Q3 2022 Intapp Inc Earnings Presentation

May 11, 2022

Good day, ladies and gentlemen, thank you for standing by and welcome to <unk> quarter fiscal year 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need your question start into one key on your Touchtone telephone.

If you call operator to say any time. Please press Star then zero.

I would now like to turn the conference over to your Speaker host David <unk> Senior Vice President of Investor Relations. Please go ahead.

Yeah.

Thank you and welcome to <unk> third quarter fiscal year 2022 earnings conference call.

On the call with me today are John Hall, Chairman and CEO of <unk>.

Steve Roberts Chief.

Chief Financial Officer.

During the course of this conference call. We may make forward looking statements regarding trends strategies and the anticipated performance of our business, including guidance provided for our fourth fiscal quarter 2022 full fiscal year 2022.

Full year 2023.

These forward looking statements are based on management's current views and expectations.

Certain assumptions made as of today's date.

And are subject to various risks and uncertainties.

Including those described in our SEC filings and other publicly available documents.

That are difficult to predict and could cause actual results.

To differ materially from those expressed or implied.

Such forward looking statements.

<unk> disclaims any obligation to update or revise any forward looking statements, except as required by law.

Further on today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results.

A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC prior to this call with that I'll hand, the conversation over to John .

Thank you David.

Good afternoon, everyone and thank you for joining us.

We ended our fiscal third quarter with strong results.

We continued to deliver on our mission to enable professional and financial services firms to better connect their people processes and data through our AI powered software solutions.

Our target firms showed continuing strong demand for digital transformation and we saw record adoption of our cloud platform.

<unk> was a pioneer in targeting the professionals, who work in large professional financial services firms.

Together these professionals lead an incredible global three trillion dollar dealmaking industry, yes.

Yes, they have been traditionally underserved by the technology industry.

Traditional enterprise software products like corporate CRM or ERP, we're really built for product centric corporations.

In contrast, the firms that we serve has been historically organized partnerships they.

<unk> has a unique organizational structure go to market approach and value, creating workflow that is based on the expertise and market insights of the professionals.

Not on making and selling widgets.

<unk> cloud solutions are purpose built to help the professionals in these firms to build and cultivate their own area of expertise. So.

Harness institutional knowledge across their firm to find and when the right opportunities in the marketplace to make better decisions using market data and to deliver better outcomes for their own investors and their clients.

Today professional and financial services firms are rapidly adopting cloud solutions that are purpose built for the way they do business.

With Intest established and trusted brand, our specialized product strategy and our deep understanding of these markets <unk> is well positioned to lead the cloud transformation for this industry.

Our strategy is working.

In our third quarter, our cloud <unk> grew 49% to $148 million.

Cloud now represents 58% of our total <unk> of $254 million.

Which was up 26% year over year.

Our SaaS and support revenue was $50 million up 35% year over year, and total revenue was $70 million up 25% year over year.

Finally, we ended March serving over 2050 firms and over 40 countries around the globe.

Now, let me share a few points on our innovation and some products that are driving this success.

We are continually evolving and enhancing our platform to help our clients leverage the power of the cloud to better harness their data their relationships and their institutional knowledge to scale and grow their business.

One such example is our new relationship intelligence capability.

Our target professionals grow their business through relationships.

Our relationship intelligence capability users in caps applied AI technology to generate predictive insights that help professionals to grow the key relationships who drive their business.

Harnessing metadata from contact E mail and meetings across the global firm relationship intelligence surfaces and scores the firm's overall relationships with all of the participants in the marketplace based on several factors, including volume recency and style of engagement patterns.

Then delivers insights about those relationships that help individual dealmakers to better nurture and leverage the firm's entire network of professionals to better grow their business.

Here's what Scott <unk>, the president of our client Castle saltwater and company had to say about our new offering.

Quote relationship intelligence easily surface relationships that we had previously identified as important.

But where our interactions were not at the level they should have it.

It quickly and visually shows the depth of our firm's relationship with the contactor company.

We are continuing to invest in our applied AI technology to enhance our offerings like relationship intelligence to bring actionable insights to each of the professionals we serve.

Let me turn now to a second innovation area and share a few points about our initiative to expand our footprint among professionals in the real estate segment of the private capital markets.

We continue to see a growing opportunity among both single strategy and multi strategy private capital firms, who are pursuing real estate investment opportunities as part of their business.

As a longtime bootstrap company, we have always followed a client driven innovation strategy and we entered the real estate space because many of our multi strategy deal club clients asked us to expand our platform to help them support their real estate investing teams as part of our overall solution for them.

Let's take a client example today.

With assets under management of $9 billion.

And in the investment focus on alternative real estate sectors Kayne Anderson.

At a configurable enterprise grade system that could act as a central hub for all their deals data and reporting.

Given the complex network nature of their transactions in their marketplace. They needed the ability to attract complex. Many so many relationships.

All the interrelated market entities and individuals that they were working with as well as an increased ability to analyze that data and run reports about those participants in their activities all from a single platform.

The firm had previously used a well known large customer relationship management cloud product.

Kayne Anderson viewed the transition to deal cloud as a fresh start with one platform specifically created with their unique needs industry data and workflows in mind.

Kayne Anderson director, Anthony Mariano told us the difference in efficiency with deal cloud versus their previous solution was quote like night and day.

This is a fantastic example of the compelling benefits of our purpose built industry cloud solution for these firms.

Next I'd like to discuss our continued momentum and development of our partner ecosystem.

First further validating our industry cloud leadership in this market in February we announced a strategic partnership with Microsoft.

As you would all recognize from your own work pattern. The dealmaking professionals in our market spend a huge portion of their working hours in Microsoft office 365, and increasingly now in teens.

And at the firm level their firm leaders are looking to support all of the professionals in the firm with a modern collaborative and compliance work environment that is purpose built for the industry and brings to life. The vision of a modern data driven competitive firm of informed expert professionals.

Our partnership is an exciting chapter in our decade long history with Microsoft to bring the benefits of the <unk> platform to our target professionals in a more seamless experience with Microsoft technology.

Their selection of <unk> as a strategic partner validates our industry cloud leadership in this market and amplifies our ability to combine our purpose built solutions with the Microsoft software that firms use everyday.

Our collaboration will focus on accelerating innovation through embedded Microsoft technologies in areas, such as AI ml and data science analytics and security.

We are committed to programs to help our clients move to the cloud securely with joint migration support and going forward, we will invest in deeper integration between Microsoft workforce solutions and the purpose built solutions that <unk> delivers providing even greater value to our clients.

As a second example, our partner ecosystem is also growing with enhanced solutions that extend the value of our industry cloud platform in functional areas.

We recently announced a strategic partnership with proposal management software provider core stocks.

Corn stocks uses AI and natural language processing to automate proposal generation by sourcing answers to RFP questions directly from firm data.

Our integration combined <unk> ability to centralized mine and apply marketing and business development insights.

Corn stocks automated document generation capabilities.

Together, we can directly integrate our combined solution with Microsoft office applications as well.

It's an end to end approach to marketing and business development that helps firms to identify pitch and when deals are new business more efficiently and effectively.

Finally last month, we expanded our relationship with KPMG.

