Q1 2023 Sprinklr Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Sprinklers first quarter fiscal year 2023 earnings conference call. At this time, all participants are in a listen only mode.
After the Speakers' remarks, there will be a question and answer session. Please limit your questions to one so we will have time to go through all the questions. Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today, Mr. Eric Crowe Vice President President of Finance for introduction remarks. Please go ahead Eric.
Thank you Shirley and welcome everyone to sprinklers first quarter fiscal year 2023 earnings call. Joining us today are Roger Thomas Sprinklers, founder and CEO and many Saturday Sprinklers, Chief Financial Officer, We issued our eight our earnings release, a short time ago filing the associated 8-K with the SEC.
We've made that available on the Investor Relations section of our website, along with the supplementary investor presentation.
With that let me turn the call over to Rajiv.
Thank you, Eric and Hello, everyone. Thank you for joining us today as we shared the results of the first quarter in FY 'twenty three I'll get us started with highlights, including what I'm hearing from customers in some of our key wins my niche will then share details of our financial results I am very pleased to report that Q1 was.
Another strong quarter that exceeded guidance Q1, total revenue grew 31% year over year to $145 million and subscription revenue climbed to $127 3 million, an increase of 32% year over year.
Coming off a strong finish that far.
To our FY 'twenty. Two this is now our third straight quarter delivering more than 30% in total revenue growth.
We continue to believe that there is a durable long term growth opportunity for sprinkler to lead the unified customer experience management category that we believe is still just getting started.
Before diving into details, let me take a moment to welcome our new CMO Betabia Raman to spring.
As you saw in our announcement in May our own joins us from fresh works, where he served as the chief growth officer of the company. He brings extensive experience in marketing hyper growth SaaS companies and we're excited about its ability to position sprinkler for our next phase of growth.
In Q1, I had the privilege and opportunity to sit down face to face with over 105 top customers and over 75, five top customer facing sprinkler right. The message. We are hearing is remarkably consistent again large global companies are all full.
Because on creating great customer experiences across channels, but in today's environment. They are also trying to reduce cost mitigate risk and convert legacy cost centers two profit centers.
Marketing and care has evolved dramatically in a short period of time.
We're seeing the volume of customer interaction shift to new channels like live chat and messaging like never before customers.
Customers are demanding personalize human interactions across what used to be siloed internal departments, and that's what a unifying customer facing platform that can bring functions together from character marketing can do.
With an AI powered architecture behind.
We are starting to see brands move from move their customer care to sprinkler, because our vision for customer service is different from that of traditional care vendors, they're buying into our vision that care can be proactive care can be omnichannel and care can be unified across.
And it can and it should transition from a cost center to potentially a profit center, but also buying into our vision that everything start by listening to the customer first not just episodically with the survey, but in real time customers are using customer.
You're using sprinkler are now able to understand what their customers like and dislike and what they want and they don't want and they're now using this information to make products better optimize their marketing content and campaigns reduce the number of customer service calls they get and get an early warning and.
Show crises and to do all of that in our consumer privacy first secure and compliant enterprise platform.
As we look across our customer base and annualize what they're doing with our platform. We're now able to see revenue generating cost, reducing and risk mitigating solutions emerged.
Consistently in every industry from some technology to financial services and that makes a sprinkler and increasingly business critical part of many of our customers Global Santa FES I T architecture.
Now share with you some exciting innovation across our product suite, along with some customer wins and why they chose frankly as a reminder, we have full product suites that support brands major customer facing functions and they are customer care.
Research and engagement and sales and marketing and advertising suites, each of which has significant revenue scale. Currently in modern care. We enhanced several of the key features this quarter, our improved knowledge base capability now allow customers to find quick Kansas before <unk>.
Beijing with a live agent or improve guided workflows enable newer agents to be as productive as the top agents by simplifying the entire troubleshooting process with easy step by step process flows and our advanced contact Center intelligence now has real time speech analytics.
In depth insights and a single source of truth for understanding sees that sentiment and escalations for complete performance visibility.
