for the quarter was $6 6 million well ahead of the high end of our guidance of $4 5 million.
Adjusted EBITDA margin was 12% for Q2 versus six 3% a year ago.
Q2 marks the fourth consecutive quarter that our EBITDA margin has been back in the mid teens.
Finally, non-GAAP net income was $4 9 million or 13 cents per share, which was five cents ahead of the high end of our guidance of eight cents per share.
On the balance sheet, we ended the quarter with $170 5 million in cash and equivalents, which was up 15 million from the end of December I'm very strong cash collections.
I know that some of you look at calculated billings, which is typically defined as revenue plus the sequential change in deferred revenue for.
For Q2 calculated billings were up 5% year over year, which is in Stark contrast to the strength, we are seeing an RP O, which I will discuss in a moment.
Calculated billings can sometimes vary depending on invoicing cycles and other factors.
We typically focus on RPM.
Which is a GAAP metric and a measure of our total backlog as we believe this is a more meaningful indicator of the underlying health and predictability of our business.
Turning to our P O or remaining performance obligations. The total balance was $284 6 million at the end of Q2, representing an increase of $81 million or 40% year over year.
Current portion of our RP O balance was $123 4 million, which grew by $15 million or 14% year over year.
The non current RP O was $161 2 million, an increase of $66 million or 68% year over year.
The high growth in <unk> reflects the strong bookings performance over the first half of this year and provides better visibility for future contracted revenue.
As a reminder, during the year, we continue to expect strong growth in SaaS revenue to be offset by declines in maintenance revenue as cloud migrations accelerate.
To give you a better indication of our success in transitioning from on premise to SaaS, we have begun disclosing SaaS a R. R.
This represents the annualized value of our daily subscription revenue for the most recent quarter.
As we've noted on our last couple of earnings calls, we anticipated a more challenging quarter in Q2 from a comparison standpoint.
Did transpire in the second quarter as we finished with $89 9 billion and SaaS are or which was up 17% on a year over year basis.
While our trailing 12 month net dollar retention on SaaS was 116%.
Both of these numbers were slightly below recent trends, but again as we previously commented we expect SaaS. They are our growth to accelerate over the second half and exit the year at our 20% growth target.
Now, let me turn to our guidance for.
For the third quarter, we expect total revenue in the range of $54 five to 55 million subscription revenue to be in the range of 39.2 to $39 7 million.
Adjusted EBITDA to be in the range of seven to seven and a half million dollars.
And non-GAAP EPS to be in the range of 14 to 16 cents per share based on a fully diluted share count of approximately $37 2 million shares.
For the full year of fiscal 2022.
Increasing our total revenue range to 215.5 to $216 5 million with subscription revenue expected to be in the range of $156 million to $157 million.
We are also raising our outlook for adjusted EBITDA to a range of 27.5 to $28 5 million.
Generating non-GAAP EPS in the range of 56 to 59 cents per share based on a fully diluted share count of approximately 37 3 million shares.
In summary, I'm pleased that we've been able to navigate this transition and make an acquisition all while maintaining strong profitability generating good cash flow and meeting or exceeding expectations.
And a responsible balanced profitable growth business is very much a part of our DNA.
Well, we're in the midst of this transition a good proxy for our future progress towards the rule of 40 is still look at SaaS AOR growth plus adjusted EBITDA margin looking.
Looking at our targeted SaaS. They are our growth of 20% plus the implied adjusted EBITDA margin from our FY 'twenty two guidance today would put us at 33%, which is illustrative of our continued profitable growth objective.
Now I'll turn the call over to the operator for any questions operator.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your hands.
That before pressing the star keys.
Your first question comes from Ryan Macdonald with Needham and company. Please go ahead.
Hey, Thanks for the question. This is Matt Shea on for Ryan wanted to touch on model three point O. We learned at Rainmaker that three pointed out will allow customers to create a mix and match and ultimately create a hybrid offering so I'm curious what kind of opportunities. This creates that you maybe can't go after before and then is it fair to.
