Q4 2022 Pros Holdings Inc Earnings Call
Greetings and welcome to the Pros holdings fourth quarter and full year 2022 earnings conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
I would now like to turn the conference over to Belinda over to put director of Investor Relations you May now begin.
Thank you operator, good afternoon, everyone and thank you for joining US our earnings press release, SEC filings and a replay of today's call can be found on the Investor Relations section of our website at pros Dot com. Our prepared remarks will also be available on our website immediately following the call and will be replaced by the official transcript which include.
Participant questions once available with me on today's call is Andras, Reiner, President and Chief Executive Officer, and Stefan Schulz Chief Financial Officer. Please note that some of the commentary today will include forward looking statements, including without limitation, those about our strategy future business prospects and market opportunities.
And our financial projections and guidance.
Actual results could differ materially from such statements and our forecast for more information. Please refer to the risk factors described in our SEC filings pros assumes no obligation to update any forward looking statements to reflect future events or circumstances as.
As a reminder, during the call we will discuss non-GAAP metrics reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent to which available without unreasonable effort are available in our earnings press release.
Before I hand, the call over I'd like to notify our investors and analysts about our upcoming analyst day, which will take place. The afternoon of Tuesday may 23rd during the 2023 pros outperform user conference at the Hyatt Regency in Denver, Colorado. The event will be webcast live for those unable to attend in person investor.
And analysts who wish to attend the phone conference will receive a discount on the conference registration for more details on outperformed 2023 or to register visit pros Dotcom slash outperform with that I'll turn the call over to you Andreas.
Thank you Bill and good afternoon, everyone and thank you for joining us on today's call.
So I reflect on 2022 I'm proud of how our team executed to deliver a strong year.
We grew subscription revenue by 15% in total revenue by 10% year over year.
The increased momentum we signed 2022 is supported by the fact that we more than doubled or deal count for the full year compared to 2020 one.
Our value proposition has never been more relevant which is fueling demand for platform.
Do they are leaning into automation and AI to drive greater efficiency and fuel profitable revenue growth.
In times of economic uncertainty. The question management teams are trying to answer is simple how can we drive organic growth efficiently.
The prose platform helps answer that question.
In today's rapidly evolving markets speed is a competitive advantage.
So as they get quotes out faster win.
However, operating at speed is becoming increasingly challenging because of the number of product configurations.
Distinct sales channels in negotiated customer prices.
For businesses today, the only solution is to digitize sales in support in Omnichannel sales model.
Industry analysts predict that by 2026, 85% of Peter B C. L senior actions between suppliers and buyers will occur in digital channels.
Upfront, 55% in 2021.
The pro supply for mis uniquely able to automate.
In digitally connect Omnichannel cl's experiences driving higher productivity in sales and a better customer experience.
We continue to be recognized for innovation leadership with 15 awards and accolades received in 'twenty to 'twenty two.
In Q4 pro Swiss recognized a game as a leader in Gardner's 2022 magic quadrant for C. P Q solutions.
With Gartner siding that pros Smart C. P. Q is ranked number one overall four or ability to support channel sales.
Additionally, with noted the pros delivers more AI driven guided selling capabilities than any other product evaluated.
Together with our leadership position in the I D. C market scape pros continues to be the only platform with a leadership position in both price optimization and management N C. P. Q.
Our leadership in the market continues to drive new customers to pros in Q4, we welcomed unlimited technology in vector security, both leading providers of security solutions.
With pros unlimited technology in fact, your security can accelerate sales productivity with guided selling workflows in reduce quote turnaround time fueling profitable growth.
Industry analysts predict that by 2028, 85% of all companies with <unk> go to market will employ AI to augment at least one of their primary sales processes up from nearly 40% in 2020 one.
It's going to be core to the way companies execute in they will be looking for technology that drives the best outcomes.
In Q4, we announced the availability of our next generation of price optimization powered by pros Gen for AI.
First pricing solution in the market to use neural network technology neuro.
Neural network algorithms adapt in real time to ever changing market factors in drive robust results, even with imperfect data, which drives higher ROI results for customers.