Customers want to modernize their contact centers with AI and they want to convert them into proactive and potentially revenue generating customer expedient centers. These are some of the reasons, we secured exciting wins in our customer care product suite this quarter with new customers like Mercedes Benz.
And aromatics and had expansions with existing customers like Applebees and star hubs and Grupo Bimbo.
She was group have been but it's an example of one of the largest food companies in the world that's headquartered in Mexico City.
Grupo Bimbo currently use all our full product suite.
Having implemented social engagement and failed first modern research and then modern marketing and advertising originally when they got started our AI was helping them gain powerful insights into organic and paid AD performance and was giving them competitive insights on more than 400.
There are competitors in Q1, they expanded into our modern care suite with our <unk> solution to and they did that to improve agent productivity to unify customer experiences across digital channels and to deliver a more proactive care to customers as they themselves can.
To expand across Latin America in Mexico, Colombia, Chile, and Peru in line with our stated strategy of innovating and expanding with partners. In Q1, we also announced integrations with Amazon and Twilio, enabling customers of those great companies to take advantage of.
Our modern care suite.
In modern research, we launch conversation inside the ability to cluster conversations from public digital data, that's legally available using AI and to surface brand inside that otherwise may never have been discovered customers like pepsico or use.
Our conversation insights to inform strategies like sustainable packaging, we also announced enhancements in our media monitoring and analytics module, including new premium data partners like in L. A media axes and financial times conversation insides help.
We are in corporate communication leaders to better understand their digital audience in real time, and it allows them to optimize their messaging, we help them and other market is to facilitate data driven decisions across organic paid and advocacy marketing across the suite we had several.
<unk> in Q1 with customers like Dr. G O and Cody.
In our social engagement and sales suite, we announced an official partnership with in the old new ticked off content marketing specialty sprinkler is now the only tick tock marketing partner with a platform capable of helping marketers manage and execute and optimize both.
Organic and paid content campaigns on ticked up we also further extended the portfolio of modern channels.
So customers can now monitor engage and grow their communities on discord, which supports voice video and text with a 150 million active users are channeled relationships and differentiated features like customizable reporting cross silo works.
Flows and cross channel customer conversations or what helped us secure new customers like Acos and expand with brands like cross country might gauge exco Nobel this quarter.
And finally in our marketing and advertising suite, we launched our proprietary creative performance framework by leveraging AI, our customers can now identify and easily build and duplicate creative assets across channels. We also invested in dynamic image templates, which allow.
How customers use system generated insights to automatically built several versions of content without investing additional truck production dollars in marketing and advertising. We saw continued momentum with brands like U B S you'd be solved gartman transunion and Puma.
These customers and others to sprinkler for our ability to unify workflows across global teams and optimize paid social media performance across channels using artificial intelligence.
Our unmatched pace of innovation is at the core of our ability to win new customers. In Q1, we released approximately 600, new and unique platform features based on customer requests and added new language options in our AI studio, allowing organization.
To participate and expand their global listening capabilities. We also added new conversational AI integration.
Demonstrating up pop platforms openness and extensibility.
Our self service products that we launch a few quarters ago are seeing great momentum as well modern care light, which is a newer one and modern research light products continued to drive trials and generate demand for the broader platform.
When we founded spring weather in 2009, we knew the world would eventually need a unifying platform and operating system to manage the extended digital AD for every customer facing team and that is what we've been building and that's what we will continue to build as I reflect on our upcoming.
Coming one year anniversary as a public company and it's almost a year now I think about the unique 13 year advantage, we have in helping brands listen to reach and engage customers on the ever expanding channels of their choice.
We've also innovated and grown with our customers providing them with a different path to deliver the next generation of digital customer facing functions. One that doesn't just let them catch up to the present, but also future proof them in our rapidly changing world with that.
Let me now turn the call over to the niche.
Thank you Roger and good afternoon, everyone.
As you heard from Rajiv, we delivered another strong quarter across the board and are pleased with our ability to once again exceed expectations across all key financial metrics.
