Q4 2022 eGain Corp Earnings Call
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Hello, and welcome to the eGain 2022 Fourth Quarter and Full Year Financial Results Conference Call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead. Tweep is muted of the microphone.
Thank you, operator, and good afternoon, everyone. Welcome to eGain's fiscal 2022 fourth quarter and full year financial results conference call. On the call today are eGain's chief executive officer Ashu Roy and chief financial officer Eric Smith.
Before we begin, I would like to remind everyone that during this conference call, management will make certain forward-looking statements which convey management's expectations, beliefs, plans, and objectives regarding future financial and operational performance.
Forward-looking statements are generally preceded by words such as believe, plan, and expect, anticipate, or similar expressions.
Forward-looking statements are protected by safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ in material respects.
information on various factors that could affect eGain's results, details on the company's reports filed with these..................
Securities and Exchange Commission. EGAN is making these statements as of today, September 8, 2022, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call.
In addition to GAAP results, we will discuss certain non-GAAP financial measures, such as non-GAAP operating income. The tables included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures.
Our earnings press release can be found by clicking the press releases link on the investor relations page of eGain's website at eGain.com.
Along with the earnings release, we have also posted an updated investor presentation to the investor relations page of eGain's site. And lastly, a phone replay of this conference call will be available for one week.
And now with that said, I'd like to turn the call over to EGANES CEO , Ashu Roy.
Thank you, Jim, and good afternoon, everyone.
We finished a year strong and overall we are very pleased with our progress this year.
Both our top and bottom line results were ahead of our guidance and street consensus.
So our total revenue for the year grew 17% year over year to 92 million.
and we generated good cash flow from operations over the year of over $8 million.
That was a good way to end the fiscal year for us. Looking at the last quarter, let me share some notable new wins.
The first one is a top 10 airline in the world.
and they selected eGATE knowledge as their centralized platform to empower agents across their global contact centers.
This is phase one.
In the second phase, they'll use the same knowledge assets to drive better customer self-service.
Interestingly, we are partnering with Deloitte to deliver this solution to the airline client.
The next one is a leading US-based provider of health and benefit plans.
Their challenge was similar. They were struggling with knowledge silos and it was showing up in long customer calls and repeat contacts.
So again, our knowledge hub solution is what they went with.
The third one is the
Department of Taxation for a state government in the US.
They selected eGain for
as well as the omnichannel advisor desktop capabilities.
In this case, our FedRAMP authorization was a significant factor in the selection.
The last one I want to bring out is one of the lines we won, which is a European-based message.
a leading vehicle leasing companies, and one of the biggest vehicle leasing companies in the world.
They plan to deploy the eGain Knowledge Hub as a central platform across 29 countries in 19 different languages. So the power of centralization where there is a need for multilingual and appropriate regulatory personalization, that's something which was very important for them.
Those were really good wins. Excited about those new plants and more.
So, in terms of customer expansion in the quarter, one of the notable ones was, again, a federal agency who's an existing customer.
who they have upgraded to the FedRAMP version of the eGain Knowledge Solution.
Looking back at the fiscal year,
I just want to observe that at the start of the year, we mentioned we were making a bet to scale our sales capacity.
And that's something we continue to do through the year.
And by the end of the year, so over the year, we ended up increasing our sales capacity by over 50%.
and that steady investment increase
also then ramped up improvement in our bookings and our pipeline build.
Just a few metrics to share to show our progress.
over the whole year. These metrics are tricky for quarterly...
data because they tend to vary. Over the year you can see the difference. This is something I'm sharing at this time.
Our new logo based ARR.
new logo based ARR for fiscal 22 was up 45% year over year.
In terms of pipeline
The RFP volume from Prospects
went up by over 50% year over year in fiscal 22 compared to fiscal 21.
And then.
We ended the year with
or RPO, our remaining performance application, at over $100 million.
which is again up over 50% euro a year.
So these are some relevant metrics. Of course we look at these and they tend to be a little volatile but over the year the progress is evident.
Looking at the market, we continue to see the
the big opportunity in knowledge management.
and overall customer engagement powered by knowledge.
