Q1 2024 UiPath Inc Earnings Call
Good afternoon, and welcome to the you Ipass first quarter 2024 earnings conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to our host Kelsey Turcotte Senior Vice President Investor Relations. Thank you you may begin.
Good afternoon, and thank you for joining us today to review U Ipass first quarter fiscal 'twenty 'twenty four financial results, which we announced in our earnings press release issued after the close of the market today on.
On the call with me are Daniel D&S, you Ipass co founder and co Chief Executive Officer, Rob Enslin, Co Chief Executive Officer, and Ashish Gupta, Chief Financial Officer, Rob will start the discussion and then turn the call over to Daniel after that as Jim will review our results and provide guidance then we will open the call for questions.
Our earnings press release and financial supplemental materials are posted on the you Ipass Investor Relations website IR diet, you Ipass Dot com. These materials include GAAP to non-GAAP reconciliations, we will be discussing non-GAAP metrics on today's call.
This afternoon's call includes forward looking statements about our ability to drive growth and operational efficiency and our financial guidance for the fiscal second quarter and full year 2024.
Actual results may differ materially from those expressed in the forward looking statements due to many factors and therefore investors should not place undue reliance on these statements for a discussion of the material risks and uncertainties that could affect our actual results. Please refer to our annual report on Form 10-K for the year ended January 31st 2002.
23, and our other reports filed with the SEC, including our quarterly report on Form 10-Q for the period ended April 30th 2023 to be filed with the SEC forward looking statements made on this call reflect our views as of today, we undertake no obligation to update them I would like to highly.
This webcast is being accompanied by slides, which this quarter includes an embedded AI demonstration video, we will post the slides and a copy of our prepared comments to our Investor Relations website immediately following the conclusion of this call now I'd like to hand, the call over to Rob.
Thank you Kelsey and good afternoon, everyone. Thank you for joining us.
I want to take a moment to thank our team.
Important for everything you do to Mike do you have a successful and our customers for placing their trust me.
It was a good start to the fiscal year with first quarter results, reflecting our commitment to driving growth and scale, coupled with increasing profitability and cash flow.
While the broader environment continues to be variable level of engagement with prospects and momentum in our large customers gives us confidence in the strategic role automation will continue to play in digital transformation.
Turning to the numbers, we ended the quarter with IRR of one point to $49 billion, an increase of 28% driven by nice new IRR of $45 million.
Excluding FX headwind of $6 million net <unk> totaled $51 billion.
First quarter revenue was $219 million, excluding the impact of foreign exchange revenue was 297 million and grew 21% year over year.
non-GAAP operating margin increased from negative 4% in the first quarter of last year to a positive 17% in the first quarter of this year.
Significant acceleration of our path to the 20% plus long term operating targets, we laid out at Investor Day I.
I am very pleased with the progress we are making to better align the team to <unk>.
Requirement.
And the resulting efficiency improvements.
non-GAAP adjusted free cash flow was the first quarter record of $73 million. The first time, we delivered positive non-GAAP adjusted free cash flow.
Yeah.
We ended the quarter with approximately 10850 customers, reflecting all focused on acquiring customers with a high propensity to invest in automation.
New customers included Liberty Bank, New York City Health and hospitals.
One federal credit Union and nausea, a benefit solution.
And we are seeing good momentum in our large customers.
With $1 billion or more in AOR increased 43% year over year to 240.
While customers with 100000 or more and they are increased to approximately 1860.
Customers choose to you on that.
Because of our market, leading technology and breadth of platform capabilities, which allow for consolidation vendor rationalization and accelerate ROI, helping.
Helping them achieve speed and agility, while driving efficiency and improving employee and customer experiences.
For example, Colgate palmolive with more than 70 automation across various departments. They expanded the broader platform capabilities in the first quarter.
Great to have an integrated platform.
Solid based vendor spend and utilize that governance capabilities.
And he was silica which started to you ipass change with test suite expanded to additional platform capabilities as well.
They look to improve cost savings productivity and employee and customer experiences.
It has been a busy start to this fiscal year, we launched our new segmentation model nearly doubled the number of solution accelerators.
It's a P solution accelerators to complement our partnership hosted our annual AI stomach for a record number of participants introduce Alex platform released 2023 painful.
Several strategic partnerships.
And our board and management team.
We also recently hosted two incredible insight.
You Ipass stomach.
An exclusive event for our digital C suite and most forward thinking customers and are you I pass to get a public safety events in Washington.
There were two clear takeaway.
Our platform is driving meaningful ROI for our customers.
I want to understand how they can leverage your iPad platform to deliver the power tariff AI responsibly and at scale.
