Q1 2024 Domo Inc Earnings Call
Hello, and welcome to the demo Q1 fiscal year 'twenty 'twenty four earnings call all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star one on your telephone keypad.
I will now turn the conference over to Peter Lowry Domo, Vice President of Investor Relations. Please go ahead.
Good afternoon, and welcome on the call today, we have Josh James our founder and CEO and David <unk>, Our Chief Financial Officer, I'll lead off their safe Harbor statement and then onto the call. Our press release was issued after the market close and is posted on the Investor Relations section of our website.
This call is also being webcast.
Statements made on this call include forward looking statements related to our business under federal Securities laws.
These include statements about future and prospects are financial projections, our cash requirements.
Land and expectations for our pricing go to market strategy product adoption and product impact our expectations for our sales sales team and new business opportunities and initiatives the potential of AI and its impact on our business and the impact of macroeconomic and other conditions 100 basis.
These statements are subject to a variety of risks uncertainties and assumptions.
For a discussion of these risks and uncertainties. Please refer to documents, we filed with the SEC, including today's press release, our most recently filed annual report on Form 10-K, and our most recently filed quarterly report on Form 10-Q.
These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward looking statements.
In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of downloads performance.
Other than revenue unless otherwise stated we will be discussing our results of operations on a non-GAAP basis.
These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the Investor Relations section of our website with that I'll turn it over to Josh Josh.
Thank you Pete and thank you to everyone for joining the call today.
I'm going to touch on some of my key priorities in getting back to growth highlight a few Q1 customer wins give some product updates, including how we're thinking about recent developments in AI.
In Q1 total revenue growth was 7%.
Our subscription revenue growth was 10% and billings declined 4%.
These metrics highlight the fact that three months ago, we walked into a situation, where there were disturbing trends and trajectories.
We feel good as a team that we have been able to stabilize things and Reenergize the organization and get us poised for the future.
My top priority as CEO is to get our growth rate up and to do so in a financially responsible manner.
What's going to bring us back to growth is a relentless focus on our customers and are motivated and aligned sales team.
I also think there's a lot of potential upside in how we price and go to market, which I'll also talk about today.
Focusing on our customers is exactly what I've been spending my time on since my return.
It was a very productive quarter and I couldnt be more excited about the feedback we're getting from customer interactions.
As I visited with some of our largest customers and prospects.
It's clear we are providing tremendous value to some of the best brands in the world.
I heard numerous examples of how companies are using domo to foster and data driven culture that transforms curiosity into business impact.
For example, the Chief data officer of one of our largest customers in Japan told me to expect broad adoption of domo into business.
When I asked why she said it's simple.
I would tell them if you want to use your legacy solution, that's bundled with other stuff and.
<unk> come to be for reports you can do that.
Or you can just use domo.
This is an example of where our differentiation as a data experience platform really stands out.
If freeze it and data professionals, just like this customer from a backlog of data requests.
Equipping broader employees with information that will make their work more impactful.
We had another fortune 100 companies users demonstrate how much faster, we add value with data integrations and no code apps built in three or four hours.
Our top two competitors didn't work after 18 months of trying.
We expect a large upsell there.
We also had great customer interactions at our annual user conference Domo, Palooza, where we heard how companies like Ford UHD tailor made and sephora are transforming their companies with data.
We launched our on the road customer connections to <unk>, and our Domo central customer community hub with great success and.
And we're thrilled to see some of our largest international customers host their first annual Domo day to rally their entire companies around the possibilities of our platform.
And in Q1, we had a number of notable wins all of which showcase our ability to unseat some significant competitors.
First was a new logo win with a U S based construction manufacturing holding company.
The company was challenged to combine the disparate data across its multiple subsidiaries through its existing provider.
Chose domo, thanks to our ability to bring it all together under one master parent account with complete visibility through the ease of our mobile app.
We also won business with a private equity firm that chose <unk> to replace its existing VDI solutions, because they could not integrate all the data sources they needed to report on the performance of their portfolio companies.
With Domo robust connector library, the company is able to provide reporting across new and existing portfolio companies.
And we've already started Q2 with an exciting new logo win a fortune 500 multinational lodging vendor chose domo to share data with its hotel franchisees and a platform that is scalable easy to use and cost effective.
John will replace the technology from one of our most significant competitors.
