Q3 2023 Yext Inc Earnings Call
[music].
Good day and welcome to the Yexed third quarter fiscal 2023 financial results Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
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To withdraw your question. Please press Star then two please.
Please note this event is being recorded.
I would now like to turn the conference over to announce Erdman Senior Vice President of Investor Relations. Please go ahead. Thank you operator, and good afternoon, everyone. Welcome to the <unk> fiscal third quarter 2023 conference call with me today are CEO and chair of the board, Mike Wallrath, CLO, and President Mark Ferron, Tino and CFO .
Daryl bond.
During this call we will make forward looking statements, including statements related to our future financial performance expectations regarding the growth of our business our outlook for the fourth quarter and fiscal year 2023, our strategy and estimates of financial and operating metrics capital expenditures and other indications of future future opportunities as further.
Described in our third quarter earnings press release.
These forward looking statements are subject to certain risks uncertainties and assumptions, including those related to excess growth the evolution of our industry, our product development and success, our management performance and general economic and business conditions, such as the impact of the COVID-19 pandemic.
We undertake no obligation to revise any statements to reflect changes that occur. After this call descriptions of these and other risks that could cause actual results to differ materially from these forward looking statements are discussed in our reports filed with the SEC, including our most recent Form 10-Q for the quarter ended July 31, 2020 to our annual report on Form 10-K for the fee.
Full year ended January 31, 2022 in our press release that was issued this afternoon.
During the call. We also refer to non-GAAP financial measures reconciliations with the most comparable GAAP measures are available in the earnings press release, which is available at investors <unk> Dot com.
I will now turn the call over to Mike.
Thanks, Nils and thanks, everyone for joining US today, we are pleased to report Q3 results that demonstrate the continued execution of our strategy to drive efficient and profitable growth by delivering best in class products and services to create tremendous value for our customers.
I'll start with a brief rundown of our financial performance in Q3, our revenue was $99 3 million on a constant currency basis, our quarterly revenue increased roughly 4% over the prior year period, primarily driven by new customers and Upsells.
Our non-GAAP net income per share was <unk> <unk> compared to a non-GAAP net loss per share of <unk> in the same period last year.
This improvement was largely driven by our success in streamlining our business and improving our operating efficiencies.
What this illustrates is that the groundwork we laid in the first half of this year is paying off and we're delivering on our financial commitments, we made while continuing to find ways to improve our margins and successfully manage cost to increase our profitability.
This quarter, we were able to further reduce our non-GAAP operating expenses as a percentage of revenue to 73% down from 81% in the same period a year ago.
In addition, sales and marketing as a percentage of revenue was 44% down from 52% in the year ago period, while our direct payor, our growth was up 3% year over year or 6% on a constant currency basis.
In other words, we generated are our growth with a significantly reduced sales and marketing budget or.
Our sales team has grown increasingly productive as we align around our highest priorities customer satisfaction operational efficiency and product innovation.
To achieve these results, particularly in the face of a challenging macroeconomic environment is a testament to our team's strength and commitment.
The macroeconomic headwinds have placed increased scrutiny on budgets and elongated sales cycles and this is likely to continue to impact our business in the near term, but our value proposition resonates strongly with our customers as we continue to do more with less we are helping our customers to do the same it is important to underscore that we are a net <unk>.
Of course for our customers.
Our customers are the best source of real time feedback, both direct and indirect and gathering that information as our first responsibility.
Acting on it by developing products features and enhancements. This is one of the best means of showing them that we're listening and we're committed to making product decisions that will drive greater value.
While we remain focused on operating efficiency, we are committed to developing new and transformative technology to enhance our platform.
Our continued investment in technology innovation helps strengthen our relationships with our customers and leads to greater adoption of our answers platform.
This is reflected in our strength in bookings this quarter, both in terms of the breadth and the size of deals we closed as.
As I mentioned earlier, we're seeing direct air our growth from new customers and Upsells and just as importantly, our Q3 gross retention rate was the highest it has been this year.
We calculate gross retention by comparing the total dollar value of contracts up for renewal in a given quarter against what was renewed excluding up sells and in Q3. This percentage moved up into the mid eighties.
This is very encouraging, particularly when taking into account that a handful of sizable renewals closed in the early days of Q4 and these closed in Q3, our gross retention would have been several points higher.
Even without these deals we demonstrated sequential improvement in gross retention this quarter our focus in this area is having a positive impact.
