Q1 2023 UiPath Inc Earnings Call
Greetings and welcome to the you Ipass first quarter 2023 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Note that this conference is being recorded.
I would now like to turn the conference over to your host Kelsey Turcotte Senior Vice President of Investor Relations for U Ipass Kelsey you may begin.
Good afternoon, and thank you for joining us today to review U Ipass first quarter fiscal 2023 financial results, which we announced in our earnings press release issued after the close of the market today on the call with me are Daniel DNS, you Ipass co founder and co Chief Executive Officer, Rob Enslin co chief.
Executive Officer, and ashamed Gupta, Chief Financial Officer, We will open with prepared remarks, followed by a Q&A session.
Earnings press release and financial supplemental materials are posted on the you Ipass Investor Relations website IR Dot you AIPAC Dot com. These materials include GAAP to non-GAAP reconciliation, we will be discussing non-GAAP metrics on today's call. This afternoon's call includes forward looking statements about the impact of fed ramp authorization.
Our ability to drive growth and operational efficiency and our financial guidance for the second fiscal quarter and fiscal year end 2023 actual results may differ materially from those expressed in the forward looking statements due to many factors and therefore investors should not place undue reliance on these statements for a discussion of the material risks and.
That could affect our actual results. Please refer to our annual report on Form 10-K for the fiscal year ended January 31st 2022, and our other reports filed with the SEC, including our quarterly report on Form 10-Q for the quarterly period ended April 32022 to be filed with the SEC.
Looking statements made on this call reflect our views as of today, we undertake no obligation to update them.
I would like to highlight that this webcast is being accompanied by site, we will post the slides and a copy of our prepared comments to our Investor Relations website immediately following the conclusion of this call before the current nichol over to Daniel I'd like to inform you we will be holding our 2022 investor day during our forward five user conference on Tuesday September .
27th at the Venetian Hotel in Las Vegas, starting at noon Pacific time, Please save the date invitations with registration information will be forthcoming now I'd like to hand, the call over to Daniel.
Yeah.
Thank you Kelsey and good afternoon, everyone.
Thank you for joining us.
I'd like to start by thanking the UA bus team for their hard work and their dedication to our customers during the storm will impart.
I am pleased that first quarter results exceeded expectations.
We reported <unk> of 977, maybe $1, which grew 50% year over year.
Net new add on it was $52 million net of $515 million due to Russian sanctions.
When we provided the guidance in late March we knew it wouldn't be a choppy quarter, particularly in Europe , given the ongoing geopolitical situation and macroeconomic environment.
At the same time, both prospects and existing accounts tell us that automation is a long term solution to this kind of volatility, which leaves us very optimistic about the business long term.
This year, we expect to cross the 1 billion dollar Mark in both.
Revenue and as we look ahead, we have aspirations to be multiples of the size we are today.
Which is why we have brought together a global team that his cave technology businesses of size their leadership and experience build upon our current foundation and will help drive the next chapter of sustained profitable growth.
Pat.
Yeah.
Choppy macro environments.
Lee.
Areas that can be improved.
And the team is focused on simplifying our go to market approach.
I think we've done a light went that way.
All team better market segmentation.
Sales productivity and best in class customer experience and outcomes, we will be scaling through our emerging enterprise teams, which are more cost effective while at the same time, increasing our presence with key accounts, where the expansion opportunities are significant.
We have.
I haven't had enough dedicated attention.
Chris Weber, our new Chief business Officer is already driving themes to reach higher to C level executives and instilling even better operational regroup on deal execution was reducing bureaucracy.
Organizational complexity.
Our market opportunity continues to be significant as the amount of manual work and organizations in need for agility is only increasing.
We continue to win in the market given the measurable return on investment we create for our customers and the breadth and depth of our platform.
I have never felt more confident in the leadership team there.
Directionally the company and our ability to build operating leverage while continuing to win this large market.
Turning back to the quarter.
We continue to see broad adoption across industries, ending April with more than 10330 customers, including new logos Bridgestone Americas Korea investments savings Bang Ductile, you'd then me and virtual.
Sure.
We also had great competitive wins in this quarter.
