Qualys Inc. Q1 2023 Earnings Call
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Okay.
For standing by and welcome to the quality first quarter 2023 Investor Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one on your telephone you will then hear an automated message advising your hand is race chip.
Remove yourself from the queue. Please press star one again, 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 Sir.
Yeah.
Thank you Norma and good afternoon, and welcome to qualify as first quarter of 2023 earnings call.
Joining me today to discuss our results are submit the car, our president and CEO and Jimmy camera CFO .
Before we get started I'd 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.
Actors that could cause results to differ materially are set forth in today's press release.
Finally, 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 we will present, both GAAP and non-GAAP financial measures.
Reconciliation of GAAP to non-GAAP measures is included in today's earnings press release.
And as a reminder, the press release prepared remarks Investor presentation are all available on the Investor Relations section of our website.
I would like now to turn the call over to Matt.
Thanks, Blair and welcome to our fourth quarter earnings call. We're pleased to announce that we delivered another quarter of healthy revenue growth and industry leading profitability.
A number of P. R C.
I have met with over the past several months continue to emphasize four key priorities identifying all assets in the environment prioritizing and quantifying cyber is finding fast and cost effective solutions to address risks and ensuring adequate protection against adversaries.
Barton So these priorities what further reinforced by the findings in our 2023 truly support leaseback Wallace's correct research unit after having analyzed $2 3 billion or buys one of our detection and our platform. According to our research findings in the report the average number of days to weaponize vulnerabilities in 2022, what might be which is far less than a month.
Taken by TTM surpass these water bodies.
<unk> are looking for platforms that can help them patch prioritize what liberty's before they got weaponized unexploited. The message is clear legacy technologies available in the market today that purely focus on generating more and more detections and alerts are not enough to help secure organizations against a backdrop of accelerated digital transformation.
Cyber security skills gap organizations required for director steps in prioritizing the most severe of a security findings present in their critical assets and resolving them prior to exploration.
As <unk> looked to navigate the current macro and manage increased but your scrutiny. They are recognizing the need for a holistic risk based approach to quantify and align cyber as to their business objectives, and thereby be in a position to communicate effectively with their board and C level executives.
In terms of platform innovation for years, our Michelle our quality has been to drive continuous innovation to advance these initiatives in doing so we believe we have built a new security industry paradigm, where today.
Which de Leverages, how powerful real time data processing capabilities across more than 13 trillion data points on a natively integrated platform on.
Unlike traditional detection early technologies the quality cloud platform is proactively enhancing security programs worldwide by not only detecting what Liberty's English configurations. We're also prioritizing remedy of being in preventing risk with over $45 million purchase declared by our cloud agents and just 2022 alone and.
And by leveraging the Mitre attack framework, we now further reflecting the power of our platform to combine a continuous real time view of an organization security posture through the lens of an adverse III, which negatively which natively integrated pre emptive risk mitigation and prevention solutions.
These capabilities along with our cloud threat detection database, featuring a unified <unk> platform of over 25 card fees uniquely provide organizations with a comprehensive risk management solution to deliver quantifiable cyber security outcomes essential to protecting the digital infrastructure of countries.
Consequently, our strategic vision to consolidated security stock has caused industry analyst who are taking notice IDC recently pointed to a future upon liberty management, which evolved into an integrated cyber security risk management platform, our cyber security asset management with external attack surface management.
Along with the MBR tourists and patch management on a single platform are key to addressing this market demand.
Of additional importance the seismic shift in software application development and digital transformation using open source software is resulting in a surge of.
Software supply chain attacks and the response.
We are taking our innovation to the next level by extending the power of the MTR to manage the risk of software completion of analysis in on Prem and cloud environments with this extension of the quality of our platform security teams can automatically identify open source software across the production environment of virtual images by leveraging the same quality of Adrian for deep scan detection.
And remediation spanning the entire application lifecycle with high efficacy and speed. This development enhances advances our existing software completion analysis in open source.
Software assessment capabilities for Dev ops teams to secure container requirements and continuous integration.
Deployment and at one time as well.
In addition to this enhancement we are also advancing our customer customer and remediation capabilities in our agent base of MTR and policy compliance solutions as organizations develop more and more custom software.
Need to expand vulnerability management from third party software to first party software is increasing with this initiative, we are enabling customers to create their own detection for <unk> and their own custom software across their entire environment.