Their UK finance arm has been a deal cloud client themselves for many years now.

Now we've expanded that relationship into a market partnership to help us support it taps growing base of large enterprise class and global firms.

Our partnership with KPMG will particularly benefit large enterprise clients as they plan broad digital transformation program centered on Intest cloud platform.

Intest industry specific tailor cloud solutions combined with KPMG scaled capabilities and cloud transformation services will enable us to deliver robust solutions and services to make our joint clients complex digital transformation programs successful.

Together with KPMG, we can provide the scale of resources that our largest clients need to more smoothly improve their operations, while minimizing disruptions to their people or their performance.

We are excited to partner with KPMG to enable us to further land and expand within the large opportunity space of complex global professional and financial services firms.

Let me turn now to some client wins.

Several notable client wins last quarter helped grow our global presence.

Adv partners recent selection of deal cloud expanded our footprint in Asia.

Based in Hong Kong, the private equity firm focuses on bespoke capital solutions and operational and managerial improvements.

Looking to optimize the efficiency and connectivity of teams across multiple locations.

<unk> selected deal cloud to manage deals and investor relations across multiple offices.

Large selling point was our ability to configure deal cloud to suit their specialized needs.

South African corporate law firm cliffs Decker hosmer selected our collaboration and content suite to simplify collaboration via Microsoft 365.

Currently using Microsoft teams Sharepoint and outlook.

Firm needed a solution that could extend the value of their Microsoft office 365 platform investment with capabilities that simplified compliance governance and collaboration.

Their head of it he told us that they wanted to remove the constraints of their legacy on premises document management system by shifting to a cloud based solution that bridges the gap between the standard Microsoft applications that Theyre lawyers use daily and the advanced experience that they require.

Finally women's World banking asset management, the investment arm of women's World banking recently selected deal cloud.

This firm makes direct equity investments and financial institutions with an explicit focus on women.

They are now using deal cloud to track and report on their value added initiatives for their portfolio companies to ensure they meet key objectives.

As the size of their teams and funds were increasing the volume of outreach and conversations in which they were engaged became too complex to manage without a robust cloud solution.

Deal clouds tailored capabilities, including relationship intelligence will help them better manage their pipeline and portfolio.

I'd like to conclude my remarks today by thanking our loyal clients, our growing ecosystem of partners and our innovative and talented employee base for driving <unk> continued momentum and success.

I'll now turn the call over to Steve to discuss our financial results.

Thanks, John and thanks, everyone for joining us today.

As John noted, we had a strong quarter with our cloud <unk> up 49% year over year, and our total <unk> up 26% year over year.

Before I go through our financials as a reminder, I'd like to quickly review a few fundamentals of revenue recognition in our financial model.

Cloud <unk> is recognized as SaaS revenue Ratably, following a new sale or renewal.

On premises <unk>.

Recognized in two parts, 50% as subscription license revenue recognized upfront at the time of the sale or renewal and 50% that support revenue recognized Ratably and included in our staff and support revenue line.

Because it is recognized Ratably SaaS and support revenue is more predictable quarter to quarter.

While subscription revenue license revenue can vary based on the timing of revenue recognition.

Okay moving to our numbers.

Q3 was another strong quarter for intact as follows.

And support revenue was $49 8 million up 35% year over year, reflecting both new sales to new clients and Upsells and cross sells to existing clients of impacts purpose built cloud solutions.

Total revenue was $69 7 million up 25% year over year, driven primarily by continued strong sales of our cloud solutions as well as by solid growth in professional services revenue.

Subscription license revenue was $10 9 million compared to $11 8 million in the prior year period, primarily reflecting ongoing migrations of on premise and software to the cloud.

Mitigated by strong renewals of on premises subscription licenses in the current period.

Professional services revenue was $9 million as compared to $7 million in the prior year period.

Putting software implementations consistent with growth in our new sales.

Overall, we continue to execute our land and expand model ending the quarter with more than 2050 clients 484 of which had.

More than $100000 up from 408 in the prior year period.

In addition, we up sold and cross sold our existing clients that are trailing 12 months net revenue retention rate was above our expected range of 108% to 112% for the third quarter in a row.

Based on the trends that we expect to continue we are raising the expected range of our net revenue retention rate to 110% to 114% on a go forward basis.

Before discussing gross margins expenses and profitability. Please note that I'll be discussing non-GAAP results going forward as a reminder, our GAAP financial results along with a reconciliation between GAAP and non-GAAP results can be found in our earnings press release and supplemental financial tables.

Third quarter results were as follows.

Recurring revenue gross margins are up modestly year over year, driven by an increase in fact and support gross margins.

Our services gross margin decreased year over year as the sub contracted for some additional services work in this quarter as compared to the prior year period.

Total non-GAAP gross margin was 57, 3% as compared to 68, 1% in the prior year period, primarily reflecting a slight increase in the mix of services in the current period and a decrease in subscription license business reflective of our clients' continuing shift to the cloud.

non-GAAP operating expenses were $49 1 million or $13 million increase year over year as we continue to invest in sales marketing and product development to support our growth.

As compared to the prior year's quarter. This spend reflects the expenses of being a publicly traded company.

non-GAAP sales and marketing expense was $20 million or $5 6 million increase year over year as a function of increased head count and related sales commissions to capture new business in our growing markets.

non-GAAP R&D expense was $15 3 million, a $3 2 million increase year over year, as we increased head count and made investments in our product roadmap.

non-GAAP G&A expense was $13 8 million or $4 2 million increase year over year in line with expected expense increases associated with being a publicly traded company.

non-GAAP operating loss was $2 2 million as compared to our third quarter of fiscal 'twenty, one non-GAAP operating profit of $1 9 million, primarily reflecting planned growth investments in the business.

non-GAAP net loss per share was <unk> <unk> in the third quarter of fiscal 'twenty, two as compared to a loss of 14th.

In the third quarter of fiscal 'twenty one.

Primarily reflecting a year over year reduction in interest expense and an increase in the weighted average share count.

Turning to the balance sheet, we ended the third quarter was $42 $7 million in cash and cash equivalents.

An increase of $5 1 million as compared to the end of fiscal 'twenty one.

Now turning to guidance.

For the fourth quarter of fiscal 'twenty, two we expect.

Fast and support revenue of between 51, and 52 million and total revenue in the range of $71 million to $72 million.

We expect our non-GAAP operating loss in the range of $4 million to $5 million.

And the non-GAAP net loss per share in the range of seven to eight.

Using a basic share count weighted for the quarter of approximately 62 million common shares outstanding.

For the full year fiscal 'twenty, two we expect SaaS and support revenue of between 191% and $192 million.

And total revenue in the range of $267 five to $268 5 million.

We also expect our non-GAAP FY 'twenty, two operating loss in the range of $7 million to $8 million and.

And a non-GAAP net loss per share in the range of 15 to 16.

Using a basic share count weighted for fiscal year 'twenty two of approximately 61 million common shares outstanding.

One last point I'd like to make here.

As it relates to fiscal 2023 guidance.

We plan to provide that guidance specifically after our next quarters earnings release.

But our initial look suggests that we will likely be guiding to approximately 20% total revenue growth for fiscal 'twenty three based on the strong demand that we continue to experience in our marketplace.