In spite of a challenging macro environment, our ability to deliver strong results demonstrates the long term tailwind from our customers transforming their digital edge, the breadth of our product offering and the importance of our unified <unk> platform.
For the first quarter total revenue was 145 million per.
Or do you, 1% year over year and above our previously announced guidance range of 140 million to $142 million.
This was driven by subscription revenue of $127 3 million, which grew 32% year over year.
<unk> was also above our previously announced guidance range of 123 million to $125 million.
Q1 marked the fifth consecutive quarter of accelerating revenue growth for our subscription business.
I'm also happy to report that our subscription revenue base net dollar expansion rate in the first quarter was 123%. This metric continues to grow and demonstrates our ability to upsell and cross sell our extensive product set to our installed base of mid and large enterprise customers.
And we now have 90 customers contributing $1 million or more in subscription revenue over the preceding 12 months, which is a 30% increase year over year.
This momentum speaks to the strategic value that our platform creates for the world's largest and most valuable brands.
As a reminder, we calculate this customer count using $1 million and recognize revenue from these customers for the duration of the 12 months as opposed to at all.
Turning to gross margins for the first quarter on a non-GAAP basis, our subscription gross margin improved further to 81% as we continued to drive efficiencies in our cloud operations, leading to a total non-GAAP gross margin of 72%.
Professional services gross margin came in at approximately 10% consistent with the last few quarters.
In terms of our operating expenses, we continue to invest in growing our sales and marketing capabilities to adapt the market opportunity in front of us.
As Roger alluded to earlier, we are excited to welcome Aaron as our new CMO and we will be working with him to further energized and streamline our go to market initiatives.
During the first quarter total non-GAAP operating expenses increased 41% over the prior year to $115 million, representing 79% of revenue up from 73% of revenue during the same period last year.
As you may recall on the last call. We said that this level of investment was partly the result of catch up investments from prior years due to the unknown impact of Covid at that time.
That level of catch up investment is nearing its end and we estimate the magnitude of the year over year increase in non-GAAP operating expenses to decelerate in the coming quarters.
non-GAAP operating loss was $10 3 million or five cents per share.
Recall, our previously announced guidance range with an operating loss of 14 million to $16 million or 676 cents per share to seven cents per share.
This is important to highlight for two main reasons firstly the <unk>.
Top line beat a $4 million at the midpoint drop entirely to the bottom line demonstrating our ability to run an efficient operation as we scale. The business secondly, non-GAAP operating losses have been on a declining trajectory for the last few quarters, highlighting our renewed focus on operating discipline across.
The business.
As we've indicated since the IPO, we believe the market for CSM is expensive and investing in the platform is the best way to maximize the opportunity and drive long term value for our shareholders.
However, I want to stress that we closely monitor the returns we get on these investments and if those returns the grade we will pare back our level of investment accordingly.
To that end I'm very pleased to report that in terms of free cash flow, we generated a positive $6 2 million and adjusted free cash flow during the first quarter compared to a burn of $12 6 million in the same period last year.
The adjusted free cash flow metric excludes the 12 million litigation settlement that was accrued for in Q4, FY 'twenty two but paid in the first quarter of FY 'twenty three.
This litigation settlement was a onetime nonrecurring items and therefore excluded from the free cash flow calculations.
The positive adjusted free cash flow in Q1 was driven by the strong billings number posted in Q4, FY 'twenty two coupled with the operational improvements we've been making throughout our business.
Given the seasonality and low duration of our billings, we estimate that free cash flow will remain negative on a full year basis for FY 'twenty three.
However, we remain committed to getting to a free cash flow breakeven level during FY 'twenty four as indicated on our Q4 FY 'twenty two earnings call.
We ended the quarter with a healthy balance sheet, including $531 million in cash and investments putting us in excellent shape to continue investing in strategic initiatives that will drive growth with an eye towards profitability.
Calculated billings for the first quarter were $138 7 million.
Which was an increase of 27% year over year.
The dynamics of our billings trends as outlined on the fourth quarter earnings call continue to hold true specifically as it pertains to seasonality and duration.