Even with the economic slowdown leaning into this market with the current level of sales investment we have built up to.
is a good bet.
We believe in a tough market, customers will continue to invest in agent experience and also...
self-service automation.
Further, our top two verticals, that is financial services and insurance being one, and government now being the second biggest.
Together these two comprise over half of our business now.
These two verticals, we believe, should not get too negatively impacted in the market slowdown. Of course, there will be some impact. Why is a bigger bracket response coming?
So we do anticipate decision making slowdown, that's natural. So we feel it prudent for us to.
and conservatively while maintaining current levels of sales investment.
In fiscal 23, we intend to focus on driving sales productivity.
as we take a balanced view of growth and profits in the current climate.
On the product front,
A couple of interesting things in the quarter.
recently announced our eGain Knowledge Connector for Microsoft SharePoint.
As you all know probably SharePoint is the leading content management tool out there now.
And what we are seeing is increasingly our clients want to modernize their knowledge management, but at the same time they also want to federate all their legacy content from multiple SharePoint repositories. Just to give you an example, one of the clients we recently won, not in the last quarter, but a couple of quarters before that, and we are deploying and going live with a solution. They have over 60, six zero SharePoint repositories.
alongside the SharePoint install base in the end approach.
Then just yesterday we announced our connector to IBM Watson.
This leverages our bring your own bot or BYOB architecture.
We are seeing that businesses have built many bots and continue to build their specialized bots using technologies like IBM Watson. And now they want to leverage that specialized bot investment in combination with modern knowledge platform like ours.
to deliver better service.
So these connectors make it easy for them to do so.
Looking ahead.
We see businesses continuing to invest in digital transformation. So demand for our solutions, I believe, is still strong and will get stronger.
while accommodating for the economic slowdown, which is a cycle.
So a couple of things I want to highlight. One was the beginning of the year, I think we had mentioned this.
The partner had published an annual research paper early 2022.
calendar 2022, which brought out the technologies that are important for enterprises looking to improve customer service.
And then number one technology recommendation at that time to these customer service leaders for the year was to invest in knowledge management tools.
So now you fast forward that and in July , a couple of months ago, they published another Gartner estimate where it talked about the hype cycle of different technologies which they publish every year and refresh every year.
In that, the penetration of knowledge management technology for customer service, they are still under 20%.
In fact, it said it was anywhere between 5% and 20%, so definitely under 20%. And the fact that there's a big market ahead of us. At the same time, we assess that the value of this technology is high, final prices.
And their assessment on that, in that document, which we completely agree with, that the three reasons knowledge is seeing resurgence of interest in the enterprise.
The first two are more demand oriented, the third one is more capabilities of technology and solutions. The first thing is just the proliferation of number of customer contact points. That's driving a lot of inconsistency and customer frustration in service.
The second is
The world of hybrid works and...
high levels of employee attrition. Thank you for listening and have a great day.
highlighting the need for better knowledge and guidance tools for these frontline agents.
And then the third bit, which is the supply side.
Their assessment, and we are part of that solution, is that new knowledge and AI technologies are making it possible to deliver these better solutions and show the value of knowledge and guidance using AI and knowledge technologies.
These solution stories and client successes at scale, that's creating a virtuous dynamic in the market.
With our leading solutions in the space and our client successes, we believe we are well-positioned to capture market share with our key ourselves to pass through.
Before I...
hand over to Eric a couple of comments. First, applaud for our annual customer conference.
After a two year gap, we are very excited to announce eGame Solve 22. This is our annual customer conference.
We will be holding it on October 11th and 12th at the MGM grant in Las Vegas.
This time around we have a record number of customer speakers so we're very excited about it. We've been missing it for two years.
And we'll also be announcing some exciting capabilities of the conference.
In addition, several eGain partners, including Deloitte, will be showcasing value-added solutions alongside our... This is...
proposition.
In conclusion.
