Q4 2022 Qualys Inc Earnings Call
Yeah.
Good day, and thank you for standing by walking through the call this fourth quarter and full year 2022 earnings call.
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Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Blair King. Please go ahead.
Good afternoon, and welcome to close this fourth quarter of 2022 earnings call.
Joining me today to discuss our results are submit declare our president and CEO and Jimmy cameras CFO .
Before we get started I would like to remind you that our remarks today will include forward looking statements.
Generally relate to future events or future financial or operating performance.
Actual results may differ materially from these statements factors that could cause results to differ materially are set forth in today's press release.
Filings with the SEC, including our latest Form 10-Q and 10-K.
Any forward looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events.
During this call will present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in today's earnings press release.
As a reminder, the press release prepared remarks Investor presentation are all available on the Investor Relations section of our website, so with that I'd like to turn the call over to Matt.
Thank you Blair and welcome everyone to our fourth quarter earnings call. We delivered another quarter of strong financial performance, reflecting a year of accelerating revenue growth and industry leading profitability.
In terms of innovation in 2022 was a strong year for quality as we expanded our platform and our market opportunity, we introduced context xdr to enable high fidelity detection and response capabilities for our customers.
It relieves <unk> true risk to enable comprehensive risk, scoring and ideas of integrations.
We brought external attack surface management into our cyber security asset management application.
Unified in multiple context vectors around asset criticality, while leveraging gang system configuration with asset elementary in a single agent and BARDA unique edr application to market.
They're flexing the power of our platform, we introduced our cloud native total cloud with flex scan, which pairs agent and agent zero touch assessment options with comprehensive cloud posture management and container security.
These innovations allow our customers to reduce complexity as they standardize on a trusted platform that delivers an immediate ROI and lower total cost of ownership.
Relative to slight lower than traditional detection only technologies.
With seasonal increasingly focused on comprehensive risk management, we have upgraded our true risk platform capability to ingest third party skills into the quality cloud platform, which we call. It enterprise risk management and is now in preview with our customers.
Regardless of which vendors scans and organizations environment with this enhancement to our tourist application. While this is not providing enterprise customers at a holistic enterprise wide risk score based on Africa, <unk> and our cloud database, which is the unified threat intelligence platform of over 25 countries.
What makes this capability. So special is our ability to then reduce an organization's enterprise risk score by leveraging quality remediation application with automated workflow through a unified dashboard.
Additionally, total cloud, which is our cloud native risk management solution for public cloud is now GAA infants.
Since our acquisition of Blue Hexagon in October .
Really added a new cloud detection response module to our telco cloud solution as organizations increasingly prioritized moving workloads to hybrid and multi cloud environment. We view this new MLP AI based technology for zero day threat hunting and responses on other strong competitor differentiator.
I quickly evolving market.
Looking forward, we will continue to seek out opportunistic acquisitions to further enhance our platform accelerates our time to market and further expand our market opportunity.
Now turning to our sales and marketing execution in Q4, we continued to witness organizations broadly responding to evolving macro by applying additional layers of scrutiny to sprint and delaying project start dates.
Believe that this increase scrutiny comps increase opportunity as organizations standardize on trust our platform to consolidate security stacks leverage automation and achieve expedient permutation of risk quality unique organically based platform to address this need.
Nevertheless to fully capitalize on this opportunity request for us to go to market execution.
The last year, we have made some meaningful progress on several fronts in this regard, including successfully growing the sales and marketing teams and investing in our sales enablement and operations functions. We still have work to do in our sales execution.
This was particularly evident with.
Within the context of current market dynamics, and persistent macro headwinds, which resulted in lower than expected bookings growth in Q4, Accordingly, I'd like to share a couple of plant personnel and alignment changes within our sales and marketing organizations, which position us for forward success earlier today, we announced upcoming departure of our chief revenue.
Fisher Island Peters, we thank Alan for his contributions during his tenure at quality as we continue to grow and scale our sales organization in the interim I will be overseeing the sales team as we focus on product led growth inherent in callers.
We are fortunate to have a talented next level team of regional sales leaders, who are energized about our competitive position in the market and I'm confident in our ability to effectively drive our business forward as we search for a successor.