Since inception, our platform is being infused with AI.
We offer our customers best in class model read communication understand documents I see screens and interfaces.
Coupled with this next wave of Jared of AI, we can help customers make automation, even more accessible across the employees and significantly expand use cases.
Equally as important our automation platform provides the guarantees guardrails and governance, our customers required to deliver chairs of AI safely.
We are investing like some of it we are moving fast, which Daniel will talk about in a few minutes.
I know he's not new to you is that we are delivering real value to our customers to date.
During the quarter Grubhub, what show cardio a U S customer since 2022 decided to replace a competitor and migrate their entire automation program to us.
With our strategic focus on AI as they work to accelerate development and deliver especially at governance.
The purchase document understanding Proteus invoices and plan to roll it out across other use cases.
Another Great example of twin Die capital, which is innovating the car buying experience for Genesis.
Kia dealerships and the customers by leveraging document understanding to streamline the loan and lease process.
Reducing the time it takes the funnel are translating into a better experience for both the dealership and the customer.
And we see level sponsorship that exploring additional opportunities to further streamline the organization and drive efficiencies to the bottom line using AI and you Ipass automation.
Our partner ecosystem also continues to play a critical role in our success during.
During the quarter, we expanded our partnership with Snowflake launching a pre built solution. They are manufacturing data cloud to instantly connect data to business processes without using complex Coke These technical integrations in hand.
Customers the ability to seamlessly integrate across applications.
Sure.
Go to market partners expand outreach to customers in a scalable and cost effective manner.
Great example is key on the German multinational and you iPad customer since 2019, working with Pwc Qian continues to scale across the organization.
Look to incorporate AI suite into the automation program.
We also recently announced the partnership with T systems.
<unk> cloud provide.
Provide as classified by the German Federal Ministry for Economic Affairs, and energy They love our insurance platform at scale public sector organizations, and large enterprises across Germany, Austria and Switzerland.
As part of this partnership we plan to work with T systems to develop industry specific offerings to joint customers.
One of them.
He is deutschland ticket with T systems, and you'll have that anticipate helping them manage demand for the new flat rate transport tickets in Germany.
And finally, we announced an expansion of our partnership where they say Pete joined he also automation capabilities to customers.
This partnership will help enterprises, both the clean coal an S. One o'clock complement it's a people process automation, enabling organizations to improve efficiency and productivity across AAP and non issue if you work.
We are pleased to be the premier sponsor for all three of Sap's Sapphire event.
Orlando.
So Luna and Sao Paulo.
Laura I will join a S. A P T him on stage at Sapphire Barcelona to underscore the partnership we now have in place.
Our partners also very excited about the announcement.
Pursued being wise Americas, Vice chair has told us that having two alliances weapon E wide ecosystem that leverage the strength of your iPad automation platform to help clients drive even more value from the AAP investment makes a lot of strategic sense.
There is a significant amount of inbound interest and I'm convinced that together, we can help customers achieve game changing result.
In summary.
I am pleased with the progress we have made on our strategic initiatives, which are raising our profile and relevancy in not only with customers, but also with go to market and technical partners.
That being said, we are mindful of ongoing macroeconomic variability and we have more work to do extending our market leadership, helping customers get the most out of automation and continuing to improve our execution.
With that I'll turn the call over to Daniel.
Thanks, Rob.
Afternoon, everyone.
We're very excited to have introduced our newest blocks were released 2020th rebuilt four earlier this month.
This is luiz further accelerates our customers' ability to discover automate and operate at scale and continues to expand our leadership position in U I E.
A P I automate.
Our customers are really excited about this new release and our plans to use generic division to further increase adoption of our platform.
We believe the agenda that'd be there will be a very important part of our enterprise value Foundation, along with domain specific AI and automation.
And it is our platform that will allow us to deliver it in a secure and government that enterprise customers require.
Generally the feedback is very powerful but by itself is the.
The limited scope of capabilities in the enterprise it can read and generate tax but not take action.
Yeah.
Automation is like a brain without a buddy.
But when they are used combine women enterprise automation block four it opens a whole new set of use cases and opportunities for customers.
Our software robots can already read screens and documents.
So we've done a few bad they can answer customer emails create someone who's a complex documents and respond to support questions.
Customers can use this new generative skills to extend existing automate shows.
Such as customer service.
And finally new ones.
We also believe Germany.
Will democratize access to our platform, making it easier for both knowledge workers and developers to create automate shows using just natural language descriptions generative I will ask you every employee.
One of our biggest competitive advantages and leveraging the power of generative bag is our long time investment in AI computer vision.