Signature Aviation <unk> Aviation services company selected pros in Q4 to take advantage of our latest Gen. Four AI advancements to fuel their profitable growth strategy.
In travel disruption airlines of experience over the last couple of years has increased their focus on extreme automation in full digitization of their customer experience.
Our digital offer marketing in dynamic offers solutions are helping airlines entice customers with relevant offers and pull them into direct in digital channels driving higher conversion rates through channels with lower costs of sales Aegean.
Airlines, Greece.
Largest carriers selected pros in Q4, and we'll use our dynamic offer solution to distribute offers to online channels.
Philippine Airlines say, no mining or among others expanded their partnerships with pros with the adoption of our digital offer marketing solution.
We our focus is always on value creation for customers and you our shareholders.
We made organizational changes in early 2023 and are now projecting to generate free cash flow and positive adjusted EBITDA. This year.
We're also accelerating our timeline for long term growth and profitability targets.
Further fueling our profitable growth will be our focus on three key pillars of our strategy.
The first is driving market adoption of the pros platform with our land and expand sales motion.
We're laser focused on landing customers with solutions that drive immediate value and then expanding quickly to drive more value over time.
A great example of this is our expansion within the general electric family in Q4.
In Q3, we announced our win with GE healthcare and in Q4, we expanded into G power.
The second pillar of our strategy is to establish a new software category of profit and revenue optimization software.
Where innovation leadership is recognized by industry analysts that crosses software categories that we accessing today, whether it be revenue management price optimization and management or configure price quote.
However, we bring so much more value to the market with the extensive capabilities in our platform and or AI.
We believe the value we deliver it's reflected in a new category of software profit and revenue optimization.
This year, we're focused on elevating our messaging in leading the marketing innovation that drives profitable growth for businesses.
The third pillar of our strategies focus on customer experience in rapid time to value.
I'm confident that no one else in our market can deliver the measurable ROI, we delivered to our customers as fast as we deliver it.
We will continue to build implementation assets and drive platform innovation that allows our customers to activate even more use cases with rapid time to value.
We entered this year well positioned to fuel our profitable growth, we have the right people strategy and platform to capture the market opportunity in front of us.
Before I close I'd like to talk a little bit about her incredible team and culture.
Our people first culture is what makes pros such a special place and I'm. So proud of the environment. We built it prioritizes personal growth and ensures every employee can reach their full potential.
We continue to receive recognition of our culture, including recently by people magazine in the 2022 companies that care.
A list of the top 100 U S companies that demonstrate outstanding care respect and concern for their employees.
While we've had to make difficult decisions over the past several months, we know that the culture that we built this one did encourage is current and past employees to care for and lean on each other.
I'm thankful to all of our team members over the years for their contributions to pros and we're committed to supporting both current and former employees of pros throughout their careers at.
I'd also like to thank our shareholders partners and customers for their ongoing support of pros with that I'd like to turn the call over to Stefan to cover financial performance and outlook.
Thank you Andreas and good afternoon, everyone.
Our team delivered a strong fourth quarter and full year.
Despite a challenging economic environment, our solutions have proven to be mission critical to businesses as they look to drive profitable revenue growth.
Our platform and our package offerings launched in the second half of 2021 really set us up to drive a strong 2022 where we consistently outperformed our revenue guidance.
With our platform launch we were also able to drive our revenue performance with greater efficiency.
This resulted in improved subscription gross margins.
We even generated positive services gross margins as well as positive adjusted EBITDA in the second half of 2022.
Now I'll cover our results in a little more detail.
Subscription revenue in the fourth quarter was $53 $1 million, increasing 13% year over year and exceeding guidance.
For the full year subscription revenue was $204 million, increasing 15% year over year.
Our strong subscription revenue performance, along with a stronger than expected services revenue result, led to total revenue in the fourth quarter of $79 million, increasing 9% year over year and $276 $1 million for the full year, increasing 10% year over year.
Recurring revenue for the fourth quarter and the full year was 84% of total revenue.
And our trailing 12 month gross revenue retention rate continued to be better than 93%.