Additionally, I am pleased to announce Brinker Sherwood joined Wallets in November of last year was recently promoted to serve as our new chief product officer, overseeing both product as well as marketing given bank has a strong background in product loan growth, we believe having both product and marketing under the same negotiate would help increase return on our investments and drive up.
Operational efficiencies in our go to market motion.
It's great to have been kicked around the team.
Looking forward to his leadership and helping execute our long term growth agenda.
We diligently address the challenges brought on by today's market uncertainty, we remain confident in our long term strategy and trajectory I've.
I've met with over 100 seats over the past few months and our message is clear they are looking to pivot to platform based solutions to solve their complex security problems.
In the face of an evolving macro escalated trade environment, and cyber security skills gap organizations need to reduce complexity and cost while presenting measurable risk reduction initiatives to board and C level executives.
This was underscored at our recent quarter Security conference in Las Vegas, which brought together over 500 quality customers and partners several customers in attendance highlighted the ability to measure their organization security posture by leveraging the <unk> platform, while reducing risk and cost one customer stated back through.
<unk> truly is the reduce risk and eliminate the 60% of critical liberties in a very short amount of time without having to buy separate threat intelligence feeds.
Against this backdrop, we had several positives in Q4, we continued to see the steady adoption of <unk>, which is now deployed by 48% of photo worldwide customers.
Few key seven figure <unk> wins in the quarter included two global 500 financial institutions, which shows quality for its ability to replace traditional siloed security tools and enhanced security posture on a unified platform and a global 50 insurance company that is leveraging <unk> to not only detect but also remediate vulnerabilities in both on Prem and cloud.
Workloads.
Beyond these wins.
I'll take a moment now to share a couple of additional successes with customers who are consolidating their security stack to optimize and reduce risk first a new logo fortune 1000 web hosting company selected cyber security asset managers are going to be empty.
The risks and remediation application in a seven figure competitive win replacing Barnes solutions from Cleveland Us with one platform the ability for this customer to significantly enhance it security program with automating scripts.
Comprehensive internal and external risks.
A quick remediation CME.
Seem to be seeing an alerting on a natively integrated platform that all key differentiator as compared to one number do detection only solutions in the market.
In addition in 2022, highlighting organization strategic focus on high quality real time asset inventory, we expanded our engagement with an existing financial services customer signing and over $800000 upsell deal for quality cyber security asset management solution.
This customer is standardizing on our cyber seeking different management solution due to their age as a context.
End of life visibility and real time inventory they are able to get out of the same agents and platform have already deployed for BMD.
This enabled them to and how is that investment in quality platform of consolidating solutions, which is important to customers and current macro environment.
As more and more customers are beginning to.
To preserve quality at a leading security platform.
Okay.
As the leading security platform that they can leverage to solve their complex and difficult security problems. We are growing increasingly confident in our ability to drive growth and gain market share. This is evidenced by the continued growth in our large customer spend with customer spending $500000 or more with us growing to 100.
16, Q4 up 27% from a year ago.
Turning now to our growth initiatives and SME SMB market, where we are with slower growth. We have introduced new product packaging the MTR true risk, we MTR to fix it.
Patch management, and VW are true risk protected with both cash management and multi vector edr.
These new packages offer simple easy to deploy all include the cyber security solutions to manage their immediate and protect against continuously emerging cyber threats and reduce risk.
The small customers, we believe that the convenient packaging and pricing of this offering will help streamline the sales process for our partners, reducing time to value and further advance our value proposition in the SME SMB market. In addition, we are pleased to share that in Q4, we expanded our partnership with Oracle.
Oracle cloud infrastructure OCI began.
Offering of full.
Manage one liberty scanning service that enables call as customers to leverage their own Liberty management licenses to scan that we'll see a computer virtual machines.
Also pleased to note that <unk> has electric quality development Englishman solution to help scan their internal environment for one Liberty. This is a testament to the effectiveness of quality and security cloud infrastructure and advancing our partner ecosystem.
