Q2 2023 PROS Holdings Inc Earnings Call
Greetings and welcome to Pros holdings.
Second quarter 2023 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 as a reminder, this conference is being recorded.
I'd now like to turn the conference over to the Linda I'll forget the director of Investor Relations. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining US our earnings press release, SEC filings and a replay of today's call can be found on the Investor Relations section of our website at pros Dot com. Our prepared remarks will also be available on our website immediately following the call and will be replaced by the official.
Transcript, which includes participant questions once available with me on today's call is Andres Reiner, President and Chief Executive Officer, and Stefan Schulz Chief Financial Officer.
Please note that some of the commentary today will include forward looking statements, including without limitation, those about our strategy future business prospects and market opportunities and our financial projections and guidance actual results could differ materially from such statements and our forecast for more information. Please refer to the risk factors described.
And our SEC filings pros assumes no obligation to update any forward looking statements to reflect future events or circumstances. As a reminder, during the call. We will discuss non-GAAP metrics reconciliations between each non-GAAP measure and the most directly comparable GAAP measure to the extent to which available without unreasonable effort.
Are available in our earnings press release with that I'll turn the call over to you Andres.
Thank you Bill and good afternoon, everyone and thank you for joining us on today's call I'm proud to share we delivered an outstanding second quarter exceeding our guidance ranges across all metrics.
We grew subscription revenue by 14% year over year total revenue by 11% year over year in delivered positive adjusted EBITDA. So a result of our Q2 outperformance we will once again raise our revenue growth and profitability outlook for the full year, which stephane will cover in his prepared remarks.
Our strong first half performance demonstrates the critical need for a platform in the market.
There is no question that the last couple of years have elevated the importance of doing business in real time.
In today's markets everything is in a constant state of rapid change course currencies supply chains prices demand patterns and in response businesses must constantly change what they sell how they sell and how the price.
Manual business processes in disconnected digital tools diminished productivity deteriorating, both the customer experience and employee experience.
Further beta be purchasing continues to follow the trends we've seen in B to C. <unk>.
<unk> buyers expect experiences that are self service personalized transparent inaccurate throughout all touch points.
Meet expectations, so buyers today and to consistently outperforming their markets businesses need to embrace digitization automation and AI.
In fact industry analysts believe AI software will grow 50% faster than the broader software market over the next two years and we're already seeing growing interest in AI in our business.
Additionally, our land realized and expand sales strategy has made it easier than ever for businesses to adopt our platform.
And we're seeing incredible results as our team continues to execute against this strategy well.
We're landing new customers with greater velocity across the Bto B industries, we serve sales cycles with new customers in 2023 or 30% faster year over year.
We're also driving rapid time to value leading to rapid expansions. Great example is the expansion we had with the specialized North America industrial distributor in Q2.
This customer join process, a new customer in Q1, selecting the pros platform to automate price management and cross sharing or price there.
The customer went live with the land solution in just over a month realized value then immediately expanded to adopt her latest gen four AI price optimization capabilities.
Now I'll share a few other examples of incredible businesses, who adopted our AI powered platform in Q2.
Pods of leading moving and storage solution provider selected the pros platform in Q2 to drive harmonized pricing across your C. L channels.
The pros platform is key to pod strategy to drive a digitally connected customer experience.
Novo lax and manufacturer packaging products selected the pros platform to fuel profitable growth empower a better customer experience by digitizing C. L said cross sharing or price.
<unk> will use rei powered pricing and see PQ capabilities to drive market relevant real time offers to their customers across North America.
Mark any division of U P. S expanded their use of the pros platform in Q2 to power real time pricing to their sales service portal in billing systems we.
With this expansion market will drive and improve experience throughout the customer lifecycle.
In Q2, we expanded the reach of our market, leading omni channel see PQ capabilities with a new partnership with Adobe. They combine said Dobies commerce offering with our C. P Q product configuration capabilities.
Going forward Adobe's customers can now seamlessly use our best in class configure ader solution to power personalized products and offers through their ecommerce channels.
We also continued to innovate to deliver new predictive AI capabilities through our platform recently, we brought to market or capacity of where price optimization AI.
In neural network power AI model that determines the marginal opportunity cost associated with supply.
Many industry struggle with the dual challenge of unpredictable demand patterns in diminishing supply when setting price strategy.
Or capacity of where price optimization utilizes order confirmation data competitive intelligence data shopping data any inventory on hand. In addition to other available market data signals to drive prices that will win in.