With that John and I look forward to taking your questions.

Ladies and gentlemen at this time I'd like to ask a question you will need to press. The Star then the one key on your Touchtone telephone.

Please standby please standby, while we compile the Q&A roster.

And our first question coming from the line of Koji Ikeda from from Bank of America. Your line is open.

Hey, guys. Thanks for taking my questions really nice quarter here a couple from me.

Just wanted to firstly ask you kind of on your last comment there on the guidance or I guess first look on the 2023 revenue growth, 20%. That's a really nice number I guess what are you seeing maybe in terms of the bookings trends are the pipeline pipeline our end market demand trends, that's really giving you the confidence to give this number today.

Yes Koji.

Steve.

Think that we are seeing.

Just strong new sales activity across the board.

And as you would note we did raise our <unk> range.

A couple of points here and feel like we're getting good.

Contributions both from new logo sales and from cross sells and Upsells.

And we've talked before about some of the.

Kind of uneven revenue you see from things like our subscription license visits and we are starting to come to the end of.

Some of the impact of that that you would see given all of the cloud growth. We've had over the last few quarters. So we're just feeling like that that's the likely place we'd be in that we just put it out there.

At this time.

Got it got it and then just a follow up on that net revenue retention the guidance range up to 110 to $1 14 up from 100, <unk> hundred 12 thinking thats for the total business so that would imply that.

Cloud NRI.

The range is much higher than that so I was wondering if you could unpack.

Maybe that that cloud <unk> is there anything from a specific product or vertical that's driving the bulk of that kind of increase in the NR expansion range and do you view those drivers to be the same over the medium term here. Thank you for taking my question.

Well.

Nearly all of our new sales is cloud, whether it's new logo or NR upsell cross sell so it's the same either way I think we're seeing strong contribution.

From financial services and from professional services.

And so in fuels balanced and our market feel.

Pretty pretty solid right here John .

John feel free to.

Add to that.

I think thats right the firms that we're calling on are continuing to execute the digital transformation programs that they put in place they want to modernize their operation that historically have been underserved by the traditional horizontal software providers.

And they see us increasingly through references and referrals across the industries as the player thats, bringing the modern cloud platform to them. So I think we're starting to get some real momentum here at user adoption and cross sells and Upsells.

And we're just growing in confidence that.

This is a long term trend.

Thanks, John Thanks, Dave Thanks for taking my questions.

Okay.

Our next question coming from the line of Kevin Mcveigh with Credit Suisse. Your line is open.

Let me add my congratulations as well just really really exceptional results.

I Wonder can you give us just some context I mean, I know you are not necessarily tied to M&A or kind of IPO activity, but some of your clients are yet youre seeing an acceleration in the adoption is it the scope with things that they are focusing on that's driving that or just any puts and takes just given the current environment.

Because the fundamentals are strengthening despite the market.

Yes.

Market volatility that a lot of your clients.

Thanks, Kevin Yes.

The.

Core of our end markets are the private capital markets, which is a secular growth industry of 20% give or take that has sustained itself even through.

The economic cycle past couple times, so we're selling to.

Two a growth industry that has more and more dry powder and multiples go up and down but they're.

Investing through those and then the.

The advisory community around those investors are helping them to make those deals whether it's.

The initial fund formation or deployment of capital or.

Disposing of assets at the end of the.

Holding period and realizing some return on those and all of those factors are kind of at the center of our growth pattern and then we have a whole set of expansion capabilities within all of those advisory firms as well for some of their other activities. So over the course of our company's history, we've grown right through.

The whole economic cycle, two or three times and I think the long term trend for the private capital markets gain traction on the public markets as a form of investment and we're very well positioned to take that.

Is it from that.

That's super helpful. And then just my follow up was.

Microsoft partnership and KPMG seem really really interesting.

Should we expect other partnerships like that because it feels like thats driving.

A structurally higher level of client engagement in terms of just the spending.

Without getting too specific or are there other examples of where we should expect that type of collaboration going forward.

We're very excited about both the Microsoft and the KPMG partnership and.

As you might recall as we were coming public one of the things you were talking about is we got more traction in the marketplace and got more scale, we would be able to form relationships with some of the larger.

Strategic partners in the market and I am very excited that we are at a stage now where that's starting to happen and youre right. It is helping us to have a higher level of engagement of the firms, particularly the large complex.

Global institutions, where there's just a huge upside for us to sell through our platforms to all the different components inside one of these big global institutions.

And one of the things that we've talked about is that just within our top 100 clients. Although we claim them when we win the logo in some form there's a $1 billion of additional upsell and cross sell that we can do if we never sold another logo beyond our initial 100 that we have today. So building out this ecosystem of capability.

To help us tie ourselves deeper and deeper into these large firms is going to support our growth. There. We will continue to look for additional partnerships as we scale, we're not announcing anything like that today, but it's part of our growth strategy to build out our ecosystem and to get a richer and richer ecosystem that gives the big firms more and more support options.

And the way that they work with us.

So just really really amazing job congrats again.

Thank you very much.

And our next question coming from the line of Alex Sklar with Raymond James Your line is open.

Thanks, John maybe to start I wanted to ask about the new in tap document solution for legal you all announced this week it sounds like there might be some repackaging of solutions that you add plus acquired with rep stored but is that solution targeting kind of the larger document management system opportunity and can you provide any color on kind of the value proposition.

Particularly for your existing legal customers.

Sure. So this absolutely was the expansion of some of the technology and expertise that we acquired with the Rep store.

Mission that we did just before we became public last year.

As you will recall, we've done seven acquisitions over our history, and we're going to look opportunistically at M&A in our future. This particular, one expanded out.

That form into areas of Microsoft Office teams 365 Sharepoint.

And one of the things that we've discovered is that.

Our tradition or client users in many of our firms in this case from the law firms the outside counsel law firms, who circulate in the industry and go into sometimes in house corporate legal departments experienced the technology.

So was that they had there and said well we could really use what <unk> is bringing to market in this area and a lot of the corporate legal departments have not had great success with the large corporate document management systems. They have made a big commitment to Microsoft office 365 and teams they want the collaborative experience when they.

Wanted embedded directly in the working environment that most of them spend their days and wishes outlook and sharepoint teams in those systems and so our approach to this whole category is to leverage the environment.

The firm's professionals are already working in this case the companies Department.

Lawyers are already working in.

The solution there is something thats easy for them to adopt its something that we can get through it departments. There because they are already committed to Microsoft in a big way and it brings a lot of value quickly to the users. There. So we're excited about this it's a good example.

Of the way that the professionals across the steelmaking ecosystem circulate a little bit and historically that's been our market expansion strategy is to follow the clients and followed the demand and bring them.

Products that re leverage the platform that we've already invested in.

Okay. That's.

Thats great color.

As a follow up for you Steve just maybe following up on <unk> question as well the 20% outlook for 'twenty three is really impressive.

As the comps get harder here post the <unk> acquisition. It does look like it's an acceleration versus what's implied for the fourth quarter Guide I just wanted to see if there's anything timing related there you could call out.

I'm not sure I completely followed that.

How you phrase that I think.