With computer vision, we understand screens from legacy modern applications and our knowledge of screens continues to grow exponentially with more than 2 million calls every day to our AI computer vision service in the U S. Paul automation cloud.
We are uniquely able to combine this understanding of screens with the cognitive intelligence of Genuity back to watch what happens understand what's being done and automate it in our enterprise ready blocks for.
Let me show you a quick video of a research project Codename wingman.
We are currently working on which illustrates this.
You are not on the webcast.
Please go to our Investor Relations website for building.
Okay.
This shows how generative AI and computer vision.
Robust workflows without writing any code as this technology matures room research into products, we expect to extend the capabilities beyond developers to knowledge workers, who will be able to simply describe tasks in natural language and have them executive directly by our platform.
At our former four user conference in the fall of 'twenty 'twenty. One I described the potential of generative AI using the phrase semantic automation I am very pleased to report that our first offering in this space <unk> is now in preview.
<unk> intelligent transport data between documents spreadsheets on apps understanding the content automatically inserting the data into the right places.
This use case has the power to transform how people work and is made possible by the depth of our expertise in combining AI computer vision, our own domain specific models and general Dubai.
Generally Dubai also creates a compelling opportunity and automating manual tests today.
Today application testing often still requires manual intervention, which makes it slow unresponsive and highly repetitive.
The opportunity for a combination of generative AI and computer vision prompted through natural language descriptions and deliver through our platform has the potential to meaningfully transform the testing market and we are well positioned to execute here.
Generically bag.
Ah represents a massive opportunity for you eyeball and I am working closely with the team and our customers as we infuse it across our platform.
<unk> its potential.
This is why I'm, so excited to welcome Curt on them now.
Two our board of directors is a former practitioner with C level technology roles.
GSK Hallmark Baxter International and Daimler Chrysler Karen that brings a wealth of experience and the customer perspective.
Which I believe will benefit the entire company.
Before I close and hand, the call over to Ashish I would like to thank everyone, who has contributed to you a box success. We remain focused on building an enduring rule of 40 company and are pleased that our first quarter represents another step.
On the journey.
With that I will turn it over to Ashish.
Thank you Daniel and good afternoon, everyone unless otherwise indicated I will be discussing results on a non-GAAP basis and all growth rates are year over year. I also want to note that since we price in sell in local currency fluctuations in FX rates impacted results.
We continue to execute against our strategic imperatives of balanced growth and profitability, which resulted in first quarter revenue first quarter revenue outperformance as well as record non-GAAP operating margin and non-GAAP adjusted free cash flow.
As a result, we are meaningfully increasing both our full year non-GAAP operating income and non-GAAP adjusted free cash flow outlook. This afternoon.
Turning to the first quarter <unk> totaled $1 to $4 9 billion.
An increase of 28% driven by net new <unk> of $45 million.
Excluding the FX headwind of $6 million net new <unk> totaled $51 million.
We ended the quarter with approximately 10850 customers, including great New logos like Asda Giblin Life Sciences, Robert We'd Corporation task Rabbit in P&L.
As Rob mentioned, we saw strength in large customers as they continue to increase their you ipass footprint with broader platform adoption and increased consumption.
A great example, as Tetra Pak a customer since 2018, who continues to expand on our platform, adding additional products. This quarter like document understanding action center and automation hub as they migrate to the cloud.
Our strategy is to focus on customers with higher propensity to invest in automation as we transition our smaller accounts to a distribution channel.
AI is also a central part of our strategy and is infused across our platform.
Great example is canon USA working with Greek is canon USA working with Greenlight consulting Canon has built an automation program that leverages document understanding and customize machine learning models to process over 5000 invoices each month.
Automation gives them greater accuracy and efficiency and requires far less need for human interaction saving their employees over 6000 hours of manual work annually.
Our dollar based net retention rate for the quarter was 122%.
Normalizing for FX, our dollar based net retention rate was 127%.
Dollar based gross retention of 97% continues to be best in class.
Revenue grew to $290 million normalizing for the FX headwind of approximately $7 million revenue grew 21%.
Remaining performance obligations increased to $904 million.
Up 34% year over year.
FX adjusted <unk> was $891 million.
Current RPI increased to $559 million.
Turning to expenses.
We delivered a strong first quarter total gross margin of 87%.
Software gross margin was 93%.
First quarter operating expenses were $205 million, reflecting.
<unk> disciplined cost control.
We continue to find opportunities to optimize the business, which allows us to both reinvest in growth and increased profitability.
We have built a strong foundation to scale the company and will continue to leverage automation and improve operational excellence to grow the business efficiently.