I just want to wrap up with a couple of summary thoughts. The first thing is the market need for our solutions continues to be strong and relevant, and we are more excited than ever. Second, the market need for our solutions continues to be strong and relevant,
Given the economic environment, we are adopting a prudent stance. And so we're focusing on productivity of our sales team in fiscal 23 and not necessarily increasing, further increasing our investment on the sales capacity side until we see the productivity showing up, which we expect.
And then lastly, our product strategy overall remains unchanged as we continue to build out our platform and grow our partner ecosystem.
connectors, APIs, and developer support.
So with that, I'll ask Eric Schmidt, our Chief Financial Officer, to add more color around our financial operations. Eric?
Thanks, Ashu, and thanks everyone for joining us today.
As actually noted, we finished the year strong with both our top and bottom line results ahead of our guidance and street consensus.
Let me share some financial highlights for the quarter and full year before getting into our outlook and guidance for fiscal 2023.
Total revenue for the fourth quarter was 23.5 million, up 16% year over year, or 20% in constant currency.
That's revenue for Q4 was 20.6 million, up 15% year over year or 18% in constant currency.
For the full year total revenue was 92 million up to 17% year over year or 18% in constant currency.
This is an important milestone for us when compared to the 8% growth we realized in fiscal 2021 and fiscal 2020.
For the full year, SAT revenue was 80.9 million, or 21% year over year.
Legacy revenue in Q4 was down to $805,000.
which was down 14% year over year and accounted for now only 3% of total revenue.
Looking at non-depth gross profits and gross margins, gross profit for the fourth quarter was $17.6 million for a gross margin of 75%.
compared to 75% in the prior year quarter.
For fiscal 2022 gross profit was $70.5 million or a gross margin of 77% compared to a gross margin of 76% for the prior year.
Now turning to our operations, one gap operating costs for the fourth quarter came in at $16.9 million compared to $13.3 million in the year ago quarter. The increase was primarily driven by investments in product development and sales and marketing.
Looking at our bottom line, non-GAAP operating income for the fourth quarter was $722,000 for an operating margin of 3% compared to an operating margin of 10% in the year-ago quarter.
non-GAAP net income for Q4 was $893,000 or $0.03 per share. This compares to non-GAAP net income of $2.5 million or $0.08 per share in the year-ago culture.
Non-grant operating income for the fiscal year was $9.2 million or an operating margin of 10% compared to an operating margin of 4% last year.
Non-GAP net income for the fiscal year was $8.9 million, or 28 cents per share on a basic basis and 27 cents per share on a diluted basis.
This compares to non-GAAP net income of $8.7 million.
With 28 cents per share on a basic basis and 27 cents per share on a diluted basis in the prior fiscal year
Good evening to our balance sheet and cash flows.
During the year we generated cash flow from operations of $8.1 million for a 9% operating cash flow margin.
balance sheets remain strong with total cash and cash improvements at the end of fiscal year.
was 72.2 million up 14% from a year ago.
Now, turning to our customer metrics.
As actually mentioned,…
strong bookings in the quarter reflected a combination of new customer wins as well as expansion and renewals with existing customers.
The number of
One million AOR customers increased 31% year of year, given our continued focus on selling to large fee to see organizations and government organizations. The fee to see organizations and government organizations.
And now, our PO increased 54% year over year to 100 million 0.5, driven by the strong renewals.
Our SaaS AOR excluding our OEM business increased 20% Euro VM
and our LTM bola-based SES retention rate
It was 105% compared to 107% a year ago.
What we saw with some of our customers that it increased volume due to the COVID spike.
that there were some reductions at the renewal time as these customers saw their volumes normalize.
These reductions, when they're renewed, contributed to that slight decline in our attention rate Hence our Buchholz underlying fact from Knight.
Before moving on to our financial outlook and guidance, I'd like to add to some of the metrics that actually discussed financial outlook and guidance.
specifically around our new AOR bookings.
and looking to do this, ready to highlight some of the key initiatives that we focused on in fiscal 22. Again, given the variability, we plan to share these additional metrics on an annual basis.
Again, if you look back...
Our strategic focus in fiscal 2022 was to invest in sales and marketing with an emphasis on U.S. markets.
to accelerate the growth of new ARR bookings.
with knowledge-led focus.
