Q1 2022 AvePoint Inc Earnings Call
Good afternoon, everyone and welcome to add points first quarter 2022 earnings call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press the one followed by the four on your telephone keypad.
If at any time during the conference you need to reach an operator. Please press star Zero as a reminder, today's conference is being recorded for.
For opening remarks, and introductions I will now turn the call over to Marc Griffin Investor Relations. Please go ahead.
Thank you good afternoon, and welcome to add points first quarter 2022 earnings call.
Today, we'll be discussing the results announced in our press release issued after the market closed.
With me on the call. This afternoon is Dr. Dr. T J Jones, Chief Executive Officer, and Jim Cathy <unk> Chief Financial Officer.
I will begin with a brief review of the business results for the first quarter ended March 31 2022.
Tim will then review the financial results for the first quarter, followed by the company's outlook for the second quarter and full year 2022, then we will open up the call for questions.
Please note that this call will include forward looking statements that involve risks and uncertainties that could cause the actual results to differ materially from management's expectations.
Encourage you to review the Safe Harbor statements contained in our press release for a more complete description.
Material in the webcast is the sole property and copyright of <unk> point with all rights reserved.
Please note. This precedent presentation describes certain non-GAAP measures, including non-GAAP operating income and non-GAAP operating margin, which are not measures prepared in accordance with U S. GAAP.
The non-GAAP measures are presented in this presentation as we believe they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance.
non-GAAP measures should not be considered in isolation from as a substitute for or superior to financial measures prepared in accordance with U S. GAAP.
Listeners, who do not have a copy of the quarter ended March 31, 2022 press release may obtain a copy by visiting the Investor Relations section of the company's website.
With that let me turn the call over to T. J.
Thank you Mark and thank you to everyone joining us on the call today.
I'm very pleased to report that 2022 is off to a great start.
We delivered a solid first quarter highlighted by robust SaaS revenue growth and continued progress on our innovation roadmap.
Total revenue for the first quarter was $53 million ahead of our guidance on strong SaaS revenue of $26 6 million, which was up 45% from the same period in 2021.
We grew total ALR, 30% year over year, Q1 hundred $67 $4 million.
Our commitment to create innovative solutions to meet their evolving business needs of our customers over the past 20 years continues to set <unk> apart.
The first quarter was no different with many exciting enhancements to the alpine confidence platform, which enables organizations to secure collaboration data sustained connections between people and ensure business continuity.
With 66% of enterprise it spending shifting to cloud technologies in 2025 and more than half of businesses identifying optimization of their use of cloud as a top priority our resilience to ensure business continuity and compliance with data retention and other regulatory guidelines.
This is why we were able to successfully onboard a global leader in application testing and quality engineering services to protect the data in its entire Microsoft <unk> environment as well as extend that protection to its salesforce CRM data and <unk>.
<unk> application leveraging the Salesforce platform.
The global scale of our confidence platform with 14 deployments across data centers around the world ensures the firm can also satisfy its local data sovereignty requirements.
Our fidelity Sweet preserves data integrity as organizations transform from one system to the next capturing data for compliance or integrating SaaS applications to streamline the way users work.
Our control suite, enabling <unk> to Delever central services at scale with automation and repeatable businesses templates.
This in turn empowers business users and delegated businesses or department owners to control their budgets licenses users and workspace in Germany, We're automating the security provisioning governance and lifecycle of Microsoft <unk> five collaboration spaces for our customers 10.
Users. So we can focus on its mission to develop solutions addressing basic human needs of food energy and building.
As many companies continue to navigate global supply chain disruptions are platforms deep integration with Microsoft <unk> five enables one of the worlds largest managed transportation and logistics providers to save time reduce cost and increase productivity in order to follow through on its commitment to achieve supply.
<unk> excellence for its customers with that point. This firm is centralizing the management and governance of its Microsoft <unk> workspace is leading the charge to shift its mindset I'm using file shares to decrease its exposure to risk and ensure its data is protected and easily restored.