All of this shows the tremendous momentum, we're seeing with customers around the world as we deliver agile data experiences that sparked bolt curiosity and enable exponential business impact.
Beyond our relentless focus on our customers another growth driver is going to be an aligned and motivated sales force.
We entered this year with much more stability in our sales force than we had last year and I feel even more confident after Q1.
I've been spending a lot of time with our sales force and I can tell you that they are incredibly motivated to go execute against the targets. We have all outlined and that includes customers of all sizes.
We've aligned the sales force very closely to how we restructure but we were executing consistently well in fiscal year 'twenty, one and 'twenty two.
In Q1, we had just five sales reps leave the company and what is a seasonally high rep attrition quarter. We think reflects a committed salesforce we.
We also have a much tighter alignment between marketing and sales.
The top of funnel continues to grow and although deals are taking longer in this environment. Our pipeline is building.
And then finally I think we have upside in how we price and go to market with our product.
We've been increasing our ability to provide access to domo on a consumption pricing basis, because we believe this will remove many of the barriers to adoption and better align our pricing to the value delivered to our customers.
This allows us to offer our seat licenses to our customers for free.
Our visualization and seats are free and we just charge for consumption.
We think this will dramatically alter our outcomes positively.
We currently have over 150 customers on our consumption pricing model, which represents over 5% of our customer base and over 11% of our <unk>.
Initial feedback has been positive.
The consumption model enables <unk>, a product led growth where adoption drive upsell without the need to negotiate around seats.
It makes the product more discoverable, because a customer has access to the entire platform and they only pay for what they use.
In Q1, we have already seen significant upsells from companies wanting to take advantage of more premium global features by moving to a consumption model.
For example, we are seeing our consumption customers expanding in areas like data science, whereas before they either didn't know it existed in a platform where they werent willing to pay for it without trying it first we've been very deliberate and careful about how we have tested and rolled it out but we have almost a year's worth of data around it and we are ready for prime time.
Sure.
At <unk> in March we also announced a variety of product updates that allow users of any skill level to unlock new data create new content drive action and expand their impact on the business.
As a result, we're seeing a significant rise in adoption as customers realize the value of our expanding product suite.
Among these products or solutions that enhance our pro coat capabilities to increase to almost appeal to data and it professionals.
Most notably Jupiter Workspaces.
We also shared several updates to low to mid coat features including our Microsoft Office suite integration and our variable solution, which we're seeing rapid adoption across our customer base.
All of these investments work together to make our customers even more successful as sharing data that is actionable for everyone regardless of data acumen.
The impact of our date experienced platform is also earning us recognition from the industry analyst community.
This quarter Domo was named a leader in the nucleus research 2023 analytics technology value matrix for the third consecutive year.
And for the seventh consecutive year, we were ranked the number one vendor in the Dresner Advisory services 2023, cloud computing and VA market study, beating out 17. Other contenders. This type of recognition opens the door to new potential for increased opportunity with business and de lever.
<unk>, who want natural working environments that make data sharing effortless.
All of these investments make our customers even more successful at creating data experiences that are actionable for everyone.
It really is an exciting time in our industry with emerging tech like large language models accelerating the proliferation of AI and ml.
It has been incredible to see chat GPT become a household resource in a matter of months and has highlighted the tremendous potential of these technologies.
At Domo, we've always been excited about the promise of AI and are focused on integrating it in ways that add tangible value to our customers data environments.
True to our business, we tailor our AI solutions to benefit everyone across the organization from data scientists and App developers to business users and leaders.
And AI is only as powerful as the data connected to it.
We happen to have the most end to end connected data stack in the world opening up numerous possibilities with workflows alert based actions and automated apps.
Businesses recognize the transformative potential of AI, but many grapple with how to optimally integrate and manage the diverse range of AI models available without being locked into a single one such as chat.
Our Google Bart.
Though these large language models has significant power enterprise use cases are still nascent compared to the outcomes trading the hype cycle.
What's different about our AI service layer is that it gives businesses the freedom to select and integrate model securely.
And by simplifying and infusing flexibility into the process businesses can take advantage of the power of AI without being bogged down by the complexities of the AI ecosystem.
The result is that our customers have control over which models are used how and when.
It's easier to manage deploy and optimize and let users host their own models and solutions right and our data experience platform to support real world use cases that matter to everyone technical and business teams alike.
And I'm excited to announce here today that our AI service layer will be available in June .