In Q2, Singapore Airlines cargo selected the pros platform to take advantage of where capacity of where price optimization in AI in digitize their sales motion to fuel profitable growth.
In the travel industry Airlines are looking to win more market share through fully digitizing their sales and customer experience starting with how the inspired passengers to book travel in.
In Q2, new customers Condor in gas sex in existing pros customer Korean airlines, among others adopt it or digital offer marketing solutions to drive higher conversion of sales.
Airlines continued to lean into AI and automation to optimize revenue management in our latest innovations in this space continued to position. The pros platform is the best in class revenue management solution in.
In Q2, Lufthansa expanded their use of the pros platform by adopting the next generation over AI powered dynamic fair pricing empowering them to drive more flexible fare options using an elasticity base approach.
Before I close I'd like to share some incredible industry recognition of our platform innovations in Q2 Forrester research published your wave evaluation on C. P. Q.
Recognizing process and leader in the category in stating that proceeds Sun match with its next generation of AI powered pricing cost optimization science.
Process now the only independent software solution to be named a leader in C. P. Q by both Gartner and Forrester.
I'd like to thank our global team for their relentless focus on our mission of helping people and companies outperform also like to thank our customers partners and shareholders for their ongoing support of pros with that I'd.
I'd like to turn the call over to Stefan to cover our financial performance and outlook.
Thank you Andrew and good afternoon, everyone.
We delivered another strong quarter wrapping up an incredible first half of 'twenty, 'twenty, three which put us in position to raise our total revenue and EBITDA outlook for the year.
I'll start by highlighting what is contributing to our success before I move to our results and guidance.
First our platform strategy and land and expand selling approach has continued to provide far greater access to our market leading solutions.
Our package modules allow customers to start it natural entry points addressed an immediate pain point generate rapid ROI and grow with us overtime.
This has resulted in significantly more transactions over the last two years.
Second through this go to market transformation, we have also been able to deliver our solutions with greater efficiency.
Through platform and delivering innovations, we have been able to improve our gross margins and reduce our customers' time to value.
Additionally, in Q2, our team delivered non-GAAP services gross margin of 11%, which is a 15 percentage point improvement over last year.
Moving onto our second quarter results subscription revenue in the second quarter was $57.3 million up 14% year over year, and total revenue was $75 $8 million up 11% year over year.
Our second quarter recurring revenue was 82% of total revenue.
Our second quarter calculated billings increased 27% year over year and 10% for the trailing 12 months.
The quarterly growth rate was slightly higher than we forecasted last quarter and as expected a significant improvement from our first quarter.
The size and timing of many of our billings can have a significant impact on the quarterly calculated billings growth rate, which is why we continue to focus on the trailing 12 month metric.
Our trailing 12 month gross revenue retention rate in the second quarter remained above 93%.
non-GAAP subscription gross margin was 78% for the quarter improving from 76% a year ago.
Also as I mentioned earlier, our professional service team delivered 11% non-GAAP services margin in the second quarter.
We expect services margin to be in the upper mid to upper single digits in the second half of the year.
We generated positive adjusted EBITDA in the second quarter, beating guidance and a more than 100% improvement year over year.
This result was driven from our revenue outperformance and our continued focus on driving efficiency improvements.
Our free cash flow burn in the second quarter was $6 $2 million.
As expected our free cash flow burn in the second quarter was impacted by expenditures related to our outperform event.
We historically experienced stronger free cash flow in the second half of the year and we are expecting positive free cash flow in both the third and fourth quarters of this year.
We exited the second quarter with $184.6 million of cash and investments.
Additionally, as many of you already know our May 2024 convertible debt of approximately $143 million is now a current liability on our balance sheet we.
We currently anticipate retiring these notes with cash and investments on our balance sheet at the time of maturity.
We also added a three year $50 million revolving line of credit, which provides us with an additional source of capital in the future.
Our non-GAAP loss per share was one cent per share.
Now turning to guidance.
We expect third quarter subscription revenue to be in the range of $58.6 million to $59.1 million, representing 14% year over year growth at the midpoint.
We expect third quarter total revenue to be in the range of $75 million to $76 million and we expect third quarter adjusted EBITDA of between 2.5 and $3.5 million.
Using an estimated non-GAAP tax rate of 22%, we anticipate third quarter non-GAAP earnings per share of between three and four cents per share based on an estimated $46 7 million diluted weighted average shares outstanding.