Our subscription <unk> was $229 million, increasing 17% year over year on a constant currency basis and exceeding guidance.
Totally or are was $247.5 million, increasing 9% year over year on a constant currency basis and was within our guidance range.
Going forward, we will focus on subscription a R. Because air are from maintenance customers now represents well under 10% of our total air are and will continue to decline during 2023 as we approach the end of life of our perpetual license agreements.
This is a significant milestone for us as it marks the end of our transition to SaaS.
Our fourth quarter recurring calculated billings increased 6% year over year and 13% for the trailing 12 months.
Our non-GAAP subscription gross margins were 77% for the fourth quarter and the full year, which increased over 500 basis points from 71% in 2020 one.
Additionally, we delivered another quarter of a positive 4% services gross margin.
Getting us to a year in services gross margin that was just short of breakeven.
Our professional services team drove significant improvement from a loss of 6% in 2020 one.
As I mentioned last quarter, we expect services margins to be slightly positive on an annual basis in 2023 and beyond with some quarterly fluctuations due to seasonality.
Total gross margins were 65% in the fourth quarter and 64% for the year, which is more than a 350 basis point improvement over 2020 one.
The path to profitability starts with improving gross margins and our team delivered in 2022 reflecting continued focus on driving efficiencies in how we provide and deliver our solutions.
We generated an adjusted EBITDA profit of $2.4 million in the fourth quarter significantly outperforming our guidance our adjusted EBITDA loss for the full year was $14 $9 million, a 40% improvement year over year.
Our adjusted EBITDA outperformance was driven by the better than expected revenue and cost savings in the fourth quarter.
Our fourth quarter earnings per share was two cents per share, beating guidance and we generated just over $1 million in free cash flow in the fourth quarter and our free cash flow for the burn up free cash flow burn for the year was $21.7 million and in line with our expectations.
We exited the year with $203.6 million of cash and investments.
We ended the year with 71 quota carrying personnel, which was slightly better than our expectations star.
Starting in 2023 we are adding quota carrying personnel to drive expansions.
The quota for these reps will be lower than the quotas for our new business reps and will create a larger pool of quota carrying personnel with varying levels of quota.
Because of this change we will not be providing quarterly updates on quarterly carrying personnel as the comparisons to past quarters will be inconsistent.
Now we are comfortable with our sales coverage at this time and we will continue to manage this coverage to achieve our growth goals going forward.
We will also continue to focus on driving higher sales rep productivity building on the success, we had in 2022 where we doubled our deal count every quarter of 2022 with only a few more sales reps than we had in 2021.
Now before I cover guidance I want to mention a couple of things.
First we are confident in our ability to capture the incredible market opportunity in front of us.
But we are considering the current economic environment as we set expectations for the year.
Second in the Echo Andras his comments, we continue to scale our business and have recently made changes to our cost structure, allowing us to accelerate our near term and long term profitability goals.
We expect to report positive adjusted EBITDA and generate free cash flow in 2023.
I'll provide more insights into our long term model at our upcoming analyst day during the outperform conference in May.
With that here's our guidance for the full year of 2023 with the stated growth rates, reflecting the midpoint of the ranges.
We expect subscription air are of $250 million to $253 million, representing 11% growth year over year.
We expect full year subscription revenue to be in the range of $230.7 million to $232.7 million, representing 14% growth year over year and total revenue to be in the range of $293 million to $296 million, representing 7% growth year over year.
We are expecting full year adjusted EBITDA profit of between three and $6 million, representing an improvement of over $19 million year over year.
We expect to generate free cash flow in the range of $2 million to $6 million, an improvement of over $25 million year over year.
Turning now to guidance for the first quarter of 2023 we expect subscription revenue to be in the range of $54 million to $54.5 million, representing an 11% increase year over year.
And total revenue to be in the range of $74 million to $71.4 million, representing a 7% increase year over year.
We expect first quarter adjusted EBITDA loss of between three and $4 million, which is a 5.6 million dollar improvement over the first quarter last year.
And as a reminder, it is typical for our business to have higher expenses in the first quarter.