New logos like Zelle Leafs and dose Qusai, which selected the UA best platform, including the use of this suite to accelerate the time to value for new automation and UEFA integration service to combine the power of both automation and API.
It shows in a single workflow.
We now have 1574 customers that accounted for at least 100.
All of a sudden dollars even that are on an annual basis.
This includes 168 customers over $1 million in and you want a R. R.
During the quarter.
A global financial services and insurance company chose to standardize on our entire platform was phasing out a competitor.
We are implementing automation across lines of business and plan to use document understanding are met and that suite as well as <unk>.
Jay Lop citizen development.
They have a corporate initiative to remove $100 million in cost by 2025 and see automation is instrumental in achieving the goal.
We consistently hear from customers that our end to end platform focused on innovation and vision for the future of automation are important differentiators for you wipe off and keep to winning in the market.
The recent Forrester RPI inquiries sports like 2022 between February 2020 in December 2021.
Forrester analyst, where do you see the most inquiries the boat you a path to point several times. The next window was 72% of total conversations we're focused on automation platforms.
We continue to deliver on our promise to make glass full deployment easier faster and simpler with the introduction of $22 four or most recent platform release.
Few highlights include.
General availability of automation cloud robots with two source offerings.
A Vietnam automation cloud robot created on demand in automation cloud, providing unattended robots.
Server list automation cloud robots.
All of robots that we run selected automation drops on demand.
Expanded integration options in our integration service.
Controls' and templates to streamline development news citizen developers access to AI powered tools like forms AI document understanding and test capture.
Security and compliance upgrades that include every UA puffs service not in scope for Sop to an automation cloud she bought the station and support for Max expansion in the ready to grow attended automation and support for all running workflows.
And Linux.
During the quarter, we also announced automation cloud public sector achieved factor them in process Staples.
So I have the ramp Authorisation will increase our addressable market in the federal space, where we already have a meaningful presence.
All of this points to the considerable momentum that continues to build in our cloud business, which continues to be in hyper growth with cloud there are more than doubling year over year.
And to provide customers with more flexibility. We recently introduced a new pricing model that allows for world migration between on Prem on Clos.
Cloud customer case study.
Is global Health care exchange, which started its automation Jordan.
Automation Claude.
During this past quarter, they expanded with multiyear road map to apply automation to address more complex business problems labor.
Bridging document understanding for large scale document conversion.
Our computer vision, two source images reliably from vendor websites.
Rolling out our new citizen development program to accelerate in tours know adoption.
We also continue to expand our partner ecosystem, making automation easier.
As both go to market them technical partners help customers deploy automation as quickly.
Realized fast time to value.
On the go to market side partners like NCS, both deploying our platform internally as well as leveraging it to generate revenue and better serve their customers.
Our leading technology services for them in Asia Pacific.
N C S expects to deploy hundreds of automation within their organization and to create a UA buff automation practice focused on the delivery of the fully automated enterprise to their customers.
From a technical perspective, we announced integrations with.
Adobe's document services and Adobe acrobat sign to help customers automate end to end document processes to drive productivity and scale in a secure manner.
Mind shift.
A leading provider of automated prior authorization and real time medical benefits check technology to enable better patient care fostered by reducing menu operational tasks and introducing significant operational efficiencies.
And air slate fast growing workflow automation company to empower individuals and small businesses to create innovate automate to digitally transform their organizations to run faster easier and more efficiently.
Before I turn the call over to assume I like to welcome our new co CEO , Rob Enslin well.
When I met her up I knew that he would be the right partner to help me lead you Ipass.
His roots were in development that S. C P.
She went on to a series of increasingly senior executive roles.
Based on his ability to build on our lead organizations his operational skills and commitment to customers.
Most recently as president of Google Cloud.
Let the team of several thousand employees that drove considerable growth upscale.
With his experience and skills are important it's drops personality and his passion for the power of automation, which are great fits for you ipass.
Does the call over to Rob for a few minutes to share his perspective.
Thanks Danielle.
It's exciting to be on the first of many earnings calls at your iPad.
Just over two weeks since I formally join but I've been watching the company for some time.
