Q4 2022 Brightcove Inc Earnings Call
Speaker 1: During today's presentation, we will make statements related to our business that may be considered forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Rehdigation Reform Act of 1995.
Speaker 1: including statements concerning our financial guidance for the first fiscal quarter of 2023 and the full year 2023.
Speaker 1: expected profitability and positive free cash flow, our position to execute in our go-to-market and growth strategy, our ability to expand our leadership position, our ability to maintain an upsell existing customers, as well as our ability to acquire new customers.
Speaker 1: Forward-looking statements may often be identified with words such as, we expect, we anticipate, upcoming, or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially.
Speaker 2: ireling
Speaker 1: Also, during the course of today's presentation, we will refer to certain non- GAAP financial measures. There is a reconciliation schedule showing gap versus non-gap results currently available in our press release issued aftermarket clothes today, which can be found on our website at www.brightcove.com.
Speaker 3: Thank you all for joining today. I'm Mark DeBavuas, CEO at Breakhove, and with me today is Rob Norrick, Breakhove's Chief Financial Officer.
Speaker 3: We're excited to be here to discuss our fourth quarter and full year 2022 results.
Speaker 3: I'll also provide an update on the progress we've made on our strategy and high-level overview on key areas of focus and goals for 2022.
Speaker 3: I'll begin with a quick overview of our financial results for Q4 and full year 2022.
Speaker 3: Total revenue for Q4 was 49.2 million. Within, albeit at the lower end of our guidance range, due to lower than expected, overages in the quarter.
Speaker 3: The Justin Ivita was 1.2 million, our 14th consecutive quarter of positive of Justin Ivita.
Speaker 3: Adjust the EBITDA was just below our guidance of 1.3 million for the quarter due to the lower overges I mentioned and also one time Severance costs related to a team restructuring we instituted with new management coming on board.
Speaker 3: Excluding those evidence costs, the adjusted EBIT would have been well within the guidance range.
Speaker 3: Let's turn to our full year results.
Speaker 3: Just a quick reminder that the guidance Rob shared in early 2022 prior to me joining the company.
Speaker 3: was 207 to 250 million in revenue and 15 to 19 million in adjusted EBITDA.
Speaker 3: For full year 2022, total revenue was 211 million right in the middle of the original guidance range.
Speaker 3: On a constant currency basis, revenue was approximately 216 million up 2% year over year and above the high end of our original guidance range.
Speaker 3: Full year 2022 adjusted EBITDA was 17.9 million above the middle of the original guidance range and on a constant currency basis was approximately 20.9 million well ahead of the high end of the guidance.
Speaker 3: I am pleased with these results. They demonstrate our understanding of the business and our ability to accurately guide investors.
Speaker 3: We manage the business well in the context of significant foreign currency exchange headwinds, meaningful market uncertainty, and through the massive transformation we instituted across our business to prepare for 2023 and beyond.
Speaker 3: I join the company in late March 2022 in the midst of a very uncertain macroeconomic environment.
Speaker 3: We quickly worked to install a world-class executive team that could put in place and execute on a long-term strategic plan that would enable Brecov to consistently generate double-digit revenue growth and expanding adjusted EVA DOM margins.
Speaker 3: I'm proud of what we've accomplished so far, and that we successfully put the pieces in place to deliver on these long-term goals.
Speaker 3: This is a testament to the smart approach, hard work, and focus of everyone at Break-Over.
Speaker 3: And while I'm pleased with these results, that does not mean I'm satisfied.
Speaker 3: 2023 will be the key year in proving out our strategic plan and showing investors our ability to execute.
Speaker 3: And that's what we're already doing and plan to do throughout 2023 and beyond.
Speaker 3: Our team transformation in 2022 has put us in position to deliver on our vision to be the most trusted streaming technology company in the world.
Speaker 3: It is clear to us that the streaming markets are at an inflection point.
Speaker 3: On the media side of our business, we see continued user and consumption growth, an increasing number of customers for us long-term, and also trends that are turning clients in our direction.