Using an estimated non-GAAP tax rate of 22%, we anticipate Q1 non-GAAP loss per share of between nine and 12 cents per share based on an estimated 46 million shares outstanding.
Now related to the cost structure changes I mentioned earlier, we expect to incur severance charges in the first quarter of approximately $2.8 million to $3.2 million, which we will exclude from our non-GAAP results.
In closing I would like to thank all of our employees around the world for their continued hard work and dedication to pros.
Also like to thank you our shareholders for your continued support of pros and we look forward to speaking with you at our upcoming events.
I will now turn the call back over to the operator for questions operator.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.
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Our first question comes from the line of Scott Berg with Needham. Please proceed with your question.
Yeah.
Hi, everyone. Congrats on the nice bookings quarter and thanks for taking my questions here I've got a couple Andreas I wanted to start off with the reopening of China and the impact to your business I know on the travel side, it's heavily dependent on international travel and when we think of Asia Pac China, a large chunk of that one of the data points.
We've recently heard is air travel at least bookings for Asia Pac based air travel in January It was very close to 2019 levels.
Two questions on that one have you seen that as well and then two if that area or region is trending towards kind of more normal levels all of a sudden.
How does that impact your business or potentially impact your business. This year. Thanks.
Yes, Scott Great. Great question, Yes, we are seeing that region continued to improve and are really pleased that it's opening up.
That impacts frankly, not just that region, but all regions.
Hmm.
We think that this year definitely that that will help us.
And it's something that.
I think it is still early.
But throughout the year I think that that's going to be an area, where we'll continue to see investment.
So overall, we were pleased with that recovery.
Got it helpful and if we look at the <unk> side of the business.
Which I believe than yours and ice prior conversations was trending towards pre pandemic levels shall.
Should we think of the bookings in 2022 is kind of maybe in line with ease with what you saw in 2019 or is that business to have a little bit to go before it's completely healthy again.
Yeah, I would say look BW has continued to improve and and.
Formed very well last year, and we continue to see that continue to improve as we get into 'twenty three.
I would say overall I would say last year, we set pretty aggressive goals from a sales perspective to get back to 2019 and I'm very pleased with how we executed throughout the year.
And overall I would say look travel.
Performed well last year as well, it's still not back.
But definitely travel contributed.
As well in 2022.
Okay.
Got it and I'm, sorry, I'm just slide one more in here really quick you are hiring a bunch of additional reps for.
Expand motions this year and I get why youre, not going to give that metric going forward because it's a different metric at least but how do we think about your expand kids in 'twenty two with with regards to your bookings and expectations that are you seeing customers expand like did it also pre pandemic or is this really just a chance maybe fuel those claims going forward.
No. So that's a great question. So overall, we saw about a 50 50 split between new and existing which is a very healthy level and in last year. You know, we really focus on deal velocity and continuing to start smaller and drive expansions.
We see a lot more opportunities with our platform to drive even more expansions within our customer base of more capability.
We can sell to our customer base.
We're setting up a sales organization that can help drive faster expansions within the customer base and we see that as an opportunity long term smaller quote us.
And different approach, we're trying in some segments of our business first but it's the model if we see a lot of op retained in the future, but overall very pleased with both the new and existing in the approximate 50 50 split between both.
Great. That's all I have thanks for taking my questions and congrats again, thank you.
Our next question comes from the line of Chad Bennett with Craig Hallum. Please proceed with your question.
Great. Thanks for taking my questions.
Further kudos on not only the strong finish to the year, but but achieving EBIT positive in non-GAAP profit.
It's been a long time coming so it's good to see that in the pivot towards.
Pretty significant free cash flow and adjusted EBITDA growth this year, so nice job.
Thank you.
Yeah, I guess just in terms of the guide and Stefan I know you cited Youre, obviously factoring in kind of every what everybody's talking about macro wise, but just if I look at the subscription growth and I understand we're starting the year here.
Obviously, we.
We hope to do better, but you know the the growth rates of 14%.
At the midpoint relative to your your kind of 14% or maybe even a little bit higher closer to 15 this year in subscription growth.
Just considering the momentum throughout the year.
Obviously travel.