For the full year, we are raising our guidance for total revenue to a range of $300 million to $302 million, representing 9% growth year over year at the midpoint.
We are also raising our guidance for adjusted EBITDA to a range of 5.5 to $7 $5 million, which implies a year over year, an improvement of more than $21 million at the midpoint.
In closing I would like to thank our employees and customers for their continued passion and support we also thank our shareholders for their continued support of pros and we look forward to speaking with you at our upcoming events I will now turn the call back over to the operator for questions operator.
Thank you and he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line within the quasi kill you May Press star two if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star.
He is.
Our first question is from Brian Schwartz with Oppenheimer and company. Please proceed.
Yeah, Hi, Thanks for taking my questions congratulations on a real strong quarter.
Just wanted to follow up on the commentary about the.
The increase in <unk> and the momentum around the sales sales cycles.
Stefan did a good job of giving us some of the company specific initiatives that you've done with what that is helping with the go to market, but can you maybe shed light on the macro side. You know specifically you know if if part of these faster cycles are coming from the end market demand strengthening or even a.
Hi is just AI as a topic is that also.
Somehow helping the speeding and the accelerating of the sales cycles that the business experienced in the quarter and then I have a follow up thanks.
Great.
Hey, Bryan.
Good question, So I would tell you a little bit of both.
Credit to our go to market team their spend as we talked about as we launch our new packages late in 'twenty, one we really focus on bringing land motions that we can activate very quickly and we can expand quickly and I think a lot of dosing proved men said, we've put in place we're seeing continued.
To drive sales efficiency.
In addition to that I would say that our gen. Four has been a hit I would say overall, it's had a very positive impact in our deals and we're seeing a lot of companies wanting to implement AI.
That's a first land.
And that was indicative of what we saw last quarter. So overall I would tell you a little bit of both I did talk about.
Overall sales cycles for new deal Saint <unk> improved by 30%.
And that's it estimate too we have solutions that really resonate we can get to value quickly and we can expand quickly.
And I think that that's what's driving the.
The accelerated growth.
Thank you and then the follow up question I had was just if you could provide a little more color on what you're seeing in terms of.
The geography, specifically Europe and in the U S. You know that Europe , you know looking at at least the revenue.
Both results, it's the basket that we've seen in a long time, you know the the U S. I'm not so much but again, we don't have visibility into the bookings and the backlog. So I'm just wondering if you can shed some light on what you're seeing.
In terms of net.
There are geographies where.
Where we're seeing strength both in the Americas, and North America U S and in EMEA and I would tell you we're seeing strength across pretty.
Pretty much Oliver <unk> industries from technology to automotive and industrial to chemical and energy to health care.
Pretty spread out both from the B to B industry perspective, as well as from a geography.
In both the EMEA and Americas, it very strong in the quarter.
Thank you for taking my questions.
Thank you.
Our next question is from Parker Lein with Stifel. Please proceed.
Hey, guys. Thanks for taking the questions. This afternoon Stefan first one for you when I look at the RP O figure, but year over year and sequentially that was down here I was curious if you can help us square away that RP O performance with what was a strong billings quarter end.
Subscription revenue growth anything you have to offer there would be helpful.
Yes, absolutely Parker. So you know one of the things that Andras was just talking about.
The changes that have occurred as a result of our <unk>.
That form our strategy and the packages and the.
This land realized and expand sales motion that we've been going through and so our RPE OS are going through a bit of that change as well and so youre going to see our what I'll call. Our long term RPM metrics starting to come down and there are short term metrics starting to come up.
All of that on the same backdrop is Q2 is typically our lowest billing quarter.
So that was still the case in Q2 on a relative basis and and so I think what youre going to see is youre going to see our short term RPM metric start trending up as we go exit this year in the latter part of 2023, and I think youre going to continue to see our long term RPM metric come down because we're focusing on shorter term deals.
Not as not as much of a long term deals that we've seen in the past.
Understood. Okay very helpful. And then under if you just mentioned that you've had strength across pretty much all <unk> industries. When we look at the rule of 40 target and the associated growth rate there.
How much of the share of growth do you think comes from these strategic industries and geographies that you're currently focus on versus.
Banding into that large underpenetrated market, maybe thats, new teams or new geographies that are going after that opportunity just as far as it split is concerned do you need to go outside of where you're currently focused or is there enough on your plate.