And as noted previously we expect the delta between revenue growth and billings growth with billings growth lagging revenue growth by approximately five percentage, assuming all else stays the same.
As of the end of Q1 total remaining performance obligations or RP O, which represents revenue from committed customer contract that has not yet been recognized was 585 8 million up 34% compared to the same period last year.
Current RP O was 412 point.
5 million up 30% year over year.
Both metrics attached to the durability of our business.
We continue to believe that subscription revenue subscription revenue growth <unk> and RVO growth represents the best metrics to evaluate the underlying health of our business.
Our billings can fluctuate significantly relative to revenue based on the timing of invoicing cadence of renewals and the duration of customer contracts.
Moving now to our Q2 and full year, FY 'twenty three guidance and business outlook.
I had alluded to this during the Q4 FY 'twenty two earnings call and it is probably worth repeating here that we face tougher compares for the remainder of this year given the strong growth we demonstrated over the last three quarters of FY 'twenty two.
We also recognize that macroeconomic and geopolitical issues are currently impacting businesses in global markets and as these conditions can have a near term impact on our business, we have incorporated that into our guidance.
Starting with Q2 FY 'twenty three we expect total revenue to be in the range of $146 5 million to $148 5 million, representing 24% growth year over year at the midpoint.
Within this we expect subscription revenue to be in the range of $129 5 million to $131 5 million, representing 26% growth year over year at the midpoint.
We expect our non-GAAP operating loss in the range of 11 million to $13 million and a non-GAAP net loss per share of five cents to <unk>, assuming 263 million weighted average shares outstanding.
For the full year FY 'twenty, three we're raising both our subscription and total revenue outlook for the year.
We expect expect subscription revenue to be in the range of 545 million to 546 5 million, representing 27% growth year over year at the midpoint.
We expect total revenue to be in the range of $612 million to $618 million, representing 25% growth year over year at the midpoint.
Note that the midpoint has moved up by the full amount of the Q1 beat.
In addition, the low and the low end has moved up by more than the Q1 beat and the range now has been tightened as in as we move across the arc of FY 'twenty three.
For the full year, we expect a non-GAAP operating loss in the range of 37 million to 41 million equating to a non-GAAP net loss per share of <unk> 18 cents to <unk>.
Assuming 263 million weighted average shares outstanding.
Not at the Beach.
At the midpoint for Q1 for operating loss was $4 7 million, but we are comfortable improving the full year operating loss by an additional $2 3 million for a total full year improvement of $7 million.
Again this is a continuation of our focus on operating discipline and managing the business, while still delivering a strong growth metrics.
As a quick reminder, in driving the net loss per share for modeling purposes, and $9 4 million and tax provision for the full year FY 'twenty three needs to be added to the non-GAAP operating loss ranges provided.
We booked a $2 5 million provision in Q1 as the timing of some estimated tax credits were delayed.
We estimate the tax provision to be approximately $2 5 million here in Q2 with the remaining tax provision spread across Q3 and Q4.
Moving forward, we are firmly focused on durable revenue growth.
Continued operational improvements leading to declining operating operating losses.
We estimate the quarterly non-GAAP operating losses to improve markedly in the second half of FY 'twenty three.
Lastly, I would like to thank all our employees for delivering a strong Q1 and a great start to FY 'twenty three in the midst of an uncertain macro environment and volatility in the financial markets I'm grateful for the confidence that our customers have placed in us and the dedication of our employees.
We remain focused on building a track record of successful execution with prudent operating discipline across the business and with that let's open it up for questions.
Operator.
Thank you and at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before.
Christmas Darkies again, we ask you. Please limit your questions to only one so that will have some time to go through all the questions.
One moment, please as we poll for questions.
And our first question comes from the line of pendulum pendulum Bora with J P. Morgan. Please proceed with your question.
Oh, great. Thank you for taking the questions and congrats on a good.
The start to the year I wanted to ask you about the demand environment seems like in.
In the Q2 guide kind of incorporates some kind of a buffer from potential adverse impact from the macro.