Im also excited to announce that our AI checks to sequel, our AI text, the Beast mode, and our AI text generation are available now.
Access via Domo brick and the Domo App store.
We believe we will be a powerful player in the field as it develops.
In closing I have been back for a quarter, we have turned the ship around and are building momentum in the right direction over.
Over the next two to three quarters I anticipate we will see these efforts start to show in renewed increasing growth rates. We have the right products, we have the market opportunity and we have the sales capacity we need to grow.
The entire company is energized to execute for the remainder of the year and I'm very confident in our future alright over to you David.
Thanks, Josh I am also very bullish about demos prospects after having been in the seat now for almost three months in Q1, we posted 10% subscription revenue growth and 7% total revenue growth we.
We slightly exceeded the billings guidance, we provided at the beginning of the quarter. We delivered Q1 billings of $78 3 million a year over year decrease of a little under 4% and.
In reviewing the metrics that will impact the remainder of the year. Our current RPI <unk> of $237 5 million grew 6% year over year and our total <unk> grew 1% to $356 7 million.
<unk> grew in line with our subscription revenue growth.
An area, where we saw continued success with multiyear contracts on a dollar weighted measure we now have 65% of our customers under multiyear contracts at the end of Q1 up from 64% a year ago.
Our gross retention improved from Q4 and approach nearly 90% and our net retention was just above 100% down slightly from Q4 excluding.
The impact of foreign currency fluctuations, our NR would've been about 2% higher.
Q1, total revenue was $79 5 million a year over year increase of 7%.
Subscription revenue represented 89% of total revenue and grew at 10% year over year International revenue in the quarter represented 21% of total revenue consistent with Q1 of last year.
Our subscription gross margin was 85, 9% up one three percentage points from Q1 of last year and up three percentage points from Q4, reflecting continued optimization of our third party hosting services.
In Q1, our non-GAAP operating margin was up two seven percentage points from a year ago non-GAAP operating margin, primarily excludes stock based compensation as well as executive severance, which was related to the transition of C level executives.
Our net loss was $6 1 million down from $7 6 million a year ago and our net loss per share was <unk> 17.
This is based on $35 2 million weighted average shares outstanding basic and diluted.
In Q1 cash provided by operations was $800000 in.
In total our cash balance declined just <unk> 5 million from last quarter to $66 million, we expect second quarter cash flow from operations to be slightly negative. However, we continue to expect full year fiscal 'twenty forecast from operations to be positive.
We believe we've got adequate cash in order to continue to pursue our business objectives.
While we're pleased that our actual results for Q1 came in better than our original model expectations for sales Rep attrition and dress retention are Q2 and full year guidance reflects continued conservatism about how the macro may impact conversion rates and timing, resulting and resulting new business.
For Q2, we are guiding to billings of about 69 million to $70 million, which is relatively flat sequentially consistent with the trend we've seen over the past three years and down 5% year over year.
For full year billings growth, we are providing a range of about $335 million to $353 million, representing a range of 4% to 9% growth.
Looking ahead to the second half of the year. We continue to believe we're in a good position to accelerate our billings over the first half outlook as we expect growth in our ramp sales capacity to accelerate.
Now to guidance for our GAAP metrics for the second quarter of FY 'twenty four we expect GAAP revenue to be in the range of $78 5 million to $79 5 million.
We expect non-GAAP net loss per share basic and diluted.
211.
This assumes $35 9 million weighted average shares outstanding basic and diluted for the full year of fiscal 'twenty. Four we expect GAAP revenue to be in the range of 323 million to $330 million representing year over year growth of 5% to 7%, we expect non-GAAP net loss per share basic and diluted.
<unk> seven to 39.
This assumes $36 one weighted average shares outstanding basic and diluted our EPS guidance implies a positive operating margin in Q2 and for the full year. Our annual guidance is consistent with the guidance we provided last quarter.
In closing we were able to achieve our Q1 results that were in line to slightly better than expectations as outlined in our guidance last quarter. We believe we have great alignment between sales and marketing and our sales force. It has re energized to hit their quotas and we believe we're in a good position to accelerate our billings in the second half of the year as the sales.
Reps, we have onboard continue to ramp.
With that we'll open the call for questions operator.
Thank you if you would like to ask a question. It is star one on your telephone keypad.
With which to withdraw your question simply press Star one again.
Your first question comes from the line of Derrick Wood with TD Cowen. Please go ahead.