At least sound like Youre more confident that that it's going to be better this year.
I guess maybe.
Yeah, I don't know how you quantify the macro kind of impact on the guide, but just how do you think about b to b versus travel growth in in that subscription growth rate.
Yeah. So.
Chad.
To your point, we when we set the guidance and we do this every year when we first set it for the first part of the year. It's always a it's a long period of time to set the guidance. So we typically look early on and we don't factor in as much for the latter part of the year. So.
That does leave us an opportunity to reassess as we get to the mid year point to see if things have.
They built better visibility.
Visibility into the second half of the year, if that's something we can adjust for so that's that's very similar to what we do every year and that's no different this year.
The other thing that we have to factor in is we are going to have a little bit of a currency headwind.
We talked last quarter about that being about a two percentage point delta on total and it also is applicable to subscription.
I actually I don't think it's going to be that much I think it's going to be somewhere between 1% and 2%. So hopefully it's around one we've seen the though the euro strengthened that's helped things as well in terms of looking at our B to B and our travel.
Businesses.
I would say that.
Because we have we're coming from such a recovery stage on the travel side you guys are going to see a really nice growth rate on travel Andras commented that our travel business did very well in in 'twenty, two versus where we were in in 'twenty, one, but we still see a.
More of an opportunity to recover what was lost in the.
In the 'twenty to 2020 'twenty, one timeframe. So I would tell you that travel is going to have an outsized growth rate, primarily because of the recovery because of Asia opening et cetera, but that doesn't take anything away from our <unk> business. Our <unk> business is going to continue to do well, it's just not having the same level of recovery that traveled there. So I would say just between the.
Two travel is going to be a bit higher of a growth rate.
Because of that phenomenon.
Got it and then just is there anything that you saw in the fourth quarter, whether it's towards the end of the quarter.
From a billings bookings standpoint.
That plenty impacted your thought process or is it just.
Conservatism, just because of everything you're hearing out there I mean, I don't know if billings growth rate kind of came in where you thought it was or or how you think about that thanks.
I would say.
No Chad I would say look we have to be cognizant. The way. We approach guidance is the same way every year. If you look at last year, we took the same approach.
We want to be very confident with the guidance that we provide and we go about it the exact same way I will say, we hear everyday companies talking about the macro in the fact that we have to take that into account we can't assume it is a difficult selling environment and we have to.
Assume it's going to be a difficult selling environment.
You know, we're actually pretty pleased with with our guidance with where it is starting the year in and we're very focused on executing and I would say, we have you know pretty aggressive goals.
Do but overall our approach hasn't changed.
Yeah, and I think got it and maybe related billings, sorry, sorry to your point on calculated billings to add to that.
You know our calculated billings in the fourth quarter were pretty much in line with what we were thinking in terms of.
Where it landed.
In the short term calculated billings is really a function of what was already lined up and a little lesser to do with what you earn in new in the in the quarter.
So we have a pretty good idea of what that's going to be where we get where it gets more difficult when youre forecasting it over a longer period of time.
Our calculated billings were were pretty much in line with what we were thinking and keep in mind too that there is there are there are some timing effects that occur there that kind of drive that up or down and we certainly benefited from a timing benefit in Q4 of 21.
And that did have a rift.
Reflection on how we showed calculated billings in Q4 of 22.
Got it and maybe one last housekeeping one if I could Stefan how should we think about.
The maintenance.
Tend to decline this year, and then I'll hop off thanks.
No maintenance will will decline at an accelerated rate from what it has in the past.
We had a good migrations year in 2022 real happy to say say that I mean, it really has changed the dynamic of what our <unk> looks like maintenance is a very small component as I commented in my prepared remarks. So.
We've always talked about think about maintenance declining in the call. It the 20% to 30% range I think as we go into 2023, 30% to 40% decline is probably more in line with how to think about maintenance.
Got it thanks, so much nice job.
Thank you.
Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question.
Yeah, Hi, Thanks for taking the question Stephen I was wondering if you look at gross revenue retention I think it was above 93% again really solid number but.
