Q2 2023 AvePoint Inc Earnings Call
Good afternoon, and welcome to the half 0.2nd quarter 2023 earnings Conference call all participants will be in listen only mode.
You need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask any question. You May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.
Please note. This event is being recorded now I'd like to turn the conference over to Jamie or STI, Vice President Investor Relations. Please go ahead.
Paul.
Thank you operator, good afternoon, and welcome to <unk> second quarter 2023 earnings call with me on the call. This afternoon is Doctor TJ Jang Chief Executive Officer, and Jim Kathy Chief Financial Officer. After preliminary remarks, we will open the call for a question and answer session.
Please note that this call will include forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.
We encourage you to review the Safe Harbor statements contained in our press release for a more complete description.
All material in the webcast the sole property and copyright about white with all rights reserved.
Please note. This presentation describes certain non-GAAP measures, including non-GAAP operating income and non-GAAP operating margin, which are not measures presented in accordance with U S GAAP and.
The non-GAAP measures are presented in this presentation as we believe they provide investors with the means of evaluating and understanding how management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from a substitute for or superior to financial measures prepared in accordance with U S. GAAP.
A reconciliation of these measures to the most directly comparable GAAP financial measures is available in our second quarter 2023 earnings press release as well as our updated investor presentation, both of which are available in the Investor Relations section of our website with that let me turn the call over to TJ.
Thanks, Jamie and thank you to everyone joining us on the call today.
Highlighted by 30% our growth as well as total revenue and margin performance that once again exceeded our guidance our second quarter results demonstrate the demand for our platform and the strength of our business model and.
I missed the ongoing uncertainty in the macro environment, we continue to see customers depend on <unk> confidence platform to rapidly reduce costs improve productivity and make more informed business decisions as they advance their digital workplaces.
Demand coupled with our sustained focus on profitable growth drove another quarter that surpassed expectations on both the top and bottom line.
Jim will dive into our financial results shortly but first I want to discuss two main topics.
First generative AI and how were positioning our point for continued long term success and Miss the massive and dynamic changes that are happening in our platform environment and second the journey of Apple wins customers or our ability to partner with them in every stage of their digital workplace transformation and cloud optimization journey.
<unk> remains a key competitive advantage for <unk> and led to another strong set of results this quarter.
Let's start with generative AI.
We're excited about the potential AI to disrupt industries and drive innovation and as the earliest Microsoft SaaS cloud partner and today. The most mature b to be SaaS data management vendor Hopkins well positioned to lead the way.
In conversations I've had with our customers our partners and my peers two things are abundantly clear.
First the bedrock for impactful AI solution is data, especially the powerful combination of propriety data gathered from unique sources on top of foundational AI models, which together will pave the way for unprecedented commercial success and customer satisfaction.
And second the only way to create a successful strategy to unlock business value is by applying advanced information management strategy to the organization's proprietary data.
This is where the outpoint confidence platform comes in.
The point has been working with customers for over two decades to modernize control and up high resilience to their data management practices and over the last several years, we have incorporated machine learning and AI into our platform, establishing the foundation for a powerful insights impactful recommendations and comprehensive.
<unk> of our customers' digital workplace investments.
Our innovation has already help customers achieve business value by swiftly detecting and guarding against ransomware attacks, ensuring policy enforcement for Holly information accessed and improving the lifecycle of information through strong data governance.
Today, we manage more than 250 petabytes of data for our customers on a daily basis, which gives us unparalleled insight into how data is used in different context now we have opportunity to go further and helping organizations extract value from their data.
A great example of this is a private preview program, we launched for our cloud record solution last quarter with for Australia, and government organizations offering AI powered capabilities that transform how organizations classify content efficiently accurately and at scale.
One of the participants completed the migration of their datasets from a legacy platform to the cloud, but was unable to correctly classify much of the content due to resource constraints.
Our automated intelligence model, which can rapidly identify and classify various type of content.
<unk>, the appropriate business rules and lifecycle to ensure business and legislative compliance while completing this manually would have taken the organization years, our model there. So in weeks, yielding a factor of nearly 20 extra productivity improvement.
This provided the government agency with better information at lower cost, which in turn will be used for more rapid and accurate reporting and decision making.
