Q4 2022 Copperleaf Technologies Inc Earnings Call

Speaker 2: Good afternoon and welcome to Copper Leaf's 4th quarter 2022 results conference call. At this time, all lines are in a listen-only mode. Following the call, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 the operator at this time.

Speaker 2: I am required to provide the following statement respecting forward-looking information

Speaker 2: During the call today, the company will make forward-looking statements that are based on assumptions and therefore subject risks and uncertainties, that could cause actual results to differ materially from those projected.

Speaker 2: The company undertakes no obligation to update these statements except as required by law. You can read about these risks and uncertainties in regulatory filings that were filed earlier today.

Speaker 2: Also, the commentary today will include adjusted financial measures, which are non-IFRS measures. This should be considered as a supplement to, and not a substitute for IFRS financial measures.

Speaker 2: Reconciliation between the two can be found in the company's regulatory documents, which are available in CDAR.com or on our website.

Speaker 2: In addition, commentary today will include key performance indicators that help evaluate the business, measure performance, identify trends affecting the business, formulate business plans and make strategic decisions.

Speaker 2: Such key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies. And with that, I'd like to turn the call over to Paul Czachruski.

Speaker 3: Thanks very much and good afternoon everyone.

Speaker 3: Thank you for joining us to discuss Copper Leaf's 2022 performance. I'm excited to share an update of our progress in 2022 and some of our plans for the future.

Speaker 3: On today's call I'll make opening remarks before passing the call over to Chris to provide a detailed review of the financial results. Following our prepared remarks we'll open the call to questions.

Speaker 3: Copperlist demonstrated ability to deliver tangible return on investment to our clients, drove continuing demand for our solutions in 2022, and again, earned us 100% client retention for those companies that have already implemented our solutions.

Speaker 3: Our dedication to helping our clients successfully optimize their investment planning and maximize capital efficiencies has earned us the trust of some of the world's largest and most respected organisations.

Speaker 3: Against an uncertain macroeconomic backdrop, Copperleaf reported a 26% increase in annual recurring revenue, and subscription revenue grew 27% to $39.9 million.

Speaker 3: Revenues for the full year increased 6% to $73.4 million, despite a 60% reduction in perpetual revenue, which was driven by deal mix, timing, and our ongoing transition to SAS. The conversion to SAS reduces initial year revenue, but creates a highly visible future revenue.

Speaker 3: million in 2022.

Speaker 3: With progressive pipeline growth thanks to the investment in the global go-to-market team and the continued development of our partner ecosystem, we're entering the year with the largest pipeline of opportunities in our company's history, giving us confidence on bookings in 2023. With our best-in-class decision analytics solutions, we're going to be taking a look at the future of our company.

Speaker 3: marquee reference clients, global coverage and strong client retention. Copperleaf offers long term, high quality recurring revenue in the fast growing decision analytics market.

Speaker 3: Our increased environmental, social and governance-focused investments also contributed to revenue in 2022.

Speaker 3: Coppolaive's unwavering commitment to providing practical software solutions to help manage ESG issues continues to drive demand, influencing nearly a third of our sales in 2022.

Speaker 3: We strongly believe that technology driven approaches to sustainability will drive continued growth as they become more crucial worldwide. In such an environment Copperleaf is ideally positioned with proven solutions to meet the rising demand in the space.

Speaker 3: The Copperleaf Community Client Forum is a thriving and expanding community with nearly half of our clients participating in client-led innovation with Copperleaf Labs during 2022.

Speaker 3: Collaborating with the Copperleaf community enables us to stay at the forefront of industry and find solutions that drive our business.

Speaker 3: Looking ahead to 2023, we're confident that we have the right strategies in place to continue our growth trajectory.

Speaker 3: We started 2023 with a refreshed operating model that focuses on and brings dedicated resources to four key areas of our client facing organization.

Speaker 3: partners and ecosystem, product management, industries, and value engineering. Let me share some more details in the first focus area, partners and ecosystem.

Speaker 3: Our team has been working hard to establish Copperleaf as thought leaders in the industry and we believe expanding our partnership ecosystem will help us amplify our position in the market and reach new customer segments.