But if I go back pre Covid I believe you talked about 95% in the past as we looked at 2023 and beyond do you anticipate getting back to those levels.
How much does that factor into the growth outlook. This year. Thanks.
Yes, So Parker I would say looking back Youre right I mean, but the year right before COVID-19. So 2019, our retention rate was around 93, but you are right. Prior to 19, we did have higher.
Retention rates.
You know as we've gotten bigger and as we've gotten done more are executed more transactions that are more of the land and expand variety. We knew that was going to have some pressure on our retention rates and that has been the case.
And so we were very happy with doing 93% or better and that is certainly something we factor in and.
Is there an opportunity to do better absolutely there is an opportunity to do better and I think you know the.
The work that we're going to be doing around these expansion reps and spending more time to to sell the value of what we currently have in those accounts in and what we can do to add more value I think will go a long way towards helping that gross retention.
I will say this it's a little short of me to call out and improving it off the 93, because we feel like 93 is actually a pretty strong number, but but yeah. I mean, we've done it before to your point, so I feel like it's something we can do again.
Understood and then shifting gears over to the cost structure changes.
The opportunity for leverage here on the path to profitability in 'twenty, three and how should we think about the impact across different areas of the business is there any one.
Segment sales and marketing R&D that maybe had an outsized impact from the cost structure changes.
I wouldn't say there was an outsized impact you'll see.
As the expense numbers come in in 'twenty, three I think you'll see an impact in the sales and marketing area Youll see some impact in R&D.
And G&A as well.
From a cost of sales perspective, youre going to continue to see the scale that we've been talking about over the last couple of years come into play, but no I Wouldnt say theres an outsized.
You know change one way or the other now within each one of those line items, we havent changed our priorities. So for example, we are going to be investing in more of the expansion reps that we talked about we're also going to be investing in new new.
New business logo reps as well, we're going to spend more money investing in are our demand Gen and a marketing.
Brand awareness initiatives, so theres going to be areas, where we do make some investments.
And that's gonna be factored in and then some.
Really on the on the product side.
We have looked at some of our lesser priorities deep prioritize those so we can put more wood behind me here on some of our bigger priorities, especially around what we want to do.
With our with our platform that Andre mentioned earlier, so that's really what's happening think of it as a yes. There were some reductions made and they were made in many different areas, but was really emphasizing how do we make sure that we stay in and continue to invest in those bigger priority items.
Got it I appreciate the color. Thanks again.
Hmm.
Our next question comes from the line of Knowhow Ciotti with Northland Capital markets. Please proceed with your question.
Yeah, Thanks and congratulations.
Congratulations on the good results in the.
The <unk>.
Adjusted profitability in fiscal year 'twenty three is a big positive surprise, so that's great to see as well.
Starting with the revenue guidance.
Can you just.
Why only 7% year over year growth for fiscal year, 'twenty, three given that for fiscal 'twenty to get 13% billings growth.
Does this imply that you're basically expecting flattish balloons frozen fiscal of 'twenty three.
No it doesn't mean that.
What we've done now is you know in order for us to drive.
The growth rate for the full year, we've got to not only leverage the billings that you talked about that we ended 2022 with but we've got also you'll see that executed all the way through 2023.
And as we typically do when we set guidance at the beginning of the year, we're really only factoring in what we have near term visibility to think next six months and we don't factor in as much around what we see around the second half. So you know as is typically the case I would tell you that.
We factored that in so that we have more of a chance to have upside than downside, but we are being cautious because of what we see in the marketplace.
We do also have a little bit of a currency impact I mentioned earlier about a 1% to two percentage point somewhere between one and two percentage point of an impact on on currency, which is impacting us a little bit.
And so those are some of the things that are that are driving that but let me put it this way we're executing to.
Our plan in a in an idea that can do better than that.
Okay, and then you have the Q1 guide for subscription revenue growth of 11%, but full year, a 14% so does that imply accelerating.
Revenue growth as we go through calendar 'twenty three.
It does yeah. It does but that's that's a different factor because what we're really talking about there is timing of when those bookings come online. So from a revenue recognition standpoint. So as you probably know there's a good portion of our business that is where we get the bookings, but we don't.