And finally, we have continued to expand our coverage for public cloud providers, bringing real time cloud affect discovery at prioritization reputation solutions on a single agent to Alibaba is Florida.
Turning now to our go to market motion Q1 remained a cup. Peter Despite include upsell performance New business was challenging as organizations continue to apply additional layers of scrutiny.
Spending and delayed projects start base, which impacted bookings, while we expect these conditions to linger for at least the remainder of the year consolidation remains a key theme with our customers given our product leadership and continuous innovations. We are fortunate to be engaged in many such conversations those conversations are laying a firm foundation for future growth.
And our customers are on a long term transformation journey with us existing customers continuing to invest in consolidation requires this platform was evidenced in Q1 by the steady adoption of <unk>, which is now deployed by 50% of our customers worldwide.
<unk> seven figure annualized bookings wins with <unk> in the quarter included two global 200 financial institutions, which shows qualify its ability to replace traditional siloed security tools and enhanced security posture on a unified platform and one of the world's largest health care providers that is leveraging the MTR recruiters.
A comprehensive risk management platform and both on Prem environments.
Floors.
Beyond these wins, let's take a look at additional examples that demonstrate how the power of wireless cloud platform drug.
Slated into strategic customer wins and provided immediate value to the customer.
First with zero Trust transformation underway.
We are helping customers standardize their operations across a broad spectrum of security subscriptions in a high six figure annualized bookings when a large government agency aspiring to move beyond extra protection only solution for that expanded its use of <unk> policy compliance by adding customer assessment and remediation cyber security asset management, patchy management and customer.
Dr contact with this customer selected <unk>, because we offer the only security and compliance stock available in the market today that utilizes both effector arm authorized platform and a single lightweight agent to enable full asset visibility and context aware mapping to prioritize volume produced proactively reduced technical debt automate patching and future.
Proof their security architecture with high Fidelity incident response capabilities across all environments.
Also a good example of how we are benefiting from.
The investments, we're making in the channel to drive new business opportunities and other marquee six figure annualized bookings enterprise customer win in Q1 was with a leading business services company in the Fortune 500, this customer expanded their BMD, our deployment with true risk, while adopting cyber security asset management and cash management as part of.
Initiatives to transform its IP security architecture, while replacing point solutions from two lenders to the single platform.
The ability of this customer to significantly enhance the security program with comprehensive internal and external asset criticality holistic risk, scoring ticketing and automated patching across multiple environments natively integrated platform are all key differentiators compared to alternative legacy technologies.
With customers beginning to perceive quality, leading risk management platform that consolidates multiple point solutions.
Growing increasingly confident in our ability to drive long term growth with and gained market share. This confidence was again bolstered in Q1 as customer spending $500000 or more with US grew 27% from a year ago to 162 growing our partner ecosystem continues to be a key pillar in our go to <unk>.
And this quarter, we expanded our partnership with a leading msos in North America.
Its platform already anchored in our MDM solution. This partner is now launching in managed patching service further validating our vision there.
Organizations need help with timely remediation and not just more and more detections. This MSP standardizing on quality with automated packaging solutions across Windows, Linux and Mac operating environments.
Mobile devices and third party applications without the need for a VPN.
In addition, illustrating the fast progress, we're making in our external attack surface management year from solution, we extended our relationship with a leading fabric insurance company, which is now adjusting our ESR intelligence field to continuously assess the risk for adaptive cyber insurance for their customers.
Furthering our efforts to remove friction in the sales cycle by helping customers to accelerate their cloud transformation and consolidate their security stack. We have introduced a new adaptive subscription model for organizations to extend the existing Vmware deployments in the cloud and container environments for ESPN and CW BB through our total cloud solution the early feedback.
We have received from customers for this model is quite encouraging and we're looking forward to early adopter customers in the current quarter.
In summary, it's a review that during times like this the best companies continue to innovate focus on customer success and emerge stronger than before looking beyond the short term. We believe the powerful combination of our cloud native platform and frictionless go to market motion positions us well for the phone number to holistic risk management platform of the future throughout the balance.
This year, we will continue to focus on executing our strategic vision driving customer success and expanding our lead over the competition with.
<unk> approach to balancing growth and profitability.
With that I will turn the call over to Jimmy.