I think that this is just how we feel it's looking right now going forward and thought we would put it out there I mean in the fourth quarter will come when it comes I think we've suggested in the past there are some interesting comparisons quarter over quarter, particularly as it relates to our subscription license business that are sometimes a little.

Cut to work through and that will be another one in Q4, but but as I said after that I feel like with our growth in cloud given the percentage of our overall mix and the way. This is going I think that will start to be less and less of a factor for everybody as they try to model our business. So that would be helpful to good.

Okay, great. Thank you.

Okay.

And our next question coming from the line of Mark Elaine with Stifel. Your line is open.

Yes, hi, guys. Thanks for taking the question just looking at the target again for next year, how much of that.

Considers migrations of the base versus net new is are you seeing any acceleration in the pace of customer migrations or is that how it really steady here.

No I would say, it's pretty steady we are still at sort of.

Low single to mid millions per year kind of steady cloud migrations again at the moment.

At the pace that makes sense for our client base.

And that continues and so no particular acceleration there.

The same consistent pattern, we're seeing.

For now.

Got it understood and then nice growth in the 100000 plus customer cohort over the last year or are you seeing larger and larger organizations moving into the cohort or has it really come from a balanced.

<unk> of the customers that have been with you for a long time moving up into the cohort as well as your sales team is going out there and capturing more of that large scale opportunities.

Yes, I would say, it's a good mix of both I mean, John you might want to add color, but I think we do see both when we land we can land heavier at 100000 plus for sure and we can also grow clients over that amount.

Part of an upsell or cross sell so it's a good mix.

Got it appreciate that.

Congrats on the quarter.

Thanks.

Our next question coming from the line of Evan <unk> with Piper Sandler Your line is open.

Yes.

Hi, Thanks for taking my question.

The kind of results.

A couple of quick quick question as far as like kind of the macro environment and.

The potential for a recession I mean have you.

Part of that is that any of those things.

Kind of macro factors.

And have incorporated as you think of the 20% growth for next year.

Well I'll start and maybe John you can elaborate I mean, we're certainly mindful of what's going on in the market for sure.

And the threats of recession and so on.

And thinking about that but as John said, we we are seeing strong momentum in the business.

No.

Spend on technology for our solutions for our clients is a relatively small part of their they.

They are fairly profitable P&L and they have.

The digital transformation trend is a strong one and its value added thing for our clients to be doing and theyre doing it so.

We're mindful of it but I think we feel we feel relatively good about where we are right now so yes have considered that for sure.

Okay, perfect and then the other thing from a product development perspective.

Really rely on.

Technical talent.

How is kind of the talent environment Ben.

Some of the capacity being being kind of sucked out of this.

Eastern Europe , and Russia in region.

Yes.

Cable to recruit and retain talent.

Just if you can comment on that that'd be great.

Yes.

There is definitely tight.

Charter market for technical talent in particular.

Hanging out there.

One of the reasons that.

We are excited about some of the partnerships and some of the other things that we've talked about is that we're growing the ecosystem. It gives us more access to resources to help meet the demand coming from all of these firms. We're also recruiting aggressively ourselves.

Taking a little longer to get people in this environment, obviously, but we're doing it so I think thats going to be a continuous sort of on a project to make sure that we are continuing to focus and get the best possible talent and get them into the company and get them, helping us to execute the vision I will say on the flip side.

We've seen some excellent excellent talent come to the company over the past few quarters, some from even our competitors or our clients, who see the progress that we're making and the brand that we're establishing a lot of these very prestigious and markets that is very attractive.

And so folks are having a lot of success, joining us and I think thats going to help us even in a in a tight market, but it's something that we've got to pay attention to.

Alright, perfect and if I could just slip one more in.

Just given some of the valuations coming in.

Are you.

Kind of looking at the opportunity for M&A.

It's not like a big priority now.

Well I would say look we're always looking.

It is part of our.

It's one of the drivers of our business over time as John said and you can see no, but yes in a market like this it's kind of an interesting one.

To do it to do deals I would think but we are always looking and I would say there's nothing.

In particular here that debt.

That we would talk about but it's always part of the program to keep looking.

Perfect. Thank you very much.

And our next question coming from the line of Terry Tillman with two Securities. Your line is open.

Hey, Tim This is conor faster I'll on for Terry Thanks for taking my questions first one here. So you've mentioned that you are seeing some solid momentum with with new logos I'm. Just curious if theres been any shift in terms of maybe where you might be landing within the client organization. So as you gain traction you kind of do you find yourself speaking more with senior management at client companies start to <unk>.

The importance of.

The cloud transition on enterprise scale.

Thanks Connor it is true we are as we grow and grow within many of the clients that we're working with increasingly talking with more senior people inside the organization who view.

The cloud transformation as an important component of an overall strategy of modernization for their firms that has several benefits they want to become more efficient.

Operationally and economically they want to inform their professionals with better data about the markets that they're competing in they want to arm those folks with better insights to make wise investment decisions and provide the right kind of advice to their clients and there is a talent war as well I mean, all of our in market firms are competing in their own version of the talent War.

<unk> and the current generation of people coming into these firms want to work in a modern cloud enabled way and so there is sort of macro trends there that are driving these folks too.

Continue to see this as a strategic <unk>.

Decision to modernize the firm and execute additional transformation program. So at all sides of the firm from the smaller ones. The midsize ones. So the larger ones. We are moving up in the audiences that we're calling on.

To talk to people, who have more of a strategic view.

I guess one of the reasons why we have some some confidence that this is actually a meaningful trend.

Over the long term that these firms are just going to have to get with the times and get systems and that helps them to compete and create the right environment for their people.

Got it appreciate the color there and just one quick follow up so as you've been adding more head count to support and client success teams.

Kinds of use cases are you seeing as a result of maybe stronger client relationships and maybe how have your investments here helped to accelerate expansion. Obviously, you can show your value faster and grow more quickly. Thank you guys.

Yes. Thank you so we are.

Growing our client success and support teams as well as our services group as well as our account management group, we have been doing that consistently each quarter as we've grown the business.

And part of what we do is engaged with each client on a regular basis to help them explore additional areas, where they can deploy the system. It's part of our take care of them client success efforts. It's also part of our account expansion land and expand strategy. So specifically we are seeing.

<unk> in relationship intelligence, we're seeing this expansion in the real estate area came directly from this kind of conversation with some of our.

Multi strategy private capital firms that needed help with their real estate.

Investment groups, we've done the same thing in this corporate legal expansion that we've done where the clients themselves have pulled us in to go pursue that market segment with some of the solutions. We developed for the outside counsel firms. So theres a lot of.

Organic.

Land and expand momentum inside of our business based on the operating model of how we engage with folks. The team has just done a tremendous job.

Our account management program over the past three or four quarters as we've invested more in both account management and services and client success and support to try to grow our footprint inside of these firms.

Yes.

Perfect I appreciate the color. Thanks.

Thank you.

Okay.

And as a reminder to ask a question. Please press star one.

Our next question coming from the line of Brian Schwartz with Oppenheimer. Your line is open yes.

Yes, hi, Thanks for taking my questions. This afternoon, John I was wondering if you could just give us an update provide any color on what youre seeing in terms of the demand activity, maybe the pipeline momentum in your international markets. You did talk about some real nice customer wins in your introductory comment but can.