Expect that these hybrid clients start small and then you guys can upsell the modules over time.
Yeah, Hey, Matt Good evening, so by hybrid I assume you mean being able to consume revenue and compliance management through our software as well as business services.
And interestingly enough part of our investment thesis with business services was really just the or was primarily to go after new logos, but what we have seen and we've signed a few deals with customers now where they didn't use model N in the business for things like government pricing as an example, Medicaid claims process.
Sing and did not have the expertise in house and so they found business services to be a very attractive and so when we talked about that hybrid environment.
And it really reflects the fact that we have such a broad set of offerings that we can tailor to our customers' specific needs in their business requirements and how they want to want to consume our offerings.
Got it that's helpful and then appreciating that the.
The business services help expand your Tam.
In part due to those kind of pre revenue biotechs were starting to see some slowdown in biotech funding you know relative to some of the 2020. One peak levels. Just curious if that poses any risks to the business services segment or if you know that tail is still long enough that whether there's a slowdown in funding or not it's kind of immaterial.
Relative to the broader opportunity in front of you.
Yes, it's more the latter we've actually been seeing a pipeline accelerate and business services and I think it's more reflective of how big an untapped and underserved that market is.
While certain areas, maybe slowing down a bit there's still a broad part of that market that continues to invest in amalek Sue I cited in the script is a great example of a customer that we actually started working with during the FDA approval process and then they signed a big customer when they got their stamp of approval and start selling.
Yeah.
The next question comes shall merits, which vary with please go ahead.
Hey, guys. Thanks for taking the question.
And rain linker, you talked about some new products, including advanced testing services and engaged would love to hear them.
About any early customer feedback there if those products are available for customers yet. Thank you.
Yeah, the advanced testing services or products that we have available and are leveraging in the marketplace. Today in just about every single one of our.
Customers uses those services.
Services to help deal with the stringent.
Internal audit constraints around consuming a new cloud release, so the advanced testing services has actually been a major enabler of some of our larger SaaS transition.
And engages design it is a product that's on the roadmap and it's a product that's really designed to help our users better navigate the system consume.
New features and functions more quickly and it's something that we'll be rolling out next year.
Yeah.
Helpful. Thanks, and then just as a follow up one.
One of the trends you talked about it a rainmaker affecting high tech was the ongoing supply constraints. Just wondering if you could talk about.
How are you like which of your products help here, if you're seeing any increased demand in this space because of what's been going on in the supply chain. Thanks, so much.
Yes, certainly our channel data management product helps high tech customers with supply chain constraints, because they wanted to make sure that they are have the right incentives in place.
Pushed their scarce products through the most profitable and most reliable.
Channels. So we have seen an uptick in the hi Tech business as I said and our channel data management is one of those products that solve the very top of mind issue for these companies.
Thanks again.
Thanks, Joe next question, Chad Bennett with Craig Hallum. Please go ahead.
Great. Thanks for taking my questions John maybe first one for you just.
Can you give us a little bit inside the dynamic on our P. O between C. R P O and and and non current and just.
That delta there whether in terms of deal ramps or deal structure, and maybe what to expect as much as you care to share in upcoming quarters with respect to C. R. P O.
Yeah sure no happy to.
We actually saw a solid growth on both metrics, but obviously the total ARPA number at 40% year over year outshine, the debt and what I would say there is that we actually look at both the current RPI gives us a great great visibility in terms of our next 12 months.
Revenue, particularly on the subscription side of things. So that's an important metric for us and then on the total RP O side that really goes to the overall health of the business and what we're seeing from a bookings standpoint, one of the big drivers behind that is that is the SaaS transition deals those tend to be larger deals and longer term in nature, it's not uncommon for those to be $3.
And five years in length, and so those contribute quite a bit to the total number and then roll into the current number each year.