During the quarter, we released a number of upgrades to our confidence platform to partner with organizations on their digital transformation journeys, including robust data protection capabilities with the introduction of ransomware detection within our resilience suites, the extension of our <unk> authorization across our platform and introducing two new <unk>.
Products add point in trust income fight.
Ransomware attacks HAE companies every 11 seconds with the cost to recover in the millions of dollars when Mci group, a global engagement and marketing agency with 60 offices in 31 countries experienced the ransomware attack with a user's one drive a quickly realized the need for additional data protection to retain documents.
Four five years and financial documents for 10 years as well as the ability to execute granular restore up data.
With that point Mci group was able to add to its ransomware resiliency and achieve unlimited retention up data in Microsoft <unk> with multiple daily backups and satisfy a 24 by seven internal support SLA for data recovery.
The digital transformation underway reflects the importance of upholding the highest security standards for companies implementing cloud solutions, including public sector and federal organizations since our initial pegram authorization last year, we invested in the authorization of solutions that go beyond our Microsoft <unk> offer.
Including Salesforce and Google Workspace to help organizations like the U S Department of State U S Treasury, IRS and others highly regulated industries to collaborate with confidence.
As a result of our <unk> authorization Apple now working with our small business administration to reduce risk of data loss for critical business content containing salesforce through automatic backups and the ability to restore content out of place to another sales force environment did you.
The transformation is also transforming the way that people interact and transact.
As companies like WP continue innovating offerings for how people shop in E. Commerce, It's 100000 employees around the world are using Microsoft <unk> to power this innovation through greater collaboration and productivity.
At that point <unk> manages its growing SaaS operations through streamlined management and can now gain full visibility into his entire Microsoft <unk> ecosystem with consolidated and secure dashboards, which give a better understanding of the applications features and site users are accessing most so they can make appropriate.
Adjustments to increase adoption.
We also expanded into innovative purpose built applications tailored to the modern workplace through the launch of <unk>, a virtual data room powering highly secure digital collaboration.
A recent Deloitte survey of merger acquisitions professionals found 87% organizations are managing deals in a purely virtual environment. Despite half the respondents, citing cyber security as their greatest concern.
<unk> security stores data within customers' own offices, five tenants and Taylor's access for only business leaders, who should be privy to sensitive information.
Key differentiator from other forms of private channels that exist within Microsoft teams and slack are Google workspace the feedback since launching some fight with customers as well as our partner community is positive in terms of how it builds on the power of our confidence platform positioning us as a holistic partner throughout organs.
<unk> M&A journeys as well as flexibility to evolve over time to address other typical business user use cases, where comply account apply.
Since launching our global partner program last July we have continued to accelerate our mid market growth rates as well as reach small and medium sized businesses with the same enterprise grade technology available to fortune 500 businesses are.
Our channel ecosystem expansion is continuing in line with our geographic and market segment expansion.
Our MSP business, primarily focused on the SMB market continues to grow in triple digits and this portion of our channel business is expected to reach 10% of our total <unk> by end of the year.
During the quarter, we added <unk> and bars Thats was distributors like DNA <unk>, a leading technology distributor of it solutions in North America DNA, just monitor solutions team enable us partner to take advantage of the fast growing market in SMB cloud managed services by equipping them with key technologies across India.
<unk> solutions segment's.
Strategic distribution partners like <unk> play a pivotal role in expanding our partner channel to continue enabling us to scale and deliver cloud services through their cloud marketplaces.
Finally, we extend our commitment to meet the needs of an evolving ecosystem with the introduction of our <unk> certification program launched with technical and sales tracks to empower partners to best use all point technology and design custom cloud solutions.
It will also signal a differentiated level of expertise and our industry, leading technology to help them source more business and exceed competitors.
Our direct sales team continue to drive our enterprise business quickly responding to evolving market trends and help customers solve their complex business problems has.