Before I move on please note the year over year decrease in G&A reflects both cost efficiencies as well as a reallocation of software expense to other line items.
GAAP operating loss of $46 million included $85 million of stock based compensation expense.
non-GAAP operating income was $48 million, resulting in a record first quarter operating margin of 17%.
Combination of revenue outperformance and disciplined expense management resulted in record first quarter non-GAAP adjusted free cash flow was $73 million.
I am very pleased with this achievement and we expect to be non-GAAP adjusted free cash flow positive every quarter for the remainder of the year.
We also have a strong balance sheet, which is an important asset in the current operating environment with $1 $8 billion in cash cash equivalents in marketable securities and no debt.
Now, let me turn to guidance, which assumes the overall macroeconomic environment continues to be variable, including in North America and that we are in the midst of executing our new go to market strategy, which includes account segmentation and the transition of smaller customers to distribution partners.
For the fiscal second quarter 2024, we expect <unk> in the range of 130 $1 billion to $1 $306 billion.
Revenue in the range of $279 million to $284 million non-GAAP operating income to be approximately $10 million and we expect second quarter basic share count to be approximately 563 million shares.
For the fiscal full year 2024, we expect <unk> in the range of one $4 billion to $7 billion to $1 43 $2 billion revenue in the range of one to six $7 billion.
To 127 2 billion.
non-GAAP operating income to be approximately $168 million. This.
<unk> to our non-GAAP operating margin of 13%, a 700 basis point increase year over year.
Before I close I want I want to leave you a few final details.
First given our first quarter gross margin outperformance, we now expect gross margin for fiscal year 2024 to be 85%.
And finally, we expect fiscal year 2024, non-GAAP adjusted free cash flow of more than $160 million or 13% adjusted free cash flow margin.
Looking forward the team remains focused on delivering growth at scale in a disciplined manner, which allows us to both invest in extending our market leadership, while expanding operating margin and increasing adjusted free cash flow. Thank.
Thank you for joining us today, and we look forward to speaking with many of you during the quarter with that I will now turn the call over to the operator operator, please poll for questions.
Thank you and ladies and gentlemen at this time, we will conduct our question and answer session.
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Once again to ask a question press star one on your telephone keypad, we will pause for a moment as we poll for questions. Thank you.
Okay.
Okay.
Okay.
Yeah.
Our first question comes from.
Terry Tillman with Chewy Securities. Please state your question.
Hey, this is Joe Meares on for Terry Thanks for taking the questions I. Appreciate it. So you recently announced your new business automation platform with us it sounds like a big deal to US can you just explain what drove the decision to make this integration and what you think the opportunity is here.
Hey, Tony This is Robert Thank you for the question look with Barcelona with.
Many of Hep's customers and.
Truly exciting event for us.
The key sponsors in both Orlando Barcelona in Sao Paulo.
They sit in terms of the customer a large global apparel footwear company. This morning in Barcelona mentioned why.
The partnership for them. It's important then and it's basically around the ability to migrate to this will drive a clean coal accelerated digital transformation, combining some of Etp's technologies around <unk>, which is process modeling connected without your iPad test mining.
And driving up the your iPad platform to get to that global footwear apparel company.
As he said.
Uh huh.
He is working with robust over a couple of thousand hours with ACP system and seeing significant benefit together with.
Customers wanting to move fast customers wanting to actually see how automation on top of the existing environments, whether they're actually going to go through digital transformation or not and we believe that.
Ill go to market organizations on both sides will be able to deliver the value to these customers much much faster. So it's a significant partnership the feedback we've got from global system integrators has been exceptionally positive. We've mentioned a couple of them and we've had a lot of positive inbound interest.
In this partnership with Asap.
Today, we also have customers that already.
We're already utilize it in the <unk> suite of capabilities. We have you can see as we've mentioned previously with Auryxia and the benefits. Thanks, a lot of it. So we think at the end of the day customers are going to see significant benefit the pie.
Connecting our ERP systems will cost mission critical ERP systems, together with World class automation system.
Super Helpful. And then just as a follow up we recently saw you iPad product demonstration that use <unk>.
GBT to call with test scenarios for the test suite. It seems very additive to the platform can you just explain at a high level, how chat GBT augment the product and then what your product does that Cherokee boutique cannot do thanks, so much.
We're very excited about the opportunities that the genetic defect.
Is going to bring to our platform.
We are seeing a.
The good opportunity to increase the adoption of old platform by making the existing use cases easier to implement and democratizing access to.
The platform in the sense that even more and more or less technical users can use. It we are building as part of this project with my wingman. We are building our KOL Pi looked like cool technology, where users can specify in natural language.