Speaker 3: Specifically, the big media streamers continue to add subscribers and users, albeit at lower rates than prior years. And that means they will be under increased pressures to reduce costs, including the outsourcing parts of their tech stack to trusted providers like us.
Speaker 3: The next set of target streamers in the US and globally is growing a number and they are seeing continued user growth and will continue to rely on tech providers like Breikov that increase their speed to market and lower costs.
Speaker 3: Longer term, we believe the creator economy and certain long form TV and movie producers will launch their own services and strive to be in this next set. Think superfan offerings.
Speaker 3: and they will need end to end solutions like the ones we provide.
Speaker 3: On the enterprise side of our business, video is now imperative for marketers.
Speaker 3: A key tool in driving improved audience experiences, pipeline generation, purchasing decisions, and direct transactions.
Speaker 3: and one that needs to keep abilities and depth of integrations we provide.
Speaker 3: And with the continued hybrid working environment, it is undeniable that video is the medium for employee and other communications.
Speaker 3: Again, an area we deliver on for enterprises.
Speaker 3: Whether you want to manage, distribute, and monetize your content, communicate and engage with your audiences, or market and sell your products and services, Brecov is in an enviable position to offer solutions for all of these needs.
Speaker 3: We provide solutions via our leading platform that make us the streaming technology partner for any company, creator, business, or brand.
Speaker 3: As we've discussed previously, our revised strategy is focused on creating new and larger customer opportunities and improving retention via our solutions.
Speaker 3: and better and more efficiently capturing our addressable market focused on how we go to market.
Speaker 3: All with the goals of driving revenue and adjusted EBITDA growth, margin and
Speaker 3: scale. We focus on five core strategic pillars.
Speaker 3: One, delivering more end-to-end solutions and services.
Speaker 3: to accelerating and incubating new and existing customers.
Speaker 3: 3. Super serving our largest and most strategic customers.
Speaker 3: For, partnering to efficiently reach the broader market, and five, allowing ourselves to pursue supplemental business models that provide revenue opportunities.
Speaker 3: in addition to our core SAS revenue model.
Speaker 3: I'll provide a brief update on some examples of the progress we've made on each of these in the quarter.
Speaker 3: I'll begin with our solutions and services where we are making great progress delivering innovation.
Speaker 3: During the fourth quarter, we hosted our investor presentation and outlined our key strategic product initiatives for you.
Speaker 3: Cutsmer feedback to those has been incredibly strong, reflecting a clear desire for break to do and solve more for them.
Speaker 3: One of our early successes on this front is our recently announced strategic partnership with MagNite, one of the largest global cell-side advertising platforms.
Speaker 3: Under this agreement, MagNite SpringServe ad server, VN Integration, will power ad delivery for our enabled customers and give them greater control, insight and transparency into available ad supply.
Speaker 3: will be our first supplier with more to come to fill unsolved adamantory for our customers.
Speaker 3: So for the first time, Breiko will be a true participant in the ad monetization business with and for our customers.
Speaker 3: We will be helping those customers make money, increase fill rates and generate higher CPMs.
Speaker 3: Customer interest and reaction has exceeded our expectations and we plan to launch our pilot customers later this quarter expanding further throughout 2023.
Speaker 3: This is a great example of multiple parts of our strategy in execution.
Speaker 3: This is a great example of multiple parts of our strategy in execution. One being more end-to-end in our solutions.
Speaker 3: to helping accelerate our customers' businesses and three doing so with a supplemental business model in this case around a new share.
Speaker 3: As a side note on this last point, we continue to anticipate our SaaS model will provide the overwhelming majority of our revenues, but adding supplemental business models like this enhances our value to customers, hopefully leading to bigger, longer-term relationships, higher attention, and additional revenue.
Speaker 3: Two other areas we have expanded in our solutions and services offerings recently are around expansions to our marketing studio and communication studio solutions.
Speaker 3: including some key integrations launched and customer wins in Q4.
Speaker 3: On the marketing studio side, you'll remember that this was a key effort started prior to me joining and focused on creating a differentiated solution for marketing and comms leaders to use video more effectively across all marketing channels.