So when drilling down into these areas, first off on the product front,
When looking at
New knowledge ARR bookings.
This went up 69% year over year in fiscal 22, so significant increase.
And for comparative purposes,
This comprised 57% of total new ARR in fiscal 2022, and that is up from 48%.
in fiscal 2021.
On the second point, when focusing on
new customer wins to complement the expansion within the install base which has been historically our primary area of UARR, bookings from new customer wins were up 102% year-over-year in fiscal 22 and comprised 42% of total UARR bookings.
And this is up from...
30% in fiscal year 21. So again.
sort of a marked increase in New ARR coming from the new customers
And then finally the regional focus, as we've discussed
your bookings in North America.
has been an area that we've seen a big ramp up. And overall bookings in North America were up 75% year over year in fiscal 22, and comprised 79% of total new ARR bookings in 22. And this is up from 64% in fiscal 21.
So looking at these metrics we are encouraged to see the early positive results while expanding the sales team's capacity by more than 50%.
Now onto our financial outlook and guidance.
As I noted last quarter with the current strength of the US dollar to the pound
For comparable purposes we are also providing revenue estimates on a constant currency basis to provide better visibility into the underlying business trends.
For the first quarter of fiscal 2023, we expect total revenue of between $24 million to $24.5 million, which would represent growth of 12% to 14% year-over-year.
Adjusted for constant currency we expect Q1 total revenue of between $25.1 million to $25.6 million representing growth of 17 to 19%.
Turning to the bottom line for T1, we expect gap net loss of $2.1 million or $2.3 million to $2.3 million or a loss of $0.07 per share.
which includes stock-based compensation expense of approximately $2.5 million and depreciation and amortization of approximately $120,000.
We expect non-gap net income of 200,000 to 400,000.
or break even to one cent per share.
The sequential increase in spending in Q1 is primarily driven by
annual compensation adjustments which become effective in the first quarter and then also the full impact
hiring that took place in Q4. Many of the people that came on board towards the end of the quarter, so we'll obviously be seeing the full impact of those hires.
for the full duration of the quarter.
And as
As she had mentioned, given the current macro environments, where we are seeing some of the deals taking longer to close, we all believe it's prudent to pause the hiring of these additional sales cohorts and ready.
move our focus to making the current team productive.
Looking at fiscal 23 full year ending June 30, 2023, we expect total revenue of between 101 million to 103 million which would represent growth of 10 to 12% per year.
Adjusted for constant currency that would equal 103.2 million to 105.3 million.
representing growth of 12% to 15%.
and non-GAAP net income of $3.8 million to $4.8 million for 12 cents to 15 cents per share.
or a gap net loss.
of 3.7 million to 4.7 million or a loss of 4 cents to 15 cents per share.
where we estimated share-based compensation expense of approximately 8.5 million and depreciation of approximately 500,000.
Our currency conversion rate assumptions are as follows.
A few out of 23.
Thank you.
FY23, we are assuming the...
The US dollar to GDP of $1.15 to one pound.
This compares to Q1 of 22 where the rate was $1.38 to the pound.
And then for comparable purposes...
For FY22 that exchange rate was we used the dollar rate was 133 to the pound
Looking at the weighted average shares outstanding, we expect approximately 31.9 million for the first quarter and for fiscal 23, 32 million for the full year.
In summary, we feel we executed well and are pleased with our strong financial performance 4C.
We made significant progress ramping our business in fiscal 22
and are seeing positive results from our strategic investments.
For fiscal 2023 we will take a more balanced view of growth and profitability and will be holding off on making additional sales investments until the current team
is productive. In the meantime, the demand for our knowledge-led offering continues to be robust and with our strong balance sheets we are well positioned to continue a positive momentum and grow our market share this fiscal year.
And lastly, as I actually mentioned,
We will be hosting an Analyst Investor Day as part of the eGainSolve 2022 conference in Las Vegas on October 11th.