To build on this momentum last month, we welcomed Tom Nielsen T X as our chief revenue officer to lead the execution of our sales and customer success strategies Thomas.
Tom was most recently EVP and head of worldwide sales at new relic and his expertise in building and managing scalable dynamic go to market engines is what makes him the ideal leader to drive improved sales execution and accelerate our global revenue growth.
He has oversight of our overall revenue strategy will drive better integration across our direct and partner businesses and alignment across our sales and customer service organizations.
Tom's focus will be on our revenue engine will continue to look for ways to drive efficiency of our business and enhance our profitability, which is critical to our success is our Q3 results indicated in our Q4 and full year guidance suggest we continue to operate with an unwavering focus on long term sustainable growth through an efficient operate.
Model.
I'd like to take a moment and thank our entire global team for their hard work and commitment to <unk> and to getting the right answers for our customers.
And with that I'd now like to turn the call over to Mark.
Thanks, Mike, we're making good progress in driving efficiency across our sales organization and as Mike mentioned, we're successfully doing more with less.
This shows on our air our growth, which we achieved with a leaner stronger and hungry or sales team not surprisingly doing more with glass is also what our customers strive for particularly in this economic environment. So our objectives are closely aligned with our customers.
Well it resonates with our customers is being able to show how quickly we can solve their answers problems across one area of the organization and then demonstrate how our platform can be adapted to manage additional pain points I'm encouraged by the momentum we are beginning to see here and most importantly, our results are resonating with our customers.
It's becoming even more clear that we are well positioned to drive long term growth as our new and existing customers are taking greater advantage of multiple products across our answers platform what resonates with them is the value add and cost savings that our products enable and help our customers with digital adoption and becoming mission critical particularly with the growing.
<unk> have disconnected digital tools that are implemented across organizations.
<unk> real time customer insights and data driven decisioning are essential for operating within the digital environment and our answers platform presents an opportunity to help our customers optimize their growth.
So remain the best in class solution for our customers, we are continually making enhancements to the answers platform and developing even more functionality that improves the overall user experience and our fall release, which was announced a couple of weeks ago. We added features like listings verifier and point in time backups for pages that will trend.
Form our customers use two of our most popular products. This is our third consecutive seasonal release, where we've introduced major enhancements to our listings product, while also introducing new and innovative ways for organizations to drive user engagement through pages search reviews and connector.
We added Twitter and Instagram to the X publisher network for social postings.
This broadens our platform, which has the industry's largest network of 250, plus direct integration partners and gives the X listings customers the ability to promote new content.
Oliver valuable updates and drive user engagement across key social media platforms.
With these and our ongoing enhancements, we continue to strengthen our answers platform and our value proposition to clients the breadth of clients leveraging the platform across several verticals and use cases demonstrates the positive trends underpinning our business and gives us confidence in the long term opportunities.
In Q3, we expanded our leadership position across financial services health care and technology, while also adding significant wins and multi product cross sells to verticals and E Commerce sports government and religious organizations here are a few examples.
We substantially expanded our relationship with the church of Jesus Christ of latter day seats with a new multiyear contract originally they used listings and pages for a portion of their locations and because of our successful implementation and the lift in traffic and rankings. They asked us to expand their usage and roll.
To all of their global locations.
Additional to listings and pages. They also broaden their use of our other products on the answers platform.
The Department of Defense Agency became a new UX government client after running a highly competitive RFP that we ultimately won they chose gx to help them attract talent from centers across the U S through listings and support services.
Another exciting competitive win in the Commerce space was a global climate solutions manufacturer. The client was up four listings renewal in Q4 was also running an RFP for a search in pages provider for their BW ecommerce experience.
After a competitive process <unk> was selected with our ability to handle BTB ecommerce scale of both Skus and query rules plus the data modeling capabilities. The knowledge graph their team can now deliver a superior experience for their customers.
Another solid commerce win for US was an NBA franchise, which added yet search to help increase sales at their online store, we were able to demonstrate that by enhancing the search functionality on their franchise homepage, we could reduce the number of redirects to third party commerce sites, enabling them to maintain a direct connection with the fans.
And an increase potential sale on their team store.
Our financial services team added several new clients and expanded existing clients.
While not booked in Q3 find a financial advisor was launched by a major financial services company. Following a highly competitive process across multiple software providers. The complexity of the search functionality that the client needed to address spend both their internet and external sites sources, and there were intriguing development and regulatory.