I've studied your iPad platform market opportunity and competitive moat and I'm convinced that in automation AI and ml space.
Yeah, I've path will be a leader at all companies will embrace overtime.
I've also been impressed by Daniel's focus on culture.
Which is the intangible that can create success undermine potential.
We have the opportunity to build a company that not I need to live as disruptive technology to our customers, but it's also define but how we develop and empower employees care for our communities and give back to our society.
Spent my early days being what you would expect meeting the team and some of our customers.
And starting to form my view on where I can have the most impact.
We have a powerful financial model and at the scale, we can drive both growth and operational efficiency I look forward to digging deeper into the business and meeting many of you over the coming months.
I will turn it back to Daniel.
Thanks, Rob.
I'll turn the call over to assume to talk in more detail about our first quarter results and provide guidance.
Thank you Daniel I also want to welcome Rob to the team before I get started please note that unless otherwise indicated I will be discussing results on a non-GAAP basis, and all growth rates are year over year.
We ended the first quarter with total <unk> of $977 $1 million up 50% driven by net new <unk> of $51 $8 million.
On a year over year basis, FX created an approximately $5 million headwind in the quarter, and we wrote down $5 5 million and <unk> as a result of Russian sanctions.
Our dollar based net retention rate of 138% for the quarter reflects the write down of Russia <unk> net.
Net of the Russia impact dollar based net retention rate was 139% dollar base gross retention rate was 98%.
First quarter revenue grew 32% to $245 1 million normalizing for the year over year, FX impact, which was an approximately $14 million headwind revenue grew 39% year over year.
We are seeing the large deals that had been in our pipeline starting to take shape, including one that we closed with a customer in the health care vertical in the first quarter, which helped to drive some of our first quarter revenue upside.
First quarter remaining performance obligations increased 46% to $675 $6 million.
Normalizing for the year over year, FX impact, which is an approximately $47 million headwind RP O grew 56% year over year.
Current RPI increased 45% to $424 million total gross margin was 85%, reflecting first quarter revenue seasonality and investment in cloud infrastructure.
Software gross margin was 92% we continue to invest in services and cloud hosting as we scale our cloud business.
First quarter operating expenses of $219 $1 million increased 49% driven in part by head count additions and our annual employee Merit cycle as we reward our top talent and focus on long term employee retention.
First quarter GAAP operating loss of $116 million included $101.5 million of stock based compensation expense.
non-GAAP operating loss was $10 $9 million.
First quarter non-GAAP adjusted free cash flow was negative $53 $8 million as we mentioned on our last earnings call, we pay our annual corporate bonus and our fourth quarter sales Commission in the first quarter we.
We continue to expect non-GAAP adjusted free cash flow to be driven by normal seasonal patterns and to be neutral to slightly positive for the fiscal year.
And we have $1 $8 billion in cash cash equivalents and marketable securities and no debt.
Let me now turn to guidance.
One of your iPad strengths is our global presence, which gives us diverse perspectives and access to talent.
We price in local currency and with more than 50% of our business conducted outside North America. Our results are subject to foreign exchange volatility, we recognize the macroeconomic and geopolitical issues are impacting global markets and the strengthening of the U S. Dollar continues to create a currency headwind for our business as.
We did in March the guidance, we are providing this afternoon contemplates the current operating environment and includes an FX headwind offset by growing momentum in the business.
Please note FX commentary is the incremental headwind to the numbers we discussed at the end of March.
First for fiscal second quarter 2023, we expect air or in the range of 1.04 billion to 1.0 for $2 billion. This includes absorbing approximately $3 million FX headwind.
We expect revenue in the range of 229% to $231 million. This includes absorbing approximately $5 million FX headwind.
We expect non-GAAP operating loss to be in the range of negative 60 to negative $55 million. This includes absorbing an approximately $2 million incremental FX headwind.
And we expect second quarter basic share count to be approximately 546 million shares outstanding.
As a result of our strong first quarter, we are absorbing incremental FX headwinds and raising our full year guide for air our revenue and non-GAAP operating margin.