Yes, Parker Great question I would tell you that within the industries, we're already focused and the geographies that we're already focused we can achieve.
Our rule of 40 long term goal that we set so we feel very confident that is continuing.
To grow within this industry.
Where we're sitting in a great position that with our platform. We can expand to other industries, but I don't believe we have to do that now to reach.
That long term goal that we set.
Got it very helpful. Thanks again guys.
Thank you.
Our next question is from Chad Bennett with Craig Hallum Capital Group. Please proceed.
Great. Thanks for taking my question.
So maybe.
Maybe a couple of different things I'll I'll I'll tack here so.
Just on the the the land and expand.
I know it's been.
That go to market and platform strategy is has been in place I think greater than a year and a half now.
And I know deal count, especially in B to B increased significantly last year, but by Andre Stefan for that matter is there any kind of indication.
On the <unk> side.
How how feel growth or deal activity is growing.
Maybe relative to two subscription revenue growth and maybe how.
That deal activity, you will maybe it's not doubling year over year like it did last year, which was phenomenal, but it is still very robust relative to maybe the subscription growth youre seeing.
Great question, Chad I would tell you that Q2 was another record quarter from a deal perspective compared to last year are you now so while last year was very strong.
We had another.
The strengthening in Q2 and overall I would tell you like.
Our win rates are improving our velocity is improving.
Thank a lot of it has to do with the work that's been done over the last year plus like you talked about I mean, the example that I gave in the prepared remarks, if a customer landing in Q1.
<unk> just over a month and then expanding that really was not possible before and that's really the power of the platform now is that.
We can get to value very quickly.
Prove the value and driving expansion faster, we're also seeing continuing to see strengthen in new wins.
You know on.
Significantly more than we were intent to sell more into net new accounts that makes it seem like we typically had in <unk>.
Yeah and the overall.
Market reception has been positive.
Got it and then maybe just I don't know if you commented specifically on travel, which I think people have asked you for a couple of years now, but just just kind of qualitatively or quantitatively has has traveled picked up from a bookings standpoint.
What's your kind of level of comfort there and I think.
I remember Stephane you talked about.
We would see in the second half on the travel side.
From kind of booked deals already in the backlog some some revenue contribution and maybe acceleration on the travel side in the in the second half of this year is that all is that still true. Thanks, Yeah. So I would tell you on the travel side, we're seeing that the travel the airlines have our recap.
Green quite nicely, but we're seeing the spin.
Spin still below pre pandemic levels and I would tell you still what we're seeing is airlines are significantly under staff. So even when we're getting so like they are getting through contract signature is taking longer than what <unk> traditionally done.
So still I would say.
Similar to last year, not seen the uptake yet, but we do see activity. It's just getting you know continuing to drive acceleration there.
We'll see it more in the back half and into next year, but that's not fully recovered yet.
Yes, Chad the second part of your question about the revenue coming online from previous book deals. We are on time with those so a.
Part of our guide includes some of the revenue that we're going to pick up from the bookings that were done earlier through the go lives. So we are going to see that happen.
Good great to hear congrats on the quarter nice job again.
Thank you.
Our next question is from Rob Oliver with Robert W. Baird. Please proceed.
Great Hi, guys. Thanks, good afternoon.
So I think first question one for you Andre So thats definitely one for you and I think.
You guys, just kind of touched on a little bit of it but.
It's fair to say that the strengths here near term in terms of upside is coming predominantly from b to b in light of Andre. So of your just your commentary right. There that airlines are still a little bit slow to recover and I guess corollary to that would be that your commentary around sales cycles.
Assume it's also on the <unk> side as well around the kind of more land and expand margin market motion is that correct.
Correct correct, Yeah Beta V. It's really what's driving the improvement both.
Both on the sales efficiency acceleration and overall on the bookings growth.
Great Great and then.
Stefan for you.
Strong quarter. So so just.
Nitpick here, but.
Subscription revenue guidance was reiterated.
Despite the Q2 beat and raise the full year. So it looks like the raise is coming from probably maintenance and services and stuff is that the right way to think about it.
Should we think about that thank you.
Yes that is the right way to think about it but let me give a little color into why that is.
You know, we're very happy with the first half performance from a booking standpoint, and I think what you will see in through Congress as comments and what's implied in the guidance as you know we've had an uptick in new logo demand, mainly because of the the land and expand strategy that we've put in place so what's happened.
Rob is that <unk>.