Our track record of innovation combined with our unique features and platform capabilities establishes our ability to continue releasing more AI driven solutions that democratize insights recommendations and protection for our customers and our build upon robust data management strategy, you'll hear more from us in the months.
Some of our continue the AI innovation, especially at our upcoming industry shipped happens conference in October .
Turning now to the customer journey.
This innovation aligns with how we see our customers continuing to evolve their digital workplaces and how our platform supports every stage of their transformation.
This often means initially solving one problem and then leveraging our other platform solutions to address their additional needs before I share. Examples of this in action during the second quarter. Let me remind you of the components of our platform, which supports every stage of an organization's digital workplace transformation, including cloud consumption.
<unk> use cases to help organizations maximize their ROI on cloud.
When confidence platform consist of the control suite, which delivers a sustainable readymade framework for automated governance and policy enforcement protecting business critical information across collaborative workspaces, They resilient suite, which enables organizations to efficiently comply with data protection regulations and preserve critical records each.
During business continuity and compliance and the modernization suite, we transformed legacy data and business processes for use by modern SaaS platforms, driving digital workplace transformation and enhancing the employee experience across the organization moving onto the examples starting with expansion from a modernization.
Two the resilient suite.
The global analytic company headquarter UK initially came to us to perform a migration to Microsoft who strive leveraging our data analytics capability to reduce the data you state to be moved into the cloud while maintaining the fidelity of information during the move our success here with just the beginning of the partnership as our Chief Information Officer.
Also concerned about protecting its Microsoft Sweetest spot Azure active directory now known as Microsoft intra I'd and Azure storage environments are seamless migration engagement bolstered by our platform play to address the entirety of their data protection needs led to a competitive win with our resilient suite in Q2 is shown.
You can't secure its digital workplace for 15000 users.
Second expansion from the control suite to the monetization suite, a fortune 100 multinational consumer goods Corporation headquartered in U S with more than 100000 employees had deployed Microsoft PVC pipe and needed additional capabilities for holistic data governance strategy. They originally leverage our cloud governance product to operate their.
And more effectively they needed to understand how their content, what's being shared internally and that only the right people have the proper access in accordance with our rigorous security requirements.
Once we demonstrate our ability to meet these needs they added our pie graph product in Q2.
Leveraging our platforms data orchestration engine with AI sentiment analysis model to assess the usage of their Microsoft three five investments and gain better insights into employee engagement and importantly, their journey with US will continue as we're in talks to extend our governance capabilities to improve their use of homegrown business workflows.
As well as our Cao records product in the resilient suite to drive a more comprehensive approach to information management.
Third the expansion from that resilience suites to the control suite, a large Hawaii based financial institution was concerned about data loss and ransomware attacks and originally choose our resilient suite for data protection and frequent backups that were easy to use and met privacy statues, including the California Consumer Privacy Act just two.
Months later, they added our policy things that product from a control suite empowering them to manage their digital workplace trigger automated alerts that identify critical issues and in force policies mandates, which have never been more important for global financial service institutions.
And we're already in discussions with them to expand their resilience suites deployment with our product specific to Microsoft power platform and Azure as they broaden their digital workplace adoption.
As you can see from these examples the Apple and confidence platform offers a unique value proposition to companies of any size in any industry located anywhere in the world, regardless, where they are in their digital transformation journey, we empower companies to optimize and secure the solutions that most commonly established and underpinned their digital workplace.
Today and going forward, we believe that the more automation will lead to even greater customer collaboration and efficiency. Our Q2 results made clear that our strategy is resonating both with the customers and with our partners who are critical to our long term success and with whom we continue to do incredible work.
I turn the call to Jim I want to recognize the team for another strong quarter in signing new logos, which are the foundation of our future growth one of the largest food and beverage companies in the world became a app point customer in Q2 purchasing our cloud governance and policy insights product to amplify the benefits of their data sources the organ.
Nation was looking to ensure the use of their datasets, where safe responsible and effective with our products. They will now be able to process volumes of information by making sure. The data is appropriately shared accessible interoperable and reusable in other words, making information actionable our ability to generate proactive.
Sites will allow their security team to understand the information and context and make sure their governance policies aligned to their regulatory requirements. In addition to taking more proactive posture. There is a clear cost benefits with reduced time spent on investigating data breach events our products provide the single pane of glass to monitor and analyze.
No data usage, so they can protect their data and information from fraud, and bad actors to safeguard their reputation and revenue.