Speaker 3: Last year we made substantial progress enhancing our alliance ecosystem, with partners continuing to influence most of our deals and contributing to our record global pipeline.

Speaker 3: Subsequent to the quarter end, we signed an endorsed apps initiative agreement with SAP.

Speaker 3: This relationship signals SAP's recognition of Copperleaf's industry-leading technology and the value that our combined solutions can deliver to organizations globally.

Speaker 3: I truly believe the cooperation between SAP and Copperleaf will provide our mutual clients with best-in-class capabilities to further unlock value in their business and achieve their strategic goals.

Speaker 3: Turning to product management, we've taken some significant steps forward.

Speaker 3: Copperlist delivered four product releases during 2022 and released numerous new innovative features.

Speaker 3: This includes a Q4 release of Optimize Ready, which is machine learning-backed functionality that helps clients improve investment quality and portfolio values by automatically analyzing investments and portfolios to spot issues and inconsistencies and provide recommended solutions.

Speaker 3: Our technology is one of our key competitive advantages and by implementing a go-to-market model that incorporates product specialists and clear global product ownership, we believe that we will accelerate our ability to bring new products to market to deliver value to our clients.

Speaker 3: At the time of the IPO in October of 2021, we estimated our total addressable market at 12 billion per year.

Speaker 3: sectors and also in our efforts to penetrate new industry verticals in our

Speaker 3: During 2022 alone, we signed our eighth water client in the UK and had new sector success in air services, pharmaceutical, metro transit and mining, representing substantial new referenceable global markets for copper leaf.

Speaker 3: Overall, despite some macroeconomic headwinds, we continue to see a healthy demand environment, with strong demand from clients and prospects for decision analytics.

Speaker 3: Our pipeline has continued to grow over the past 12 months, which speaks to the strength of our value prop. Thank you for your attention.

Speaker 3: and the expanded go-to-market team we've been building.

Speaker 3: In 2023, we expect our growth to be driven by sustained industry tailwinds, such as the increasing needs of our clients to practically manage ESG requirements.

Speaker 3: Acceleration of our ability to bring innovation to market in the form of new products and enhanced services.

Speaker 3: Leveraging our investments in sales and marketing, which are demonstrating early positive results, with increased lead generation and pipeline activity.

Speaker 3: expansion of our alliance ecosystem which includes new partners like SAP.

Speaker 3: In summary, Copperleaf remains well positioned for growth, with best-in-class solutions, a deep sales pipeline, strong balance sheet, and a growing client base.

Speaker 3: We've established the tools, community and structure to scale the business and drive future growth and shareholder value. I'll now turn the call over to Chris to review our financial results in more detail.

Speaker 4: Excellent. Thanks, Paul. Good afternoon, everyone.

Speaker 4: We're pleased to report that our 2022 results continue to deliver growth across our key financial metrics.

Speaker 4: Revenue for the year ended December 31, 2022, was $73.4 million, an increase of 6% from $69.3 million in the comparative period, driven by an increase in new clients and the expansion of existing clients.

Speaker 4: It's important to recognize that the 2022 revenue growth rate was impacted by a 60% reduction in perpetual revenue for the full year, driven by deal mix, timing, and our clients continued transition towards SaaS.

Speaker 4: Perpetual and Term-Based Licence revenue was $5.1 million for the 12 months ended December 31, 2022, representing 7% of total revenue compared to $12.7 million in the comparative period, which represented 18% of total revenue.

Speaker 4: Subscription revenue for the full year ended December 31, 2022 was $39.9 million, an increase of 27% in the prior year, representing 54% of 2022 revenue as compared to 45% of revenue in 2021.

Speaker 4: Professional Services revenue for the year ended December 31, 2022 was $28.3 million compared to $25.2 million in the prior year and this segment represented 39% of 2022 revenue.

Speaker 4: Our annual recurring revenue at December 31, 2022 was $46.4 million, a 26% increase compared to $36.8 million at December 31, 2021.