Yeah.
So.
Should we see that.
That delta John kind of compressing it you know in May.
Whereas the CRP O accelerates a bit, especially as you.
Can it get to the second half of the year into next year and maybe that the deal ramps are more of a tailwind.
Yeah, I would say maybe over time, you might see those numbers converge those growth rates converge a little bit you know the way I guess I would think about the the total RP O number and in the long term our P O us each year.
In fact back fills your current RP O. So as you consume current RP over the next 12 months, you've already got bookings in place that will that will fill in for that number that you consume each year and so that's why I think both are important to the total ARPA number in that long term. It gives us a pretty good runway of visibility for the next several years.
Got it and then maybe one follow up.
I think I think it was Jason but maybe it was John just in terms of you talked about net expansion and and I think you said you know you're you're seeing.
More net expansion from kind of cross sell up sell or add on products.
From from a materiality standpoint versus you know kind of like for like migration dollars can you can you just talk about kind of how significant that span over the last few quarters and maybe you know any any type of <unk>.
Improvement I guess, maybe maybe that's the right or wrong word in terms of cross sell up sell efficiency into the go to market.
Thanks.
Yeah, Chad I'll take that so as.
As I've said on past calls SaaS transitions have been a great catalyst to get back in front of our customers and retail the Marvell story and even more importantly, playing out not just the SaaS transition, but what are the other things that customers can consume for model N to drive value and I think what's become.
A really encouraging trend out of those discussions as we have a number of products that were not contributing in a material way to our bookings 18 months ago, but now are making up a significant part of our bookings. In addition to SaaS transitions and so when I look back over the last couple of quarters, it's things like state price transparency, it's things.
Like our global products Global price management global tenders validate all business services some of the enhanced our support offerings that we're able to bundle.
With with with a SaaS contract so.
Like I said, it's been a great trend in the business that these SaaS transitions have been a catalyst to get back in front of customers.
You'll probably banking as I, just rattled off that list, we have a lot of different things that we can sell sell to our customers and that doesn't even include just moving current model N footprint into other divisions. So there's a nice dispersion across all of those different opportunities. We have as we look at what we're selling into the base.
Great. Thank you nice job on the quarter.
Thanks, Chad.
Next question, Michelle ROIC with Baird. Please go ahead.
Yeah, Hi, everyone.
I'll, maybe stay on the same topic a portion of your bookings that come from non SaaS transition deals.
Can you just.
Just maybe elaborate on how that impacts the financial model, maybe differently that model N has been seeing you know I think we.
We've been in a period of time, where you've had success signing a really big deals, but multiyear deals. Some deals that have ramps are what you. Just described are maybe more prone to near term activation. So it kind of creates that saw yeah more near term certainty on top.
Of the longer term tailwind with the transitions.
Okay.
Okay.
So Joe could could you could you restate the question.
Yeah, basically I guess, the just because that is if you get a year of book gangs, where it's not so heavily reliant on SaaS transitions to the earlier point about.
The other products and the upsell cross sell that seems to be here I think that activity here, how that might influence your I guess execution in Europe more near term growth profile. As these are the types of products that might be proud of Utah quicker activation ultimately.
Yeah, Okay. That's really helpful. Joe. Thank you yeah. So I guess, there's a couple of things that I would say there.
And some of this goes back to what I started with the at the company you know we have a multi <unk>.
<unk> million dollars.
$70 million bogie that we've been going after with SaaS transitions and we've talked about the white space in our customer base and this was even pre some of the new products that we have being three to four acts that and so the fact that we have that unique opportunity, but once popped up from a go to market or a selling motion perspective.
The capitalize on that I thought was an issue and so what we're seeing now with some of these results is that multiyear African bifurcated or our sales force around hunters and farmers getting more high value products for those those teams to sell and you know as you point out certainly when you get a customer to us.
The cloud being able to turn on a new <unk>.