Compliance requirements.
As opposed to a search bar, we developed the guidance search experience. It generated recommendations based on the user's response to a series of questions our team's ability to support all of the clients customization requirements, let us.
Let us to winning the account and the client began heavily marketing the service in Q3. Consequently, this guided search functionality also has been successfully implemented at two other financial service providers.
Another competitive win that demonstrates the strength of our sales pipeline across the technology vertical was blocked inc. They chose to partner with us to power the search experience for their square support and square seller community.
And lastly on the partnership front, we renewed a multiyear agreement with thrive one of our largest partners with the close of this deal thrived now uses the full expense of our answers platform listings pages reviews, and search will be providing them with premium support services and to add additional integration.
<unk> and customer service to support them on a global scale.
Our teams are executing strongly on our revised go to market in Q3 was a good indication that we have the right playbook in place to drive long term growth by delivering unparalleled value to our customers now I'll turn the call over to Darryl.
Thanks, Mark as our financial results demonstrate we continue to execute well in the third quarter. Our revenue was relatively flat year over year at $99 3 million, which was within our guidance range FX continued to represent a headwind and as a result of the stronger dollar our revenue in Q3 was impacted by roughly half a million.
More than anticipated last September when we provided our Q3 guidance.
Third quarter revenue included a negative year over year impact of approximately $3 $7 million due to FX adjusting for this impact on a constant currency basis, our third quarter year over year revenue growth was approximately 4%.
Unearned revenue was $153 3 million at the end of the quarter up slightly from the same period a year ago.
<unk> recurring revenue or <unk> is a good measure of adoption and customer satisfaction at the end of Q3, <unk> was $389 5 million up 1% year over year, we experienced a negative impact from FX of approximately $12 $4 million year over year on a constant currency.
Excluding the FX impact our Q3 year over year AOR growth was approximately 4%.
Direct customers, which include enterprise and mid market accounts represented 81% of total error.
Correct IRR at the end of Q3 totaled $317 3 million, representing 3% year over year growth.
Excluding the impact of FX, the direct AOR growth relative to last year was 6% on a constant currency basis.
Third party resellers, which represented 19% of total error or at the end of Q3 generated <unk> of $72 3 million, representing a decline of 8% over prior year exclude.
Excluding the impact of FX third party reseller air are declined 5% relative to last year on a constant currency basis.
Our trailing 12 month net dollar base retention, which excludes our small business customers was 96%.
Our trailing 12 month net dollar based retention for direct which also excludes small business customers as well as our third party reseller customers was 97%.
Our customer count for direct increased 6% year over year to approximately 2900.
Turning to non-GAAP results, which are reconciled to GAAP in our press release Q3 gross profit was $74 8 million, representing gross margin of 75, 3% compared to 76, 5% in the year ago quarter.
Gross margins were up sequentially from last quarter, and we continue to expect to be in the range of our long term non-GAAP gross margin target of 75% to 80% for the fourth quarter and full year.
Q3, operating expenses were $72 $1 million or 73% of revenue compared to $81 million or 81% of revenue in the year ago quarter.
To improve operating efficiencies, particularly in sales and marketing.
Sales and marketing as a percentage of revenue declined to 44% in Q3 from 52% in the third quarter last year and we expect this metric to continue to improve.
Our Q3 net income was $2 5 million compared to a net loss of $5 5 million in the year ago quarter.
Our Q3 net income per share was <unk> <unk> compared to a net loss of <unk> <unk> per share in the third quarter last year.
Cash and cash equivalents were $162 million at the end of Q3 compared to $188 million at the end of the second quarter. The decline in our cash balances included continued share repurchases executed during Q3, which totaled $10 $1 million.
Year to date, our share repurchases totaled $69 $1 million, we intend to continue to maintain a strong balance sheet and cash position going forward and will remain open to buying back our stock at attractive prices.
Net cash used in operating activities for Q3 was $10 $8 million compared to $9 $7 million cash used in the year ago quarter, and our Capex was $1 5 million compared to $1 8 million in Q3 last year.
Turning to our outlook.
S dollar continued to strengthen even further versus the currencies in which we transact our international business, which resulted in a larger than expected FX headwind in Q3.
This looks at ebbs slightly so far in Q4, and our guidance does not assume any impact from foreign currency exchange rates. Today, We expect Q4 revenue will be between 101 hundred $1 million.