Talk about the men and women that youre seeing so far in Q2 across your various theatres globally, especially in Europe , and how would you characterize the pipeline are you seeing any change in the texture of the deal dynamics or customer conversations.
Any color would be helpful.
Great question and thank you for that let me confirm that we are not seeing any.
The shift in the demand for our product and platform. Let me clarify it by just may be giving you. An example, two weeks ago I was talking to a large.
Manufacturer, who spent about a 1 billion and a half.
Dollars between content and advertising they had deployed a marketing and advertising solution originally for media measurement and optimization on the digital side and the projected savings was $25 million, which they wanted to.
Use that to fund some other initiatives and now they are looking at we did a workshop to see how much content optimization can save them are called center products.
Are primarily deployed to get efficiency, using AI and improve agent productivity. So we attach ourselves on the cost reduction and on the revenue improvement side and traditionally its an enterprise platform selling to the largest companies in the world and you know the number of clients we have.
That pay us over $1 million in that it's gone up this quarter, that's why I like always.
We've always engaged in a business outcome and a quantified business outcome based sales approach so.
Look there are a lot of factors at play.
While we're not seeing it immediately it will not be very smart of us did not factor that in there are uncertainties.
The C suite.
The executives, we speak to all talk about uncertainties in as many food affordable and everyone talks about uncertainty and hesitation is prudent on our part to kind of model some of that.
Understood I'll stick to one and get back in the queue. Thank you.
Thank you.
Our next question comes from the line of Raimo <unk> with Barclays. Please proceed with your question.
Hi, This is Frank on for Raimo. Thanks for taking my question I wanted to ask one around your efforts vertical was the product specifically, how the steps taken here been progressing and how has this helped to minimize the time to value for new customers. Thank you.
Hey, Marc Thank you, it's almost like you read their minds.
And I told you about all the customers we met and we we've built you know we've always been proud of our 33 products in the full product suite.
As you kind of double click and now look at our customers who are paying us 708.
Digit numbers in Iraq.
What we're finding is they all have all standardize business outcome based solutions that they've implemented on the platform and so theres a big Aha that we've had and that is that's going to now drive us you'll see as early as next quarter.
Introducing a whole layer of vertical solutions, let me bring it to life with a couple of examples when we looked at the travel and hospitality industry. An example of product selling would be hey, Mr. Airlines, you should use our listening capability well, we found out when we looked at some of our top <unk>.
<unk> says, they're not using the word listening anywhere what so one of the airlines are not going to name them had implemented sprinkler was a threat detection solution would that means as an AI based listening capability looking for anyone talking about bombs or explosives of gun.
One's a y lens.
<unk> did with the name of the Airlines. So that's a great example of product waste solutions and I'm pretty sure. We'll have everybody's attention if our STR center Aes consistently talked about the tech detection package as opposed to why they should implement solution like a listening product.
Second example is that of an Oh is that of an oil company I'm you know oil companies are largely monopolies duopolies or like a few large companies in every country and continent.
We found that one of the typical use cases for large companies and big later than environment is to understand how consumer perception is shifting so if I'm a world company I wanted to know where how to adjust my policies and where.
And it's going to go and the best way to do that is to understand.
How public perception, let's say on renewable energy solar and electric vehicles are changing and how regulators are gone now shift the subsidies and that would allow them to get ahead of it and understand who is for and against.
Their specific industry in and how to get ahead of that through policies. So there's a couple of examples you will.
To start seeing us talk a lot more about solutions and my hope is that let's say a year from now you know hopefully 75% to 90% of the buying that customers do happen to the solution for level and not at the product level. It makes sense Raymond Cook has always talked to you.
Very helpful. Thank you.
Our next question comes from the line of Elizabeth border with Morgan Stanley . Please proceed with your question.
Hi, congrats on the quarter and thanks for taking the question.
Previously you had discussed some of the macro volatility coinciding with increased engagement and just renewed confidence in the platform as customers navigate the difficult environment and I wanted to ask if that trend was exacerbated our slowed over the last quarter and any color on how engagement trends.
Have occurred over the last couple of months, just given this volatility and the higher level of uncertainty seems to be that they at least a new normal for now thank you.