Speaker 4: As of December 31, 2022, our net revenue retention rate was 110%, reflecting expansion within our client base and strong renewal history. This percentage will vary period to period due to the timing of large expansion contracts within our existing client base and the mix between perpetual and SaaS expansion deals. Revenue backlog was $107.3 million at December 31, 2022.

Speaker 4: to capitalize on the inflection in the decision analytics market, we had an adjusted EBITDA loss of $24.9 million for the year compared to an adjusted EBITDA gain of $2.1 million in the prior year.

Speaker 4: Adjusted EVA loss in the fourth quarter was 2.0 million compared to an adjusted EVA gain of 2.3 million in Q4 2021.

Speaker 4: Adjusted Ybirah for the fourth quarter was impacted by lower revenue which was partially offset by reduced incentive compensation.

Speaker 4: Net loss for the year ended December 31, 2022 was $28.2 million, or a loss of $0.41 per share, compared to a net loss of $6.5 million, or a loss of $0.24 per share, in the prior year.

Speaker 4: Net loss for the fourth quarter was $2.4 million compared to a net income of $0.1 million for the comparative period.

Speaker 4: We finished the year with $149.5 million in cash compared to $161.4 million in cash at the end of fiscal 2021, which places us in a strong financial position to build on our advantage and further penetrate the investment planning and decision analytics market.

Speaker 4: With our strong unit economics, we remain focused on making thoughtful, long-term investments that will drive accelerated growth in 2023 and beyond. As we continue to expand our reach, we're confident that our focus on operational excellence will drive best-in-class margins, expand our leadership position in the growing decision analytics market.

Speaker 2: by the number one on your touchstone phone. You will hear a one tone prompt acknowledging your request.

Speaker 2: Your first question comes from the line of Belen Becker from William Blair. Your line is now open.

Speaker 5: Hey, guys. Nice job on the subscription front here. Maybe you wanted to touch on, you called out the partnership approach and the SAP opportunity. I get that it's probably not a material revenue driver any time in the near term, but is there a way that we should think about the ramp opportunity here?

Speaker 5: or what that long-term opportunity can set with that partnership with SAP, given their long-term positioning in the EAM market.

Speaker 3: Thanks for the question. I think I did it because you were weirdo

Speaker 3: think you know the way to think about it is this the the endorsed apps initiative is a is an invitation only thing we scan the market for what we do selected us as best of breed invited at the end and the reason they're doing so is because we fit nicely in an end-to-end solution from their point of view they have

Speaker 3: installed base now, they recommend us if a client needs AIPM and that provides us with a lot of leads, a lot of pipeline and also some trusted advisor status from their point of view to help us get close. So in the medium to long term it looks really positive for us.

Speaker 3: In the short term we need to ramp up and they need to understand what we do and we've got an education process around that. We expect the software to be on the SAP store early in Q2 and from that point we start selling together in earnest into the install base.

Speaker 5: I think it's as you say there's a ramp period there, but the median for long term feels like a really material following wind for us. Got it, but that's really encouraging. Maybe to stick with some of the other prepared remarks around some of the new vertical traction.

Speaker 5: but how should we think about your guys' balance between kind of model development and expansion into kind of new verticalized use cases versus digging deeper, going deeper in some of your more entrenched areas and delivering value and still kind of evangelizing some of those market opportunities as well.

Speaker 3: Yeah it's a good call. I think just a slight, maybe not a correction, but a clarification there is it's pharma and not necessarily healthcare, but at this point. But one of the features of copper leaf is that expansion into new sectors doesn't see us doing remarkable things.

Speaker 3: accessing new industries gives us more TAM gives us more opportunity.

Speaker 3: Now having said that, we don't want to do that in a way that's terribly ad hoc. We're very planful about which industries we go after. We will be putting dedicated resources into industry specializations so that we speak the language of our clients and we can articulate value to them in terms that they can understand.

Speaker 3: that does take resources. So we don't want to be everywhere all at once. We are being pretty planful about selecting our industries and we believe we're doing that in a way that we can absorb and not detract from the work that we're doing in our core of core which you know still is on a global basis largely untapped and white space.