I'll discuss our first quarter results and outlook for the second quarter and full year 2023.
Thanks, and good afternoon before I start I'd like to note that except for revenues.
Thank you to our non-GAAP .
With rates are based on comparisons to the prior year period unless stated otherwise.
Turning to first quarter results.
Revenues grew 15% to $137 million with China continued to increase its contribution making up 43% of total revenue compared to 41% a year ago.
Revenue from channel partners grew 18% outpacing duet which grew at 13%.
<unk> growth in the U S up 15% with approximately in line with our international business, which grew 15%.
Looking ahead to the balance of 2023, we expect our U S and international revenue to remain at roughly 60% and 40% respectively.
Thank you Ron we saw continued strength in customer dollar retention and upsell in line with expectations with our net dollar expansion rate on a constant currency basis at 1% or 9%.
One last quarter, but down slightly from one <unk> last year.
While there remains room for improvement from smaller customers spending less than $25000 per day.
Pleased with the strong revenue growth of 18% from larger customers.
In terms of new product contribution to parking patch management and cyber security asset management.
<unk> made up 10% of LTM bookings and 15% of LTM mute button comes from the line.
The success to an increasingly complex threat environment that highlights the relevance of our calling card popcorn to holistically assess manage and remediate risks.
Reflecting our scalable and sustainable business model adjusted EBITDA for the first quarter of 2023 with $58 7 million, representing a 45% margin compared to 48% margin a year ago.
Operating expenses in Q1 increased by 20% to $54 1 million.
Driven by the growth in sales and marketing investment.
<unk> higher head count and related costs.
During the remainder of 2023, we believe it's prudent to take an opportunistic approach and executing against our investment plans, while not losing sight of the importance of optimizing our prior investments to drive long term profitable growth.
EPS for the first quarter of 2023 with $1 nine and a free cash flow for the first quarter of 2023 with $62 8 million, representing a 48% margin.
Thank you Ron we continue to invest the cash we generated from operations back into call it, including 4 million on capital expenditures and $56 6 million to repurchase 584000 of our outstanding shares.
I thought that ended the quarter, we had $187 9 million remaining in our share repurchase program.
Now, let me turn to our guidance.
Starting with revenue.
Full year 2023, we are reaffirming our revenue guidance range of $5 53.
257 million, which represents a growth rate of 13% to 14%.
For the second quarter of 2023, we expect revenue to be in the range of $135 2 million to $136 2 million, representing a growth rate of 13% 14%.
This guidance assumes no material change in our net dollar expansion rate in 2023, the continued challenges and new customer growth.
We believe our value proposition remains strong with strong demand from existing customers and anticipate the current macro environment will moderate returns in 2023.
Despite having increased our sales and marketing head count by over 20% in 2022.
With that said given the long term growth opportunities ahead of us.
And our industry, leading margin implying further room for investment, we will continue to responsibly and operation people and system.
<unk> 99 to optimization.
As a result, we continue to expect full year 2023, EBITDA margin to be in the low 40% with full year EPS in the range of $4 three to $4 <unk> up from the prior range of $4, one zero to $4 1 million.
For the second quarter 2023, we expect EPS in the range of <unk>.
92, one cleanup lane.
Our planned capital expenditures in 2023.
To be in the range of 15.
29% over the second quarter of 2023 in the range of $3 million to $5 million.
Consistent with prior guidance for the remainder of 2023, we intend to align our product and marketing investments to focus on specific initiatives to drive more pipeline and supports the all in response to current market conditions.
In doing so we plan to prioritize investments in sales and marketing as well as related to core functions as its been over our investments in engineering.
I think endeavor to sharpen our execution by focusing on sales and marketing enablement and productivity.
We will be able to drive wallet share long term return, while balancing growth and profitability.
In conclusion in Q1, we delivered healthy topline growth and industry leading profitability.
With our comprehensive risk management solution coronary industry attention and delivering immediate time to value for our customers. We are confident in our ability to deliver on our growth opportunity long term are investing responsibly to maximize shareholder value.
With that Matt and I would be happy to answer any other questions.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
Your question. Please press Star one again, please wait for your name to be announced please standby, while we compile the Q&A roster.
One moment for your first question.
And our first question comes from Jorge Guevara with Baird. Your line is now open.
Mr. <unk>. Your line is now open.
We will go to the next caller.