With these.
Tasks, they want to automate and we use our computer vision.
To read the obligation screens and by combining our own technology with the COO.
Cognitive followed or Joe.
Drug GPT, we can actually create very easy to use workflows.
Can be deployed and run by older blocks.
Moreover, we feel that are in our document understanding business, we can accelerate the creation of domain specific models by training them using the general debate.
But then deploy them in the secure and governed meta. So this domain specific models have the advantage that they.
A very precise and they don't Covid will see Nathan they don't pools.
These risks and you mentioned testing.
Exploring Lee.
<unk> was very difficult traditionally to automate because people if they're very very fast through building an application and user interface, usually changed quite a lot, but now we see the opportunity to have.
Descriptions of the tests in pure English like you do for the menu of desktops.
And then.
Our automation platform.
Employee's computer vision in general.
We'll simply explore the user interface and will be capable of understanding and application testing more like a human use.
Result.
And acceleration of actually implementing large application because people will face much more often so development cycles will with short term.
So let me once we believe this is an amazing opportunity for our platform and I want to stress.
Again that.
The bulk of it really puts into highlight the power of our computer vision that the REIT screens, the bulk of our execution platform that can execute screens through applications and the power of our end to end plus what's that can orchestrate deliver automation in the enterprise grade.
Manner.
Okay.
Thanks, so much.
Our next question comes from Raymond <unk> with Barclays. Please state your question.
Thank you and congrats for a number of solid quarter guys.
I wanted to stay on that testing.
And actually help with the SEC.
The first question.
And then thinking about like testing in an SVP migration environment looks like.
As a lot of customers have to go to <unk> low customers need to be do and we think that customization et cetera.
So that will be like a significant opportunity for you guys around.
Testing, there and worked here.
Am I dreaming here or do you see that and whats the opportunity here and I had one follow up question.
Yes Raimo.
Yes.
But when you when we mentioned the Oracle suite.
Announcements.
Earlier that.
That is in a combination with <unk> for Hana migration that safety. So we are an integral part of it migration. It was also.
Automation on top of.
On top of a small amount of migration with pacey till we actually have customers today that actually utilizing significant part of both platform and the opportunity is significant because it also ties in Acp's PTP BTT platform together with a slow migration. So that's why we feel really confident about it we also feel that.
It changes the discussion in front of customers and it drives a significant amount of efficiency in the migration process as well we've also.
Delivered ACP heat maps, and ATP solution accelerators to help move that motion even faster. So we do see that as a significant opportunity with our partner.
Yeah, Okay, perfect makes sense and then ashish.
Great Great results on on cost control and what Youre doing there and how do we.
How do you think about your key investments keyed in theory for the reminder of the year in terms of.
Kind of controlling cost, but also kind of getting ready for an IND.
Keith things are kind of looking better in the second half of the year with a view on 2024.
You kind of run the business at the moment many thanks.
Yes, I think firstly as we consistently invest in the areas that we see opportunity Raimo that is both in the go to market side as well as in product and you can see that in the results of the roadmap.
Daniel talked about in the product and the excitement that we have there and things like that.
And deals like the SAP partnership that happened through the investment of time of our resources. So we focus people in the right places with the highest return.
We've talked about it I think we have enough scale now where a big chunk of our base is really scalable globally. You look at our G&A structure I think we've we built the foundation to scale across every single country and support.
The customers and the strategy that's in place today and on the go to market side, Rob brings a ton of expertise and the leadership of the go to market teams really are constantly looking for the best opportunity and focusing on customers with the highest propensity to invest automatically leads to death.
Better Rois in terms of the investments we put in so while I think that we will continue to operate the company efficiently.
Efficiently for us means investing in great opportunities and deemphasizing areas, where we don't and that Formula I think has shown positive results by by you can see not just the generation of free cash flow, but also us raising our overall operating margin guidance here to 13% for the remainder of the year yes.
Okay makes sense. Thank you.
Our next question comes from Matthew Hedberg with RBC. Please state your question.
Great guys. Thanks for taking my questions, Rob maybe I'll start with you.
Upselling the platform beyond RPI.
Clearly a big opportunity for you guys and when we look at your growth in large customers. It seems like its showing up there can you talk about a little bit more about the success youre seeing there moving customers beyond.
RPI to the to the broader platform and what does it do to IRR per customer.
Yes, maybe you can give us a comment on the IRR per customer, but persistent and when you look at our customers above 1 million netting that's improving all the time I would say, Matt the discussions we're having with customers today using our Northstar model.
It's significant it's really around how we can help their businesses, we can help drive efficiency and how we can help them.