We expect our Q4 non-GAAP EPS to be between <unk> and <unk>, assuming a weighted average basic share count of approximately 123 2 million shares.
For the full year fiscal 'twenty, three we expect revenue of 399 million to $400 million.
Our full year revenue guidance includes an estimated negative impact of $8 $7 million to reflect foreign currency exchange rate fluctuations since our initial full year revenue guidance from March 2022.
Our full year non-GAAP net loss per share is expected to range from five to four cents. This range factors in our Q3, EPS upside as well as our expectations for continued improvement across operating expenses, particularly sales and marketing full year EPS. It seems a basic weighted average share count.
Of approximately $125 5 million shares.
Operator, we are ready to open it up for Q&A.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speaker phone please pick up the handset before pressing your keys.
If at any time. Your question has been addressed and we would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
And our first question will come from <unk> Khan with tourists. Please go ahead.
Yeah, Hi, Thanks, a lot.
Two questions from me.
Plus on the on the net dollar retention for direct.
It came down a little bit sequentially, I guess, 97%, which is a kind of remember correctly it was 19%.
In the previous quarter, what's the what's driving the sequential decline and then the second question I have is just on the C. P reseller opportunity.
Mike I think on the last call you talked about how you could expand a the.
The opportunity with the C P resellers.
Are there any updates on this trial around this time that you can share with us.
A little bit of FX in there as well.
Two main things that are driving that down.
And I.
I think your second question I missed a little bit it was on the partner reseller channel.
Yeah, I think so.
On the previous call you talked about how you could expand the opportunity.
In terms of how much you do would be.
C P resellers.
And.
And you know if I just look at the MS. Shannon Oh, it's.
It's down year on year, but if you could expand upon maybe.
All right, so let's talk about that yes.
So I think what I said last time was that we believe that there are growth opportunities in that channel.
But we're not.
I wouldn't call those immediate.
I'm sure we've talked about this last time to the timing on those as you know we.
I think there are a couple of things driving that I think the first is that as primarily a listings channel and it is the primary way that we access to smbs.
It's just a it's a challenge space and I think in this environment, that's going to continue to be a challenged space and so companies that primarily service Smbs you know not not universally but many of them are going to have a harder time in this environment and that's what our customers are in that channel. So you know we have opportunities to grow in that channel by expanding product offering.
And in growing some of those partnerships, but you know I think you know part of the reason why we've been so focused on the direct there or is that we think it's the best measure of the near term health of our business and you know over the long haul we're going to remain focused on that partner reseller channel, but we.
We don't see it as as stronger near term growth opportunity is the direct business.
Got it a quick follow up if I may.
Maybe.
Yes.
Talk about the.
Oh the performance internationally is that.
Is that weaker or stronger versus the U S. How is that doing and then.
Maybe Oh, you spoke about how it's so it feels like a long way or is that more pronounced internationally or maybe not just give us some color.
So.
Anecdotally I think we saw the elongation of the sales cycles, probably arrived earlier internationally.
Particularly in Europe with.
With some of the geopolitical things happening over there.
I think we're seeing you know as I've as we've talked about last time minutes. It's unchanged, we're seeing that across the board I think every every management team and CFO and maybe maybe in the world is explore is scrutinizing expenses, a little more closely and are determined cycles are lasting longer and you know I think you know.
You talked to a lot of peers and hear the same things.
So I wouldn't say that there's a.
Necessarily from my point of view, a quantifiable difference between what we're seeing internationally versus in the U S. Just arrived I think a little bit earlier internationally than in the U S.
Got it. Thank you Mike Thank you Dear.
Our next question will come from Ryan Macdonald with meet him. Please go ahead.
Alright, Thanks for taking my questions, Mike maybe to start for you you know obviously you've come in and you've made a lot of changes this year in terms of restructuring customer success, bringing in some new leadership to sort of build the pipeline as we go into next year.
And it's great to see that you're starting to see some of those improvements on the gross retention side, just curious as we're kind of looking into fourth quarter here, how what youre seeing in terms of the renewals obviously its a big quarter for you how are those trending and then what sort of visibility does that give you in terms of a fiscal 'twenty four and how we should.
To think about maybe the mix of growth versus profitability there.
Sure Yeah, Thanks, Ryan so.
From a from a gross retention standpoint, where we're happy to see improvement there, we're certainly not where we want to be on that and we've talked about that but.