Finally, I am pleased to announce that <unk> recently received federal everybody start us at the high impact level on our newly introduced Gulf Cloud platform currently because the only fed ramp high ready platform offering inventory by Liberty management and cash management in a single unified workflow.
With government agencies increasingly moving workloads from on Prem environments to the cloud. This marks the achievement of a key milestone in mix, while it's the only modern alternative to legacy scanners for federal local and state government agencies, given the certification our consolidated platform and our investment to establish a public sector presence. We believe we are now well positioned.
<unk> to addressing new vertical that will help drive growth in the long term.
In summary, the cyber security market is a mission critical technology, we believe our natively integrated platform.
That is quantifying it immediately and reducing risk brings a highly differentiated value proposition to our customers as they get more security using less resources are dosing. The cordless platform. In 2023, we will continue our disruptive innovation and further enhance the in advance of our go to market investments to crisply execute our long term.
Strategic vision.
<unk> already proven approach to balancing growth and profitability with this I will turn the call over to Jeremy to further discuss our fourth quarter results and outlook for the first quarter and full year 2023.
Thank you, Mike and good afternoon.
I start I'd like to note that except for revenue all financial figures are non-GAAP and growth rates are based on comparisons to prior year period unless stated otherwise.
2022 with another notable year of product innovation for our colleagues as we continued our product leadership, while growing revenues by 19%.
Our gross margin at 81%, despite inflationary pressures and generating EBITDA margin of 45%.
While our profit margin was well above our industry peers 2022, with a year of investment for pilots with both R&D and sales and marketing growing faster than revenue.
In R&D, we invested in our security research and product management team.
Third strengthen the value proposition of our products and assistant executing our go to market strategy.
And sales and marketing and with a mix of investments in head count at balance sheet shows and marketing campaign.
Having executed against our 2022 investment plan with over a 20% increase in sales and marketing head count we look forward to optimizing our investment in 2023, as we remain committed to driving long term profitable growth.
Now, let's turn to fourth quarter results.
Revenues in the fourth quarter grew 19% to $130 8 million upfront, 16% and a year ago period.
This concludes at de Minimis add from Blue Hexagon acquisition, which contributed a few hundred thousand dollars to Q4 revenue.
Revenue from channel partners grew 22% outpacing direct which grew 17%.
Revenue contribution mix has shifted slightly over the last year with threatening making up 58% of total revenue versus 59% a year ago.
We expect a similar trend to continue in 2023.
Thank you your growth in the U S of 19% was in line with our international business, which grew 20%.
Going ahead to 2023, we expect the U S and international revenue mix to remain at roughly 60% and 40% respectively.
In Q4, we saw continued strength in customer dollar retention.
Lower performance in <unk> with our net dollar expansion rate on a constant currency basis at 109% down from 111 last quarter, but up from $1 eight last year.
Where we saw room for improvement with primarily in smaller customers with less than $25000 with Tesla during the last year.
We expect this segment to gain momentum with the launch of a new product packages Este, Matt just mentioned.
In comparison customer to spend $25000 or more with us.
<unk> by approximately 20% both in count and revenue.
In terms of new product contribution to bookings, we continue to see healthy demand for patch management and cyber security asset management with the two combine making up 9% of LTM bookings and 15% of LTM new bookings in Q4.
The increase adoption for these products resulted in 50% growth in Q4 on a combined basis.
Adjusted EBITDA for the fourth quarter of 2022 was $55 1 million, representing a 42% margin compared to a 45% margin a year ago.
Operating expenses in Q4 increased by 25% to $58 4 million.
Primarily driven by the growth in sales and marketing investments, including higher head count and related costs as well as punditry channel.
EPS for the fourth quarter of 2022, with one point of Hawaiian and our free cash flow for the quarter. Our fourth quarter 2020 was $40 9 million, representing a 31% margin compared to a 32% margin a year ago.
Thank you for we continue to invest the cash we generated from operations back into <unk>, including 3 million on capital expenditures.
$104 5 million to repurchase 848000 of our outstanding shares.
At the end of the quarter, we had $134 5 million remaining in our share repurchase program.