Yeah. Thanks for that question Elizabeth.
Like I said, we're not seeing any pronounced shifts you know we are all world is coming back to normal, but you know most of you should be experiencing what I'm experiencing.
No mild COVID-19 cases around the rice and sometimes you know what I mean, there is a procurement person out.
Or oh, the customer champion.
<unk> buyer, who is out and you know we're seeing stuff like that like I'm sure everybody is seeing.
But there's a lot more conversations about uncertainty and pulled back on that.
That that that we're hearing so we're just going to be prudent in modeling the rest of the rest of the year and one of the things we've done and like all companies I'm sure have and you know the public market is a great barometer.
What they value you know we've also under monoecious leadership, we have put a focus on our bottom line like we have never done before.
If you'll recall for most of my conversations look our goal is to build a company that that can stand the test of time across decades, and we think this is an opportunity and our goal is to pull this up to let's say 25%.
Percent plus growth company, and then put our attention to the bottom line and that then focus on efficient growth and that's what we're planning to do.
Thank you.
Our next question comes from the line of Michael turn with Wells Fargo. Please proceed with your question.
Hey, there great. Thanks, Good afternoon I appreciate you taking the question.
Obviously, the macro is top of mind for everyone. So we've been feeling that.
Couple of different types of questions that I think your perspective around would be valuable number one is just around what's discretionary versus what's necessary in terms of tax spend particularly looking at marketing focused software spend and then potential for vendor consolidation and I'm wondering if the vendor consolidation piece is something that you feel.
Sprinkler stands to benefit from given the number of product offerings you have within your portfolio and if there are any observations you can share around where you sit on that discretionary versus a central conversation I think that's also very useful from our side. Thank you.
Absolutely.
Thank you for the question Michael.
We are not.
100% of our revenue and subscription comes from.
License right, we don't there's zero consumption based models had sprinkler.
So the concept of discretionary comes from you know you know this.
Our budgets are fairly fixed.
They're not nobody's, creating new budgets for Raj. So it comes from marketing Tech and AD Tech and care Tech.
The budgets that are consistent and what were seeing everybody do so we're not in we don't we're not seeing and we are not in the discretionary pool for anything and what we're seeing is everybody wants to make that dollar work harder and as you mentioned unifying point.
<unk> into our platform consolidating vendors and not just consolidating vendors.
On contract, but unifying a true need so that they are reducing the.
The need for more human capital right.
We're seeing that as a trend that we're seeing on the.
We're on the right side of that movement in the <unk> is fairly resilient and durable and we see ourselves as a cost reduce if we see ourselves as a risk mitigated we see ourselves as a revenue generator right with conversational Commerce. If you look at financial services, it's a pretty important industry for us.
You know.
I was talking to the Chief compliance officer of one of the larger.
Financial services companies and they're.
They are now paying hundreds of millions of dollars in fines because investment advisors are jumping out into a whatsapp channel to talk to customers. So you know we were on the right side of that movement.
In in the short medium and long term.
Thank you.
Our next question comes from the line of Michael <unk> with Keybanc. Please proceed with your question.
Hey, guys.
Congrats on the continued acceleration in subscription, especially.
I Wonder if Rajiv you pointed to diminish.
Having focused a bit more on the bottom line. So <unk> can you walk through.
Exactly where you've had the most incremental investments in the last year, where there will be the biggest change in other words.
We should see the most operating leverage.
Longer lines, and if possible more specifically.
The lines and whether or not all of that is going to actually lead to just a quarter of free cash flow in fiscal 'twenty four before earlier on the path to say positive full year and 25.
Yeah. Thank you for the question so.
I think as I said in my prepared remarks, some of the investments we've been making in FY 'twenty to really a catch up from a year and a half of Covid and we felt given the investments we've already made in the business.
One term of investments going forward ought to be on a sort of a declining trend given the investments already made.
As it relates to operating discipline across the business. This is looking at a variety of things there.