But I think that the actions that we've taken over the last few quarters of really focusing around customer satisfaction and getting into those conversations earlier or we're showing progress there.
And you know we're happy about that.
And we're also seeing good things on the on the bookings side you know, we're obviously, we'd prefer to be seeing more on the bookings side.
But those two things really make up our are our growth rate right. So I think the progress that we've made from an operating efficiency and profitability standpoint is as sustainable and we're not done with that work will continue to find ways to be more efficient and it's fundamental to just operating better as a company.
And obviously, the macro and the FX headwinds are impacting us as well.
From a revenue perspective, you know we're still in the middle of Q4 here.
Planning for next year, and we're certainly not prepared to give guidance for next year at this point.
But I do think that ultimately revenue growth is going to follow are our growth and based on the current headwinds in the a or the total are number as you can see which is impacted by the mix between partner and direct.
And that IRR numbers, and showing the kind of acceleration that would indicate that theres going to be a major acceleration in revenue next year.
And so our focus is going to remain you know as I as I said in my prepared comments on operating the business efficiently and focusing on sales productivity in all the key metrics that are going to help us ultimately reaccelerate here or in the future.
That's really helpful. I appreciate the color there and then yeah I mean.
I guess, a key part of of you know a reacceleration of growth in the out years as you add a new CMO.
Putting a greater focus on lead generation, our new C. O. ROE can you just talk about maybe some of the initiatives and the early on they're kind of putting into place on one on how do you sort of rebuild that top of the funnel and build the pipeline from marketing perspective, but then do you know with the new C. R O coming in you know how do you.
Expand that sort of end market sale from sort of the CMO to the CIO overtime.
Yeah. So there's a lot there obviously in.
I think Randy has been in her seat for you now.
You know about three months now and Tom has probably been in his seat for about five weeks and.
And so I talked about this you know certainly in the last call.
We need to temporary expectations, we obviously want to move really fast we know these sales cycles in normal times are six to nine months.
You know and in this environment those sales cycles can can take even longer and so.
As I mentioned on the last call, it's going to take some time to see the impacts of the really hard work that's being done on both the demand generation side of the business as well as the overall go to market motion.
And a big part of that is you know how do we how do we make sure that those things are really well coordinated and that the portfolio of investments across that that that entire portfolio is balanced and that's a lot of the work that we're doing today and I'm pleased with the progress that we're making and like I said I think we're seeing.
Being good indications of progress in things like gross retention in the breadth and diversity of deals that we're seeing.
We want to see more pipeline, we want to see more at bats, and more opportunities.
And that's where it comes as we get as we get this thing.
We get this thing going so positive.
Occasions, and very confident that we have the right people, leading those functions and the right teams of people at the company.
We just we need some more time to get that together.
Thanks for the color.
Our next question will come from Arjun Bhatia with William Blair. Please go ahead.
Hi, Thanks for taking the question. This is Chris on for origin I, just wanted to get a sense for the early feedback you've gotten from customers on the brand repositioning that you went through last quarter earlier this year.
What impact is this also having or what impact does the simplified messaging that you've developed having on rep productivity.
Hey, it's this is mark so overall, the what's really great about the repositioning and sort of the the more clear message in the Florida more clear description of the value that we deliver is that it's opening up a lot of new use cases.
All of a sudden you have customers who are looking at us in a completely different light, we sort of introduce ourselves and explain ourselves in a different way, which allows us to move more laterally across different use cases, and even different buying centers inside of the enterprise, which is really really cool what we're seeing ultimately, though is a more clear picture and a clear understanding of who.
Hu <unk> is today, but also where we're going so as our customers are thinking about sort of where we fit in the future where we fit into new solutions in new areas that we can potentially help them and they they just have a better kind of mental roadmap mental framework for for how we fit into that and it really is you know looking at a broad set of services that are available across the answers platform are being able to leverage it in.
Both internal and external use cases, and we're seeing that and in some of the deals that I talked about earlier and in a lot of the stuff that we're being introduced and brought into at at prospects that honestly their use cases, we've never really seen in the past and it's kind of exciting that we're now are you now able to participate in those so.
Overall pretty exciting.
I'll just add to that it's like that.
Sitting in the seat again.
I actually get to talk to a lot of other people who sit in the seat and that's one of the fun parts of this job.
And one of the things that you know since I started talking to other Ceos and C level executives about.
Their answers problems I still as yet have found someone who feels that they don't.