Speaker 6: Got it. Super helpful. Thanks, guys. Thank you.

Speaker 6: Super helpful. Thanks, guys. Thank you. Thanks, Dylan.

Speaker 2: Your next question comes from the line of Maxime Matuszanski from RBC Capital Markets. Your line is now open.

Speaker 7: Yeah, hi, good evening. I just wanted to touch on kind of the efficiency of the sales force. You did a lot of hiring in 2021 and I guess early last year, and I wanted to ask about kind of the performance of those new hires and if the performance levels.

Speaker 7: you expected? I mean, I think you touched on kind of the lead gen and pipeline activity increases, but are those kind of investments performing at the levels that you expected? And if not, you know, at what point presumably in the coming quarters would you have enough data to determine that success level? Yeah, it's a good question, Matthew, thank you.

Speaker 3: to build capacity. We never really expected that that capacity would deliver a huge amount in 2022 but we did see good pipeline development and in fact we did see some of those new people close deals. So early days but we are seeing some some good performance out of the the build of the sales force.

Speaker 3: You know, execution is, you know, 2023 is all about execution and making sure that all of the capacity that we've built into the go-to-market team is contributing.

Speaker 3: bookings in ARR year.

Speaker 3: So, you know, I think they are performing to schedule. You know, last year we saw the market and the macroeconomic conditions turned a little bit against us, and that was a little unexpected, but we are executing to plan and I think we've hired well and the team is doing well.

Speaker 7: Okay, got it. That's very helpful. I'm just switching to

Speaker 7: the rapid start and kind of the success that you're seeing in the UK water market. I'm curious if there's any other logical pockets of geographies and sectors where you can have similar success and was there something unique in terms of the regulatory framework?

Speaker 7: success as well.

Speaker 3: Yeah, I think we're already seeing this in a couple of different places and it's not necessarily just limited to geographic trends. There definitely is a, you know, the UK water market is a regulated, well-regulated sector. They're fairly forward-looking on the topic that we present around value-based...

Speaker 3: in the distribution transmission, the power distribution transmission market in Japan, where regulatory conditions are changing similarly. And we've got a good pattern there where we can rinse and repeat solutions and we've got a good track record there as well. But all of these things do tend to have global implications.

Speaker 3: those pockets of best practice tend to be followed by industry practices in other countries.

Speaker 3: In the power sector people are looking to the UK to their standardised asset risk modelling, the CNA models and that's been good for us. We've managed to codify that and take it internationally. The experience we've had in the UK water sector is starting to have traction elsewhere because people do look to the UK as a best practice market. And so it's not just market, you know, industry by market, it's taking that knowledge.ets.archives

Speaker 3: The fact that we've actually coded that knowledge into our value model library and we can shift and lift that and apply it quite quickly to clients in other geographies who are walking down a similar path, it's another one of the industry advantages that we have.

Speaker 7: Great, thanks. And final one from me. You had a strong improvement to your even margins this quarter, which was held kind of at the quarter over quarter, absolute declines in operating expenses, really kind of across the board. I imagine you mentioned it.

Speaker 7: Part of this is reduced incentive compensation. So I'm wondering what levels of expenses we should expect going forward and how much of that decline was kind of that reduced incentive compensation.

Speaker 7: of this is reduced incentive compensation. So I'm wondering kind of what levels of expenses we should expect going forward and how much of that decline was kind of that reduced incentive compensation. Yeah, I'll take that one. Thanks, Max.

Speaker 4: Yeah, so just as we said in our remarks.

Speaker 4: a lot of that the Q4 specific drop that you see was you know was focused on the incentive compensation but as we said throughout the year we did you know cut back on on hiring to a certain degree based on the macroeconomic environment

Speaker 4: So as far as your question, you know what to expect for 2023, I think you can start to look at what the run rate was at least starting going, you know, through Q3 at least, and more or less carrying that forward. Obviously, you know, as we explained, I think in our prior quarters.