Speaker 3: We're proud to have launched this in 2022, offering a new user interface for ease of use across multiple marketing functions and new and expanded integrations with other marketing technologies, including Hootsuite, Salesforce Marketing Cloud, Adobe, Ella Claw, SiteCord, Drupal, WordPress, LinkedIn, and more.
Speaker 3: These integration capabilities allow marketers to truly create a video first content strategy for more personalized digital marketing.
Speaker 3: On Communication Studio, our reimagined solution for both internal and external communications use cases, we have made incredible progress.
Speaker 3: Starting with a number of customized services deals, we've now productized our capability to launch and manage a robust internal communication solution for any company.
Speaker 3: In Q4 we've landed some incredible customers here including a major streaming company, a large technology company and a major regional healthcare provider, all managing internal and or external video communications using Bragghove.
Speaker 3: We continue to have an aggressive product roadmap with initiatives ranging from performance enhancements to additional feature development to major new products and services and are now executing on multiple fronts to deliver consistent innovation going forward. From a go-to-market perspective, super serving our largest and most strategic customers has been the first key priority and I'm extremely encouraged by our Q4 performance here.
Speaker 3: But we saw in the quarter was a meaningful increase in new business as a percentage of bookings over the last three quarters. A multiple increase in average new business deal size.
Speaker 3: and a greater amount of value from six and seven figure deals in both new and add on business than in recent history.
Speaker 3: This is exactly the type of impact we were focused on as our revamped sales leadership team executes on the strategy to push larger strategic customers and engagements.
Speaker 3: As we continue to broaden and enhance our product offerings, we expect to have an even bigger opportunity to drive winds as well as cross-sell and upsell inside these larger customers.
Speaker 3: Several of our key wins in the quarter are great examples of our strategy in action, and are the types of customers we believe break-oak can continue to win and serve.
Speaker 3: We signed several sizable renewals and expansions with leading media streaming entities in Q4, including...
Speaker 3: Sky Mexico, a leading pay TV service in Mexico and across Latin America, with whom we successfully streamed the world cup in the quarter, they renewed and significantly expanded their agreement with us, and they looked to expand their business in the coming years.
Speaker 3: AMC Networks are leading US Entertainment Company and streamer behind streaming services like AMC Plus, Shutter, Acorn, All Black, and more. Signed an expanded multi-year renewal agreement with us in Q4.
Speaker 3: Having recently undertaken significant cost saving initiatives, AMC recommitted to break-o, given the efficiency we drive, and the important role we play in delivering for their D to C initiatives.
Speaker 3: Other media entities that sign larger expanded renewals with us in Q4 include Rogers, Al Jazeera, Discovery New Zealand, Manchester City Football Club, and Lead-Dit Football Professional.
Speaker 3: Larger expanded renewals and enterprise in Q4 were also strong, and those included Marriott, Cannon, Rolls-Royce Motor Cars, Service Now, Fashion and Retail Leaders including Kuchi, Hugo Boss, Tom Shoes, and Netaportare, and Farma Leaders like Pfizer and another major pharma company that renewed a multi-year seven-figure deal. As mentioned, we were strong and new business growth as well.
Speaker 3: global focused on the creator economy, including digital creators, platform innovators and their fans. They'll be using Break Hope for their video needs supporting their community and events.
Speaker 3: As you can see, we have some fantastic customer examples across our areas of focus.
Speaker 3: Following me joining the company it naturally took time to build our strategy and teams.
Speaker 3: And while it's hard to specifically draw a long-term trend yet, just a few quarters into executing the new strategy, we are seeing meaningful new business growth and larger customer deals right on track with this strategy. The other go-to-market strategic priority for us is building more and deeper partnerships to reach the broader market.
Speaker 3: Direct sales alone cannot drive all the demand and deals we believe support long-term growth.
Speaker 3: Direct sales alone cannot drive all the demand and deals we believe support long-term growth. It's also not an efficient way to drive smaller output deals.
Speaker 3: Streaming is a global market with sizeable growth opportunities.