Great. Thanks, and thanks for taking my questions, Josh I know one of the one of the initiatives you plan to focus on was rebuilding the large deal pipeline and just just wondering if you could shed some light on what that looks like is that re engaging with C level folks at existing customers is that identifying some.
Larger new prospects.
Just wondering how those efforts have gotten off the ground and when do you.
We are thinking about.
How that translates into dividends and closed deals in the quarters ahead.
Sorry can you can you repeat the first question.
Okay.
Yes can you hear me.
Yes, yes, we can we had to change rooms, we had a technical issue on our side. So yes. Please repeat.
Okay, Yes, so Josh I was asking about the efforts in building large deal pipelines and I know that was going to be a big focus for you just was hoping to kind of hear what what some of those initiatives looks like is that trying to reengage with C level folks at existing customers is that bill.
Building up new large prospects.
Just wondering how those efforts have gotten off the ground and how youre thinking about.
The sales cycles, and when the dividends should start to pay off.
Yes, great. Thank you.
Yes, I mean, it's.
Not so much about the big deal pipeline is just re engaging with customers anywhere and everywhere. So.
Any of the reps that have interesting relationships from conversations with customers and prospects.
Trying to go out and see them.
I'm sure I'm talking to at least one or two customers a day.
And a lot of travel.
And just again.
Again like I mentioned in the prepared remarks trying to Reengage. The sales force get everyone excited and make sure. The whole company sees that we're leaning in doing anything and everything we can to.
Close the deals and then upsell and I would say in terms of the big deal pipeline, that's probably been the the.
Biggest difference maker as is going into our current accounts, where we already have established relationships where they are already.
Positively and they are predisposed to want to do more business with us and finding the senior level executives, they're facilitating conversations.
And that's worked and we have found a bunch of opportunities.
Definitely increased the pipeline meaningfully for the enterprise business in particular and in terms of when that will come to fruition. When we will start seeing those dollars I think there's a chance that we could see some of that this quarter.
Definitely we will see those things in Q3 and Q4 playing out.
But yeah, a lot of great great conversations a lot of customers leaning in the macro is certainly not to.
As positive as it has been historically as we all know, but one thing that we've seen with our customers because we do help them save money. We do help them find revenue. If we already have the relationships were already relationship. We already have established vendor we can find deals intra quarter that arent on their project list.
And because they trust us we can do a quick proof of concept and away. We go. So I think we're going to find some contracts that way.
Yes, that's great to hear.
On the consumption push it sounded like there is a little bit of a change and focus here maybe stepping on the pedal a little bit more can you just talk about how broad.
Youre going to try to push this in.
When you do flip customers to consumption is is.
Or is it kind of net neutral initially and then do you see stronger expansion motions. Once you kind of get customers on board and then just kind of a third part to that.
That a way to monetize some of the stuff you're doing with generative AI. It seems like that could be an easier way to <unk>.
Monetize llm's and some of the things that come with that.
For sure for sure yes. It helps us know theres a lot of functionality, we've added into the platform over the years.
But when you are charging per seat every single time, they want to try something and you have to go out and they have to get approval for it internally.
And then we have to get them into some kind of a trial.
And now with the way, we're doing things with consumption. It's all just sitting there at the fingertips.
And so they can try it out and pay for it for the data that they use it or two days that they use it and just really provides a lot more flexibility one of the things that we've seen already is with our data science.
Our data science efforts that we have which lead us right into the AI conversations.
The take rate from our consumption customers is more than double.
Then it is for our our regular customer base.
Our customers have only been with us for a year.
No.
That's something that we're seeing is the take rate on the additional products and services is dramatically different in terms of.
We get asked a couple different parts of your question in terms of the pace.
Yes, we are definitely speeding it up the more data we get the more excited we get.
And so that gives us the confidence to be able to lean into it I tried to be very thoughtful in the remarks that we made that we've been very judicious.
Judicious and deliberate about evaluating this change.
And as people internally or coding is not just the change in pricing.
It's a change in approach, we get to go and interact with their customers and help them find ways to improve their business without having any conversations about seats.
We get to be more consultative in terms of the relationships that we have with them.
And this is definitely also in response to.
The power of the eye.
I've had conversations with CIO of a fortune 100 companies that tell me that.
<unk> Oh my God, that's great. So are we.
And they look at me kind of funny I'm like yes, we're exactly where free exactly the same way the power be ice free.