Migrations have been a little behind where we thought they would be in the first half of the year and so as a result of the migration is being a little behind we're expecting to see them happen later in the year to early next year. What that means is maintenance is going to hold on a little bit more than that I think we were previously thinking and that in turn impacts the guide for <unk>.
Subscription E R R and subscription revenue now the good news is that's going to still come to bear to fruition as we go into the later part of this year and early part of next year, but that's the reason for it is a little bit slower migrations in the first half of the year.
Okay. Okay got it yeah. That's helpful got that now alright, guys. Thanks, very much I appreciate it. Thank you.
Our next question is from Scott Berg with Needham and company. Please proceed.
Hi, Andrew and stuff and thanks for taking my questions here Stefan I wanted to follow up on your last answer there to Rob a little bit on the slower migrations here in the first half of the year than maybe what you were expecting.
I guess, what's the what's the key driver to the slowness is it something on the customer side is it purely you guys are focused on net new business, which seems to be ahead of expectations. They seem to be like I don't know, maybe a little bit independent of each other but you seem to indicate that there may be a little bit more connected than what we think.
Yes, Scott there you know I understand the point about that.
Intuitively, they would be kind of disconnected because.
There's different motive motions going on in terms of the migration versus in a new sale, but in reality.
There is more similarities than what kind of.
You see on the surface.
Customers that had been leveraging our solutions now for over eight years are getting a lot of value from it there they've got a cadence to their it changes and the things that they're wanting to do within their business and you know our timeline for wanting customers to migrate doesn't always match up with with theirs. So in order to move migrations there is a big.
Selling effort, there's a marketing and sales effort that takes place with that and given the strength that we've seen in our pipeline and the opportunities on new logos.
Our reps have tilted more towards that and you know and I think you know several years ago, we talked about this naturally reps are more attracted to.
New logo wins, and so we do see that.
And so and that's that's one of the reasons why we've seen a bit of a.
A delay on some of those migrations, but the good news is you know those were gonna still come we still see those in the you know in the future. There just can be a little later than what we had initially thought at the beginning of the year and that's what's impacting our subscription revenue.
Subscription they are our guide.
Got it very helpful and then from a follow up perspective Andreas.
I attended your annual customer conference perform obviously in May would certainly see the attendants. This year was heavier than last year, especially given where we are relative to the pandemic what type of momentum did you see off that conference because I know historically, it's been a very good marketing and pipeline driver for the company.
Yeah, Scott Great question overall, we always see our event I really drives a lot of momentum and I would say a lot of our results last quarter, where were in large part to.
Outperform in outperform tends to be a great close it in an event that drives the acceleration in our deals as well it creates a lot of new expansion opportunities and I would say that the gen. Four AI resonated across the board in a lot of our new innovation. So.
We have seen quite a bit of interest post outperform as well as we saw last quarter with many of our wins that were part of out performed.
Great. That's all I have thanks for taking my questions.
Thank you.
Our next question is from Neil talk say with Northland Capital markets. Please proceed.
Thanks, and congratulations on a strong quarter.
Recurring revenue billings was up 27% year over year for the June quarter, well ahead of what our I think he had coyote stephane, 20%, what's the big driver here of the upside was it expands or rather what was the bigger driver I'm sure. Both of them are drivers, but which one was the bigger expanse or new customers or is that kind of outperformed some of them.
Recurring revenue billings.
Yeah. It was a new customers that we have.
<unk> seen a very strong new customer ads typically we talk about a 50 50 split between new and existing it's trending higher this year.
You know in an overall new is is definitely driving and we're seeing very good expansion as well, but I would say, it's still tilting a little bit more towards new.
Now I'm glad you asked that question because.
I wanted to take the opportunity to talk a little bit about what we're going to see in the second half because you know as you pointed out we saw a good second quarter coming not quite as good as it was because of the reasons Andras just highlighted but we're expecting to see something very similar in the Q3 Q4 orders as we did in Q1 Q2. So Q3 is gonna be.
A a flattish maybe even slightly down because of the timing of billings and they will see a nice recovery in Q4.
So almost identical to what you saw in Q1 Q2 will happen in Q3 Q4.
By the way you took my next question right out of my mouth, but just to be clear. When you say Q3 down you mean deceleration or down year over year.
Down year over year. So it's really more of a yeah I think when you look at the trailing 12 month metric, which you know I highlighted in my prepared remarks, that's really the metric to focus on because timing of billings year over year change and and the dollar amounts of those invoices can be quite large that can have a material movement in terms of growth rate on a quarter.