Okay.
One moment.
Question comes from Matt Saltzman with Morgan Stanley . Your line is now open.
Okay.
Hey, Tim Thanks for taking the questions.
So I know that you guys typically guide to revenue growth and billings, but.
I do see the billings slowed to single digits in Q1, so when you think about the longer term growth algorithm.
How do you guys anticipate getting back to mid to high teens growth, 20% top line growth over the longer term are there any areas.
Our product portfolio that youre looking to pass on.
Could you potentially look at acquiring other capabilities just curious on kind of the growth I'll go from there.
Yes. Thanks for the question Great question sorry.
Generally we will continue to be excited about.
What we're seeing with fiber asset management bench management now adding ESL.
Total cloud coming up so we feel like there's really interesting areas, where our customers are looking to consolidate and look Q1 was a tough quarter as you heard as we had talked about last quarter earnings call.
We haven't made a decision with the CLO change of that.
Decision was really what we focused on implementing through this quarter.
Of course, there was a little bit of disruption, but the good thing is that now that transition has been completed as I haven't directly involved now with our sales teams.
Focusing on working directly.
Looking at it. So today, we are looking at a growing and maturing pipeline for 2023, we're getting better at improving our sales execution compared to last year to be up about 20% more growth in our sales and marketing head count and an early signs right. Now for Q2, we are optimistic with what we are seeing I mean of course, we are.
We're cautious about the macro back.
Looking at our.
Net retention rate, except driving overall.
Field hardly above the business, even though we are cautious about the macro and we're looking at these things plus our new.
Product initiatives coming together.
So that we can start to get back to that growth rate that we had last year.
And just to add a little bit more color to that if you take a look at the year over year compare Q1 with a tough quarter on Q2 to start becoming easier. So we do anticipate.
That bookings growth to take us through the rest of the year and lifetime I've mentioned, we have made significant investment in sales and marketing head count and.
Without the current macro conditions, we would have expected higher return, but with that said, we do anticipate that to kind of generate the type of returns and growth in the longer term.
Got it thank you and just as a quick follow up I noticed this quarter you still lapped some of the some of the benefits of log core J last year.
Are you able to quantify at all what those benefits were from a percent standpoint as it pretends to growth in the first quarter of last year. Just so we can kind of look at it on a like for like basis.
Yeah last quarter, we didn't have.
We did highlight that.
India benefited almost per day, and we did have a strong Q1 last quarter, but not specific to lot for tank, particularly.
Got it thank you.
Thank you one moment for our next question.
And our next question comes from the line of Brian Essex with Jpmorgan. Your line is now open.
Hi, good afternoon, and thank you for taking the question I was wondering could you give us a little bit of sense of what you saw from a macro perspective in the quarter, maybe relative to <unk>.
Particularly if we see some of your peers have exposure to financial services. It might've been a little challenging maybe mid market.
<unk> was a little bit more challenging.
We would love to get your view on competitively and from a macro perspective, what you're seeing thanks.
Sure I think I don't feel like we saw a really significant change materially in Q1 from what we saw in Q4, I think overall a lot of cautiousness.
Project start dates we are getting pushed out I think we do see weakness in the new business like everybody else and I think especially on the lower end of the.
Market, but as we look at essentially people auto.
They're just more layers of scrutiny et cetera.
However, as people are picking us step back from a new business perspective thinking about when they are if they wanted to switch that also focusing on existing trusted vendors, but they really feel they can do more with and so that's kind of what we are excited about and the conversation that we're having is while new business is kind of where it is right now that everybody is feeling.
We do see a lot more conversations happening on.
Instead of going out and buying one scanning solution and another solution in other.
Patch management solution with quality can I do more I already have you guys can I consolidate and get the benefit out of that and so those are the conversations that are quite encouraging but other than that.
We don't see material difference in the macro from Q4 to Q1.
<unk>.
In our guidance as well, we don't really look at it is this macro stays the same or no improvement.
Happening in the macro.
And then.
We didn't really have any material difference in exposure from the.
The financial <unk>.
<unk> issues that we've had so.
Jimmy can maybe Robert.
About 20% of our business comes from financial institutions and from our side, we haven't seen anything in our discussion to Orix Europe anything specifically in our bookings.
We don't think it's going to be material to our business.
Ed.
Steve and Bob.