<unk> list environment that we're looking at today. So we see we see lots of opportunity on that.
Daniel mentioned document understanding.
The return on document understanding the results that we have with customers today and healthy health care providers and financial institutions is absolutely significant and we see more and more customers expand and then as customers start to see areas debate.
Say when we engaged in a sales cycle.
And we gain with taste sweet and I look at the full platform.
Being more and more customers select us because of the platform opportunity that it provides so I would say <unk> and automation today.
Enterprise version of the way the companies look at enterprise automation Youll SaaS is clearly the leader in that space. The partnerships that we have got in place with Big GSI and Big Technical partners is making a big difference.
Very confident of way we hit it.
With our focus on industries and these partnerships.
Sort of curious like what do we think about that longer term margin progression, how should we think about the cadence.
Beyond this year, which has obviously been pretty dramatically this year so far.
I think we're really pleased with the progress.
The pace of execution by every single employee of UI path frankly.
Working to both serve our customers and find efficiencies.
Together.
We've talked about 20% margin in terms of a long term operating margin goal, we will update that at the appropriate time as we see the need to but we're more than halfway there we feel really good about that progress.
We're committed to being a rule of 40 company.
And I think just continuing and continuing that progress is what we're focused on.
Thank you very much.
Thank you and our next question comes from Mark Murphy with J P. Morgan. Please state your question.
Hey, this is already on for Mark Murphy. Thanks for taking the question I wanted to ask is there any material portion of your pipeline, where you look at it and you feel like you have been involved in general.
Ill end with external products to be clear I understand that you guys have you ever in AI and ml product, but specifically if youre kind of seeing any incremental pipeline with the adoption of these kind of emerging.
So I don't think we look at our pipeline in that vein.
When we go around and we and Rob can talk through the customer portion and the customer stories every customers in our pipeline reflects the continued interest in understanding their automation and AI go hand in hand, and the power of generative. They I really makes us the right long term fit for their platform. So we see that in the.
The pipeline in terms of just the continued.
The continued throughput of the deals and the deals with our largest customers, reflecting our strategy.
So that's the way we see it do we have a specific set of pipeline or deals just around AI, we don't look at it that way.
We believe our customers do either.
Yes, I would just understood.
Let me just add to that because I think it's really important that I think Daniel and Daniel prepared remarks came across really well when you look at the way we look at enterprise AI and we are getting significant amount of discussions with ask estimate you have to go back to domain specific AI and domain specific AI, we've had yes, yes.
Our work in this space that our customers whether it be tossed mining document.
Standing our computer vision technology, and don't forget forget communication mining as well. So we've got years of understanding and that we spoke of that clipboard AI previously.
Generative AI customers really wanted to understand how we can.
Can benefit them in the future with automation and how these two go hand in hand, and I think that's going to be.
Something that you Ipass will continue to evolve really really fast in the next month and I would believe that we are seen as a leader in a thought leader in this space as well.
Do you want to make some comments on that.
Yeah as I said.
So.
I really believe that.
On the.
Strategic standpoint <unk>.
<unk> will follow a bit like cool.
Our human brains enrollment.
We have oh.
Very powerful cognitive engine, but we have a lot of specialize.
If I can say sold that help us to do many task on autopilot for instance.
Try to look things initially I'm training using my cognitive my understanding again.
But then I would play on autopilot, because it's much more effective with more precise sexually much less intensive in terms of resources that is requires so obviously this is going to be the model.
That will prevail in the in the enterprise World and.
This is why I believe we have an extensive modes.
We have based on our computer vision technology, and actually our ability to execute actions on screens, which is a very hard thing to do.
I believe so it's part of our IP for the past 15 years.
I really believe that it's exactly the missing piece for us to really go to the next level.
The option.
Got it.
Very insightful and thoughtful answer from all of you. So I'll just leave it at that thank you.
Thank you.
And our next question comes from Keith Weiss with Morgan Stanley . Please state your question.
Yes. This is Sandra Zhang for Keith Weiss I wanted to start first with <unk>.
Ashamed in terms of the demand environment, you guys talked about sustained deal scrutiny similar to last quarter as you look into the trends in may and look into the pipeline for the rest of the year. How are like what does the customer buying behavior, how is that shaping up any sort of changes you're seeing.
In may versus what you've seen in Q1, and what you saw in Q4.
I think it reflects just the way that we've described it which is it's it reflects the variability of the macroeconomic environment.
Yes.
That I think those changes every single day, and we're attuned to that with our customers, but there is no change.
Change that we see a major difference in from that perspective.
Is there any sort of regional variation.