On a quarter basis. So trailing 12 months is the best way to look at it.
And at the end of the day when that's all of the dust is settled and we look at how we're going to perform over the course of 2023, you can expect to see a growth in calculated billings it'll be similar to our total revenue growth rate.
Great and then if I could sneak one in here Salesforce announced a list.
List price raised on average, 9% do you see that impacting your projected time to achieve rule of 40 performance.
Or sorry, I didn't catch that last part.
Do you see salesforce as price raises impact and froze ability achieve their rule of 40 performance either positively or negatively.
If anything potentially positive because of that their prices were really high end and bringing them higher just creates more opportunity for us, especially on the CPU front.
But overall, we don't see that really impacting our business.
Why is that why why wouldn't you expect to impact your business.
But I.
I don't see any negative potential impact if anything it's positive, but I don't see it affecting in any negative way them raising prices.
Yep, Okay exactly great. Thank you yes.
<unk>.
Our next question is from Jason <unk> with Keybanc capital markets. Please proceed.
Good afternoon, Thanks for fitting me in.
Nice to hear the momentum on the airline side.
I get that you know not quite back to pre pandemic spending levels that nice to hear some momentum if we can.
Kind of double click on the pipeline a little bit I'm curious if.
If you can share anything related to.
Are you seeing strength for some of these new ancillary products like digital offer you mentioned a couple of customers there.
Revenue management upgrades that you're more confident about.
Or is it just new logo wins there.
I guess first of all I did want to clarify something the momentum we've seen in the quarter with more <unk> oriented. So travel we're seeing it continue like last year, but not in momentum compared to beat it but in terms of travel there. Yes, we did highlight that adult fair Mark.
<unk> technology is one of the technologies, we're continuing to see momentum the whole future of digital retailing next generation of our aim.
And in those type of solutions are the ones. We're seeing their line seemed best think about digital experience for the passenger.
And how you are creating more relevant offers.
And in that they don't.
Sorry to kind of the areas that we're seeing in tracing the travel industry.
Okay, perfect and then maybe I'm trying to clarify that prior question.
Competition, maybe just an update on the competitive environment are you guys seeing any one less or or.
Just any any update on that front.
Yeah, no no major changes on the competitive environment.
Nobody that we're seeing less or more of I would say just in general I feel are competitive decision is continuing to strengthen our we did talk about continuing to improve our win rates.
In sales velocity on the beta besides so so overall no no major changes on the competitive environment.
Okay, great. Thanks Andre.
Thank you.
Our next question is from Viktor Chang with Bank of America. Please proceed.
Hi, Oh, okay. So Stefan congrats on another solid quarter and thanks for taking my questions. Most of them have been answered, but maybe one from my side I'm thinking about 26 outlook can you talk a bit about assumptions since yeah.
The growth into 'twenty six.
Is it what are your assumptions on macro and should we expect some M&A for that for you to achieve that growth and then more specifically thinking about airlines as well are you baking in some level of success and offer Spanish plan, which would be a bigger market compared to.
What youre currently addressing.
Yeah, So so victor for 'twenty six.
I assume you're asking relative to the <unk>.
Color that we gave for at our analyst day.
We are not assuming any significant change from what the market looks like today. So so you know the market conditions that exist today, or we basically assume that steady state of what that would be into the future so nothing better or nothing worse. So.
That's kind of what we assumed and then as it pertains to the the.
The Tam that we were considering for the the growth in our travel business. We really we're not assuming any expansion of Tam at least in this model now I do feel like Theres upside related to that as we see Tam expansion occur through off of water management I think that's going to present some opportunities to <unk>.
US maybe you could achieve that or even outperform that but as of the model that we pulled together in the color. We gave our last month or so that does not include the Tam expansion from all from order management.
Got it very clear.
Thank you ladies and gentlemen, we have reached the end of our question and answer session I would like to turn the call back over to Linda over to Pat for closing comments.
Yeah.
Thank you for listening to today's call. We look forward to speaking with you at conferences and events. This quarter, we will be attending the Keybanc technology leadership Forum on August 7th in Vail, and the virtual Oppenheimer technology Internet and Communications Conference on August 9th do you have any questions. Following today's call. Please contact us.
I R at pros Dot com, Thank you and goodbye.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Okay.
Thanks.
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