Speaker 4: We are largely planning on holding headcount flat through 2023. We believe that the hiring that we've made in 2022 sets us up very well for that. We have put quite a bit of infrastructure in place in 2022, is now a new publicly traded company. And as well, as we saw last year, there were some

Speaker 4: you know, sizable salary increases. There was inflation that had to be taken into account. So all of that will come into play with regard to our expenses next year, just as far as run rate expenses on the headcount that we've got with those salaries and increases baked in.

Speaker 8: Great, thanks. I'll pass the line.

Speaker 8: Thanks, I'll pass the line. Thanks, Max.

Speaker 2: Your next question comes from the line of Tanus Mucipoulos from BMO Capital Markets. Your line is now open.

Speaker 4: All right, good afternoon. Chris, just to.

Speaker 4: expand on the OPEX discussion. So, was there a reversal of previously accrued incentive compensation Q4? That's correct. Okay. Yeah. That's why Q3 is about a run rate. Got it. Okay.

Speaker 4: Okay. How should we think about licenses in the business going forward? I mean, I guess licenses are going to be maybe a random number, at least as customer specific and guild specific. But would your expectation be perhaps that, you know, is 2022 maybe going to be the high watermark and just licenses will probably be a lower amount in subsequent years or?

Speaker 3: hundreds and thousands so you know every one or two really shifts the needle quite substantially. So I think there's still some fluctuations left in it. Last year we saw a pretty substantial reduction in perpetual licenses which you know indicates it follows the general trend towards that and we believe that that will just continue over time.

Speaker 3: but year on year there's still going to be fluctuations. So you know we have to look at our pipeline and and try to assess what we think is likely to go perpetual and what's likely to go south. We've got indications on that in terms of the track record of the country and the you know the capitalization rules inherent in the industries in the countries. So we make our best guess but over time we're definitely heading

Speaker 4: in recent weeks or other than any changes of note, be it in terms of sales cycles, approval processes, customer scrutiny on budget, all that kind of stuff.

Speaker 3: Yeah, it's always hard to spot a trend that are coming out of the environment that we came out of. We feel like things are freeing up a little bit, but it may also be a factor of some...

Speaker 3: well, a function of the fact that we're getting in front of clients live again. You know, I've been able to do some travel and get in front of some people and sit down with them and talk things through. And I think, you know, when you're a large enterprise software company, that face-to-face is still important. So I think we're probably seeing the effect of a bit more face-to-face engagement.

Speaker 3: We were able to meet up with all of our clients over the past four or five months. We had our three industry summits in all of the three regions in addition to our virtual summit last year.

Speaker 3: And so, you know, I think that's been having an effect. But generally speaking, I am probably seeing some springing up and a little bit more confidence in our client base to move forward.

Speaker 3: you know, I think that's been having an effect. But generally speaking, I am probably seeing some springing up and a little bit more confidence in our client base to move forward. Great. I'll pass it along. Thanks.

Speaker 2: Your next question comes from the line of Gavin Fairweather from Coremark. Your line is now open.

Speaker 9: Oh hey there, thanks for taking my questions. Maybe just to build on that that recent discussion around things freeing up, I'd imagine that you have a decent amount of kind of bottom of funnel deals given some of the macro influences that you saw throughout 2022. So are you seeing those deals are now kind of resuming and an increasing pace here in the first half?

Speaker 3: Could that maybe shift the seasonality that we see in 23 and make it a bit more front-end weighted if some of those delayed deals are moving along and closing? We would love to see that as well Gavin but I think we can expect another year that runs according to most of our clients.

Speaker 3: annual cycle, you know their financial year. You know generally speaking in this industry you see a heavy Q4 and the second half is generally heavier than the first. You know I think that we'll probably see something akin to that pattern as well this year. You know we're putting best efforts into generating linearity quarter on quarter because it doesn't suit us to have massive Q4s either.

Speaker 3: for all kinds of different reasons, but it is the shape of the industry and it's the way that enterprise software is kind of almost towards the client base to buy. So I don't think we'll be able to unilaterally kick that, but we can mitigate it a little bit. 2023 is still going to be remaining largely back in loaded. Okay, got it. And then any other trends you'd call out in the pipeline.

Speaker 3: would make us change our plans or anything like that.