We are pleased to announce that our board has authorized an additional $100 million share repurchase program, bringing the total and the other one not for share repurchases to $254 5 million.
Now, let us turn to our 2023 guidance.
Starting with revenue for the full year 2023.
Our revenue guidance is 553 million to 587 million, which represents a growth rate of 13% to 14%.
For the first quarter of 2023, we expect revenues to be in the range of $130 2 million $131 million.
Presenting a growth rate of 15% to 16%.
This guidance is assuming no material revenue contribution from our newer products such as context, Xdr and total cloud.
<unk> unfavorable market dynamics throughout 2023.
Similar to what we witnessed in the fourth quarter of 2022.
Given the growth opportunities ahead of US we will continue to invest in operations people and systems.
I think the importance of optimization.
As a result, we expect full year 2023, EBITDA margin to be in the low 40% roughly in line with the fourth quarter 2022 margin.
Full year EPS to be in the range of 4.10, and four <unk> for the first quarter of 2023, and a range of <unk> 95, and <unk> 97.
Our planned capital expenditures in 2023 is expected to be in the range of 18% to $25 million for the first quarter of 2023, and a range of $4 million to $5 million.
In 2023, we plan to align our product and marketing investments to focus on specific initiatives to drive more pipeline and support sale I'll respond to the current macro conditions, while at the same time, maintaining a disciplined approach to unit economics.
2022, we accelerated the pace of hiring and brought in great talent across all functions of the company increasing the total employee base by 18%.
<unk> sales and marketing head count by 22%.
While we plan to continue to invest in 2023, given the environment right.
Planning to prioritize increase in investment in sales and marketing as well as related support functions and systems, while largely maintaining our level of investment in engineering.
As we shift to sharpen our execution by focusing on sales and marketing enablement and productivity. We believe we will be able to drive wallet share and long term returns, while balancing growth and profitability.
In conclusion in 2020 to you we delivered strong top line growth and industry, leading profitability. We continue to lead with product innovation, introducing context, xdr and total cloud and adding to it to the MTR.
With these achievements, we remain confident in our ability to deliver on our growth opportunity long term and we will continue to prioritize investments critical to advancing our platform and go to market scale with a commitment to further elevate the areas of our business within our control and maximize shareholder value.
And I would be happy to answer any of your questions.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
One moment for our first question.
Our first question comes from the line of Dan Bergstrom from RBC capital markets. Your line is open.
Hey, Thanks for taking our question could you talk a little bit more about the buildup to guidance for calendar year 'twenty three.
What are you assuming from a macro perspective relative to what you saw in the fourth quarter, you said similar but maybe more on is it the same getting worse.
Close rates, just trying to better understand a little level of conservative.
Conservatism and everyone's numbers here.
Yes.
We really.
We saw that macro and from our perspective deteriorate in Q4 and that was reflected in our software to them.
Bookings, both on new and upsell.
And I think we see opportunity for us to continue to work with our sales team improved execution.
Those are some of the things that changes that were put in place that we are looking forward to as we get into Q1 and thus.
That's about 20 figure sort of.
<unk> not assumed any.
Change in the macro or productivity or anything like that.
When we looked at the guidance.
Great. Thanks, and then looking through the Powerpoint it looks like the penetration of Fortune 50, GTK customers increase versus previously and you called out.
An example in the prepared remarks, there just curious about what's what's securing that business what products did they adopt and then just to verify.
The first real change in penetration there in some time.
I think.
At the larger customers what's really.
Interesting is that they are complex security problems that they need to solve and the combination of.
Cyber security asset management capability, the vulnerability management detection response, and patch management together are really helping them solve that and what is happening is that everybody is talking about security budgets in the layers being added under scrutiny, but really it's a question of.
The spend that youre, putting in security is that giving you a meaningful outcomes from a risk reduction perspective, and that's really the question. That's being asked if we're going to spend this money are we getting a risk reduction and thats, where the true risk that we introduced last year.
The enhancement that we have done now has resonated well with the <unk> because now we're able to give them a risk score and they're able to actually tie the spend that theyre doing to bringing that risk score down and really able to quantify how that investment is making sense and I think that conversation has been quite exciting and that is where we see a larger.