Speaker 3: especially in enterprise customers at smaller deal sizes.
Speaker 3: We believe developing new partnerships that marry our technology and domain expertise with a partner's distribution and reach capability to drive a meaningful number of new customers will greatly benefit those customers, break-ove and those partners.
Speaker 3: The recent partnerships we struck with Roku and Magnight are early examples, but we're looking to do much more.
Speaker 3: We recently hired a new SEP to lead our partnership and channel efforts and expand our footprint in this area.
Speaker 3: You should expect to hear about additional partnerships from us throughout 2023.
Speaker 3: To wrap up, I'm incredibly proud of our progress in 2022.
Speaker 3: and excited for what lies ahead in 2023 and beyond.
Speaker 3: Bright Cova is an industry-defining software-based technology leader delivering excellence for our customers.
Speaker 3: We have global reach and diversified client base with significant opportunities for expansion in multiple markets and segments.
Speaker 3: We've studied the end user and end market trends and built our strategy to capture the inherent growth.
Speaker 3: We now have a clear product and services innovation path.
Speaker 3: Our go-to-market focus is clear on aggressively targeting larger opportunities with our direct sales team and further building out our partner ecosystem to extend our reach.
Speaker 3: We have a new expert and experience management team leading us in executing and a strong recurring SaaS revenue base now with the freedom to utilize new revenue models to aid our growth.
Speaker 3: We have all the building blocks for improved financial performance in place.
Speaker 3: In 2023, we expect to begin delivering on that goal.
Speaker 3: Rob will provide detailed guidance, but at a high level our goal is to exit this year with a return to double-digit revenue growth and improving adjusted EBITDA margins.
Speaker 3: This will put us well on our way to delivering on the long-term financial targets we outlined at our recent investor day of consistent 10% plus revenue growth and 20% plus adjusted EBITDA margins.
Speaker 3: I'm confident in our ability to deliver on these targets and our goals of growth.
Speaker 3: scale, diversification, and excellence. With that, I'm going to turn it over to Rob for a deeper dive on Q4 and the numbers, and I'll be back for Q&A.
Speaker 4: Thank you, Mark, and good afternoon, everyone. I will begin with a detailed review of our fourth quarter, and then I'll finish with our outlook for the first quarter in the full year 2023.
Speaker 4: Total revenue in the fourth quarter was $49.2 million, which was in line with our guidance.
Speaker 4: Breaking revenue down further, subscription and support revenue was $47.7 million and professional services revenue was $1.6 million.
Speaker 4: Overdrevenue in the quarter was approximately $1.3 million, which was below our expectations.
Speaker 4: We saw fewer customers and our overages at the tail end of their contracts in the fourth quarter.
Speaker 4: As we look ahead into 2023, we will be taking a more conservative approach to overages in our guidance to account for this dynamic.
Speaker 4: 12 month backlog, which we define as the aggregate amount of committed subscription revenue, related to future performance obligations in the next 12 months, was $120.1 million.
Speaker 4: This represents a less than 1% decrease year-over-year.
Speaker 4: On a geographic basis, we generated 60% of our revenue in North America during the quarter and 40% internationally.
Speaker 4: Breaking down international revenue a little more, Europe generated 16% of our revenue in Japan and Asia Pacific generated 24% of revenue during the quarter.
Speaker 4: Let me now turn to the supplemental metrics we share on a quarterly basis.
Speaker 4: Net revenue retention in the quarter was 94%, which compares to 93% in the third quarter of 2022, and 93% in the fourth quarter of 2021.
Speaker 4: Since the beginning of 2019, net revenue retention has ranged from 92% to 100%. We expect that as we continue to make improvements in our renewals business, this metric will eventually be consistently over 100% over time.
Speaker 4: Recurring dollar retention rate in the fourth quarter was 86.8%, which was below our target range of low to mid 90s.
Speaker 4: Our customer count at the end of the fourth quarter was 2845, of which 2235 were classified as premium customers.