Immediately get the revenue recognition that revenue recognition is as delayed start. So we have lined up revenue that's already been booked to your point, that's coming online from a growth rate perspective, and Thats why youre seeing that factor in.
Got it okay.
And then.
I always I mean, it's always great to see.
The significant improved profitability and are projecting but I always get concerned that that is going to come at the expense.
Future revenue growth, yet you're talking about.
Accelerating your growth targets. So can you help me reconcile.
You presented here.
Well from a from a growth rate perspective, we feel like we are continuing to invest in the areas that are going to help us drive growth now when we looked at some cost cutting areas and where we cut some costs. We did put areas in what I would call lower priority areas.
And so yeah that can have an impact on the overall growth rate I don't want to I don't want to mislead you that that area, but it's not going to have a huge impact because the areas that we are really locked in on what we wanted to accomplish both in the travel and B to B areas are areas that we are still continuing to invest in as a matter of fact I would tell you that.
We've actually allocated a few more dollars in some of those areas as we went through these exercises to ensure that the things that we really want to focus on are those areas that are going to drive the revenue growth. So yes. There is a there is.
Nominal effect because of some of the things that we've stopped doing but our plan is to more than offset that or at least offset a good chunk of that with the focus and execution in those higher priority areas.
Okay, and then as far as the off that simple that we should be thinking about the $45 million for the December quarter is that the.
Go forward rate that we should be expecting in the March quarter, and then going forward from there.
I'm, sorry, I didn't understand your question sorry.
Ah I calculate that you had a $45 million opex for the December quarter. So is that the baseline that we should be looking for going forward.
Yes that said that's in the ZIP code of what we should be thinking about.
Somewhere in that neighborhood now keep in mind, we do have seasonality. So while it will average out that way it may be a little it will.
Be a little higher than that in Q1, and then a little dip down as we go into later quarters, but yes, that's a pretty good.
Estimate of what Opex would look like yes.
Okay, great. Thank you.
Thank you.
Yeah.
Our next question comes from the line of Devin or with Keybanc. Please proceed with your question.
Great. Thanks for taking my questions.
Yes, nice to hear the win with GE.
Pension from GE health to power in just one quarter.
Just one curious to hear what she found pros, particularly useful initially and maybe a bit more details you can share on just around the expansion process TG power just within one quarter.
Yes, no great question real focus area is on.
Our price optimization and management solutions, and how we're driving price guidance to drive more profitability.
For their business and I think their spend.
We're very focused here on how we prove leveraging our next generation AI to drive.
Better win rates as well as better margin uplift for their business, we experienced in many of these like industry psyche, many customers that I had.
<unk> seen a pretty significant both revenue and margin uplift and we were able to prove in a very short amount of time.
Significant impact.
And we were working at cross you know our focus in many of these global accounts is to work across the business units to prove out the value I would say a you know a big kudos to our team and into our product organization I think car our platform launch in our ability to get started small.
All prove out the value helps to drive the sign and expand motions. So I think a lot of what we saw last year.
Our success is really.
About our platform launch at the end of 2021 and this is just one of the examples of that.
Got it got it that's great maybe.
Maybe just one more question if I may.
Nice to see that APAC is on its way to a more meaningful recovery, but I wanted to kind of dive into maybe you were up a little bit it seems like performance there kind of slowed a little bit in the quarter any meaningful changes around like sales cycle of close rates in that region during the quarter.
Yeah, I would say no no meaningful change, we actually had we talked about in travel Iberia, We say migration in the region we saw.
You know.
Good business momentum I would say looking general like cross it it's a harder selling environment.
I've I've talked about it last quarter, but in this type of market. What we're trying to be very intentional with is making sure. We can land with small investment rapid time to value and very measurable results.
Think that's this strategy across but I would say Europe , not not a big difference.
Any other market actually.
We had at cross.
Good good.
And in Europe .
No no big difference from any other market.
Okay. Yeah I appreciate the color Andres. Thank you. Thank.
Thank you.
There are no further questions in the call I'd like to hand, the call back over to Linda over to put for closing remarks.
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