Enterprises like I gave that example of this company that essentially bought just over $800000 worth of just asset inventory product to add onto that the MTR.
In Q4, typically Q4, so that they could actually enhance their security program and get that outcome and reduce the speed at which they're able to address this threat. So it's not just the projects and security are executing board is the outcome that you already and I think that's kind of what's resonating with our customers.
Great. Thank you.
Yes on moment, our next question.
And our next question comes from the line of Joshua Tilton from Wolfe Research. Your line is open.
Hey, guys. Thanks for taking my question.
Just one for me.
The growth outlook range for next year.
Kind of ahead of the growth that you guys did in your card billings in the back half of 'twenty two.
So can you just help us understand that ramp or maybe the acceleration of new billings that you guys need in order to I wouldn't say meet but maybe come in slightly ahead of the guidance that you laid out for 2023.
Yes, if you take a look at the current billing with that growth.
For 2020 to that 15% I think that what we would need to beat our revenue guidance is probably do something around that range and if you take a look at the guidance that we gave for 2023.
The assumptions that we made are we thought that it would be prudent to take into consideration. The current macroeconomic conditions as well as a trend that we're seeing right now Q4 was a tough quarter for us.
You had mentioned with lower than expected bookings performance and what we've assumed in the 2023 guidance is that that condition continue we will be actively looking to improve our sales execution as well as look at different opportunities, both large and small across all our customer base.
In order to drive bookings growth, but with that said, we feel that the guidance is properly derisked at this point.
Thank you very helpful.
One moment for our next question.
Our.
Next question comes from the line of Joel Fishbein from <unk>. Your line is open.
Okay.
Hi, Good afternoon. This is for Joel Fishbein.
Just had a question I think you had mentioned I saw that your gross margin ticked down around 60 basis points quarter over quarter, and I think you might've mentioned some.
Inflation pressures.
Could you talk about discounting and did you see any pricing pressure. Additionally, in Q4, especially as some of your existing customers we're renewing their contracts.
Yes, I think.
We went into Q4, we certainly have some more discounting pressure coming in from competition.
Right.
<unk>.
The review it case by case basis.
We have a lot of different capabilities that we.
Can offer to bring more value to the customer from the same dollar they spend with us and so yes, we do see the discounting pressure and we're essentially going back to them with a better value with the additional capabilities and youll see some of that in the the packages that we have for 2023.
Okay.
Arch management then.
Our edr et cetera, together, and simple packages, which offer them a little discount, but actually make it much easier to reduce the friction in the buying process.
Great. Thank you.
One moment for our next question.
Our next question will come from the line of Rob Owens from Piper Sandler Your line is open.
Great. Thanks for taking my question as you guys look at your sales and marketing investments from a <unk>.
Direct and channel standpoint are you leaning either direction as we look at that metric moving forward might've skew one way or the other given its been relatively static over the last couple of years. Thanks.
See I would say at a high level that we started the program.
Partners are in May of last year. So I think we are excited to see some of the early traction that we're seeing.
And Tom software deal registration.
And the engagement that we're seeing with the number of partners, but I think.
It's early days and so as we progress through this year or so we'll get a better idea of how.
The demand is coming from partners versus direct.
As that evolves, we will have a.
Better picture and so we're not necessarily driving towards one way or the other.
Thank you.
Our next question.
Our next question comes from the line of Brian Essex from Jpmorgan. Your line is open.
Hi, good afternoon, and thank you for taking the question I guess.
Maybe first.
I think Jimmy mentioned that there was no real material contribution in the guidance from cortex, Xdr and total cloud, but maybe some early indications of what youre seeing there.
Maybe outside of those products other emerging.
Products that might be.
Showing signs for early contribution and how might that drive levers for upside in 2023.
Great question. So if you look at the where.
In Q4, if you look at cyber security asset management patch management, but I think those continue to have good uptake and you'll see that contribution to the bookings I think he is by 15%.
For our part of the combination of those two and so I think we are seeing more and more interest in those I think total cloud is something that we are driving a lot of innovation in the new.
Blue hexagon coming in so.