Can you shed any light into kind of what youre seeing in terms of the customer discussions on the pipeline momentum in your international business and then I have a follow up for Steve.

Great. Thanks, Brian Yes.

As you all.

Recall the company does about 30%.

Of its business outside North America, and we've been consistently growing originally we started off in places like the UK and Australia, but we've been consistently growing in continental Europe , and the Middle East and Africa and Asia.

And we've been adding clients in each of those areas and growing the.

The clients that we've won in each of those areas in a very similar pattern to what we started doing in the United States and North America. So the international program as is an important aspect to our growth.

Thank you.

Meaningful pillar for keeping our growth rate up it's growing about.

At the same rate as the rest of the business. So it is kind of in line.

As we continue to grow.

But it's a great opportunity.

We wanted to highlight some of that is some of those examples.

Thanks for that color, John and then Steve a follow up question I have just wanted to ask about the service those capacity here for the company you mentioned in your introductory comments that you outsource some of the services work here in the quarter. When you were talking about the margin I'm just wondering if that if that is lingering or.

I guess the question is how do you how do you feel in terms of the services capacity being able to implement all of these new customers on a timely fashion fashion versus.

Having to outsource more of that network, yes.

Yes, yes, no I think we feel pretty good about our capacity over time, and we are hiring steadily and regularly.

Keep pace with the growth in the business and then this is the growth in our services business.

This may be have been a little bit temporary for here right now we had.

Some some reasons to sort of do a little more subcontractors than we might normally do this particular quarter.

But I don't expect that a permanent thing at all so.

I'm pretty comfortable with our capacity it's not.

All of that hard to get the services people, we need in <unk>.

We have to keep at it as John said, it's a tight market.

Thank you for taking my questions.

Thank you and I'm showing no further questions at this time I would now like to turn the call back over to Mr. John Hall for any closing remarks.

Okay. Thank you everyone. We appreciate your attention and your questions. We have a great Q3 behind us and we're very excited about continuing momentum. Thanks for your time today, and we'll look forward to talking to you all next quarter.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

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Good day, ladies and gentlemen, thank you for standing by and welcome to <unk> quarter fiscal year 2022 earnings Conference call. At this time, all participants are in a listen only mode.

His presentation, there will be a question and answer session to ask a question. During this session you will need your question Gordon the one key on your Touchtone telephone.

Thank you all very soon is there any time. Please press star then zero.

I'd now like to turn the conference of the Geo Speaker host, David Johnson, Vice President of Investor Relations. Please go ahead.

Yeah.

Thank you and welcome to <unk> third quarter fiscal year 2022 earnings conference call.

On the call with me today are John Hall, Chairman and CEO of <unk> and <unk>.

Dave Robertson Chief Financial Officer.

These forward looking statements are based on management's current views and expectations.

Until certain assumptions made as of today's date.

And are subject to various risks and uncertainties.

Including those described in our SEC filings and other publicly available documents.

That are difficult to predict and could cause actual results to differ materially from those expressed or implied.

Such forward looking statements.

<unk> disclaims any obligation to update or revise any forward looking statements, except as required by law.

Further on today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results.

A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC prior to this call.

With that I will hand, the conversation over to John .

Thank you David.

Good afternoon, everyone and thank you for joining us.

We ended our fiscal third quarter with strong results.

We continued to deliver on our mission to enable professional and financial services firms to better connect their people processes and data through our AI powered software solutions.

Our target firms showed continuing strong demand for digital transformation and we saw record adoption of our cloud platform.

<unk> was a pioneer in targeting the professionals, who work in large professional financial services firms.

Together these professionals lead an incredible global three trillion dollar dealmaking industry.

Yes, they have been traditionally underserved by the technology industry.

Traditional enterprise software products like corporate CRM or ERP, we're really built for product centric corporations.

In contrast, the firms that we serve has been historically organized as partnerships.

They have a unique organizational structure go to market approach and value, creating workflow that is based on the expertise and market insights of the professionals.

Not on making and selling widgets.

<unk> cloud solutions are purpose built to help the professionals in these firms to build and cultivate their own area of expertise. So.

To harness institutional knowledge across their firm to find and when the right opportunities in the marketplace to make better decisions using market data and to deliver better outcomes for their own investors and their clients.

Today professional and financial services firms are rapidly adopting cloud solutions that are purpose built for the way they do business.

With Intest established and trusted brand, our specialized product strategy and our deep understanding of these markets <unk> is well positioned to lead the cloud transformation for this industry.

Our strategy is working.

In our third quarter, our cloud IRR grew 49% to $148 million.

<unk> now represents 58% of our total <unk> of $254 million.

Which was up 26% year over year.

Our SaaS and support revenue was $50 million up 35% year over year, and total revenue was $70 million up 25% year over year.

Finally, we ended March serving over 2050 firms in over 40 countries around the globe.

Now, let me share a few points on our innovation and some products that are driving this success.

One such example is our new relationship intelligence capability.

Our target professionals grow their business through relationships.

Our relationship intelligence capability users in taps applied AI technology to generate predictive insights that help professionals to grow the key relationships who drive their business.

Harnessing metadata from contacts E mail and meetings across the global firm relationship intelligence surfaces and scores the firm's overall relationships with all of the participants in the marketplace based on several factors, including volume recency and style of engagement patterns.

Then delivers insights about those relationships that help individual dealmakers to better nurture and leveraged the firm's entire network of professionals to better grow their business.

Here's what Scott <unk>, the president of our client Castle saltwater and company had to say about our new offering.

Quote relationship intelligence easily surface relationships that we had previously identified as important.

But where our interactions were not at the level they should have been.

It quickly and visually shows the depth of our firm's relationship with the contactor company.

We are continuing to invest in our applied AI technology to enhance our offering like relationship intelligence to break actionable insights to each of the professionals we serve.

Let me turn now to a second innovation area and share a few points about our initiative to expand our footprint among professionals in the real estate segment of the private capital markets.

We continue to see a growing opportunity among both single strategy and multi strategy private capital firms, who are pursuing real estate investment opportunities as part of their business.

As a longtime bootstrap company, we have always followed a client driven innovation strategy and we entered the real estate space because many of our multi strategy deal cloud clients asked us to expand our platform to help them support their real estate investing teams as part of our overall solution for them.

Let's take a client example today.

With assets under management of $9 billion.

And in investment focus on alternative real estate sectors Kayne Anderson.

Configurable enterprise grade system that could act as the central hub for all their deals data and reporting.

Given the complex network nature of their transactions in their marketplace. They needed the ability to track complex. Many so many relationships among all the interrelated market entities and individuals that they were working with as well as an increased ability to analyze that data and run reports about those participants.

Their activities all from a single platform.

The firm had previously used a well known large customer relationship management cloud product.

Kayne Anderson viewed the transition to deal cloud as a fresh start with one platform specifically created with their unique needs industry data and workflows in mind.

Kayne Anderson director, Anthony Mariano told us the difference in efficiency with deal cloud versus their previous solution was quote like night and day.

This is a fantastic example of the compelling benefits of our purpose built industry cloud solution for these firms.

Next I'd like to discuss our continued momentum and development of our partner ecosystem.