Who doesn't feel that they have some sort of an answers problem, where a customer a constituent a prospect is asking a question about their business and getting perfect information every time and so.
You know that that's that's it.
Firstly that that changes the discussion when you start talking about problems answers problems to be solved across a much broader spectrum of companies and the new positioning really helps us get to that conversation a lot faster.
Yeah.
Great Yeah, that's all really encouraging to hear.
Changing gears, a little bit I, just wanted to kind of checking on your high level thinking about growth and profitability I know you've touched on this a bit but it's on one hand growth has slowed.
I'm in recent quarters that you've also made really good progress on driving margin expansion. This year and then on the other hand, there recently, often big pack and made us a bit more of an attractive hiring environment, especially in R&D and sales and marketing.
You know we've seen in the past couple of years.
Wanted to check your pulse on kind of your approach to hiring going into 2023. Thank you sure yeah. So so.
Thanks for the question I appreciate the recognition there's been a lot of hard work done around getting the business more efficient and.
I'll repeat what I've said before we're going to execute better because because of this work being smaller and being more and having less silos and having more a better organization is going to help us to create better results.
We'll notice that one of the places where we have certainly not decreased our investment is on the R&D line.
And so.
Even as we've as we've a.
Very carefully brought the business to more efficiency, we've been focused on bringing in talent in the product.
Products in engineering and.
R&D roles and I think we're starting to see the acceleration of our innovation and we're super grateful for the teams that are executing that.
And so it's a balance right and as we think as we look forward to next year.
We feel really comfortable that the changes that we've made from an overall efficiency standpoint are both sustainable and that we can build upon those changes.
And we feel confident that future growth of the business comes from better execution across the go to market side of the business and we'll be looking to particularly direct IRR is the leading indicator there.
And and obviously the overall air picture is going to drive revenue growth.
I said before.
Yeah.
Again, if you have a question. Please press Star then one our next question will come from Tom White with D. A Davidson. Please go ahead.
Hey, this is why it's warranted on for Tom Thanks for taking our questions. So just to start a high level question on the macro I'm curious what you guys have interactions with customers and prospects is telling you you know about how enterprises are thinking about spending for knowledge management solutions entering calendar two.
<unk> 23 in the face of inflation, a potential recession and so on.
Yeah sure so.
As I think I mentioned it before I don't know a single CEO or CFO , who isn't being a little more.
Isn't being more thoughtful about costs I think that that's a simple way to state. It I think it gets a lot more complicated when you get into the nuts and bolts of it. So for example in most cases, our solutions are going to be a net cost savers and so you know you're kind of.
You're bringing a value proposition to the table, which is you can convert manual work or work that is not being done into into automated work with with our solutions.
But at the same time, the procurement cycles, the scrutiny on expenses and the timing of those expenses are all going to be looked at very carefully and I think we're seeing that pretty consistently I think we're also seeing that it varies based on industry. So certain industries are are.
Our more more prone right now to to making cost cuts that might it.
It might be more.
Necessitated.
Or I'm, sorry, more driven by the need to cut cost and by the need to.
To find ROI in their business and so you know the hardest conversations we have are with customers, who are who see the value in the product and and have to cut pieces of the solution or potentially the whole solution anyway.
There's little we can do about that other than to try to be the best partner that we can and try to help them to prioritize the.
Pieces of the platform that are most important.
Great. Thank you.
Our next question will come from Rohit Kulkarni with MK and partners. Please go ahead.
Oh, Hey, thanks, guys.
Uh huh.
The macro and the impact on the visibility that you're having in the business right now.
Entering a more important.
All good when it comes to bookings for for the company so with the with the sales re org and stuff.
Different go to market motion, but I have to talk about Oh, Oh, Oh visibility is trending how confident do you feel it seems that clearly.
Clearly cookie acquaintances or maybe a bit conservative.
Great, So, perhaps I'll kind of address.
Hum auto how do you feel you have.
Liberty you can do.
The outlook that you provided and then I have a couple of other follow ups Oh, My Big picture stuff.
Yeah, Let me, let me take the first one and I'm happy to take the follow up so.
Yeah.
Thank you Hugh you recognize that our you know our outlook is conservative and I think as I mentioned before our planning for next year is going to be conservative as well I think we see a lot of uncertainty in the environment, it's very difficult to predict and we're not I don't think we're going to we're not going to be in the business of gambling on how deep or how are difficult.