As customers are looking for flexibility moving workloads from on Prem into cloud multi cloud and back I think a combination of quality MTR with broker cloud licenses.
Where we see initially they will look at being flexible with the licenses that they have and then adopt additional licenses as they grow into the cloud in the future. The feedback has been very positive because of the comprehensiveness of the.
Scanning capability that we bring in sort of just focusing on a snapshot only scan over to Adrian to only scan we are giving them. The most flexible options and so our larger enterprises are excited about it and sort of looking at cloud only security solution that only give them a visibly the cloud most companies obligations have on hybrid some of it is in cloud some of it is.
And on Prem and they warn vascepa risk overall risk of a combination of everything and so that feedback.
<unk> has been quite valuable and we have customers who are looking forward to starting to do evaluations of Coca cloud now that it's gone.
And give us feedback and see how that they can adopt that in addition to the BMD out of it they are using on their own Prince systems, and then context as yet it's still early days, we have a few customers that.
How it started using it at giving us feedback, but the overall theme is the same but today and sort of having multiple tools collecting parts of their data in them, having to build something to bring context and there are many tools that are just collecting logs.
And providing detections on those logs the context of the asset whether it's running a database or whether it has on liberty's all of those things are missing and so on the Polish platform, because we have so much real time context at the outset, when they're able to bring those lager and quality, that's where theyre seeing interesting use cases that they can satisfy I mean, I think thats kind of how.
Really customers are looking at is the quality platform solves multiple use cases more than the individual product is the use case that they have how that is getting solved. So it's early days for these but I think we are.
Pretty excited about.
More immediate term.
<unk> uptake that we're seeing in fibers going to asset management and cash management, and we look forward to our contacts equity RF talkin cloud more in the future quarters.
Got it that's helpful and maybe just a quick follow up.
Yeah.
Just on managed services penetration I think you've talked about it in the past, but in the spirit of expanding outside of large enterprise and outside of the traction that youre seeing with with partners and any incremental.
Traction there to note.
So I think we continue to bring MSP is onboard as you work with them, but I think nothing.
To call out that is dramatically different I think.
It will be interesting to see as the macro also evolves from the partner perspective, they see the value of managing their bottom line or to provide service to their customer by not having to go to 20 different tools to provide the service versus standardizing on a quality platform that is bringing them everything from providing where liberty management Apache to EDI.
And those are the congresses that we are having.
Partners are also looking into 2023, how they want to optimize what they provide but like I said nothing.
Material are very different to share right now.
Got it that's helpful. Thank you so much.
One moment for our next question.
Our next question will come from the line of Rudy Kessinger from D. A Davidson your line is open.
Hey, guys. Thanks for taking my questions I guess I'm curious on the guide it sounds like what Youre, saying is what's baked into the guide for 'twenty. Three is an assumption that the conditions in Q4 continued but not necessarily get worse I guess I'm. Just curious why not go to that next step I think most of your competitors and others in the broader cyber security space have gone.
That extra step to make an assumption that things deteriorate further and bake that into that 'twenty three guys. So just curious what drove that decision there.
Yes.
Yes, I think in terms of Luke.
Look I think we are.
Taking into account that.
What we saw in Q4, which brought us was fairly.
Different than what we have seen earlier and it was not.
In terms of productivity et cetera was lower than what we would expect our so we're assuming that that's going to continue and again, we are continuing to invest in the sales and marketing.
Side of the house to get more quota carriers and do here to improve the packages that we have et cetera to improve how we are looking.
Looking at execution. So that's why we're just assuming the continuation of the Q4.
Macro that we're seeing but again its.
There is lumpiness that we understand.
That's kind of how we are looking at it.
And as I mentioned in Q4, what we saw was.
Bookings came in lower than what we had anticipated and so we felt that that macro impact in Q4 already and so for us the way we look at it is because of the macro impact it had and had a trickle down impact on the sales rep productivity and then the process and we're really looking into our sales execution momentum and deal with that.
We do see signs where.
An example, we just launched a new product there are some niches that are that are going on right now that we feel like it's headed in the right direction, but the guidance actually.