But more than two decades, I point has pushed the boundaries of digital workplace transformation by innovating to meet the needs of our customers, especially as they navigate dynamic macroeconomic environments.
Hope I remarks today have made clear, we're well positioned for continued success and we're equally ready to maximize the massive opportunity ahead of us to unlock the value of generative AI to increase efficiency boost productivity and drive critical innovation.
With that I'll turn it over to Jim to discuss our financial results in more detail.
Thank you T J and good afternoon, everyone. Thanks for joining us as we review our strong second quarter results and let me remind you that unless otherwise noted I'll be referring to non-GAAP metrics.
For the second quarter ended June 32023, total revenues were $64 $9 million up 16% year over year and once again above the high end of our guidance within total revenues second quarter, SaaS revenue was $38 $3 million up 39% year over year.
And in Q2, SaaS comprised 59% of total revenues compared to 50% a year ago.
Looking at the business geographically, we saw solid performance across all regions once again driven by year over year growth in our SaaS business.
In North America on a constant currency basis, SaaS revenues grew 35%, while total revenue grew 16% in EMEA on a constant currency basis SaaS revenues grew 41%, while total revenues grew 10% and in APAC on a constant currency basis SaaS.
<unk> revenues grew 46%, while total revenues grew 28%.
As of June 32023, total <unk> was $236 $2 million, representing year over year growth of 26% and growth of 30% when adjusted for the impact of FX. We ended the second quarter with 495 customers with <unk> of <unk>.
$100000 up 19% from the prior year period.
As of the end of Q2, 49% of our total error came through the channel compared to 46% a year ago and 48% at the end of Q1.
And for Q2, specifically, 61% of our incremental air are came through the channel compared to 56% for Q1.
While this percentage may fluctuate from quarter to quarter, we expect the overall channel contribution to continue increasing in turn driving <unk> growth and operating efficiencies.
Turning now to our retention rates, which as you know are a primary area of focus for us and critical to our long term growth strategies adjusted for the impact of FX, our trailing 12 month gross retention rate for the second quarter was 87% inline with what we reported at the end of Q1.
And we are pleased that our net retention rate for Q2 improved versus Q1 as <unk> was 107% after adjusting for the impact of FX compared to 106% at the end of the first quarter.
And as we see more and more examples of customer expansion like TJ described we expect this trend to continue to remind you our medium term target for G. R. R is 90% plus and for NR or is 110% to 115%.
Both gerar and enter our improved on a reported basis as Q2 gross retention rate was 85% in Q2 net retention rate was 104%.
This compares favorably to reported gross and net retention rates of 84% and 102% at the end of the first quarter respectively.
Turning back to the income statement gross profit for the quarter was $46 $1 million, representing a gross margin of 71, 1% compared to 73, 4% in Q2 2022.
The year over year gross margin decline is primarily the result of lower gross margins on services.
Q2, operating expenses totaled $43.3 million or 67% of revenues compared to $42 1 million or 75% of revenues a year ago, representing a year over year growth in dollars of only 3% and a significant reduction as.
As a percentage of revenue as a result, Q2 non-GAAP operating income was $2 $9 million or an operating margin of 4.4% once again above the high end of our guidance.
This compares to an operating loss of $1 2 million or an operating margin of negative two 1% a year ago as our sustained focus on profitable growth drove year over year margin expansion of more than 650 basis points.
Turning to the balance sheet and cash flow. We ended the second quarter with $222 $9 million in cash and short term investments for the six months ended June 32023 cash generated from operations was $9 $3 million, while free cash flow was $8 $5 million.
This compares to cash used of $6 $6 million and free cash flow of negative $8.8 million for the six months ended June 32022.
Lastly, with regard to share repurchases during the six months ended June 30, we repurchased three 3 million shares for a total cost of approximately $17 million and through the close of trading yesterday, we have repurchased a total of 4.4 million shares for a total cost of.
Approximately $23.8 million so far in 2023 as a reminder, our plan is to utilize $50 million for the year and repurchasing shares.
I would now like to turn to our financial outlook, where for the full year. We are pleased to once again raise our expectations for total air our total revenues and operating income.
For the third quarter, we expect total revenues of $67 6 million to $69 $6 million or 9% year over year growth at the midpoint, we expect non-GAAP operating income of 5 million to $6 million.