As companies like multinational it consulting firm CCAR continue to adopt Microsoft 65 for greater communication collaboration and productivity.
In short the firm can meet its data protection and GDP are requirements, while enabling smooth management of Microsoft teams and automating business processes to save time and reduce costs. So they can focus on serving their customers.
We also saw success with our existing customer base as they continue their cloud transformation and look to gain more value from their own cloudy investments the number of our customers with over 100000 <unk> increased to 358 in Q1 up 33% year over year.
Before Jim goes over the numbers I want to touch on the share repurchase activity.
Since our last earnings to now we have repurchased approximately $4 8 million.
Shares in summary, we reported a solid first quarter and continue to execute on our initiatives, which will drive a strong 2022 with that I'll turn it over to Jim to discuss our financial results in more detail.
Thank you T J and good afternoon, everyone.
A review of our first quarter results today. Please note that I'll be referring to non-GAAP metrics unless otherwise noted a reconciliation of GAAP to non-GAAP financials is included in today's earnings release, which is also available on our website.
Total revenues for the first quarter ended March 31, 2022 were $50 3 million up 30% year over year within total revenue SaaS revenue came in at $26 6 million up 45% year over year, and constituting 53% of total revenue compared to 47% of <unk>.
<unk> revenue last year.
Term license revenue came in at $10 2 million up 17% year over year, and constituting 20% of total revenue compared to 22% of total revenue last year.
The uptick in term license is due to shifting business continuity requirements as a result of the dynamics in the global market. Some of those drivers include data sovereignty disaster recovery and regional redundancy.
As of quarter end, we had total <unk> of $167 4 million representing growth of 30% from a year ago.
Our core <unk> ended the quarter at $1 $56 4 million up 26% year over year, we had record growth in our SMB <unk> with a $1 6 million increase in the quarter SMB <unk> now totals $11 million, representing 100% year over year growth rate.
And 7% of our total <unk> up from 4% a year ago.
As customers continue their cloud transformation and expand their SaaS operations. Our average core <unk> per account continues to grow as well at quarter end. The average core <unk> per account was approximately 38500, which represents an increase of 11% year over year.
This growth was driven by 358 customers with <unk> of over $100000 up 33% from the prior year.
Our core or our dollar based net retention rate for the quarter was 108% a slight decrease year over year. This was primarily due to the realigning of our salesforce, which caused upsell and cross sell numbers to be lower than expected. As a reminder, we are in the process of realigning our sales force to implement the hunter and farmer.
Our sales motions moving.
Moving forward, we expect to see improvements in our <unk>.
Sure.
Now, let's review the income statement in more detail gross profit in the quarter was $36 2 million, representing a gross margin of 72, 1% compared to 72, 5% in the year ago period. The slight margin decline is the result of year over year increases in service revenue, our lowest margin business.
Going forward, we are continuing to drive our sales efforts toward our fastest growing revenue stream. Our SaaS solutions at the same time, we expect service revenue as a percentage of overall revenue to decline by transitioning more services revenue to our channel partners, resulting in overall margin improvement.
Sales and marketing expenses were $24 6 million or 49% of revenue compared to 47% of revenue a year ago. This represents an increase of $6 4 million year over year or 35%. This was driven by an increase in head count and personnel related expenses as we expanded our sales and customers.
Success organizations as well as additional marketing spend as we invested in both our media and event strategies.
We have grown our sales and marketing head count by 13% year over year with hires evenly distributed across our sales functions as well as marketing and customer success functions. The increase in head count has resulted in $3 $2 million increase in total compensation, primarily driven by salary and benefits programmatic spending.
Marketing is up $2 2 million year over year, primarily driven by brand awareness efforts and marketing events.
R&D expense was $5 6 million or 11% of revenue compared to 10% or $4 million in the year ago period, a year over year increase of $1 6 million or 41%.