First further validating our industry cloud leadership in this market in February we announced a strategic partnership with Microsoft.

As you would all recognize from your own work pattern. The dealmaking professionals in our market spend a huge portion of their working hours in Microsoft Office 365, and increasingly now in teams.

And at the firm level their firm leaders are looking to support all the professionals in the firm with a modern collaborative and compliance work environment that is purpose built for the industry and brings to life. The vision of a modern data driven competitive firm of informed expert professionals.

Our collaboration will focus on accelerating innovation through embedded Microsoft technologies in areas, such as AI ml data science analytics and security.

As a second example, our partner ecosystem is also growing with enhanced solutions that extend the value of our industry cloud platform in functional areas.

We recently announced a strategic partnership with proposal management software provider chorus stocks.

Corn stocks uses AI and natural language processing to automate proposal generation by sourcing answers to RFP questions directly from firm data.

Our integration combines <unk> ability to centralized mine and apply marketing and business development insights.

Corn stocks automated document generation capabilities.

Together, we can directly integrate our combined solution with Microsoft office applications as well.

It's an end to end approach to marketing and business development that helps firms to identify pitch and when deals are new business more efficiently and effectively.

Finally last month, we extended our relationship with KPMG.

Their UK finance arm has been a deal cloud client themselves for many years now.

Now we've expanded that relationship into a market partnership to help us support it taps growing base of large enterprise class and global firms.

Our partnership with KPMG will particularly benefit large enterprise clients as they plan broad digital transformation program centered on <unk> cloud platform.

Intest industry specific tailored cloud solutions combined with KPMG scaled capabilities and cloud transformation services will enable us to deliver robust solutions and services to make our joint clients complex digital transformation programs successful.

Together with KPMG, we can provide the scale of resources that our largest clients need to more smoothly improve their operations, while minimizing disruptions to their people or their performance.

We are excited to partner with KPMG to enable us to further land and expand within the large opportunity space of complex global professional and financial services firms.

Let me turn now to some client wins.

Several notable client wins last quarter helped grow our global presence.

Adv partners recent selection of deal cloud expanded our footprint in Asia.

Based in Hong Kong, the private equity firm focuses on bespoke capital solutions and operational and managerial improvements.

Looking to optimize the efficiency and connectivity of teams across multiple locations.

<unk> selected deal cloud to manage deals and investor relations across multiple offices.

Large selling point was our ability to configure deal cloud to suit their specialized needs.

South African corporate law firm cliffs Decker hosmer selected our collaboration and content suite to simplify collaboration via Microsoft 365.

Currently using Microsoft teams Sharepoint and outlook the <unk>.

Firm needed a solution that could extend the value of their Microsoft office 365 platform investment with capabilities that simplified compliance governance and collaboration.

Finally women's World banking asset management, the investment arm of women's World banking recently selected deal cloud.

This firm makes direct equity investments and financial institutions with an explicit focus on women.

They are now using deal cloud to track and report on their value added initiatives for their portfolio companies to ensure they meet key objectives.

As the size of their teams and funds were increasing the volume of outreach and conversations in which they were engaged became too complex to manage without a robust cloud solution.

Youll clouds tailored capabilities, including relationship intelligence will help them better manage their pipeline and portfolio.

I'd like to conclude my remarks today by thanking our loyal clients, our growing ecosystem of partners and our innovative and talented employee base for driving Intest continued momentum and success.

I'll now turn the call over to Steve to discuss our financial results.

Thanks, John and thanks, everyone for joining us today.

As John noted, we had a strong quarter with our cloud <unk> up 49% year over year, and our total <unk> up 26% year over year.

Before I go through our financials as a reminder, I'd like to quickly review a few fundamentals of revenue recognition in our financial model.

Cloud <unk> is recognized as SaaS revenue Ratably, following a new sale or renewal.

On premises <unk> is recognized in two parts, 50% as subscription license revenue recognized upfront at the time of the sale or renewal and 50% as support revenue recognized Ratably and included in our SaaS and support revenue line.

Because it is recognized Ratably SaaS and support revenue is more predictable quarter to quarter.

While subscription revenue license revenue can vary based on the timing of revenue recognition.

Okay moving to our numbers.

Q3 was another strong quarter for intact as follows.

And support revenue was $49 8 million up 35% year over year, reflecting both new sales to new clients and Upsells and cross sell to existing clients of impacts purpose built cloud solutions.

Total revenue was $69 7 million up 25% year over year, driven primarily by continued strong sales of our cloud solutions as well as by solid growth in professional services revenue.

Subscription license revenue was $10 9 million compared to $11 8 million in the prior year period, primarily reflecting ongoing migrations of on premise and software to the cloud.

Mitigated by strong renewals of on premises subscription licenses in the current period.

Professional services revenue was $9 million as compared to $7 million in the prior year period.

Cutting software implementations consistent with growth in our new sales.

Overall, we continue to execute our land and expand model ending the quarter with more than 2050 clients 484 of which had.

More than $100000 up from 408 in the prior year period.

In addition, we up sold and cross sold our existing clients that are trailing 12 months net revenue retention rate was above our expected range of 108% to 112% for the third quarter in a row.

Based on the trends that we expect to continue we are raising the expected range of our net revenue retention rate to 110% to 114% on a go forward basis.

Third quarter results were as follows.

Recurring revenue gross margins are up modestly year over year, driven by an increase in SaaS and support gross margins.

Our services gross margin decreased year over year as the sub contracted for some additional services work in this quarter as compared to the prior year period.

non-GAAP operating expenses were $49 1 million or $13 million increase year over year as we continue to invest in sales marketing and product development to support our growth.

As compared to the prior year's quarter. This spend reflects the expenses of being a publicly traded company.

non-GAAP R&D expense was $15 3 million, a $3 2 million increase year over year as the increased head count and made investments in our product roadmap.

non-GAAP G&A expense was $13 8 million or $4 2 million increase year over year in line with expected expense increases associated with being a publicly traded company.

non-GAAP net loss per share was <unk> <unk> in the third quarter of fiscal 'twenty, two as compared to a loss of 14th.

In the third quarter of fiscal 'twenty one.

Primarily reflecting a year over year reduction in interest expense and an increase in the weighted average share count.

Turning to the balance sheet, we ended the third quarter was $42 $7 million in cash and cash equivalents.

An increase of $5 1 million as compared to the end of fiscal 'twenty one.

Now turning to guidance.

For the fourth quarter of fiscal 'twenty, two we expect.

Fast and support revenue of between 51% and 52 million and total revenue in the range of $71 million to $72 million.

We expect our non-GAAP operating loss in the range of $4 million to $5 million.

And the non-GAAP net loss per share in the range of 7% to 8%.

Using a basic share count weighted for the quarter of approximately 62 million common shares outstanding.

Okay.

For the full year fiscal 'twenty, two we expect SaaS and support revenue of between 191 and $192 million.

And total revenue in the range of $267 five to $268 5 million.

We also expect our non-GAAP FY 'twenty two operating loss in the range of seven to 8 million and.

And our non-GAAP net loss per share in the range of 15 to 16.

Using a basic share count weighted for fiscal year 'twenty two of approximately 61 million common shares outstanding.

One last point I would like to make here.