Speaker 3: No, I feel like we're doing well in our core sectors. We've introduced some new sectors and every time we introduce a new reference client in a new sector it gives us the ability to go out and generate pipeline. So we're still at that point where our global TAM is largely white space. So...

Speaker 3: Nothing that would shift our strategy.

Speaker 10: Yeah and I can just add on to that and agree with Paul. I mean we are seeing you know continued very good growth within our pipeline over the last 12 months and you know it follows the patterns that we have been you know seeing which is continued steady growth within our core sectors electric utility, natural gas utility, water.

Speaker 10: and obviously water is a big one if I haven't mentioned that already. So a lot of that more of the same I'd say again.

Speaker 9: Okay, great. And then just lastly for me, a nice increase in the backlog this quarter, maybe just zeroing in on professional services. Can you just –

Speaker 9: speak to the backlog there and whether you can maintain kind of the current pace of billings.

Speaker 9: our grow bellings in the coming quarters despite maybe partners taking on a bigger role. That's it for me, thanks.

Speaker 10: Yeah thanks, so yeah I mean we did we did see a big jump in backlog in Q4 which is normal you know the year-on-year was only 5% considering some of the delays that we did see but no we we definitely feel like we're well positioned to execute on on the services revenue this year as Paul was indicating we do see that even with

Speaker 10: you know, the delays that we did see in 2022, you know, I'll just comment that some of them absolutely slipped into Q1, you know, we're making good progress on a couple of those that have already closed, so there's good business there. But when we look overall, as Paul was saying, the tendency is for those...

Speaker 10: not to just slip into Q1, they follow their budgeting cycles, which you know typically means that it goes pushes through to Q3 and Q4, so we'll probably expect a similar profile to what we've seen historically. And that means that that's when the you know the

Speaker 10: the deals will drop and that's where we'll start to see services revenue pick up so that'll probably be later in the year. Bottom line is we feel that we've got the capacity in hand to manage the services revenue for 2023. Thanks so much. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the number one.

Speaker 4: Your next question comes from the line of John Shao from National Bank. Your line is now open. Hey guys, thanks for taking my question. So Paul, you mentioned a geographic expansion in your prepared remarks. So how easy it is to penetrate into a new country? Does it require a lot of product modification and training in each new area?

Speaker 3: or is more of an easy sale process? I'd love to say it was an easy sale process. I haven't heard those words in the same sense for quite a while. But look, I think we're getting better at it. Our references...

Speaker 3: work well across borders. So you know we've got good references in you know the electric utility market in transmission distribution and generation. We've got good references in water, we've got good references in gas and oil and gas and now transport and transportation.

Speaker 3: in road and rail. So those references really do translate well at Copperleaf into new geography. Now in the new geography people will generally want to see something in their geography so getting that first sale even in an established industry is a lift and takes a little while and generally speaking we've got new account executives working on that because they're a new person in that market and they're generally speaking you know a different language.

Speaker 3: because the early days of a new market do require support from the rest of the business, which of course, if you do it at scale, takes resources.

Speaker 3: So I think one of the good things is we've been on an expansion process over the past couple of years, I think for 2023 it's a consolidation year, so we can take a little bit of a rest from all of that hiring and scaling and HR work.

Speaker 4: and just make the geographies and largely the sectors that we're in successful. Okay, thanks. And on the SaaS transition, I understand this quarter the license remedy was lower just partially because the transition to a recurring model. So my question is, when I look at your SaaS revenue growth this quarter, how much of the growth is coming from those existing logos moving to a recurring model versus...

Speaker 10: you know, how much is coming from new logos? I'll take that one. Basically the bulk of it is coming from new logos effectively.

Speaker 10: The only other component for the SaaS increase would be expansions, but that's largely existing SaaS clients adding to their solution rather than any active conversions from perpetual to SaaS. Okay, thanks. And the last question is on the SAP announcement.

Speaker 3: products in the stack from other vendors like Maximo and the other ERP vendors, as well as a whole bunch of other technology partners in and around our space. So there's nothing exclusive about it. I will say though that the ability for Copperleaf to support these large...