Not one thing in particular, all the way from where we spend our incremental dollars to the pace of hiring to any number of other investments that we make to grow the business and again to be very clear. We are looking to deliver durable growth and as Roger said earlier thats sort of in the 25 to <unk>.
80% zone, what we're trying to do that a lot more efficiently with respect to free cash flow. So Q1, obviously benefited from the strong billings number in Q4 of last year, but on top of that given all of the operational improvements you are making you got a benefit here in Q1.
Given where we sit and again no different than what I've said.
In the last call.
We would probably wouldn't be able to deliver a positive number for the full year, but feel very confident we can do that for FY 'twenty four.
It's a little too early for me to comment in terms of when in FY 'twenty four we will see how the business progresses. During the arc of this year and we can obviously provide more color commentary as we get towards the end of the year.
I'm sorry.
Yes, I don't know if this I hope is not a second question just a clarification. So are you saying.
I don't think Youre, saying full year of positive free cash flow fiscal 'twenty are you or just at some point.
I'm right now, saying at some point and we will provide more color as we get towards the end of this year.
Thanks.
Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question.
Yeah, Hi, Thanks for taking the question Rajeev I'm wondering if you could hit a little bit more on the rise of Tech talk just how the brands youre working with or thinking about that channel across the four key pillars of the platform is there any one area, particularly maybe marketing and advertising that they see the most immediate opportunity and what do you think the future holds there for businesses over the next few years.
<unk>.
Hum Great question Parker, So I can confirm that we're seeing.
Increasing interest from our marketing and advertising costs.
Customer base on using the platform and taking advantage of it.
So that's exciting and as you know that there are other platforms that are innovating on short form video.
And the features are becoming a little more.
And in other channels.
In terms of I think it's still early.
And as you know, we support 36 channels and we're fairly channel agnostic and with a license model to more of a.
AI driven optimization workflow governance layer right, when you're thinking about the marketing and advertising side of our business.
We I think over time, we keep thinking like man, we got too many accounts, we don't need any one.
And there's more coming in and we're learning more about ourselves.
And so I'm excited about what the future holds and you know look I think there's a there are most people may may believe that matter worse has fallen out the E. R. We are world, whether it's Florida and out or a little sooner than that I think that could potentially.
<unk> introduced another whole world.
For the next level of the Internet. So we have built the foundation of a platform that can scale across channels across to your innovation and the and the infrastructure. The unified architecture architecture, we've created for everything from care to marketing and insights kind of service really well.
Got it I appreciate the feedback thank you.
Okay.
And our next question comes from the line of Pat <unk>.
Ravens with JMP group. Please proceed with your question.
Oh, great. Thank you, so Raj and loves that you spoke to a 100 customers I don't know how you did that because it's fabulous.
I'm guessing you are continuing to do it we're already halfway through your second quarter.
How does it feel compared to Q1, so far.
Uh huh.
How to do it to stay on our plate in for 40 days.
Well I'm, hoping it wasn't all over zoom I'm delighted to hear it.
No my friend No my friend Yeah. It was it was amazing feat theres no substitute for face to face right. He the emotions don't fully copy over video.
Look I I am more pumped up.
Ever ever was and you know we touched a little bit on vertical solutions, you'll look at that business any way you want to slice. It the fundamentals are super healthy you you talk.
Talk about the N D E. That's been going up you can talk about retention rates and renewal rates, which.
We see is going up.
Kind of enterprise class levels, and it's clear that our customers are buying more and the good ones to buy more and and renewing more and so we just have to having built this expansive platform. It was just about looking at how they are using us and taking taking generalizing for each industry. So we're.
We're pretty pumped up about that I can tell you the enthusiasm that we're seeing in the marketplace man it's.
It's it's it's a I mean, you know the early days of social where we got the wave and the tailwind I'm beginning to kind of CD. The early excitement when we start talking about how do you convert.
12 data center.
Contact center operations into potentially something that's going to help you with sales and and do these concept there early but.
A lot of customer service leaders, who don't want to be really gauge it as a cost center and the back office and who think that when customers call. You you could reinvent the next generation of real World stool right. They walk in and they could ask you any kind of question. So we're building this headless ability with our bots and without conversational AI and then.