We're very excited about the attendance, the number of customers and partners that will be at the event and
So we look forward to Hopefully seeing some of you Attend in person at this event feel free to go and sign up at the egain.com website
This concludes our prepared remarks. Operator, we will now open the call for questions.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Our first question today comes from Richard Baldry with Roth Capital. Please go ahead.
Thanks. I'm curious, given the strength you had in new logo, ARR and a lot of the new productivity from the hiring you've recently done, and you've got a very large cash reserve on the balance sheet, why not keep up the hiring and sales? Even if that resulted in some modest near-term losses, you can clearly more than support that. So walk through the logic of pulling back on that when you're seeing some success.
success is there. Thanks. Sure, Rich, as I should hear. That's a good point. This is a judgment call. The way we are looking at it is.
From an annual standpoint, we are guiding conservatively, but what we are going to do is watch it very carefully, and which is what we're doing right now. As the, so what we will miss is maybe the next cohort cycle, but if we feel, which could very well be the case, that the sales investments are turning productive and the market environment is not as tough as.
some fear, then we will resume back in the middle of the year. So that's something we are keeping the option open for us.
Okay, and maybe could you talk about, you know, there's two significant cohorts you brought in. You know, have they been tracking sort of similarly to each other in terms of the ramp from, you know, cohort one versus two? Have there been any changes maybe as the macro conditions have gotten a little tougher between the two? Are those types of lessons that you're sort of watching in real time?
I think the kind of sales reps we're hiring, I feel like are more aligned to our direct selling.
in the more recent cohort. So that's a change I see. These guys are out there banging on doors, just going to read.
So that I see is the difference. And then in terms of performance, I feel like that the most recent one is not something that they haven't performed yet, but the one before that, they are in performance mode now. So that is good.
Then you talk about the legacy maintenance side. Do you feel like that's something that terminates sort of by the end of fiscal 23 or is that given the conditions you'd hate to sort of press customers to either make a decision or not in a tougher backdrop so maybe it lasts out another year or two after that?
My sense is that
we will probably drop another notch in the legacy revenue, maybe get to, if I were to take a board guess, I'd say maybe get to half of the current level by the end of this fiscal 23. But then the rest we'll sort of pretty much ignore and move on.
And the last for me would be, if you look in sort of the changing conditions, does that change any of the thought process around you've been running the professional services with modest losses as you're ramping it? Do you think you manage that to maybe break even for a period of time until you figure out when it's time to kind of get back to pushing on that in a growth mode?
Again, that's a good point. Right now we feel like that investment is quite helpful in making customers successful and making them advocates. So I think the way we would drive more profits there or not profits but margin there is going to be more likely scale than just efficiency gains at this time.
One last one. Sorry, but can you talk very generally about the inflationary environment too, sort of what you're seeing, the impact on the P&L, whether that's a revenue pricing power side or on the cost side on the wage inflation, et cetera. It may be hard to discern what the changing currencies and stuff. So I'm sort of curious your overall, you know, broad thoughts on the concept. Thanks.
I'll say something maybe I'll keep an eye on more. My my sense is that the
I'll say something, maybe I'll keep that more. My sense is that the...
The impact on cost of doing business is real.
I don't know if it is unusually high compared to prior years, to be honest. I think because it's somewhat mitigated by the economic environment as well. So from a people cost side, I think we'll have our increase in cost but not...
not unusually high, that's my sense. And then I'll.
And then on the pricing power side.
For now we haven't decided if we are going to pass on any costs. I think from our perspective it's probably a market share game. So that's a trade off we have to think about more.
Eric, do you have thoughts?
Yeah, I think just to echo.
When you think of the labor market, how it's been the last couple of years, it feels like we've been in a very inflationary condition already, right? We've been needing to absorb fairly significant annual increases. So I think in the current environment, we don't see...
a big difference from what we've needed to do in previous years and I think given the increased
This was beyond just the sales and marketing organizations.
always gives us the opportunity to really have a close look at and ensure that we're driving efficiencies across the organization. So hopefully through that process we can mitigate elevate agit River Valley, for every information beingent Wiggins, Se
costs that we may see from other vendors that we have to deal with.