What do you mean like well your paper power every time you use it you pay for it you haven't as your account that you pay for and then like Oh, Yeah, I guess that is true, but they are free so are we where free $3 99 baby we are free and.
I think that resonates really well with customers.
And by definition, if we don't have site wide license then they are using our competitors. So this will help us shore up all the relationships that we have I think in a more meaningful way and then provide a lot more opportunities for growth because youre not limited to the use cases that they got approval for beforehand to purchase.
Now there's use cases that are popping up and Theres people all over the organization that are trying things. So we've definitely noticed that when we sign up a customer via consumption compared to seat licenses that after 12 months, we have a higher contract value a meaningfully higher contract value from a consumption model than we do from the traditional user based licensing. So I don't know if you want to add anything David to that.
Yes, I guess the thing that's impressed me is just again to reiterate what Josh said, how judicious we've been on the front end to really be careful about.
It's not just a change in pricing, it's a change in philosophy of how we engage with our customers.
It becomes more about helping them identify those solutions that drive further adoption.
And.
And so it requires our aes to think a little bit differently as well.
And we've been very careful about that on the front end and all the indicators have been very positive so.
I think compounding what what Josh said I think the plan is to continue to accelerate that there's still some things that we need to do from an internal standpoint to make sure. We've got all the right controls and processes from an accounting perspective.
But those are things that.
We will just leaning to get focused on in.
And then go go much broader with our account base.
Got it thank you.
Thank you Sir.
Your next question comes from the line of Sandeep Singh with Morgan Stanley . Please go ahead.
Perfect. Thank you <unk>.
Great to hear the announcements around AI, and obviously with the consumption pricing that starts to make a lot of sense I wanted to ask two questions on a one strategically how are you thinking about distributions and particularly the world partnerships as it relates to AI on a go forward basis, and then tacked.
What are you seeing on the ground sort of today with customers is there any sense that customers are pausing and evaluating the environment or are customers already sort of leading into this.
Yes customers are definitely already leading into this I think the biggest highlight for domo as anybody out there that's trying to use data with artificial intelligence.
Edie.
To the extent that AI can be effective.
It's limited by the data that is connected to the systems that it's connected to and we happen to have the stack that's tightly integrated and we would contend is the most integrated stack data stack in existence.
And it's been it's been a double edged sword its been a very difficult to build will be built.
But at the same time, there we have all the metadata about the data that is inside our system. We know what connects connectors that came from.
No what stores, where it stored how it's connected how the data enter place and can take that all the way into data science machine learning and AI and we do have customers leaning in and quite a meaningful way and I think true to form.
We've been pretty agnostic and will can be agnostic about AI as well. So we will integrate with the entire ecosystem and if you want to come in and you found that there is.
Specialized AI focusing on let's say for instance pricing or focusing on.
Optimization of your supply chain focusing on inventory levels whatever it is that you find this AI model and you want to integrate and use that with the data that you Havent domo.
We'll definitely facilitate that so we're very excited about the prospects. We think it's going to help really leverage the uniqueness of of what we've built here at domo.
Great very exciting.
Your next question comes from the line of Patrick <unk> with JMP Securities. Please go ahead.
Hi, this is going horizontal Pat thanks for taking the question.
So I was wondering if you guys could just give some commentary on what youre seeing in the demand environment for our different geographies.
In the demand environment through different one.
Different geographies.
Okay.
Right now most of the geographies are pretty much the same.
Got it.
I think the biggest thing that we've noticed is if you have an established relationship with a customer you have an ability to get in there and sell additional products. If you have an.
<unk> relationship with the prospect and <unk> been working with them for a quarter or two.
And they've identified a project internally, it's important and they've had time internally too.
Lay out there their case for why they should make this investment in Domo. Then those are the deals that are still getting done the deals that aren't getting done in any geo is we call. It we call call into your into your accounts and maybe we've met you once or twice at different conferences and Webinars.
And we call in and you have no project identified trying to create that project from scratch right now and getting that approved is next to impossible.
And so it's that's.
That's what's dried up.
People are just pausing and we're not losing deals we're still getting the leads.
And Theyre, just going and pipelines just building for customers that aren't ready to make a decision.
So hopefully as the macro returns at some point, we will have a whole bunch of opportunities and projects, where we've been talking with prospects.