Operating system to be able to do that so luca.
More excited than I ever was and we still think it's very early.
Okay. That's great. Thank you.
Uh huh.
Yeah.
Our next question comes from the line of Tyler Radke with Citi. Please proceed with your question.
Hi, This is Billy on Kim on for Tyler Radke. Thank you. So much for taking my question European growth was very nice so I wasn't sure. If there was at all a difference in the growth rate in the U S versus international which is primarily western Europe and any different dynamics that you're seeing across the region.
Thanks.
Oh I am like I said before we end I know, we got the same question last quarter.
We run the right side of that cost savings and optimization revenue and we're not seeing.
The impact in Europe invest in Europe , Manish, you want to comment on the no I'd agree with Rajiv.
I'm in CRP of growth was up 30% if I look at the booking trends in the quarter across the three regions and nothing that would jump out at me as being out of the ordinary so we're definitely not seeing any slowdown in Europe and some other companies have alluded to and I think.
So all points to the tailwind does that argue said in his opening remarks.
Okay.
Thank you.
And our next question comes from the line of Arjun Bhatia.
Yeah with William Blair. Please proceed with your question.
Perfect. Thanks for taking the question maybe one for you when you talk about incorporating some of the perceived macro risks.
And to your guidance.
I was wondering if you could just maybe elaborate a little bit until which factors you're sensitizing Mars or just longer deal cycles do you see potential for forgone salary.
Customer oriented and then for Rajeev I'm curious how you think about your go to market playbook now that you are in a more subtle phase with the with the sales organization do you make any changes into the areas that you're focusing on whether its vertical specific whether it's <unk>.
<unk> or how much you focus on new versus expansion activity. Thank you.
Okay. So let me take the go to market first and maybe Manish can answer.
The part that debt that we're modeling in.
In terms of origin, you remember that in the last year or two we did make several go to market.
Upgrades, if you will which are just normal for the size and scale and growth of the business right, establishing a large global accounts program large enterprise and enterprise program, because all our customers. So large right. So we had to kind of trifurcate at the top.
Laying the foundation for the self service product for the out years. So all of that all those changes have been made and we're now too.
It seems it's about capacity and productivity. So I think what you saw us invest in which lay the foundation for capacity expansion and modeling.
And then what you're going to see US now is with vertical ization and the changes we were making is set the foundation for productivity optimization and and we also need it like.
1200 implementation 10, five years, and you know 90 customers paying us over a million two to kind of find enough patterns.
So we you will see us focus on on productivity more than we did and I think the capacity the angle is kind of fairly sorted out now.
Terms of modeling it look I think Manish would say two to every one of his peers at sprinkler say look I want to keep an eye on what we are spending and Fedex that caution that money's has is something that many expects other cfos have.
So that when did you want to comment on it I think that's it that's exactly right so to be to be abundantly clear, we're not seeing any slowdown in demand yet.
Not seeing anything untoward happened in terms of bookings.
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But as Roger was saying.
There are folks like me, who get paid to worry all the time and.
There is a part of me that is concerned.
They might try to pull back on spend here and there and that would lead to lengthening sales cycles that could lead to a number of other things that would slow down in business, but again, we aren't seeing that yet.
That's our current view and Thats whats baked into the guide.
Understood. Thank you very much and congrats on a good quarter guys.
Thank you Archie.
And we have reached the end of the question and answer session and I'll now turn the call back over to Rajiv Thomas for closing remarks.
Thank you Shirley and thank you for all of you who joined the call today I would also like to thank our employees you know theres a lot of things going on in the world with.
With inflation in Ukraine, and Covid and.
A lot of stuff right, that's very and is impacting every one of us and so I want to especially thank our employees for four are put into head up in.
And working through this and I want to thank our partners and you know and and mostly most of all I want to thank our customers for their business and their continued confidence with US we look forward to updating all of you again as we continue on this exciting journey of creating a new category that we call unified CX.
And the best I'm sure if you have to come thank you much.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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