Our head count was up 48% for the quarter compared to last year as we continue to invest in the development of innovative technologies that help our customers stay competitive amidst an evolving workplace trends in digital transformation.
G&A expense was $11 million or 22% of revenue compared to 21% or $8 3 million in the year ago period. This represents an increase of $2 7 million year over year or 33%. The increase in G&A expense largely reflects an increase in people and infrastructure related expenses.
Is associated with our public company readiness and ramp up efforts, including head count increases of approximately 26%.
Included in our G&A expenses were approximately $500000 of professional fees related to our M&A activities. This is the first time, we've incurred these types of expenses and without such expenses or G&A expense would represent approximately 21% of revenue.
non-GAAP operating loss was $5 6 million compared to a loss of $2 6 million in the year ago period.
Turning to the balance sheet and cash flow, we ended the quarter with $260 million in cash and short term investments cash used in operations was $6 $4 million in the quarter, while free cash flow, which includes capex was negative $7 4 million.
We also utilized point $7 million for the repurchase of shares in the quarter as well as approximately $1 5 million and completing our first acquisition.
Our use of cash in the quarter was in line with our expectations.
We've continued to purchase shares subsequent to the quarter end and to date, we have repurchased a total of 945000 shares at an aggregate price of approximately $4 $8 million.
I'd now like to turn to our outlook for the second quarter and the full year 2022 for the second quarter. We expect total revenues of $54 million to $56 million and non-GAAP operating loss of one five to two 5% for the full year, we expect total revenues of $238 million.
$244 million, we expect our non-GAAP profitability to be in the range of a loss of $3 5 million to income of $1 million.
And we expect year end <unk> to be in the range of $212 million to $216 million.
In summary, we continue to execute well delivering strong top and bottom line results and believe that that point remains well positioned to maintain this momentum and operating discipline throughout 2022 with that we'll open up the call for questions operator.
Thank you if you would like to register a question. Please press the one followed by the four on your telephone you will hear a three tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three one moment.
Poll for questions.
Operator, before we begin questions our Investor relations team pointed out that I misspoke regarding our cash flow. So I wanted to clarify that.
Before we take questions our cash used in operations for the quarter was $6 1 million and our free cash flow for the quarter, which includes Capex was negative $7 1 million.
We can now go to the questions.
Our first question is from the line of Derrick Wood with Cowen and company. Please go ahead.
Oh great.
It's Andrew on for Derrick.
I'll start.
With with.
Jim on the.
The shape of <unk> over the course of the year or two to get to your full year guidance implies an acceleration in the back half.
Is that just the hunter farmer model kind of kicking in or anything else to think about.
That new IRR through the year.
Yes, great question and good to talk to you again. So the short answer is yes, we definitely will see the benefit of that that model kicking in so that's one and then to our business is still seasonal in nature. So the second half of the year is always much stronger for us.
Then the first half so I think it's the combination of those two components.
Okay antigen maybe.
Just walk us through like how far of the way through you are.
Through this hunter farmer model transition.
You are in and kind of.
What type of.
What type of work left there is to do.
Anything to think about.
As we work through that.
Yes so.
Pretty big change to have the focus of just farmers with farming patch with also dedicated.
Our upsell quote us so there are a lot of the calendar Simon that happen. This occurred end of Q4 and beginning of Q1.
No we're through it now so all of the account executives have their patch of cowens in businesses to focus and go after.
Yes, we're looking forward to a good year.
Okay I'll pass it on thanks, guys.
Thank you. Thank you.
And our next question is from the line of Brian Essex with Goldman Sachs. Please.
Hi, good afternoon, and thank you for taking the question can you hear me okay. It sounds like you cut out a little bit.
Yes, you bet.
Great.
I guess I was wondering if we could talk a little bit about.
Cash flow.
What the outlook is throughout the rest of the year.
Is that going to be relatively seasonal as well.
And kind of how to think about modeling that out over the next 12 months or so.