Some inklings that Europe might be doing better than the U S or in Asia or is it still pretty volatile across.
The various geos.
Yes.
So just in terms of what I see and I'll, let Rob commented season with the customers, but from a pipeline perspective, we're really pleased with the execution within across our teams I think the word variable really is a global phenomenon in terms of the overall environment.
<unk> asset.
For a longer period of time.
Just since last year and I think North America is something we commented on.
In in the last earnings call. So from that those are just the dynamics and I'd say, that's pretty consistent nothing else that I would highlight Rob I don't know if you want to add onto that.
I'll close on that one I guess I Didnt I don't think theres much to highlight I would say that.
It's consistently variable I would say the same discussion taking place.
With customers when you talk about on the wholesale model into than where we were we speaking to customers about the broader automation platform <unk>.
It is progressing very nicely in both the U S or the Americas ending in and in.
In EMEA, we pretty pleased with the progress in <unk>.
We will continue to work on the progress and a P J, but.
The market conditions, I would say all variable consistently.
Understood and then like to sneak one last one if I may Daniel you've been pretty clear about on this call about the potential for general day Bye.
Help.
Make RPE more useful testing seems like a very interesting use case as well as customer service what does that mean from a pricing perspective. So as you guys incorporate this technology do you feel like you were you'd be able to.
On the pricing lever given the potential productivity.
As such that you may be extract or deliver to customers.
Yes. This is a big tailwind for us.
And it's gone.
Positively impact all areas of our plus for it because ultimately we will infuse generally.
With our platform.
This basically will.
With the increased adoption of our technology.
The generic.
In the way for itself.
And we will sell more robots, we will sell more documents processing.
We will sell more.
So I think.
Think it's Scott.
It's gonna be flicked, please be nicely into our existing price model.
Yes.
I appreciate the thoughts Danielle thank you so much.
Our next question comes from Bryan Bergin with TD Cowen. Please state your question.
Hey, guys. Good afternoon. Thanks, I wanted to follow up on the go to market refresh Rob you touched on it briefly but can you take it a little bit more on the sales and go to market <unk> across the three operating regions is really just compare and contrast, where you stand in North America versus EMEA versus APAC.
Yes, well look I mean, I think we've executed the go to market changes.
As we said we would consistently.
Those changes.
Say it settled.
Really well mostly in the in some of the segments, it's taken a little longer than that.
Then we would have hoped but right now I feel really good about where we are.
And the rhythm we have in the second in the second quarter and now the teams of folks so.
Absolutely the right decision absolutely the right execution.
And as you said a couple of times, Brian I think you'll see the acceleration in the second half of the year due to the changes we've implemented.
Okay, and then just on the partnership ecosystem kind of same question Youre, just any feedback from the service channel partners as you're shifting some of the long tail over to them any learnings thus far on the on this plan.
Yes, I would say the partners across the board.
You got to look at the partners. If you look at the Big GSI is I think we having Wayne will discussions with them.
It's very much involved in many of our norstar discussions.
Around digital transformation and big projects.
And then that that model fits really well I existing partners. The local channel partners are seeing.
Opportunities as we continue to showcase the platform they get.
Fundamentally understand how to position the platform and actually even in some of those partners, we see areas like document understanding where they actually really driving it and then distribution is way we still got some I wouldn't say work to do but we still got it.
See it come through.
And look.
The reaction I mean, thats, the one probably that we Don mentioned, because maybe it's the highest global but the partnership with T systems with large companies in Germany, Switzerland and Austria.
And the public sector in Germany.
Germany, a significant rise in you've already working with Deutsche Love ticket, which is Blake Gabon.
On the flat rate ticket system for the whole of Germany. So that's a big significant opportunity.
For you Ipass as well and then the ACP partnership.
Coming out of Sapphire will be full execution mode, and we really confident that.
The senior leadership of S&P being in Barcelona, being on stage Tomorrow, what basic BT and EE customers.
We will showcase the fundamental difference of that partnership as well.
Okay.
Okay. Good to hear thank you.
Our next question comes from Michael <unk> with Wells Fargo. Please state your question.
Hi, This is Oscar lines on for Michael carrier. Thanks for taking my question.
Looks like <unk> was down versus last year and the quarter is there any additional color that you can add on whether it's new logos or expansions that are impacting that and as a follow up are you seeing any change in the average deal sizes for new lands.
Yes, so just when you look at it I wouldn't say there is.
A driver between new logos and expansion really when the first thing is normalizing for FX and FX had a $5 6 million impact in the quarter. So I think thats. The first piece and the second is it's more of a just a general the broader macroeconomic variability that we see and the transition that we have in <unk>.