For <unk>, we now expect <unk> in the range of one point to $2 billion to $1 $2 billion to $5 billion. This includes absorbing an FX headwind of approximately $10 million.
Yeah.
For revenue, we now expect revenue to be in the range of 1.085 billion to $1.090 billion.
This includes absorbing an FX headwind of approximately $20 million.
For non-GAAP operating income, we now expect non-GAAP operating income to be in the range of 10 million to $15 million. This includes absorbing an FX headwind of approximately $10 million.
In summary, our pipeline continues to strengthen as some of our large deals take shape and progressed through the sales process crossing the $1 billion Mark we remain laser focused on realizing the efficiency that comes with scale to drive both short and long term operating leverage and further increase our speed agility and customer centricity.
Looking forward, we expect this combination of topline growth and bottom line efficiency to drive positive cash flow in the second half of the year.
As Kelcey mentioned, please note that we will be hosting Investor day on September 27th in Las Vegas, followed by a four to five user conference. We look forward to speaking with many of you in the coming weeks, we will now take questions and I will turn the call over to the operator operator, please poll for questions.
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One moment, please while we poll for questions.
Our first question is from Raimo <unk> with Barclays. Please proceed with your question.
Thank you and congrats from me for the quarter and Rob all the best in the new role.
The question I had is as well.
For all of you probably more she is around the deals taking shape. So do you remember the last quarter.
You were one of the first to talk about it because you kind of reported later.
And that created a lot of questions amongst investors in terms of how how how this will play out for you. If this was like you know macro as kind of people not finding deals are or people, who kind of need to think how they shape. The deals you've kind of made a couple of comments Ashish about that now can you speak a little bit more to that one you mentioned that one has kept deal, but it's a little.
More color that you can give us here. Thank you very much and congrats again.
Hey, Raimo. Thank you for the question.
The let me start first and then I'll, let the Jim will give you more color.
Look I've been in a long trip.
Before this learning schools, you rope in Asia, and I'm talking with a lot of customers. We are seeing a renewed interest for automation and that Oh, we haven't seen it also kind of a positive maturity on the big deal evolution through our pipe.
But overall the.
And this mark Grewal economical and we've put a lot of pressure on our customers to become more efficient and they are turning to automation as one of the easiest way to navigate through this murky waters she them over to I think remo. Thanks.
For the question.
Well, we talked about last quarter was there was no denying the macro volatility.
And we reiterated the fact that we werent, losing deals automation was important these deals existing in our pipeline. It was just a question of uncertainty as our customers were gripping with the new realities that we're hitting a new war inflation et cetera, where 30 60 days later than what we see is we see deals.
Progressing through our the stages of our pipeline and as Daniel said positive maturation in terms the way they take shape. So we as we look and we track deals through our pipeline and we see that movement. We we really feel we have more confidence or we've had moderated confidence on the conversion of those deals and we reflected appropriately in our guidance.
<unk>.
Okay very clear thank you.
Our next question is from Bryan Bergin with Cowen. Please proceed with your question.
Hi, good afternoon. Thank you.
Got a question for Rob says so Rob just as you step back and look at the business can you just talk about maybe one of your top one or two priorities as you think about the go to market function.
Sure.
Three weeks in so observations talking to customers I reiterate what Daniel and machine.
You I pass can play a meaningful role in these economies and I see that happening and we've got a focus on digital sales, we're going to drive digital sales, we're going to get up into the key customer accounts drive further adoption and higher customer satisfaction.
To ensure that we actually get better returns for those customers that were going to expand the ecosystem and channel the channel business.
Next question.
Please.
Thank you. Our next question is from Kirk Attorney with Evercore ISI. Please proceed with your question.
Yeah, Thanks, very much for taking the question and Rob Congrats on the New post Daniel I was wondering if you can just go a little bit deeper on some of the sort of sales changes you guys were making under Chris and I'm sure Rob is going to play a big role there just in terms of how Youre also leveraging partners to try to drive the sale of higher in the C suite and I was wonder.
How those two things are interplay with each other and what Youre seeing with partners that gives you confidence that that sort of up sell or higher level sell in the C. Suite. You know something you guys can do a lot more outs going forward. Thanks.