But in terms of Geo Japan continues to be successful for US we made an investment there early actually was the first country that women to before even went to London and.
And that continues to be a good business for us.
And internationally again, the rest of the international Geos I would say just mostly focused on where we have customers, where we have references and then the number one type of new deal that we get as a domo customer that was a user.
At one of our previous customers and they go to a new account and then they call us and say I want to do the exactly exactly the same thing in and those are the deals that will get intra quarter.
Great. Thank you.
Just wanted to use. So this is your first full quarter back I guess kind of in general are retrospectively. How do you feel how do you feel you guys performed versus our expectations coming in.
Well I think you walk in you kind of the hands already been dealt so you look at the hand, you try to play it. The best you can and you set yourselves up for the for the next round and that's what we're really trying to do we're trying to play the hand that we have the best we can.
We mentioned to everybody that we weren't sandbagging last time around.
Hold on hold on for Dear life and try to make sure that we optimize this thing we get to cash flow breakeven in net.
Net operating net operating margin positive.
Within that within those constraints then you'll get the get the assets moved in the right places get the swagger back.
Get the relationships with the customers get some deals closed get some momentum get some juice because it's infectious.
And I think that confidence is here.
I had a conversation with our sales consultants are sales engineers yesterday.
And I asked the question I'm like Okay, Yes, there is.
A bunch of stuff going on that's not so positive in the macro and we've had to make those adjustments here internally as well how are you all doing with that.
Kind of got a bunch of dumb dumb looks in return like why are you asking that question, yes, we get of course, we get it let's go were rallying.
We're not in a pessimistic negative situation here, let's go win some accounts. So it was really refreshing to kind of take to take the temperature of the team and I think everyone. Here is excited about what we're doing consumptions there'd be a game changer for us being able to tell the world until customers. When they are sitting there looking at power bi for quote unquote free and <unk>.
Knowing that our.
Our visualization layer is free as well our seats, our free as well and moving all of our accounts over to consumption as quickly as quickly as we can is something that's energizing knowing that we've got premium right on the heels of that.
We generate we generate over $10 million in premium last year.
Which is not a number that we're going to continue to provide but just to help people understand the significance of that opportunity for us and that's something that we're really focused on optimizing improving and consumption mix that conversation a whole lot easier. So I think theres a lot of people here that are really excited about the prospects of the future AI couldn't happen to a better company because we're so integrated talk.
The bottom we don't have 95 partners in order to make your data platform and your data experience work. We are that data platform. We are that data experience. So AI really facilitates an and dramatically improves the speed at which you can do things. So we're very excited about those prospects as well.
Great. Thank you that's all for me.
You bet.
Once again, ladies and gentlemen, if you have a question it is star one.
And your final question comes from the line of Eric <unk> with Lake Street Capital Partners capital market Sorry. Please go ahead.
Yes, I just wanted to confirm the billing guide for Q2 is at $69 million to $70 million.
Yes, that's right.
Okay. So assuming we come in at the midpoint of that we'd have kind of a down 4% for the front half of the year in order to get to that full year.
Kind of mid point range, we'd need to be coming in double digits on the billings growth in Q3, and Q4 in <unk> and <unk>.
I'm wondering what you guys are seeing in the pipeline that gives you that confidence to reiterate the year given the Q2 billings outlook.
Yeah, So a couple of observations there.
Going back if you look at our historical results over the last three years Q1, and Q2 are very close from a billing standpoint. So that's that's pretty consistent with what we've seen.
The last several cycles.
There is a bit of seasonality in the buying patterns of our clients and so we have historically seen just a natural increase I think the thing that adds to that for us this year.
As we added a lot of new sales reps.
And to the third quarter and fourth quarter of last year and it takes some time for those those reps to ramp.
And so we see a natural our full ramping of those reps in Q3, and Q4 and as a result, and that's really how we evaluate.
Their performance is once they've been ramped and they're already familiar with the product the offerings.
The accounts.
And so as they become fully ramped in Q3 and Q4.
There is a natural acceleration and so that's what's that's built into the model. So that was a that's a conscious that's not just a push everything back to the back end of the year. It truly is based on on how we've built our sales executives.
Okay and then.
Josh maybe if you could speak for changes that have been made on the <unk>.
I guess, maybe a sales management question I don't know, if jeffs available or not but.
CRA changes since taken over 90 days ago everything from training Mentorship.
Travel demos.
Changes have been made.