Conditions change in Q2 <unk>.
Got it that's super helpful. Maybe if I can sneak in a follow up.
Ed.
You commented on the CRA.
Changes in that Youre kind of taken the range maybe.
Maybe just any progress report in terms of where you are shaking out from a hiring perspective are you are you more.
So are you aggressively looking for new <unk> and then how does that line up with what your.
Plans are for incremental hiring in sales and marketing throughout the year.
Yes.
Being here for 20 years that were pretty good sense of the business the company and everything I think we do continue to look forward.
Sales leader, However, I'm back like I did in 'twenty, one back hands on working with our second lever team, which is being there'll be great and they have been with us for a long time. So we feel pretty good about that I think overall from a sales hiring perspective pretty happy with what we have seen from last year to this year with the 20% increase I think we continue to do.
We're focused on being prudent as we move forward with our investment in sales and marketing and may not be the same rate as our.
Our growth in sales marketing as last year. However, we still continue to do.
I anticipate to grow and throughout the year.
Double digit growth again, thats the thought process.
Pretty excited about the opportunities, we see and so we're going to continue investing in that area.
Got it very helpful. Thank you and thank you Jimmy as well.
Thank you.
One moment for our next question.
And our next question comes from the line of Alex Henderson with Needham <unk> Company. Your line is now open.
Great. Thanks.
So I wanted to ask a couple of questions on.
The North America revenue declined for the first time.
Quarter to quarter.
The direct revenue.
Clearly decelerated pretty sharply from two.
12% growth, 19% growth last quarter, So I've got some.
Im wondering is there a mix shift.
The emphasis.
The company that is causing those too.
And is it a function of the.
Strong 20% growth in the channel that's cannibalizing some of the direct revenues.
How are you balancing between those.
And.
Measuring it thanks.
Yes, right now we are investing across globally on annual.
What we're looking at it given the investment that we're making we do anticipate the revenue mix between U S and internationally.
Let me the Athene, Brian at 60% U S and 40%.
International in terms of the direct versus indirect we have been focusing on developing a relationship with and building our relationship with our channel partner. So we do anticipate that mix to be shifting more towards channel partners and we have been seeing the ramp up there even though.
Compared to the growth rate in Q4 it has declined.
From 22% right now 18% itself Chong from the channel partners, but it is slower.
So.
Just just to be clear.
As you look at the very large expansion in sales capacity in 'twenty, two and continuing in 'twenty three is that heavily skewed towards supporting the channel or is it <unk>.
Equally split between channel investment in direct channel direct sales investments.
It was more on the derived on the China with more of the incentives and working closely with our channel partner the burst at hiring more channel management per se.
Dollar investment that we made in the business is more geared towards the direct sales force.
Great. Thank you so much.
Thank you one moment for our next question.
Our next question comes from the line of Woody Kessinger with D. A Davidson your line is now open.
Hey, great. Thank you for taking my questions guys. Jimmy I wanted to clarify what you said earlier I think you said after the remainder of the year. You said compares hilli literally is there any do you expect your billings.
Excuse me I think you had said bookings growth to accelerate but to be clear on your current calculated billings.
It came down to 9% this quarter do you expect your billing toward your current calculated billings growth on a year over year basis to accelerate throughout the rest of the year or do you expect it to stay in the high single digits.
Okay.
We do expect it to accelerate though when I meant when I said the easier compare if you take a look at the current billings growth in the last year and the first topic grew by 20% 18%.
First is 13 and 12% of it is an easier compare in the second half of this year. So we do anticipate the growth rate in this year.
And throughout the rest of the year.
Okay got it.
That is helpful and then on the.
I don't know.
The EBITDA margin front, you guys continue to be pretty impressively, there irrespective of the revenue outperformance in the quarter, whether it's smaller pig.
We continue to point at the low forties.
EBITDA margins it seems like.
Seems conservative I don't know any any color to add as to how you guys keep shelling such good upside on the EBITDA margins and potentially.
Potentially long term is mid forties more of the right go forward rate or you guys very convinced that low 40% is the right rate going forward.
Sure.
Yes.
Hey, guys alone 40, because if you take a look at the year over year change. It's been a couple of hundred basis points contraction. So as an example in Q1, 45% EBITA margin a year ago. It was 48% and I know that we ended the year in 2022 with 45% EBITDA margin, we expect that to kind of trend.