Incremental product both in terms of the effort to sell it and implement it goes down pretty dramatically. So so yes, I would characterize some of that nice uplift that we're getting from cross sell up sell as a it's just a byproduct of how we organized and gone to market and what happens when you can transform into a cloud company.
Okay. Okay, that's great.
It would seem that you hear it services team is running at a really high utilization level.
Are you, perhaps running up against maybe the ability to hire influencing how you think about growth going forward and can you maybe just address the broader kind of thought there's this there's huge demand for high. He is a very you know specifically trade.
And service.
Professionals for the life Sciences space, how are you kind of go about competing or how you're a recruit event plans have been going.
Yes, that's also a good question Joe so.
We knew last year coming into this year was going to be a.
Pivotal year in SaaS transitions and so there were key things that we did ahead of that one we did hire up at ahead in our services organization to make sure that we have the right capacity to deliver you know what is.
There's a very robust backlog of.
Business.
And then the second thing we did is we cultivated I would characterize it as three or four our Si partnerships.
That could see the path forward, but pretty significant modeling practices during the SaaS transition period, and then some of the additional work that we were just talking about cross sell and up sell and it's really been that combination of our own hiring and the great team, we have as well as some very strong partnerships with some of the size of the field that's allowed.
The fulfill that work I will say this we probably lean a little more on a size.
As some of these bigger customers and bigger projects worked their way through the system.
But I do think we've got we've got good flexibility with the outside network to deliver.
Yeah.
That's great. Thank you very much.
Thanks, Joe Thanks, Joe.
Once again, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Brian Peterson with Raymond James. Please go ahead.
Oh, Hey, gentlemen, thanks for taking the question.
So first just to kind of cross sell there is obviously some new products that are driving bookings I'd be curious for a lot of these products or is it more greenfield than what you guys have historically done I know a lot of that's been transition and thus like are we not going to see maintenance declines as it relates to some of these deals are I just want to make sure I understand.
What's in place for your customers as you kind of broaden that SaaS adoption across the portfolio.
Yeah. The maintenance phenomenon is really related to SaaS transitions of core footprint that was out there on premise things like state price transparency some of our global products and services of course, and then some of the enhanced services type of SaaS. There is no legacy product that customers are moving.
So it is greenfield I guess to use your terms and and doesn't have any maintenance at deprecating along with it.
Got it thanks, Jason I mean, maybe just on the services side I know you guys made some announcements out of at Rainmaker.
We think about like a fully transitioned model over to the cloud what's what's the right way to think about services intensity with that because obviously the domain expertise is there I'm. Just you know maybe there isn't as much implementations I'm just curious how to think about kind of a long term subscription versus services mix. Thanks, guys.
Yeah, we certainly haven't guided out in kind of that long term model, but I can tell you anecdotally what we'd seen in some of our new customers that we've signed and implemented the services attach rate is more like 75 to $1 25.
Subscription and it just kind of depends on the customer's requirements complexity and footprint, but much more in line of what you would see.
Native SaaS company.
Thank you.
Thanks.
Next question comes from Matt Vanvliet with B T. I G. Please go ahead.
Yeah. Thanks for taking my question I wanted to dig in a little bit in terms of what you're seeing from potential price increases or other other sort of you know inflation hedging type of mechanisms that you might have both in your contracts and as you negotiate SaaS contracts or expansion.
Deals kind of what what levers you're trying to pull in and what are the spend the customer reaction thus far.
Yes.
Yeah. This is John I'll start in on that.
So you know from a I guess from a more broader perspective and an inflation in general.
This hasn't been a huge factor for us today to date on the expense side of things, where we might see a little bit of impact is really just on the employee cost. Although I would argue we've been in an inflationary market for tech talent for several years now so if not decades. So I think that's been kind of par.
Par for the course.