Sure we are.
We are looking to drive some.
Mental.
Changes in our go to market that will focus us to be more customer centric.
And we'll also with more emphasize on the emerging enterprise sector that we believe are.
Will help US you know get more new logos and the more efficient way.
I think oh.
Ooh partner strategy is to is to focus the top gsi's more on the key accounts, while we will have the long tail of partners focusing more on the emerging enterprise sector. We believe that the strategy. This new strategy will allow us.
To focus more and provide faster adoption to our key accounts, maybe Rob you also have something to add I'll just add.
I think we can be very relevant in the office of the CFO . The hit the supply chain sales leadership marketing and HR departments I think we together with the big GSI. That's we will actually have some focus because that's where they actually have they their strength is in those departments and we and our.
<unk> really add value to that so that's what we're going to focus on the big GSI and the systems integrators.
Thank you. Our next question is from Keith Weiss with Morgan Stanley . Please proceed with your question.
Excellent alright, Thank you guys for taking the question.
Nice to see that that pipeline developing better better than expected.
I guess.
Being on sort of that last question.
E.
It sounds like there is some sense of the sales we are going in my reading that correctly.
Is this a larger than typical sales reorganization and their execution risks that we should be aware of with Rob coming onboard and sort of the change that you're trying to put into place I'm just trying to make sure that we ascertain sort of the level of change and the potential risk of disruption with what you guys are doing on the sales side of the equation.
Well, we are at the scale right now where we have to prepare this company to grow consistently and efficiently into into the next stage. This is wide luxury we brought Rob increase who help us to help US you know.
Execute really well on this stage. So at this point. We are we are looking to as I said in my previous answer to them.
Be more customer centric.
K Law War emerging enterprise teams. We are looking also to globalize some function to be capable to be more consistent across the regions. So it's a balancing act between efficiency consistency and agility that we're trying to bring into our go to market we feel.
I'm on for I think that Keith I think as Daniel said, that's exactly we are focusing.
Oh.
Our next question is from Michael <unk> with Wells Fargo Securities. Please proceed with your question.
There are good afternoon, thanks for taking them taking the question I asked him in terms of the outlook and just following up on the first question around large deals I wanted to just focus in on what else changed versus last time, you've reference guiding for what you're seeing most recently so maybe if you could just expand upon any increased visibility you have now versus when you were.
We're guiding initially in March and then.
The impacts of things like cloud large deal assumptions and just want to be clear. The FX headwinds that you referenced are those incremental versus what you had called attention to and for what you think was the $20 million to $25 million in IRR, just wanna be crisper and clearer given the moving pieces here as best we can thank you, yes, no thats great great question.
When we when we sit back and we look at our guidance. We continue our guidance philosophy, We guide with what's in front of US I think you've stated that correctly. So let me start with FX is that was a theme week.
<unk> is a fat that's out there as the euro and the yen continue to depreciate and we factor that into our guidance as we provided guidance.
Our current guidance that we've provided we talked about the large deals.
You know, we just we monitor our pipeline very closely and of course, the top deals that are there and we're pleased with the momentum in the movement and I think that relates to the fact that our customers themselves are starting to get a handle in terms of navigating the environment, which takes some time to digest and in terms of what else is.
Changed I would say everything else strategically with the business remains on course, so our cloud business remains strong. We are very we're very optimistic about the customer response and the metrics around our cloud business and we one of the other areas as I think we see we continue to see opportunities for efficiencies in our company and that's why we have.
Also increased our operating margin targets for the year as we looked at as we see opportunities both in emerging enterprises as we talked about some of the sales realignment to Daniel referenced in the in the earlier comments, yeah and I just wanted to be clear. This is kelsey when you asked about FX is an incremental headwind.
The fourth quarter call.
And we also had some commentary on cloud that we expected it to be about a I think it was a 4% headwind.
As we went through the full year in that 4% is not incremental that's consistent with the first quarter with what we discussed 30 days ago.
Yeah.
Our next question is from Mark Murphy with Jpmorgan. Please proceed with your question.
Yes, thank you and I'll I'll.