Speaker 3: partnerships is limited. So we need to take the ramp process and the enablement partnership process seriously and not go too broad, too fast, because we could end up in a position where we've got channel conflict and in a position where we're not supporting those partners as best.

Speaker 3: So again, it's one of those areas that we're going to be planful about going to the places where we can do the most good and where we've got the most bang for buck for, for us and for the clients, and and also where we can provide proper support to those partners that they ramp.

Speaker 3: So again, it's one of those areas that we're going to be planful about going to the places where we can do the most good and where we've got the most bang for buck for us and for the clients and also where we can provide proper support to those partners as they ramp. Okay, thanks again. And I'll pass the line.

Speaker 2: Your next question comes from the line of Robert Young from Canaccord Genuity. Your line is now open. Hi, can you hear me? Hopefully you can hear me okay. Maybe first I'll start off with an extension last question. SAP is, they drive a lot of applications.

Speaker 4: activity within the SI and the services, all the potential channeled partners that you could be interested in signing up. I'm curious if the SAP announcement created a bump in the level of interest you're seeing from potential partners, big partners like Accenture or Capgemini, etcetera.

Speaker 3: Yeah, thanks Robert. We've certainly seen an uptick in interest in us from the SI partners particularly. I think people are recognising that the asset investment planning is a burgeoning space. They are starting to, the SI partners are starting to build practices around this.

Speaker 3: They would like to provide end-to-end solutions which include what we do but also things on either side of us which is what they do. They're system integrators and they pull software from different places and they provide end-to-end solutions for their clients.

Speaker 3: So we're seeing an uptick in interest. Whether that's directly related to the SAP announcement, I don't know. But you can imagine that the SAP ecosystem which is used to on selling and integrating SAP solutions often with other third-party solutions.

Speaker 4: they will be interested in us as well, and it will drive some uptake. Okay. And then second question, in the prepared remarks it noted that there was some issue around the availability of resources at your customers. I don't know if I heard that correctly, but if you could just expand on that. What does that mean?

Speaker 3: give us a sense of how that's impacting the conversion of the pipeline. Yeah I mean most of our clients have got have got you know substantial runways of software that they're trying to implement and they've got other things that they're doing as well and particularly coming out from underneath COVID conditions where

Speaker 3: they also were subject to the great resignation and we saw a fair amount of personnel churn at our clients and also a, you know, a probably a reduction in capacity in conjunction with an increase in demand for, you know, implementation of software internally. It drove them to be cautious about closing new software deals and taking on more work.

Speaker 3: So we definitely saw that. We do feel like that is easing a little bit, but it's still out there. Our clients are still implementing. There's a substantial trend, particularly in the SAP environment, while we're talking about SAP, to take their on-prem solutions and their perpetual solutions and convert across to SaaS....

Speaker 3: and what information you're going to need to make good decisions. So starting with copper leaf drives you towards an efficiency around deciding you know what information you need to feed those decisions. So we certainly feel like we our clients would be best placed to go first with us but it takes a little bit to convince them of that.

Speaker 1: Okay, okay. And our last question from you just down the pipeline and you said in the call a couple times that

Speaker 4: the demand is strong, the pipeline is strong, but I guess there's a bit of elongation of sales cycle and then there's this resource issue, I guess. And so I would assume that the pipeline is getting, it's not just at record level, but it's growing faster than it was before. Would that be a fair statement? If you still have the same amount of organic ecosystem, would that be right at price?

Speaker 4: lead gen and then you have some elongation. Could we infer that the pipeline is accelerating or going faster than it has in previous periods?

Speaker 3: I think annually in dollar terms we're adding more dollars of pipeline per year but if you look at it in percentage terms it's pretty steady. Chris I don't know whether you've got a view on that but we're certainly adding more pipeline in dollar terms and you know the number of deals than we have in the past.

Speaker 3: But if you can imagine, it just takes more to lift our pipeline by 20 and 30 percent than it did before. And I think the added capacity that we put into the field and the partner and ecosystem starting to contribute is making sure that we can maintain pace on the percentage of pipeline growth year over year. Okay. All right.