And for the full year, we now expect total air are of 258 million to $263 million or 21% year over year growth at the midpoint.
We now expect total revenues of $261 9 million to $265 $9 million or approximately 14% year over year growth at the midpoint.
Lastly, we now expect non-GAAP operating income of $15 9 million to $17 $4 million.
We'll open for Q&A in a moment, but first I wanted to provide some additional color on our guidance with a focus on our cost expectations for the balance of the year.
While still early we are beginning to see some signs of stabilization in the demand trends, we closely monitor and as such we are starting to make some incremental investments to ensure we are well positioned for continued growth in 2024 and beyond second we will meet conditions necessary to be deemed a.
Large accelerated filer as of December 31, 2023, and as a result, we expect some incremental costs in Q3 and Q4 relative to our prior guidance.
Taken together. These two factors are why we are not raising our full year operating income guidance beyond the outperformance we achieved in Q2, but we are extremely pleased that even after factoring this in our Q3 operating margin guidance represents year over year expansion of nearly four.
<unk> hundred and 50 basis points and our new full year operating margin guidance represents year over year expansion of approximately 750 basis points.
In summary, this was a strong quarter and a continuation of our momentum from Q1.
While we remain mindful of near term economic uncertainty, we continue to be excited by the opportunities we see in 2023 and beyond to deliver shareholder value by advancing the digital workplace, capturing a large and growing markets and prioritizing profitable growth. Thanks.
Thanks for joining us today and with that we'd be happy to take your questions operator.
Thank you at this time, we will begin the question and answer session.
I'll ask a question you May press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at.
At this time, we will pause momentarily to assemble the roster.
And today's first question comes from Gabriele voyages with Goldman Sachs.
Hi, Yes. This is Mac scam Pearl on for Gabriela. Thanks for taking my questions a couple from us could you.
You give us more color on what youre seeing in the general macro environment, and how things have trended from a customer budget standpoint over the past few months.
Said you are seeing early signs of stabilization. So so what are the signs that you.
You are seeing thank you.
Yeah. Thank you for your question Max.
Yeah from a.
A macro perspective.
We remain cautious we are happy with the momentum we have achieved so far in Q2.
On the enterprise segmentation, we still see continued elongation of deal cycles.
Not worse than Q1.
But we continue to see that so we remain cautious on our Midmarket and SMB, we continue to see very strong growth through our channel scaling.
Yeah, and just to add onto that we do look at a number of metrics, including obviously our bookings in terms of that happened just in this past quarter and looking at the lifecycle of those bookings. We also spent a lot of time looking at our CRM data in terms of how things are progressing through the pipeline.
And by looking at that information as TJ alluded to we're seeing that the things are not necessarily improving but they're also not getting worse. So when we look at how things are evolving through the process. It gives us a little comfort that there is some stabilization and we don't see things getting worse.
Thank you that's very helpful. And then as a follow up how are you thinking about investing as you anticipate tailwind from John AI implementations, especially in terms of head count.
And also more broadly how are you balancing growth versus profitability as you as you entered this new environment. Thank you.
Yeah. That's a great question, so first and foremost investing in the product. So we mentioned a great example of our preview records product that's already showing very good results in productivity improvements in the field.
And it's been very well received by our customers.
B as well as in Australia.
We will disclose more at our upcoming shift happens conference in D. C. In October to showcase how immune the latest iteration of AI and machine learning into our product to highlight the platform play second.
As mentioned, we do win on the platform play and the theme for this year continue to be a cloud optimization. So you're short leveraging our platform of solutions our data orchestration engine.
To be able to help our customers maximize their ROI.
And in the cloud. So overall, that's the major theme, we see across all companies as to how to essentially save and that'd be more drive more economic outcome out of their existing investments and this is where we will continue to shine and third we will continue to invest into channel.
To scale and we see really really good results just in the last few.
Yours alone and a couple of years and as you, we clearly articulate before of massive greenfield for us.
F&B segment, especially selling to Msp's. So there will continue to invest to overall achieve.
Profitable growth.
Very helpful. Thank you.
Thank you and the next question comes from Kirk <unk> with Evercore ISI.
Hi, This is Sean on for Kirk Congratulations on the strong results and thank you for taking the question.