A recession is going to be if it's coming so we will continue to operate conservatively, we will consider it and continue to focus on efficiency.
We will attack opportunities in the channels and the go to market aggressively.
But you know we're still in the mode, where we're focused on productivity and we're seeing improvements in our in our overall productivity.
Well when we have the productivity as I've said since the day I took over when we have the productivity, where we want it then.
We will be able to invest in our in scaling our teams and and attacking more of the market opportunity.
Okay.
In terms of Ah I think Oh people asked a question about head count going forward.
But I think I can.
Right now are there any big buckets.
Pockets of head count could be adjusted out or any specific I'm all.
Operating line items you've seen.
But.
Hey, there could be further fine tuned to the extent that Oh.
You almost have to have a new team for.
And you would've been two to seven months, so maybe just.
Talk about what you're thinking as far as the government.
Stratos.
Head count Org structure with reporting hierarchy is do you feel they are ready.
And how you can break them out from here on out into 'twenty three.
Yeah, I mean, I think we're getting a lot closer right.
I feel great about the team that we have in place.
But again you know in fairness anytime and ran they've been here very short period of time and I think it would be unfair to characterize their work is as you.
It's closer to beginning than it is to complete right and I think I think the second part of that is that the works really never complete right. Because you know there's a there's a tremendous amount of opportunity at any given time and where we are.
Where we place our focus and how we constantly reallocate the portfolio of investments that we're making in not just in sales and marketing and R&D and G&A and but also within all the sub buckets of those things so.
I think it harkens back to the.
The early question about the partner channel versus the direct channel.
I think a disciplined company has to prioritize opportunities and while we do think that there are opportunities in the partner channel and we wont pursue them, we might pursue them less aggressively in the near term because we think the bigger you know at the moment opportunities in the us on the direct side of the business and so you know.
The process that the team and I are are running as a never ending.
Process of evaluating where our investments are working and where they're not working and where we can be more efficient as a business I think I think we're pleased with the progress that we've made we've made huge strides I think I was on sales and marketing as a percentage of revenue and I think we've got the R&D and G&A bucket is a lot closer to where we want them to be on a long term basis.
But you know I'm not going to tell you that process ever ends because I think part of our responsibility is to always be evaluating what's working and what's not.
Awesome pathetic and one quick one I think you mentioned the competitive Rfps and Bob you were able to get and a couple of given this recent quarter maybe.
Talk about the whole competitive environment are.
Are you seeing any specific new entrant.
Entrant in bed or at least historically.
The point of view many people on the streets hard was but yeah. There are not too many direct competitors, but.
And then there's a there's probably a price versus demand elasticity you bet. The company again can work on but perhaps just address the.
Competitive environment, how does that evolve in your point of view.
Yeah. So.
I'll start, but I I know Mark is chomping at the bit to talk about the competitive environment. So I'm going to let him talk about some of the competitive situations.
I think as our as our I will say this as our as our platform has broadened and as the the the range of solutions that we're offering across the platform.
<unk> has grown its not as simple as you know.
Our position.
Clear leader in listings, which which which is important to us and which we're going to continue to defend through innovation.
And in our in other areas.
The search the search solutions for example, where we're going with going up against competitors that are larger than we are and not to steal <unk> Thunder, but I'll tell you, we're very happy to get in the room with our competitors and go head to head.
Yeah.
Well theres been and had continues to be an advantage for US is our platform play there are many competitors out there who can potentially provide one point solution, but not be able to bring them altogether and so we walk in every room with the advantage of having a very broad set of features within our platform that allow us to solve a broader set of use cases.
On the listing side, we are the leader in the space, we continue to be a leader in the space and you can see that with wins like the church in the agency inside the department of defense, which we're competitive in competitive bids rfps and we were able to come out on top in the search space you know where the win we had on the BBB Congress.
We had I mean that was a highly contested wind where there was a huge complex set of functionality and features that we had to provide scale to be commerce behind firewall you name. It the full the full run there and we were able to go against a much more established players who've been doing this a lot longer and come out come out on the right side of that same thing with block so.
We're feeling really really good about each one of our product sets are each one of the products. We have on the platform and how they're performing and competitive environment and we will continue to innovate and we have a pretty robust roadmap that we're very excited about and so we you know the key is to stay stay ahead and keep innovating.
Okay, great. Thanks, Mike Thanks, Mark Thanks.
Thanks.
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