Speaker 6: Thanks a lot for taking the question.

Speaker 1: for taking the question. Thank you.

Speaker 4: Your next question comes from the line of Valerie Heckel from CIBC. Your line is now open. Hi there. This is Valerie on for Todd Copeland. My question is on the company's rapid start solution for electric distribution companies which I believe was introduced last quarter. And I think the idea behind it is that it will help improve implementation.

Speaker 3: codification and the packaging up of the CNAME solutions out of the UK market.

Speaker 3: driving good discussions and we've been successful at implementing versions of the CNAME solution across different markets including Japan and New Zealand and Australia.

Speaker 3: It's a very efficient way for our clients to get into this space. You know, they don't have to invent those things from first principles. They can put their value frameworks together largely on a mix and match basis out of our framework library. Again, that's one of our good competitive modes that we've built up over a dozen years of.

Speaker 3: you know, collecting up all of this IP and making sure that we're capturing it and codifying it and and curating it in our in our library. So it is it is working and you know we've got campaigns around that with our with our global sales force and we expect that it'll follow a similar path to the the rapid start solution that we have for water in the UK.

Speaker 2: Okay, that's helpful. Thanks for taking my questions. Thanks, Ella. Your next question comes from the line of Suhada Tanika from Bank of America. Your line is now open.

Speaker 11: Hi, this is Suhadat Ghanikad for COGI. My question is on the partner channel. You have already touched this topic, but just to be more clear, it looks like the channel is expanding pretty well.

Speaker 11: Could you please give us some color on what's the revenue contribution from Partner Channel like this year versus last year? How do you see it like moving forward? How much of the bookings are being driven by the Partner Channel this year? And are there any partners who started to expand their copper leaf practices?

Speaker 10: So, I'll start here and then Paul can probably jump in for the, you know, the expansion but generally speaking it's so first of all it's not a metric that we, you know, typically disclosed going forward what we have disclosed historically is generally speaking, when we look at the bookings.

Speaker 10: You know, roughly 50%, over half of our bookings are influenced by partners in some way. So either initiated by partners or walking alongside us as we co-sell together with them or even finders that come in. So a good portion of our bookings involve a partner to some degree.

Speaker 3: Paul, maybe you want to chime in on just the expansion of their proper leaf practice? Yeah, and I think there's a couple of things to it. I mean, like I said, I think the space is evolving to the point where the SIs in the major SIs and the strategy consulting firms are

Speaker 3: We are going into 2023 for the first time with dedicated resources in our region around partner activity. And we've also created our global growth office that we talked about earlier in the prepared remarks, which effectively incorporates partners, industries, product and value engineering. And that again is dedicated resource to, you know, record.

Speaker 3: definitely will see an increase in the not just the go-to-market channels but but also those trusted advisors who advise our clients as to what software to buy.

Speaker 3: and that's important for us. Our clients love hearing from us about our software and we're very proud of what we do but it's very powerful for them to hear about our software from the trusted advisors that advise them across their entire software stack.

Speaker 11: And we're starting to see that occur more often. Sure, thank you so much. Just one more follow-up question on the sales cycle. You already talked about the labor issue in some of the verticals, and that's actually extending the sales cycle. And you also talked about it's going to take some –

Speaker 11: time to improve, but is there any specific vertical that is really affected or is there any other vertical that you're seeing a lot of improvement at this point of time?

Speaker 3: No, again it's, you know, we don't see all of the market in every geography, in every sector, but it feels like the world is climbing out of a resource hole and it's going to take a little bit of time for that to happen.

Speaker 3: So I couldn't pick up on any specific trends in any industry or any geography where we think the green shoots are greener than anywhere else.

Speaker 3: but we are seeing a general trend towards improvement in that in that area. Got it. Thank you.

Speaker 3: There are no further questions at this time. I will now turn the call over to Mr. Sakruski. Okay, thank you. If there are no further questions, we'd just like to conclude by thanking everybody for joining us today. We're very excited about our ongoing business progress. We feel like we have a tremendous...

Speaker 2: You may now disconnect.