With the.
New hires here versus how they were handled before.
Yes, I think Jeff so really known quantity.
He had the majority of the team working for him before he had relationships with the.
The international folks because they would go to that go to sales kickoffs together. They go to sales trainings together. So he's a very known quantity was very well respected and there's just different ways of doing things and we think for the time and place that we're at right now we're going to see some <unk>.
Positive momentum from that the team is certainly energized and excited in.
There is a highly competitive spirits and theres definitely a lot of a rallying together.
So it definitely feels like one team here across all the organization I'd say more than probably it ever has in my 13 years here. So maybe the first couple of years. When we're when we don't know what we're doing yet everyone's pretty excited but in terms of the last seven or eight years. It feels like we're more unified than we've been so in that sense I think Jeff plays a part.
And that certainly in and Theres a lot of rigor in the way that Jeff does things and there's really high expectations in a way that Jeff does teams does things.
All the managers across the board for the most part.
Came from his organization at this point.
And then there's a few other people that he's brought in and and a few people that are just kind of made it through all these years. So it just it feels really good. The team is really excited the reps are really excited and I think with the changes that we're making.
We're seeing with AI that we're seeing with consumption with the ability to get all of these different products out to our customers. So that they can try them out and use them in the up sells that come from the customer successes not because we're trying to convince you that maybe you should look at something but truly because theyre, having success already and it's spreading inside the organization.
That's a really fun way to be a rep. So I think people are pretty excited about the future in that regard.
Okay, and then if I could just get some insight on the ramped sales capacity.
Where you expected it to be I know you talked about almost a record low turnover here in Q1, but.
There's two parts to it there's.
The new hires and then there's also a retention of your installed base of reps.
Are we getting what we're expecting.
As far as the.
Total head count.
Versus ramp sales capacity.
Yeah, I'll take that one.
The answer the short answer is yes.
The folks that we brought in in the latter half of last year I think they are continuing to ramp nicely.
And we haven't we haven't had really what we call any sort of regrettable turnover in the first quarter.
We feel really good about where we're at and we've got some more hires out there on the horizon, but we're bringing those in sort of in an orderly way in.
And.
The other thing I'd add is we've had to be ours over the last couple of weeks and so we've had most of the different reps.
Here at headquarters.
Hearing a lot about the experiences that they're having and the discussions they are having.
Is all very positive and yes to reiterate.
Yes, Josh brings a certain amount of just <unk>.
Simon and energy back to the organization and that is especially true in the sales organization and you can fill it in talking with them. They are really excited about the opportunity and about some of these new.
New things that we've got on the horizon, whether it's the pricing model or AI.
We're really excited and anxious to lean in on those things. So I think those are all working out as.
As we had hoped.
And I'd add also it's not it's not just just goes on that's new here right. We've got.
Marc Maun in her new role, but he has been here forever. So very similar to just very well respected across the organization and <unk>.
Very well one of the highest rated folks that we had here in management and now he's got a lot more responsibility so.
He gets to prove himself, but that's exactly the kind of situation that you that you want and everyone is organization has been really excited so it's been fun to get all that feedback.
Darrin Sane was responsible for the entire product and then heat.
We had an opportunity to get Catherine and he wanted to shift over to more of engineering services and spending a lot of time with customers because we really didn't understand the market at that time.
But now he's back in that rural where he has entire responsibility for the product in and.
A new style and it's invigorating in and he's really excited and his team is really excited and the pace of innovation is definitely.
Definitely different so I think that brings a new amount of energy and then David Jolly being newest well that's due amount of energy so it really across the whole organization.
Wendy's Wendy on the.
Newest front still.
It's a new team that we all get approved to each other what we can do into our organization, where we can do.
And it feels like a new startup in a lot of sensors, but we just happen to have $300 million of recurring revenue and a great customer base and a huge platform that we spent a lot of money investing into so it feels like we're poised really well for the future we need the macro to pick up a little bit.
But with the sales capacity is coming we think theres still an opportunity to get back to some good growth.
Okay.
Currently a good Q1 and good luck in Q2.
Alright, thanks, so much I appreciate it.
This concludes today's conference call. We thank you for your participation you may now disconnect your lines.
Please wait the conference will begin shortly.
Yes.
Sure.
Okay.
Yes.
Okay.
Yes.
[music].
Okay.
Sure.
Yes.
Okay.
Yeah.