Great. Thanks and congrats on the acceleration you saw on fiscal 22.
Thank you.
The next question comes from Jeff Vanery from Craig Hallam. Please go ahead.
Great, thanks. Thanks for taking my questions guys, a couple for me. Just to the sort of the overall reflection in your guidance of a more cautious sort of macro outlook, if you would. In terms of the caution you've embedded in the guide, is there any way you can put some quantification around that? And specifically, I guess I'm wondering how much of it is based on things you've already seen? And how many how much is based on things you're anticipating? Okay, thank you.
Thanks Jeff. I think for us it's really more at the anticipation part of it so that way To our shoes point of
In general, we feel good about the opportunities, the way the teams are ramping. So just consistent with what we've done in previous years, we'd like to start the year out with a more conservative view and then hopefully as things develop we can provide updates as the year progresses.
Okay, and then in the quarter, you didn't specifically comment, and I know there's some details in the queue and the K, but can talk a bit about any differences you saw in behaviors, specifically even up to today, with respect to the OEM side channels and direct, all acting the same as they have been, again, no wiggles in any of those.
Other than some of these additional metrics that we've talked about that...
With the
the increased focus on the direct selling. You know, we've obviously seen more business come through these direct team members, but...
nothing of note to me.
Um.
the changes on the, I mean I think from a connector side we're seeing sort of increased traction with
More.
often is that we're looking to do connections through the
systems but I think in general nothing worth adding on.
I would say quantitatively no, but qualitatively there is a change as you've seen us over the last year really bring out a more Swiss approach to the partner ecosystem and I think that is working well for us. We see the partner ecosystem increasingly becoming a source of...
as opposed to source of revenue. And with our bigger sales team, we are able to go after those opportunities and work with the partner. So just expanding our, if we go back to...
Let's say beginning of fiscal 22.
We have integrations with Cisco and Avaya, and we have integration with Amazon Connect at that point. Since then on the contact center side, we've added three more.
We've added Genesis, we've added Five9, and we just, while we have the connector into podcast, but that's something we're rolling out as well. So that's a big expansion of the available market. Interestingly, some of the new wins we had, they are Genesis shops. We closed another account in the last quarter where it's a Genesis shop and we got the opportunity to improve the Genesis marketplace.
We're seeing the same with 5.9. So the pure cloud vendors, you're seeing an interesting.
very much a modern partner approach based on product connectors and mutual referrals as opposed to a very channel centric approach you're going to get a PO at the end of it.
if that helps in the color.
It does. Thanks. Thanks. Appreciate it. The two others, I guess, I think you referenced in the script some impacts of lessening volumes as contracts are getting renewed post-COVID and as overall volumes contract. Can you put that in a little more context in terms of, if you want to call it a vulnerability, you know, what kind of correlation or revenue put, you know, impact could take place if you see that more widely? Just maybe help put some bounds around.
how much of a concern that might or might not be and how much it might be able to impact. I think Jeff, I mean the good news is that you know now that we're lapping it, you know, the exposure to significant further renewals.
Yeah, we don't.
see that
too much because
because...
I think the things trying to return to normal or the new normal within the last year.
was from a
I think the sort of the increased volumes around probably what we saw was a spike in the usage of the chatbot, the virtual assistant. So we saw a spike in volumes of the messaging so that as these businesses normalize their business these numbers.
I came down so I think we haven't haven't calculated the exact
impact it would have but again hopefully we'll absorb that sort of obviously with this new business that's coming through.
Okay, I'll leave it there. Thanks for taking my questions.
The next question comes from Tim Horan from Oppenheimer. Please go ahead. Good afternoon everybody.
Thanks guys. So the COVID impact, do you think you've largely seen it? You know, is that behind you at this point or is it in front of you or is it relatively minor?
Sorry, could you repeat the question?
Yeah, so the impact from COVID.
Is it material? Is it largely done, do you think, at this point? Or is it still in front of you? Sorry, just didn't understand the answer, but we'll...
Okay.
All of us.