I'll add my congrats so Daniel we've had a few software companies, indicating that the month of April was softer while the month of May and showed some signs of maybe getting back to normal I'm I'm curious if that aligns at all with what you Ipass.
It has experienced and are you are you optimistic that Q1 could have been perhaps the trough for how we would think about the net new <unk> growth year over year.
Well.
We knew that Q1 is going to be a choppy quarter and we have guided the accordingly.
We were seeing for the quarter.
You know a positive momentum, especially on the big deals like that are.
The deal with the health care insurance company, we closed in April 14th.
Neither a positive.
A positive news for us that gave us some data wins for the entire quarter and progress them into.
Into may we are seeing a healthy pipeline creation. So we are.
Cautiously.
So optimistic about how the business is shaping right now and Mark I would just point to our guidance I think when you look at it we guided to we guided between 63 and 65 million for a year or so I think that that kind of speaks to what we see the trajectory at this moment.
In terms of are we at a trough and this will continue to monitor and make sure that we're executing at a high pace to be able to execute in any environment, but I think our guidance speaks to kind of like where we see the trajectory right now.
Our next question is from Michael <unk> with Keybanc. Please proceed with your question.
Hey, guys, thanks, very much and it looks like a nice.
And a stabilization in the business.
On that front.
And a lot of some of the prior questions.
Comments, you made last quarter, one was about decreasing size of the deals that were in the pipeline and also some headwinds around.
Public sector business in Europe .
Those two factors trended into this quarter.
We actually were talking about the large deals and uncertainty about the size of the deals and the duration of those deals and we believe.
As we've commented this quarter those deals are taking shape there progressing through the pipeline we've.
We've adjusted our guidance to kind of reflect a moderate amount of optimism in terms of the conversion of those deals, especially in the second half.
In terms of Europe and in the public sector.
We haven't to my knowledge, we didn't make any specific comments like those are examples that Jim we were giving about anecdotes. We continue to hear anecdotes around there is pressure in Europe that I think is just understandable given the climate and the war there.
But we're pleased with the movement in our pipeline and we're also pleased with the way our sales team is executing in this environment.
Our next question is from C. D <unk> with Mizuho. Please proceed with your question.
Oh, Thanks for taking my question.
You guys talked about the new business and pipeline just wondering on the dollar based net net two tenths on site mainly from a from your existing customer. It's a it's a tam down 145% and a 139, excluding the Russia Shan impact and you guys talked about that on our Q4 call, but wondering any kind of.
Color. He can see say on that expense then in terms of your customers buying more rock robots for says buying other products like automation cloud and is there some kind of tough we'll see are down a few more quarters and that D. V N R chop.
Look I think we're pleased that we continue to be pleased with our dollar based net retention rate, it's still a leading metric when you look at peer companies at $1 38.
In terms of reported we talked about the impact of both FX and Russia. That's there in terms of customer behavior, where we continue to feel optimistic about what we're seeing more customers are embracing our platform, we see larger million dollar plus customers.
Plus customers continue to increase in number and the same in $100000 plus customer city and that really reflects continued optimism and buy around the platform and the opportunity that our customers have to continue to automate more processes.
So overall, we're pleased with kind of where we are in terms of that we added 12, new customers greater than $1 million and you know that's that's nearing 170 customers now at that rate and when you compare that year over year that shows a robust growth in terms of the adoption of our platform.
Our next question is from DJ Hynes with Canaccord. Please proceed with your question.
Hey, guys congrats on the quarter.
So I imagine time to value is a big focus in the current environment, what what kind of stuff that you're doing to help customers realize a quick return on the investment they're making in and how do you help them think about that during the sales process.
Well first of all I would like to tell you that the.
Automation has become really aboard priority.
C level suite priority for many of our customers.
I talk to customers in different industries.
Public sector. They are really turning to automation at this point so it's.
Where we are seeing really good momentum into helping them with accelerating the adoption our renewed focus on the our key accounts and pairing our gsi's to the QR codes will help with the adoption I believe that also on the emerging anthro.
Price we can have.
So big we can accelerate in a big way.
Adoption and getting of net new logos.
And.
I would like also to mention.