Speaker 4: Looking at our RPU within our premium customer base, our annualized revenue for premium customer was $89,000 and excludes our entry-level pricing for starter customers, which averaged $3,900 in annualized revenue.
Speaker 4: This compares to $95,400 in the fourth quarter of 2021. Looking at our results on a gap basis, our gross profit was $29.9 million, operating loss with $6 million in net loss per share was 13 cents for the quarter.
Speaker 4: Turning to our non-GAP results, our non-GAP gross profit in the fourth quarter was $30.7 million compared to $35.3 million in the year ago period and represented a gross margin of 62%, which was down from 67% in the fourth quarter of 2021. Non-GAP loss from operations was $1.3 million in the fourth quarter.
Speaker 4: compared to positive $4.6 million in the fourth quarter of 2021.
Speaker 4: Adjusted EBITDA was $1.2 million in the fourth quarter compared to $5.9 million in the year ago period.
Speaker 4: excluding the severance Mark mentioned previously, our adjusted EBITDA would have been $1.5 million and within our guidance range.
Speaker 4: NONGAP, deluded net loss for share was $2.00, based on 42.2 million weighted average shares outstanding.
Speaker 4: This compares to net income per share of 10 cents on 41.7 million weighted average shares outstanding in the year ago period.
Speaker 4: Looking at our full year 2022 results, total revenue was $211 million compared to $211.1 million in 2021.
Speaker 4: As Mark mentioned, on a constant currency basis, revenue of $215.8 million grew 2.2%.
Speaker 4: On a gap basis, Gross Profit was $133.9 million. Operating loss was $8 million, and net loss per share was $0.22, based on $41.8 million weighted average shares outstanding.
Speaker 4: On a non-gap basis, gross profit was $136.6 million. Income from operations was $10.6 million. Adjusted even a $17.9 million. $20.9 million on a constant currency basis. And net income per share was 23 cents, based on 42.3 million weighted average shares outstanding.
Speaker 4: Turning to the balancing and cash flow, we ended the quarter with cash and cash equivalents of $31.9 million.
Speaker 4: We generated $4.5 million in cash flow from operations.
Speaker 4: and a free cash flow was negative $584,000. After taking into account $5.1 million in capital expenditures and capitalized internal use software.
Speaker 4: I would like to finish by providing our guidance for the first quarter and full year 2023.
Speaker 4: For the first quarter, we are targeting revenue of $49 million to $50 million, including $1.5 million in overgives and approximately $2.2 million of professional services revenue. From a profitability perspective, we expect non-gap operating loss to be $3 million to $2 million to $1 million.
Speaker 4: and adjusted EBITDA to be between break even and $1 million. Non-GAP, net loss per share is expected to be in the range of $0.8 to $0.5 based on 42.4 million weighted average shares outstanding.
Speaker 4: For the full year, we are targeting revenue of $211 million to $215 million, including $6 million of overdues and approximately $9.5 million of professional services revenue.
Speaker 4: From a profitability perspective, we expect non-GAP operating income of $3 million to $6 million and adjusted EBITDA to be between $16 million and $19 million. Non-GAP net income per share is expected via the range of $4.211 based on 43.4 million weighted average shares outstanding.
Speaker 4: For the full year, we are now targeting free cashflow of break even to $5 million. There are a few things I would keep in mind with regards to our guidance.
Speaker 4: First, we expect the fourth quarter and the first quarter to be the low point for revenue, and we expect revenue to steadily build over the course of 2023 as our transformation efforts begin to benefit our financial results.
Speaker 4: Growth in the first half of the year is expected to be negative, driven largely by some of the retention dynamics we experienced in 2022 and lower year over year overage contributions.
Speaker 4: We expect to return to year-over-year revenue growth in the third quarter and to generate double-digit growth in the fourth quarter.
Speaker 4: Second, as I mentioned previously, we are currently expecting over-dravity for the year of $6 million, which reflects the run rate we saw in the fourth quarter.
Speaker 4: This is meaningfully lower than the $12.2 million we generated in 2022, which was positively impacted by elevated overdues from a large strategic customer prior to them signing a contract renewal.