Yes, no. Good question. So so short answer is yes, similar to how we think about our revenue cash flow follows a similar trend where our first two quarters of the year, we're definitely consuming cash and then generally the second two quarters of the year, we will be producing cash.
And again, we're forecasting to be.
Free cash flow positive for the full year. So the way I would look at that as again, we're expecting negative for Q2, and then positive Q3 important.
Got it that's helpful. And then maybe if I could hit net dollar retention rate understand the comments on cross sell upsell would it churn look like in there is that a is that a part of it and we think that.
<unk>.
Should we should we anticipate a meaningful recovery in net dollar retention rate.
Now that you've kind of like that it out the hunter farmer model.
Yes, so maybe two thoughts one is on the gross retention or the or the gross churn, we havent been publishing those numbers yet but.
But we are seeing steady improvement on the gross retention. So I think theres a positive trend there. So that's good and then on your second point in terms of <unk> I mean, we firmly believe that the shift in this model, but again started in Q4.
Switching to the Hunter farmer the hole.
Real driver for that was seeing that as a very positive impact on MLR. So so again, we expect to see improvements on that the rest of the year.
Got it and maybe I can sneak one last one in or maybe for T. J.
Are you starting to see any kind of focus on on the backup aspect of the business, particularly with elevated ransomware and the market is there maybe an enterprise focus.
Perhaps particularly on the SMB side.
With regard to.
Looking to your platform for greater reliance on backup.
Yes, that's absolutely right Brian .
We are really benefiting from the platform play business data security and governance. So ransomware attack some of our detection and also for the SMB customers specialty Msp's, we're offering ransomware warranty so.
It's exactly what the market is asking for a need and security bend.
It's definitely a natural expansion.
An extension of our existing customers who have backup today.
Got it that's helpful. All right I'll jump back in the queue. Thank you.
Thank you Brian .
And as a reminder for questions. If you do have one you can pass the one followed by the four on your telephone keypad and our next question is from the line of Kirk <unk> with Evercore ISI. Please go ahead.
Yes, thanks, very much T. J is what if you could just talk a little bit more about the small business momentum you've been seeing and I guess, the stability or trends behind that how comfortable you are with those trends just given what's going on from a macro perspective, I think people are a little bit nervous about.
Smaller businesses potentially starting to run into more budget constraints and things like that so can you just talk about maybe your progress and then just what gives you comfort that that should be able to continue through the year.
Thank you Kurt yes small businesses.
The fastest growing segment for us in the three digits.
We are forecasting that should be 10% of our <unk> for the year.
It's really growing fast and we have a definition for 1000 employees or less companies being small business. So thats pretty generous definition. So in that regard there is a very very big market. In fact, we look at Microsoft total MTS five ecosystem for that segment, that's about 50% of their market.
So for US we are seeing massive growth.
Green field for US, we're now trading managed service provider MSP as a vertical to tackle so we're adding a lot more resources to add to continue that growth trend.
That's helpful. And then obviously Microsoft to start pushing through a price increase on office 365 in March I was wondering does that have any bearing on your business at all in terms of as people sort of reevaluate the bundle that theyre getting from Microsoft and what might be in it and what might not be in it I guess does it have really any bearing.
On your business or trends from a bookings perspective.
So overall there is inflationary pressure across the market you see various platform providers increasing prices across storage across compute.
So for that it's really our value add for our customers to maximize their investment Microsoft cloud and now extend to Google at Salesforce. So we actually see a bench.
Benefit from that as well so.
Only helpful for us too.
<unk> continued to provide that value add so to help our customers and partners to maximize their investment.
That's great. Thanks, I'll turn it over to others.
Thank you.
And our next question is from the line of Jason Ader with William Blair. Please go ahead.
Yes. Thank you. Good afternoon, guys. Just first question on the macro environment TJ did you.
Specifically address whether you are.
Seeing any impact globally I didn't catch that you might have said in your prepared remarks, but any.
Any update on.
Kind of early signs of.
Cracks are kind of leading indicators.