On the cost of that.
Okay got it that's it for me I'll get back in the queue. Thank you.
Thank you one moment our next question.
Question comes from the line of Josh Tilton with Wolfe Research. Your line is now open.
Hey, guys. Thanks for thanks for taking my questions.
Want to follow up on the last one.
I'm just going to ask it very straightforward.
To us with imperfect information current billings as kind of the best indication of what your future revenue growth is going to be and you just grew billings, 9%. Our current billings, 9% I understand the investments to kind of improve the future growth algorithm, but is there anything you can give us to.
Help us understand the confidence you have in reiterating the revenue growth for this year in light of the current billings coming in at 9% growth in <unk>.
Okay. Thank you.
And as a company it will accelerate.
We are seeing a current daily that will be higher than 9% in Q2.
In Q3 in Q4, and one of the reasons is because it is an easier compare to last year, especially because we had a tougher period in the second half of last year.
With the current billings at the second half of last year coming in at 13 <unk> percent and then plus.
That would be the assumption that we have need Inc.
<unk>, we did increase the sales and marketing investments significantly last year and 2022, we grew our head count by over 20% compared to only by 3% in 2020 lines now most of those hiring back half weighted in 2020 Q2, even if their sales rep productivity is lower than two.
They do add on digital inks.
Okay.
And the distribution and out there and be able to download.
When prices do Matt had mentioned that we have grown top line investment journey to even with a lengthy sales cycle, we do expect that to help grow the bookings.
Consequently that billing.
Okay and then.
Just a follow up on that.
Maybe my math is low and correct here, but it looks like.
Your partner sales they did grow nicely year over year in <unk>.
But on a dollar basis, they actually ticked down slightly from <unk>.
What kind of visibility do you have into that part of the business how does that compare to the visibility you have into the direct sales.
And how should we think about that partner sales growth trending for.
For the rest of the year.
Yes, we made last year and that aren't in the same timeframe, we decided to kind of rollout of the Sparc program, which is fairly new to us in the way that we have been working with our partners working from.
Incentive perspective, aligning channel managers that we didn't have before with these partners and so of course, most a lot of these deals.
Our channel managers, our technical account managers to work hand in hand, with the partner and so.
As we are going through this motion and getting better at working with the partners. We do get a certain amount of visibility because we are actively working with those partners on a.
A bunch of these deals, especially on the.
In our enterprise.
To some extent the mid market as well and so I think we anticipate that we're going to continue that investment.
On the partner side Linda.
We do think that the.
Mix will pivot more towards partners.
It's just not that we're not targeting any specific number at this point so.
Thank you guys.
Thank you.
One moment for our next question.
And our next question comes from Mike <unk>.
Walkley with Canaccord Genuity your line is open.
Good afternoon to extend your one for Marty Thanks for taking the question.
So I guess, yes.
With the release of the <unk>.
<unk> packages for some B I'm just curious if you can provide us with some color on how this has been received by some of your smaller customers. Obviously there is some pressure in this segment of your business.
It tells it would be helpful.
Yes, I think we launched them a couple of months ago. So it's still early from tracking specific numbers, but the conversations with our sales team.
Have been very positive data, where they feel like they are being able to really streamline the conversations move these packages quicker than what they would have to do with the fact that the sales execution is improving in terms of not having to court multiple line items, especially at our <unk> patch management selling it as a single package and being able to position that we've got.
Pretty positive feedback and so we're optimistic of how that's actually going to impact us over the next few quarters, but we're tracking that and where we are.
Looking to see if we need to do any additional packages as well that given the response that we've had with.
With different different down numbers as well so I think overall I would say I'm pretty positive about what we're seeing and we'll continue to track how how much of an impact on how that's actually having an impact in that segment as we move forward, but early indications definitely quicker.
Deals are closing quicker because the value prop is much clearer than it's a single item.
Great. Thank you very much for the color.
Okay. Thank you.
One moment for our next question.
And our next question comes from shrink Nick.
With Baird. Your line is now open.
<unk>.
Mr. <unk> are you there.
Yes.
At this point I'm showing no further questions, ladies and gentlemen, thank you for participating in today's conference. You may now disconnect everyone have a wonderful day.
Thank you.
Okay.
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Yes.
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Okay.
Okay.