Taking into consideration all these different elements, including the personnel changes. So we feel that it is a cautious guidance from our perspective.
Okay, and then secondly on the sales execution, you've mentioned I had a couple of times I guess.
Where do you really need improvement is it more so your tenured reps are not selling really the whole package. As you expected is that your newer reps are taking longer to ramp obviously in the macro could be impacting that but any any more tangible items you could call out on sales execution that you are looking to improve.
Sure, Yes, I think we are overlapping in restaurants, we made.
In 2002, a lot of them have done well I think we increased sales head count as well I think it's a little bit different in each segment you saw the larger customers are doing well in terms of getting additional capabilities from wallets et cetera, and then of course there are some deals on the larger enterprises are because of the macro that are additional signature of Rds.
Additional layers of convincing the value and I think there is room for us to do better than those we have been quite in some of these deals actually stay ahead of ensuring that we were in front of the right people and showing the value. So I think that the training that we're giving you on our tenured reps to make sure that as we get into 2023, we're doing a better job of staying ahead of that.
On the lower end of the customers that's more about <unk>.
How do we reduce the friction in the buying process.
By not having to have them upsell individual modules and provide better packages and then just a matter of messaging for the SMB segment around our value proposition as we call. It <unk>.
And then fix the business is going to fix things and this is going to protect you. So I think it's.
On those two different segments I think it's an island and overall of course, we have our salesforce, we have been hiring last year and there is a room for us to provide better sales enablement for them and Thats why with being cash now coming onboard and aligning product.
Marketing product management product marketing and driving more product related growth.
We could we believe we can use our platform itself as a way to create more opportunities for our sellers to show the value prop much more quickly and so it's a combination of those things that we are looking at.
Yeah, and just to add a little bit more color to it. The way you are looking at it is we've always been a product leader. We believe that we have a very differentiated platform that works very well and serves our enterprise customers that are looking to solve very complex and difficult problems and so that's why we've been successful in the last year in terms of our ability to graduate to care.
And the dollar amount from larger organizations with that said, where we've seen the lack of growth and the inefficiency. If you will is on the SME and SMB space, where if you take a look at it as an example customers who spent less than $25000 with us on the.
Can't really didn't grow that much and thats been a drag on our business, that's where we're really focused on right now with the new product and packaging, we knew that there was friction.
And this is where we're very.
Very happy with the new product launch and with that I am helping to accelerate and gain the momentum in that segment, where we've seen more of the macro head on we believe that that will have and.
Hey.
Incremental revenue if you will that will deliver that we'll be able to deliver probably in the second half of 2023.
Thank you.
Thank you one moment our next question.
Our next question comes from the line of Hamzah Firewalls from Morgan Stanley . Your line is open.
Hey, good evening. Thank you for taking my question, Jimmy you talked a little bit about the personnel changes in how youre thinking about that.
Just curious.
How are you reflecting the risk.
Additional sales disruption on the back of the tiara departure or is that something that you think you really contemplated in your 2020 outlook.
Yes.
And this is why we believe our outlook is appropriately de risk from that perspective, because if you take the assumption that we made in addition to the <unk>.
Assuming that the current macro continue.
No material.
Alright gain from venue our product I mean, we do see a huge upside to <unk>.
Our guidance is.
Our product happened to take off.
Second half of this year, however, because of the personnel changes, we believe that the sales rep productivity, even though it was lower in Q4, we're assuming that it continues that is in 2023.
Got it.
Just so I guess, maybe our models our level of debt because it is the <unk>.
<unk> metric.
I'm curious, how you're thinking about growth for <unk> throughout the year I think in times, where.
Yes, yours, where things have been slowing we've seen GCB kind of south of the revenue growth by.
A few points.
So we expect PCB to grow like maybe close to 10% this year.
Not necessarily because if you think about revenue loss from the CFPB.
So when I say the upside the CFPB could grow higher than the revenue and thats that uncertainty in terms of our guidance for the revenue. However, its more informed by what we were able to achieve in 2022.
We'll even we'll be achieving in the first half of 2023 that it will have a greater weight on the revenue for 2023.
Okay. Thank you.
Okay.
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