Terms of the go to market.
The changes that we've made and that's appropriate we commented on that at the start of the quarter. So those are really the drivers versus pointing out a specific motion.
In terms of where it is in terms of land sizes. We're really pleased with what segmentation has done in terms of focusing on the higher propensity customers. We see we're pleased with our large deal execution as Rob mentioned this our million dollar plus customers continue to grow and from that standpoint.
I think that's a good that's a good feeling from us in terms of both positioning the platform as well as larger deal execution, which of course involves average selling price being higher.
Got it thank you.
Our next question comes from Brad Sills with Bank of America Securities. Please state your question.
Oh, great. Thank you.
I wanted to ask a question around the transition to solution selling and the vertical approach here.
I think last quarter, you called out some relative strength in the financials vertical just curious if we get an update on where you might be seeing some traction across the verticals with that approach. Thank you.
Yes, Brad I mean, we still continue to see.
The benefits with.
Financial the financial sector banking.
Health care providers, we still continue to see that we announced a couple of names so that continues to be so.
Our strength, especially with the solution products, our communication mining and document understanding.
But I would say its variable and other industries.
In medical and generic.
Manufacturing.
Sweet being driven.
So if I.
The industry point of view I think over time.
As we produce more in Molson solution accelerators.
More and more focus on which solution set which industries you're.
Youre going to see the expansion by industry. The pizza is significant as well as at the <unk>. The global system integrators, the big partners actually want to work with us in specific industry focus areas and youre going to start to see that expand in the in the coming months as well.
So I wouldn't say, specifically, we saw significant uptake in any particular industry.
The first quarter, but still financial services health care is still the areas, where we see that we have seen progress.
Wonderful. Thank you so much and one more if I may just on a couple of partnerships here, the Amazon Sage maker and Snowflake partnership how do you envision these partnerships impacting the business or are we talking about just more relevance by blending data.
From these datasets in AI ml libraries.
To increase the velocity of deployment of more box the.
The accuracy of bots I mean, how do you see this impacting the business as you bring in data set from snowflake in the AI ml library from AWS H Baker. Thank you.
Daniel you.
You can take to say, Mike one on stuff like I think it's.
Pretty clear Brad that could you just help customers automate faster connect quicker.
If we could do stuff like data in the manufacturing sector and deploy bot.
Much much faster actually see quite a significant amount of excess sapphire Vince that win.
We see significant amount of customers in that space manufacturing.
Much faster, so we see that as a significant opportunity as well.
Yeah, obviously I think Christoph.
The opportunity in the.
And our analytics platform we use.
Snowflake is actually.
The foundation laid in process mining and all the analytics, we've kind of standardize on the platform and we use the.
The bulk of it of course is great for a hosting model suits to talk a little bit.
Our AI slope there just so following on that.
It's a really positive event for us.
Thank you so much.
Our next question comes from Kingsley Crane with Canaccord Genuity. Please state your question.
Hi, guys. This is Gabriel real cooking with great congratulation on the quarter.
Finally, as very question you about the Ginnie generative AI being a great gateway to leverage the rest of the automation platform. So in that respect.
What impact do you guys taking into account the guidance for this year or for longer term of January <unk>.
The adoption of the platform overall increase and thanks to it.
Well I think generally right.
It's a bit of a longer shot to have impacted the guidance for this year.
My estimation is.
Real adoption in the enterprise would probably start more like next year, rather than this current fiscal year.
Thank you.
Our next question comes from Scott Berg with Needham. Please state your question.
Hi, everyone. Congrats on the good quarter.
Most of my questions have the module ASP I just wanted to ask for one and I apologize for the background noise on the plane here.
My question is on the adoption of your COO, Bob I think they have been in the market for a little bit more than a year now I just wanted to see if you had an update maybe on the traction with selling them versus.
More traditional.
Term license spots that you have out there. Thank you.
We see really good overall progress in our hybrid offering I think is really good I think ECR, it's still early.
There is a lot of our customers will still work and are developing their cloud strategies their full cloud strategies across enterprise automation, but.
But the feedback from our customers the interest continues to be very well and it's positioned well in the market.
But having that on the roadmap coupled with the capabilities that continue to be released on our cloud platform.
We feel very good about that.
Thank you and we have reached the end of the question and answer session I will now hand, the floor back to Robert Enslin for closing remarks.
Yeah. Thank you everybody for joining us we look forward to connecting with many of you in the coming weeks and we appreciate it. We appreciate you all joining us today. Thank you.
Thank you. This concludes today's conference all parties may disconnect have a great day.