Speaker 4: And finally, we expect adjusted even a profitability to follow our similar growth trajectory to revenue over the course of the year.
Speaker 4: We expect modest profitability in the first quarter before steadily ramping over the year and exiting the year with double-digit adjusted evit margins in the fourth quarter.
Speaker 4: Our expectation is that operating expenses will see only modest growth over the year.
Speaker 4: We will continue to make incremental investments in our strategic growth priorities largely by reallocating existing expenses.
Speaker 4: To wrap up, we had a solid finish to an important year for Breikov. We are successfully executing on our strategic plan and believe we are well positioned to deliver on our long-term financial objectives.
Speaker 4: We are targeting a large and trend-favored market that will provide a number of attractive growth opportunities in the coming years.
Speaker 4: We are targeting a large and trend-favored market that will provide a number of attractive growth opportunities in the coming years. With that, we'll now take your questions.
Speaker 4: Give us a moment to shift to Q&A. Thank you everyone for joining us this afternoon. We'll begin our Q&A with questions from Steve Frankl, Rosenblatt's securities. Good afternoon. Thanks.
Speaker 4: given this quarter in particular they drove down premium RPU. Rob why don't you start with that one? Yes so Steve as you think about our RPU calculation that does include the over-drevenue so as you look quarter over quarter particularly from Q3 to Q4 the big driver there was the step down and over-drevenue that we saw as you see our customer count is basically flat quarter over quarter so that's the big step down in RPU I think the number...
Speaker 3: 2023. Maybe following up on that there's a material step up in your guidance around professional service. How much of that is dictated by deals you have in the pipeline or deals that you have that come to revenue in the next couple of quarters versus
Speaker 3: a desire to try about that kind of business. Well, when I start there and Rob can finish on it, look, it's a dedicated strategy point for Dan Freund, our DCRL, and his team to build in services to the deals that we're going We find that we have a deeper customer engagement and we gain more engagement with that customer when we activate it with that services group.
Speaker 3: So that's something that is already happening. We're seeing that pick up meaningfully in the deals that we were doing in Q4. We're starting to see that come through and the things that we're looking at in Q1. So we're excited about where that's headed as you can tell. And that's what layered into the guidance that we believe that's going to be. It has been and will be a focus as we move forward. Yeah, you can see that progress there in the initial guide for Q1.
Speaker 4: for that size deal.
Speaker 3: Yeah, well I think as you heard me say that we saw more 6 and 7 figure activity than we have in a long time and certainly saw the average deal size go up on a multiple basis in Q4. And our expectation is that will continue. It's hard to draw trends from like a quarter or so but we do feel like given where the pipeline is coming in and what we're seeing in the quarter and what we see projected
Speaker 4: place, that's their focus and we really expect that to start paying off in 2023. Great, thank you. Thank you Steve. And next we're going to go to Max McAillus from Lake Street Capital. Hey guys, thanks for taking by question. Just think in regards to Q1Guide, pretty much in line on the revenue, but about $3 million worth of money.
Speaker 4: It's got a little bit of a step up in revenue, but we do see some natural increase in the first quarter as it's part of our merit cycle and things like that. So it's a small, you know, it's basically flat with last quarter as you think about that zero to one guide. And we will accelerate that as we go through the course of the year. It's kind of a step up into the 2023 expenses without, you know, meaningful quarter over quarter growth as we go through the year.
Speaker 3: I'll just reiterate where we went on the guidance and the way Rob and I and the team run the business. We're very focused on both getting back to the type of growth you should expect from us over the long term and getting to those targets we laid out and also getting to those adjusted EBITDA margins. We view it as equally important as we get out into the marketplace and so I think you'll see that come to fruition of...