As it relates to fiscal 2023 guidance.

We plan to provide that guidance specifically after our next quarters earnings release.

But our initial look suggests that we will likely be guiding to approximately 20% total revenue growth for fiscal 'twenty three.

Just on the strong demand that we continue to experience in our marketplace.

With that John and I look forward to taking your questions.

Ladies and gentlemen at this time I'd like to ask a question you will need to press. The Star then the one key on your Touchtone telephone.

Please standby please standby, while we compile the Q&A roster.

And our first question coming from the line of Koji Ikeda from Bank of America. Your line is open.

Hey, guys. Thanks for taking my questions really nice quarter here a couple from me.

I wanted to firstly ask you kind of on your last comment there on the guidance or I guess first look on the 2023 revenue growth, 20%, that's a really nice number.

What are you seeing maybe in terms of the bookings trends are the pipeline pipeline our end market demand trends, that's really giving you the confidence to give this number today.

Yes Koji.

<unk>.

I think that we are seeing.

Strong new sales activity across the board.

And as you would note we did raise our NRI our range.

A couple of points here and feel like we're getting good.

Contributions both from new logo sales and from cross sells and Upsells.

And we've talked before about some of that.

Kind of uneven revenue you see from things like our subscription license business and we are starting to come to the end of some of the impact of that that you would see given all of the cloud growth. We've had over the last few quarters. So we're just feeling like that that's the likely place we'd be thought we just put it out there.

At this time.

Got it got it and then just to follow up on that net revenue retention the guidance range up to 110 to $1 14 up from 108 to 112 thinking thats for the total business. So that would imply that cloud NR is the kind of the range is much higher than that so I was wondering if we could unpack.

Maybe that that cloud in our Rps is there anything from a specific product or vertical that's driving the bulk of that kind of increase in the NRI expansion range.

Do you view those drivers to be the same over the medium term here. Thank you for taking my question.

Well.

Nearly all of our new sales is cloud, whether it's new logo or NRI upsell cross sell so it's the same either way I think we're seeing strong contribution.

From financial services and from professional services.

And so it fuels balanced and our market feels.

Pretty pretty solid right here John .

John feel free to.

Add to that.

I think thats right the firms that we're calling on are continuing to execute their digital transformation programs that they put in place they want to modernize their operation. They historically have been underserved by the traditional horizontal software providers.

And they see us increasingly through references and referrals across the industries as the player that's bringing the modern cloud platform to them. So I think we're starting to get some real momentum here at user adoption and cross sells and Upsells.

And we're just growing in confidence that.

This is a long term trend.

Thanks, John Thanks, Dave Thanks for taking my questions.

You bet.

Our next question coming from the line of Kevin Mcveigh with Credit Suisse. Your line is open.

Let me add my congratulations as well just really really exceptional results.

I Wonder can you give us just some context I mean, I know you are not necessarily tied to M&A or kind of IPO activity, but some of your clients are yet youre seeing acceleration in the adoption is it the scope of things that they are focusing on that's driving that or just any puts and takes just given the current environment.

Because the fundamentals are strengthening despite that the market up.

Yes.

Market volatility that a lot of your clients.

Thanks, Kevin Yes.

The.

Core of our end markets are the private capital markets, which is a secular growth industry of 20% give or take that has sustained itself even through.

The economic cycle past couple of times, so we're selling to.

Two a growth industry that has more and more dry powder and multiples go up and down but their invest.

Investing through those and then the.

The advisory community around those investors are helping them to make those deals whether it's.

The initial fund formation or deployment of capital or.

Disposing of assets at the end of the.

But from that.

That's super helpful. And then just my follow up was the.

The Microsoft partnership and KPMG seem really really interesting shall we expect other partnerships like that because it feels like thats driving.

A structurally higher level of client engagement in terms of just the <unk>.

Spend in.

Without getting too specific or are there other examples of where we should expect that type of collaboration going forward.

We're very excited about both the Microsoft and the KPMG partnership and as you might recall as we were coming public one of the things you were talking about is we got more traction in the marketplace and got more scale, we would be able to form relationships with some of the larger.

Global institutions, where there's just a huge upside for us to sell through our platforms to all the different components inside one of these big global institutions.

And one of the things that we've talked about is that just within our top 100 clients. Although we claim them when we win the logo in some form there's a $1 billion.

Of additional upsell and cross sell that we can do if we never sold another logo beyond our initial 100 that we have today. So building out this ecosystem of capability to help us tie ourselves deeper and deeper into these large firms it's going to support our growth. There. We will continue to look for additional partnerships as we scale, we're not announcing anything like that today.

But it's part of our growth strategy to build out our ecosystem and to get a richer and richer ecosystem that gives the big firms more and more support options and the way that they work with us.

It's just really really amazing job congrats again.

Thank you very much.

Yeah.

And our next question coming from the line of Alex Sklar with Raymond James Your line is open.

Okay.

<unk> for your existing legal customers.

Sure. So this absolutely was the expansion of some of the technology and expertise that we acquired with the Rep store acquisition that we did just before we became public last year as you will recall, we've done seven acquisitions over our history and we're going to look opportunistically at M&A in our future. This.

Particular, one expanded out our platform into areas of Microsoft office teams 365 share points.

And one of the things that we've discovered is that.

So is that they had there and said well we could really use <unk> is bringing to market in this area and a lot of the corporate legal departments have not had great success with the large corporate document management systems. They have made a big commitment to Microsoft office 365 and teams they want the collaborative experience something.

Wanted embedded directly in the working environment that most of the spend their days and wishes outlook and sharepoint teams in those systems and so our approach to this whole category is to leverage the environment.

The firm's professionals are already working in this case the companies Department.

Lawyers are already working in.

And the solution there is something thats easy for them to adopt its something that we can get through it departments. There because they are already committed to Microsoft in a big way and it brings a lot of value quickly to the users. There. So we're excited about this it's a good example.

Products that re leverage the platform that we've already invested in.

Okay.

That's great color and EM.

As a follow up for you Steve just maybe following up on <unk> question as well, but the 20% outlook for 'twenty three is really impressive.

As the kind of comps get harder here post the <unk> acquisition. It does look like it's an acceleration versus what's implied for the fourth quarter Guide I just wanted to see if there was anything timing related there you could call out.

Im not sure I completely followed that.

How you phrase that I think.

I think that this is just how we feel it's looking right now going forward and thought we would put it out there I mean in the fourth quarter will come when it comes I think we've suggested in the past there are some interesting comparisons quarter over quarter, particularly as it relates to a subscription license business that are sometimes a little.

Tough to work through and that will be another one in Q4, but but as I said after that I feel like with our growth in clad given the percentage of our overall mix and the way. This is going I think that will start to be less and less of a factor for everybody.

As they try to model our business so that would be helpful to good.

Okay, great. Thank you.

Okay.

And our next question coming from the line of Mark Delaney with Stifel. Your line is open.

Yes, hi, guys. Thanks for taking the question just looking at the target again for next year, how much of that.

Considers migrations of the base versus net new is are you seeing any acceleration in the pace of customer migrations or is that how it really steady here.

No I would say, it's pretty steady we are still at sort of.

Low single to mid millions per year kind of steady cloud migrations again at the moment.