That might suggest things are slowing down and then also from your Germany any impact from currency in the quarter or in the guidance.
I'll take the first one and Jim will talk about the FX.
From our perspective.
<unk>.
Global climate and.
Complex in Europe , it doesn't impact us directly because we don't have any businesses.
Eastern Europe , or Ukraine or Russia.
What we are seeing though is our western European customers. So we have very large German customers. For example, looking to expand their hybrid deployment scenarios for business continuity purposes. Historically, we see multi cloud as a strategy for that but now we see because data sovereignty because.
The regional business resiliency concerns.
Concerns there are a lot more of that ask so this where you see some term license up creep as well so for US we're very well situated to handle all types of deployment scenarios, whether it's on Prem private data centers or hybrid multi cloud. So we just see that there is the trend for that.
Focus around business continuity and contingency planning.
It's actually for us, it's something that we lean into especially because we're physically in 17 different countries. We.
We can sell into that offering some of the quote unquote hyper localization offerings.
Jim Yes.
Yes so.
Jason Thanks for the question so.
Thinking about FX, we had factored in really FX into our planning process and then what we saw in really Q1 of the almost unanticipated FX was only about a half a point.
In terms of impact on revenue, so not really material.
Compared to what we had kind of baked into the plan.
Great. Thank you and then.
T J, which specific skus or are you seeing the most momentum from now.
We continue to see.
Backup as a service the resiliency SKU.
As we stated last quarter and quarter to quarter mix is about 50% of the mix now.
Uplift from about a third of the mix. So that's definitely a big uplift in the second one is in Q1, specifically we continue to see.
A tremendous amount of migration.
So thats.
It's something that we see that people are continuing to go digital transformation into different environments, we don't think migration wherever and honestly.
Moving on Prem to cloud or even divestiture merger acquisitions that will be a continued.
Use cases there.
Alright, and then last one from me just for you Jim any update on cross sell metrics I know in the past you've talked about number of customers with more than one product more than two products more than three products.
Updated metrics there would be helpful.
Yes.
Haven't really.
Gone into detail on that in publishing it is something I think I mentioned in Q4 that were.
We're looking to gather enough information there and report on that repeatedly but as of right now.
We're not providing any guidance along those lines.
Okay. Good luck guys. Thank you.
Alright, Thanks, Jason.
And our next question is from the line of Anyhow, Kochi with Northland Capital markets. Please go ahead.
Yes. Thank you.
Can you just double click here on the why the reorganizations sales. The sales organization has resulted in a step back in our March Q, showing 12 months dollar based net revenue retention rate.
Yeah.
Yes, I think when we were talking about it earlier I think just it's the normal kind of a function of having some disruption in the organization as you as you look at realigning people and having them focus on things. They werent previously focused on I think that naturally creates.
A little change and it took a little while for that change to really be absorbed and for people to embrace it and.
And ultimately.
Move forward with it so again I think.
We anticipated.
Some of that change and again hopefully we.
We're past most of it in Q1.
And again, we think this is the right strategy to move forward and have people focused.
And embraced those those individual roles, but in the meantime, going through that transition like any other transition.
It has some challenges with it.
This was no different for us, but we believe we're through it now.
Understood and just to be clear that transition began sometime during the December quarter when exactly within the December quarter did that transition began.
It was end of Q4.
So Jim.
Tim mentioned earlier, the gross retention improved so what we're seeing is actually the <unk>.
<unk> retention renewal improved and what we're seeing is that this adjustment where people are literally reassigning new accounts to them their names or taking it when your accounts their names create some distraction in the upsell side of it that's where you see that in our change. So we started that process end of Q4.
Sure.
Also goes along with everyone's comp plan and think about every sales person will have a <unk>.
Numbering in their comp plans, depending on the patch how many accounts. They now cover some reps could be going from 70 accounts down to 30 accounts in each patch will have their own natural amount and then their byway derive a upsell quota for that rep. So every rep actually has different sized quotas.