There are 24 release with the big focus on cloud that is Oh, sorry, moving you know some of the friction of adoption. So overall, we are seeing positive signs on the accelerating the adoption within our customer base.
Our next question is from Brad Sills with Bank of America. Please proceed with your question.
Oh, great. Thanks, guys for taking my question I wanted to I wanted to maybe double click a little bit on that.
Daniel since since you have this new release.
Do you see this as kind of an acceleration.
In that down market business, lower lower TCE O or do you see this as potentially a broader play within the large enterprise base as they kind of gradually move towards the cloud I guess, what are you hearing from customers, both large and small with regard to kind of willingness to put RPI in the cloud.
Well I think it's both.
Well, we have a certain number of very large companies and then we mentioned them in the past that switch complete before on Prem to cloud development.
But I'm very bullish right now of the opportunity on more of the mid segment. We have launch in G. In this release for the first time the hosted the robots in the cloud we call them the automation cloud robotics.
That can make you know a line of business.
We are seeing faster adoption for certain extent they are independent of.
I T into developing an automation program. So this will.
We'll speed up quite a bit the adoption into into the mid market.
So I would like to mention our new completely new live you lose function that we quote said wellness robots.
Can open you know Intel.
New use cases and.
The API into combining our P. A with a P of integration that the previously required.
Different vendors different type of technology. So overall, it's a the progress in the cloud is is going very well we have a great team just spent last week in Brazil with them very impressive.
Product with World class products. They built it's it's sort of a good timing right now towards the mid market.
Our next question is from Alex Zukin with Wolfe Research. Please proceed with your question.
Hey, guys. Thanks for taking the question. So I guess all of US are sitting here and we're.
I'm trying to figure out kind of I think where were the incremental confidence of stemming from is it the <unk>.
Sealing that deals that were maybe previously out of the pipeline are now back into the pipeline that are large and strategic is it that you're you've got a greater confidence in the close rates in general is that some of the initiatives that you're putting into place.
And from a sales change perspective that they're going to materialize, maybe faster than you initially anticipated because now the guide for the year on a constant currency basis for net new IRR.
It's flat.
I think it is a really positive surprise to all of us. So I think just maybe touching on where that incremental confidence in the backdrop of we're all reading the same headlines from macro perspective that that that's at least.
For me I think you know something that stands out.
So.
Alex good to hear your voice.
I think first as you know we recognize the macro.
Back early and acknowledged it I think that's really important to emphasize so in some ways. We're a step ahead in terms of how we were looking at things.
In terms of our confidence our guidance as always to guide what's in front of US. So this isn't for US just we look at our pipeline we've talked about the strength of our pipeline overall and that has been consistent with express confidence that our pipeline even in first quarter. We never felt like things were coming out of the pipeline, we just felt and uncertainty of how the how.
And the timing in which they were moving through as we look at our pipeline today. We have several we have several of those deals that we've seen movement on and the movement through a sales process gives us increased confidence of their conversion and what shape theyre, taking and that is what we've been able to reflect in our guidance.
In addition, when you just hear the sentiment from the field automation continues to be a priority at a macro level like the market is the market continues to be in our Tam continues to be feel big we've invested in our company.
In many of our areas and many of the markets. So were also we feel very good about our connection with our customer to be able to continue to execute those are the factors that led us that allow us to kind of raise our guidance and then on in terms of the bottom line.
That is a point of focus so we've crossed $1 billion and we feel like we can both grow while execute efficiency and we've reflected that in our guide as well.
I would like to add to our renewed confidence in the executive team I think robin crews everything the lots of shops tool.
Our team we are seeing really positive response from our teams.
And.
Again, I would like to mention all the discussions we've had have been not only me, but every every people you know that I mean things talking to our customers are coming in there.
But these discussions so overall it's a.
It's a it's a better environment that we were seeing two months ago.
Our next question is from Terry Tillman with Truest. Please proceed with your question.
Hey, Tim This is Connor on for Terry Thanks for taking the question.
So just for me how it sells automation tearing with internal budgets at customer companies. So maybe a greater lobbing of funds that you're seeing to invest long term into transformational automation in a choppy macro environment. Thanks.