I would say that business is pretty much back. People are in their normal operation now. So to that extent, I don't think that COVID is terribly impactful moving forward. In terms of some of the COVID level, the extra levels of business that we had in the COVID times, we already talked about that. Do you have anything else to add?
No, I think that's it.
I think my night we back in business
So I guess the question is, are you back to normalization like COVID? I mean, is the impact from COVID behind you in terms of the increased usage? Are you back to steady state or do you think there will be more impacts from COVID going forward?
Ah, from the excess usage, yes.
from the access usage, yes.
I mean there might be some further adjustments in the next quarter or two.
further adjustments in the next quarter or two? I think
Okay, got it. Are they material or relatively minor at this point?
So I think, you know, probably not significantly material. I mean, there will be some adjustments, but.
Again, I think these are items that we'll be able to absorb if we factored into the guidance as we go forward.
And I think you also said the sales cycle was elongating. When did you start to see that? Is it material? Any more color around that?
Not yet, but I would say that is the anticipation right now.
Okay, but you haven't seen it yet. Got it.
It makes a lot of sense. And can you give us a sense, I know you also said focus on gaining market share. Can you talk about who you are gaining share from, or is the TAM expanding a lot more? Just some sense around that.
Yeah, I would say primarily it's a lot of legacy tools we see in these enterprises that have been implemented five, six, seven years ago. They haven't really done a good job. So we see a bunch of those. We also see expansion of the market in terms of people who have been looking at existing content management systems as knowledge management and now they're saying, well, that doesn't do the job. So we need a knowledge management overlay on top of it. So now those are the two we see mostly. That's kind of.
where the market is at today. And I think moving forward, we'll see more dam expansion as the market expands beyond the abundance of Italic resources we need.
knowledge for customer service, I think there is opportunity to be next year. These are the two.
And you gave a whole bunch of metrics on growth that seemed really impressive.
It seems like a lot of the bookings numbers and our POO numbers are up above 40, you know, close to 50%. I mean, absent your concern about the economy, I mean, would growth be accelerating next year or for this year's revenue growth or, you know, those metrics are, you know, not indicative of, you know, what should happen next year on revenue growth? We movements might be falling and if we don't fail, we ought to make another trade-off. So, yes there is a net loss or anything in theenbergkees chart on Google if you are
Next year being fiscal 24.
year being fiscal 24? Correct. Yeah. Next 12 months. Yeah.
Sorry, next 12 months, sorry.
Okay.
I mean the fiscal 23 which is we just starting out now, that's where we're giving the guidance which we have. Thank you.
But if you're talking about fiscal 24, yes, we certainly think that... No, no, no, I meant 23. I mean, you're growing bookings are poo, a lot of numbers, you know, sales productivity is up, you know, close to, you know, over 40%, but your guidance is, you know, going for pretty major deceleration and growth because of the weaker economy. I guess what I'm asking is if you weren't concerned about the economy, would revenue growth be accelerating?
Next year. Sorry about that. Yes, sorry, sorry about that.
or did I lose you guys?
Oh, so the answer is yes, it would be accelerating.
Yes, it was. Sorry for that.
Yeah Okay, that makes that makes sense and then I'll lastly you know I know one of the reasons that you gave for the increase spending in the lower margins this year Which you wanted to get to more scale business model? I mean do you think you're there now with this scale or is it? You know it should
a much bigger number, just any sense of what you meant by that and how you're thinking about a scaled business model.
I think as we get the productivity from the current levels of sales investment that we are at. In Super affiliates we are finding a lock-in materials making the timepetal to owe,ok,
I think we get to a scale where we see the advantages of better margins and so on.
And is that a certain revenue number? Is it $150 million in revenue, $200 million in revenue? Or just any sense, what do you think is a location where margins will start to expand again because you're at the right scale?
I would say 150 would be a reasonable place to see the impact, yes.
a reasonable place to see the impact. Yes. Perfect. Thanks a lot, guys.
So, cool.
Seeing no more questions in the queue, this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Thank you operator and thanks everybody for listening and hopefully we'll get to see some of you at the panelist day in Las Vegas. Thank you.
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