It depends on the accounts and patch they own so theres a lot of accounts being reassigned and that introduces adjustment periods.
I see okay.
And did I hear you correctly, saying that you have completed your first acquisition.
That is correct, we completed our first tuck in acquisition the details in our 10-K.
The education vertical sector.
Domain expert in that training management space, because we have.
Integrated industries, only integrated learning management training management and now training management.
Solution, that's fully integrated with Microsoft 305, and teams to offer to higher education as well as commercial.
I assume I'm, sorry, I didn't capture that from the <unk> cakes.
Briefly review the financial details of the acquisition.
Sure so essentially.
It's a.
T. J said it was an acquisition we completed at the end of February .
It was in.
And actually Singapore, where we made the acquisition the transaction had a value of 10 million sing.
The equivalent of about little less than $8 million U S had a couple of components to it but again end of February had very little impact on our revenue for the quarter.
Got it okay very good.
And then why not deploy your repurchase faster than what you did.
So that's a great question, what we've what we decided to do when we first implemented that plan was we set a target.
We set a systematic process, where we were purchasing a fixed amount with our advisors, where we set up a a recurring.
Purchase every week and we kind of set it and said, we're not going to touch it for the first six to seven weeks of the program to see what happens so we kind of.
This is the first time, we're doing a repurchase program.
And so we wanted to kind of see how it goes and again, we with the help of advisors. We set a specific number and we set a systematic approach and we've just executed upon that that is something we are revisiting to see if we want to continue at the same level or as you suggested either increase or decrease but.
That's something we're currently looking at now.
Great. Thank you.
Thanks Neil.
And we do have a follow up question from the line of Brian Essex with Goldman Sachs. Please go ahead.
Hey, great. Thanks, Thanks for thanks for putting me back in just real quick housekeeping question.
Just noticed the purchase of investments on the cash flow statement about $180 million. If you maybe just touch on that and give us a little clarity in terms of what's going on there.
Sure.
It just has to do with.
We're purchasing T bills essentially so.
This quarter, we actually went out and bought T bills that were extended beyond three months and so just the accounting rules as you got to classify them as short term investments as a correct cash.
So it's just a technical accounting thing, but essentially.
We're still viewing it as cash and cash equivalents.
Okay fair enough great. Thank you.
Great.
And we have no further questions in the queue I will now turn the call back over to T. J Jones for closing remarks.
Well. Thank you everyone for your questions and your time today, we continue to be very enthusiastic about the global growth potential for both the market at that point.
With a powerful brand we continue to increase our access to help organizations worldwide collaborate with confidence at scale.
When we announced the appointment of our newest member of our board of Directors Janet shines.
<unk>, leading channel programs and disruptive go to market strategies will provide a unique perspective as we continue to scale, our global channel one of our key growth vectors.
It's clear that we're operating in a highly dynamic market right now one where it is important to continue to grow while being prudent with expenditures throughout our Companys 20 year history, we have proven our ability to do just that and I'm confident that we will continue to do so.
We'll continue to achieve positive cash flow on an annual basis, which will enable us to evolve our product offerings continue our expansion and stay on the bleeding edge of innovation, our go to market strategy positions us well for the new logo acquisitions, a growing partner ecosystem and the ongoing expansion of existing customers.
To whom we deliver exceptional service today and in the process create value for our shareholders partners and customers Lastly, I want to thank our shareholders for your recent vote of confidence at our annual shareholder meeting to renewal my appointment to the board of directors and to approve our senior.
Decorative compensation with nearly 70% of all shares voted and at over 99% affirmative. We know it is a privilege to have our shareholders trust and faith in our ability to navigate the current market conditions focus on consistent execution and ultimately deliver.
Long term shareholder value with that thank you.
Yeah.
That does conclude your conference call for today, we thank you for your participation and ask that you. Please disconnect. Your lines. Thank you and have a great day.
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