At the pace that makes sense for our client base.

And that continues and so no particular acceleration there. It's the same consistent pattern we're seeing.

For now.

Got it understood and then nice growth in the 100000 plus customer cohort over the last year are you seeing larger and larger organizations moving into that cohort or has it really come from a balanced.

Approach of the customers that have been with you for a long time moving up into the cohort as well as your sales team is going out there and capturing more of that large scale opportunities.

Yes, I would say, it's a good mix of both I mean, John you might want to add color, but I think we do see both we see we land we can land heavier at 100000 plus for sure and we can also grow clients over that amount.

As part of an upsell or cross sell so it's a good mix.

Got it appreciate the color and congrats on the quarter.

Thanks.

Okay.

Our next question coming from the line of Ivan.

From <unk> with Piper Sandler Your line is open.

Hi, Thanks for taking my question.

Yes.

Just a couple of quick quick question as far as like.

The macro environment and.

The potential for a recession I mean have you all.

Kind of part of that is that any of those things.

Kind of macro factors.

Kind of incorporated as you think of the 20% growth for next year.

Well I'll start and maybe John you can elaborate I mean, we're certainly mindful of what's going on in the market for sure.

And the threat of recession and so on.

Think and thinking about that but as John said, we we are seeing strong momentum in the business.

The spend on technology for our solutions for our clients is a relatively small part of their.

They're fairly profitable P&L and they have.

The digital transformation trend is a strong one and its value added thing for our clients to be doing and theyre doing it so.

We're mindful of it but I think we feel we feel relatively good about where we are right now so yes, we have considered that for sure.

Okay, perfect and then the other thing from a product development perspective.

Clearly if you rely on.

Technical talent.

How does kind of the talent environment been with.

Some of the capacity being being kind of sucked out of this.

Eastern Europe , and Russia in region.

Able to recruit and retain talent.

And just if you can comment on that that'd be great.

Yes.

There's definitely tight.

The market for technical talent in particular.

Out there.

One of the reasons that.

Taking a little longer to get people in.

In this environment, obviously, but we're doing it so I think that's going to be.

Continuous.

It is on a project to make sure that we are continuing to focus and get the best possible talent and get them into the company and get them, helping us to execute the vision I will say on the flip side.

<unk> seen some excellent excellent talent come to the company over the past few quarters, some from even our competitors or our clients you see the progress that we're making and the brand that we're establishing in a lot of these very prestigious end markets that is very attractive.

And so folks are having a lot of success, joining us and I think that's going to help us even in a tight market, but it's something that we've got to pay attention to.

Alright, perfect and if I could just slip one.

<unk>.

Just given some of the valuations coming in.

Are you.

Kind of looking at sort of the opportunity for M&A.

It's not like a big priority now.

Well I would say look we're always looking at.

It's part of our.

It's one of the drivers of our business over time as John said and you can see no but.

In a market like this it's kind of an interesting one.

To do it to do deals I would think but we are always looking and I would say there is nothing in particular here that debt.

Sure.

That we would talk about but it's always part of the program to keep looking.

Perfect. Thank you very much.

And our next question coming from the line of Terry Tillman with two Securities. Your line is open.

Hey, Tim this is kind of our basketball on for Terry. Thanks for taking my questions first one here. So you've mentioned that you are seeing some solid momentum with thought with new logos I'm. Just curious if theres been any shift in terms of maybe where you might be landing within the client organization.

As you gain traction you kind of do you kind of find yourself speaking more with senior management at client companies that start to realize the importance of.

Cloud transition to an enterprise scale.

Okay.

Yes. Thanks Connor it is true we are as we grow and grow within many of the clients that we're working with increasingly talking with more senior people inside the organization who view.

The cloud transformation as an important component of an overall strategy of modernization for their firms that has several benefits they want to become more efficient.

And the current generations of people coming into these firms want to work in a modern cloud enabled way and so there is sort of macro trends there that are driving these folks too.

Continue to see this as a strategic <unk>.

Decision to modernize the firm and execute the digital transformation program. So at all sizes of firm from the smaller ones. The midsize ones. So the larger ones. We are moving up in the audiences that we're calling on.

<unk>.

To talk to people, who have more of a strategic view.

I guess one of the reasons why we have some some confidence that this is actually a meaningful trend.

Over the long term that these firms are just going to have to get with the times and get systems that help them to compete and create the right environment for their people.

Got it appreciate the color there maybe just one quick follow up so as you've been adding more head count to support and client success teams. All kinds of use cases are you seeing as a result of maybe stronger client relationships and maybe how have your investments here helped to accelerate expansion. Obviously, you can show your value faster and grow more quickly.

Thank you guys.

Yes. Thank you so we are.

Growing our client success and support teams as well as our services group as well as our account management group, we have been doing that consistently each quarter as we've grown the business.

Part of our account expansion land and expand strategy. So specifically, we're seeing opportunities in relationship intelligence. We're seeing this expansion in the real estate area came directly from this kind of conversation with some of our.

Multi strategy private capital firms that needed help with their real estate.

Organic.

Land and expand momentum inside of our business based on the operating model of how we engage with folks. The team has just done a tremendous job.

Yeah.

Perfect I appreciate the color. Thanks.

Thank you.

Okay.

And as a reminder to ask a question. Please press star one our next question coming from the line of Brian Schwartz with Oppenheimer. Your line is open yes.

Yes, hi, Thanks for taking my questions. This afternoon, John I was wondering if you could just give us an update provide any color on what you are saying in terms of the demand activity, maybe the pipeline momentum in your international markets. You did talk about some real nice customer wins in your introductory comment but can.

Can you shed any light into kind of what youre seeing in terms of the customer discussions on the pipeline momentum in your international business and then I have a follow up for Steve.

Great. Thanks, Brian Yes.

As you all.

Recall the company does about 30%.

Of its business outside North America, and we've been consistently growing originally we started off in places like the U K and Australia, but we've been consistently growing in continental Europe , and the Middle East and Africa and Asia.

And we've been adding clients in each of those areas and growing the.

Clients that we've won in each of those areas in a very similar pattern to what we started doing.

In the United States and North America. So the international program as is an important aspect to our growth strategy.

Meaningful pillar for keeping our growth rate up it's growing about.

At the same rate as the rest of the business. So it's kind of in line.

As we continue to grow.

But it's a great opportunity.

We wanted to highlight some of that is some of those examples.

I guess the question is how do you how do you feel in terms of the.

Services capacity being able to implement all of these new customers on a timely fashion fashion versus.

Having to outsource more of that network. Thanks, Yes, yes, no I think we feel pretty good about our capacity over time, and we are hiring steadily and regularly.

To keep pace with the growth in the business and then this is the growth in the services business.

This may be have been a little bit temporary for here right now we had.

Some some reasons to sort of do a little more subcontracted than we might normally do this particular quarter.

But I don't expect Thats, a permanent thing at all so.

I'm pretty comfortable with our capacity it's not.

All of that hard to get the services people, we need in but we have to keep at it as John said, it's a tight market.

Thank you for taking my questions.

Thank you and I'm showing no further questions at this time I would now like to turn the call back over to Mr. John Hall for any closing remarks.

Yeah.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

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