In terms of some of the things that we're doing from a customer standpoint, we have been able to push through price increases and we're actually getting a good traction on renewals in that regard. So that's been a that's been a positive.
And so net net I would say that inflation has not been a concern and in fact, we've been able to to benefit from it a little bit.
And I would add on to what John said, we also did recently nudge up our professional services rate card as well.
Okay very helpful. And then you know.
Exiting rainmaker.
How would you judge it are in terms of new business development and overall.
Customer relationship management there.
And you know kind of within that what what has been the feedback of the three point no strategy.
Has there been any level of confusion or just sort of additional transfer educating customers around kind of what are the long term strategy. It looks like there is.
Anything coming out of there that would be really helpful.
Yeah. So on the three point strategy I would say you know this is this is something that we've been road testing with a number of our large customers over the last year and in fact some of the strategy work, we did around most involved direct customer feedback so.
There's been a level of excitement with customers, particularly given that most of our customers view us as a very strategic partner in some of these key areas and so to have a broader portfolio of services that they can consume from one trusted advisor seems to resonate well with them.
As I mentioned in one of the earlier questions that was asked of me as well.
Small customers big customers business services and that value prop has has resonated well probably more surgically at the upper end of the market that is a broad based solution.
Look market. So so there's been good validation of the strategy and as I said it was a collaborative effort with some of our largest customers I personally was very pleased with the turnout at rainmaker. They should be the final tally. We published was opened 700 non.
Model N attendees.
And particularly given how dynamic the market is right now around some of these regulatory changes either you know that was a big topic of discussion and both new prospects as well as existing customers.
<unk> that were by industry leaders like King and Spalding on the.
They price transparency side of things those were very well attended and our sessions that we did on our own products to address those issues were oversubscribed. So.
I was very very pleased with the attendance and some of the engagement on these key topics.
And that was a virtual show so I guess, that's a trade off maybe you get a little bit better attendance, but harder harder to touch people, but we are starting to get back on the road again, our customers are getting back in the office and we've got a busy summer ahead of us getting out and visiting people that we haven't seen them and potentially a couple of years.
Alright, great. Thank you.
Thanks, Matt.
We have time for one more question, Joe Goodwin with JMP Securities. Please go ahead.
Great. Thanks, guys for taking the question and congrats on the quarter.
Just I'm just wondering what what was the percentage of ramped deals in the quarter.
We're starting to ramp deals was actually lower than it was pre pandemic. So you.
You know as we've talked about Joe will use that as a tool to keep things moving both our sales and services during the pandemic and that we.
He said that we're not really using them as much or if at all and so it was it was lower than pre pandemic levels and something that I would say as a footnote in the model N pandemic stories at this point.
Understood and then on current RP O just a sequential decline from from one Q and anything to note there John or.
And then your comment.
No I mean, the only thing that would be.
Now playing into that it's just the timing of contracts and how they're rolling through the model, particularly the maintenance and so maintenance, we see a lot of renewals around our fiscal year end and around the calendar year end and then that leads off over the course of the year and so that's that's probably the biggest factor.
Thank you.
Absolutely.
Thank you I will now turn the call over to Jason blessing CEO for concluding remark.
Thank you operator I wanted to end today's call on a personal note I just celebrated my four year anniversary at model N and just wanted to share a few things first of all is by far the best job I've ever had our corporate culture and our core values are absolutely second to none and I have worked with some amazing companies out there.
My 25 plus years in enterprise software second it has been an absolutely amazing experience to work with companies that are our customers are companies that are truly improving the quality of human life, something we've certainly seen play out in spades over the last couple of years.
And then finally, it's been really rewarding to take my 15, plus years of working at NATO SaaS companies and apply that expertise to work side by side with an amazing team here at model N.
To drive the business model transition are now coming out the back side of and it has just been incredibly rewarding to build such a great durable company, but still got many great years ahead of it. So again. Thank you everyone for attending our call and have a great night.
This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
Okay.
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