Speaker 3: Yeah, I'll start in the room. I can pick up some too. Look, I think the way we think about churn and retention is that there's a controllable set of churn that we have in any quarter or any year. We're doing a phenomenal job. The investment we've made into the customer success department and now the split out of account management and customer success to go after clients renewals and increases there has been fantastic. I think that's actually performing and you're seeing that year of
Speaker 3: or something's happened there. And so that's the sort of fluctuations you're going to see in those numbers on a quarter to quarter basis. But we're looking over the long-term trend and making sure that we're hitting the right targets that we think can help us improve the business overall. And frankly, we're a little more focused on the net revenue retention number as it sort of captures more for us in terms of how the business is actually performing. All right. Thanks, guys. And then my last one actually is just going to be, if you have any expectations for free cash.
Speaker 5: All right, great. Yeah, good afternoon. Thanks. On the bookings in the quarter, were they heavily spewed towards the media side or enterprise or mix there?
Speaker 3: It was a solid mix. I think we had really great wins on both sides. I mean, I did highlight a number of the media wins because they tend to be the ones that hit those larger deal sizes. And so you heard me talking about those larger renewals with Sky and AMC and some of the ones on the new business side where larger wins. So I like to keep that as to the highlights. But I would felt like it was a really strong mix that you sort of both sides of the business. I don't really think of it that way. We think of it as a good
Speaker 5: And it was kind of a consistent message about why those media customers were moving to you guys as if efficiency internally or as launching new services or what was the driver there. Look, I think you heard it in what I, you know, prepared remarks that, you know, we think there's multi.
Speaker 3: There's a multifaceted rationale for why you would use Breikobe on the media side of this space. There's first and foremost, larger companies are going to be looking to be more cost efficient. There's just no question about it. That was something we predicted over a year ago. When I first started, we said, we think this is going to happen. And it actually has come to fruition now. We're starting to see that. We've seen certain winds come in.
Speaker 3: specifically for that reason. The second, I would say, is speed to market and total product capability. We have the ability to do it end to end for certain customers. You'll see some of our new business wins where really we can solve the whole problem for those companies. So that's speed to market. That's also an efficiency play, but it's a different type of efficiency. And then the last thing I would say is for enterprises or for media companies, I think the fact that we are high quality, secure,
Speaker 3: been around, they understand they can trust that solution, that trusted partner is what we really want to be, that's why we put that in our vision statement. And we're seeing sort of all of those things play into different types of wins. We're not winning deals by being the lowest cost provider out there. That is not what we're here to do. We're here to go after ones that we can really help either be more cost effective and how they do the broad...
Speaker 4: I think as you think about it, the step down from Q3 to Q4, you know, when we guided the fourth quarter, we talked about a step down from one customer. That was the customer that renewed at the end of Q3. And then in the fourth quarter, we saw a dynamic where the customers were not going into to over just as they got to the end of the agreement. That doesn't mean that usage is...
Speaker 5: what we saw in that fourth quarter. Yeah. And then it looks like the strategic account team, obviously, is done well. And I think you refined the sales group. And the thing was, like, 10% reduction, I believe, is like that, or maybe change. Maybe just an update on the sales organization changes that were occurring. Yeah. There was no reduction, specifically, the sales organization. We did do a bit of a restructuring around.
Speaker 3: And then also, be better at farming our existing customer base. We were sort of, I don't know, trailing off on that capability because we had everybody sort of doing everything. So now we have hunters and you have farmers. You have new business, reps out there trying to win new accounts and move up market. We have a strategic accounts team that are specifically focused on the top 100 or so.
Speaker 3: type of accounts that can come into the business like ours and then you have an account management team that is going after renewals and Increasing the size of the business we have with existing customers all supported by a customer success team once you know that the companies are onboarded you know become a customer so we've broken that down a bit where it used to be sort of
Speaker 3: And AE had a territory and went after all of that, you know, around a certain type of customer base. And we felt like there was a better way to go about it. And we've implemented that change. And we're seeing, you know, the beginnings of how that new engine is starting to run and we're excited to drive it this year. Thank you.
Speaker 3: Well, great. Well, thank you guys. Steve, Max, Michael, appreciate the questions. As you can see, the transformation we put in place in 2022 is set us up for an improving 2023. We expect to exit the year at the type of growth and profitability that we hope you can expect from Brecove over the long run. We have supreme confidence in the team that we've put together. The guidance we've put