Just from from discussions with CFO as I can tell you digital transformation is not going away. It's only accelerating them I think we're positioned well to take to be able to have our share of that digital transformation budget that is there.
With many of our customers you can just see again like our customers greater than $1 million has moved.
62% year over year, and our customers greater than $100000 is cross 1500, and is is moving 42% up year over year that speaks to the fact that budgets continue to be allocated for automation and I think in a period of labor shortage inflation, we've always felt like the secular tailwind allow for those.
Budgets to be allocated to us and we see that in the strength of our pipeline right now.
Okay.
Our next question is from Fred Meyer with Macquarie. Please proceed with your question.
Alright, Thank you and congratulations on the strong start to the year here I think we've all been asking in many different ways about the macro environment. So I'll try to ask in a slightly different one and with respect to Europe last quarter I think we talked about how.
Certainly there is some slowness that you were seeing and I wanted to ask is there a way to kind of differentiate it in terms of eastern versus Western Europe within your pipeline or within your business or just give me any context really on how kind of both segments of Europe are performing.
Well our business in a I think we we don't disclose festival on the regional level, but the.
Anecdotally I am thinking like I'm not seeing at this point the big difference between Eastern Europe , and Western Europe in terms of the deal shaping shoot me. If you want to add anything no I agree with you Danielle I think Europe is definitely the area that we've recognized and accounted for in terms of the most challenging of the environments.
But no distinction between eastern and western Besides of course, the accounting of Russia, specifically and and are on our pause on doing business in Russia.
Great next question please or.
Our next question is from Phil Winslow with Credit Suisse. Please proceed with your question.
Hey, guys. Thanks for taking my questions. Congrats on the strong start I wanted to focus in on the front end of the automation journey here, you know process mining pass mining.
<unk> capture I mean, obviously you need to you iPad to have sort of all those front end functions than feed a logged on the automation journey. What are you hearing from customers now that you've had a couple of iterations of those solutions out there more integrated.
Is the is the sort of the full suite started starting to resonate.
And differentiate you just sort of any color there would be helpful.
Hey, Phil our customers are receiving all war and two N plus four in a very positive manner and.
And.
I can tell you that our what we call growth products internally and process mining and test mining of part of our growth products.
Are really performing very well growing at much faster rate than our.
Core businesses so.
This is one data point another one is.
This white spaces or one of our core automation.
It's actually helping drive more use cases and tool into the pipeline for automation. So overall, we are seeing really positive adoption across the entire plus four.
And imports.
In particular on we made some solid progress on the on the process mining technology, we already losing.
We are releasing it in the cloud it's much more scalable.
Using a lot more connectors so our.
We're trying to address.
Even though the needs of most of our customers with what we are having in the process of discovery pillar.
Our next question is from Ari <unk> with Cleveland Research. Please proceed with your question.
Hi, Thanks for taking the question and congrats on the start to the year.
I was hoping you could provide a little bit more color on what youre seeing in the pipeline in terms of types of customers that are coming to the table either by vertical and geography, you mentioned the big health care deal in the first quarter are there any patterns that you're seeing in terms of.
Types of customers in the pipeline for the rest of the year.
From the very beginning automation is something that's relevant to every single vertical of course, our presence in the financial and the banking the banking.
Banking financial and insurance sector and health care those are our two largest areas. So I think those continue to be there, but no. We see it really across our pipeline. It's broad based rate. We have we have both local governments, we have small enterprises with large enterprises fortune 500, our pipeline continues to show strength and interest of.
<unk> and adoption across you know across our platform and across all the segments continuing.
<unk>, including <unk>.
Flanking and replacing our competitors those are deals that we also see more and more of them, especially as we have our latest releases in our product and customers are seeing the breadth of our platform. So I wouldn't say I would say no pattern that is different than history, we feel very good about it across our verticals.
With the major verticals and focus that I mentioned.
We have reached the end of the question and answer session and I will now turn the call over to management for closing remarks.
I want to thank you all very much for participating in this afternoons call. We look forward to speaking with many of you throughout the quarter. Thank you.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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