P. J there are some concerns that as interest around AI continues to grow that customers may we prioritize spend away from other areas and I T. So it doesn't look like you're seeing any of that based on your gross and net retention rates, but can you comment on that concern and maybe what you're seeing in terms of your discussion.
Related to Jenny I right now thank you.
Yeah. That's a great question as we stated in the prepared remarks, the foundations to our effective AI deployment, it's actually based on the premise that you have really good information management strategy that means making sure that you have data collated from all your various sources across your enterprise.
And also making sure that the data are actually property classified and pack and have right lifecycle. So you don't get into trash and trash out issues. When you build that proprietary layer of modeling on top of generative Foundation models. So every enterprise is doing this today to ensure that they can leverage there.
Wrong there.
Decades worth of domain data proprietary.
Enterprise owned data to actually form better capabilities and innovation.
On top of AI to then drive purposeful outcome. So that's a space we actually play very.
Very well in and we've been doing this for enterprises.
Decades in fact, we're not a stranger to a machine learning AI as many of you know my background, it's machine learning AI, where being a longtime consumer of Azure cognitive services and other open source.
Source AI capabilities for especially for governments.
On Prem and hybrid deployment scenarios. So all these things actually points back to the importance of information management capabilities.
So it's it's not a separate use case from AI, it's really very much of the same motion to make AI effective and workable for enterprise.
Thank you and then maybe one for Jim It looks like net retention rate increased sequentially.
Excluding FX, so 107% can you speak to what contributed to the step function increase and what needs to happen from your perspective to hit the net retention rate targets that you outlined.
Yeah.
Yeah, Great question. So so this quarter was a strong quarter for us for existing customer growth in terms of additional <unk>.
For the first time, where we're over the our incremental air or for the quarter over 50% of that came from our existing customer base. So we had a strong quarter as it related to that existing customer base and even more so so that definitely contributed to the end of our growth and then in addition to that we saw a really strong quarter for us.
Existing customers, who were with us less than a year.
You know kind of adding to their original purchase which is a strong indicator for us number one that our customers are enjoying with the services, we're providing the software we're providing but also consuming more and it's interesting that when they uptick in the first year, it's almost a leading indicator because that sale does.
Not impact our N or are we won't see that impact for a full year. So when we think of NR or it's really a you know a trailing 12 month or a lagging indicator and when we sell to a customer within that first year.
It's really a leading indicator because it's it's going to bode well for future NRI. So so we feel good about that I do think we still have a lot of work to do to get to those medium term targets that we put out a couple of months back in March to get to that 110 to 115. So we definitely want to continue to see a continued execution on what we have.
Been doing so far.
Sounds good thank you.
Thank you and then extra costs from the Hotrod SKU with Maxim group.
That was a Northland capital market.
Thanks for the question.
We had a really strong incremental air or Jim you already sort of alluded to one of the drivers of that was in our our thing. So that's a positive but just to be clear is that when our are moving up the result of increasing people, there's no customers for increasing functionality.
Okay.
More of the ladder in terms of additional functionality that they're receiving but we we had a strong quarter across the board in terms of you know if we look at it from a couple of different things, it's really the demand for the SaaS platform, 39% growth was really strong geographically across all three segments we saw.
Strong growth, particularly on the E. R. R side, where each of the three segments really came in just at about the same rate for our consolidated growth rate of that 26%. So really right on target we talked about channel. We saw a 61% of our incremental air are coming through the channel really strong.
So and again that existing customer base that I referred to before a really strong quarter. So we kind of saw it across the board not just from the existing customer base, but what really throughout both new and existing.
Okay.
And then your guidance raise.
You can see that it looks like it's largely be earnings beat.
<unk>.
And so it was that a reflection that the.
Improvements in sales motion.
You know, we're taking there is a quarter by quarter basis.
Yeah, I think I think what we're trying to factor in for as we think about our air guidance is that we had a really strong quarter, we had strong growth meaningful operating leverage and obviously, we generated a lot of cash in.
In the quarter as well or first half of the year and when we think about that a or our guidance. We are trying to take into the fact take into account that we had a good quarter, but there is still macro uncertainties out there and we're trying to plan Accordingly, we talked at the beginning of the year that this year was going to be uncertain. It was going to be bumpy it was going to be lumpy and so although.
We had a very good quarter.
We're excited about that we're also trying to.
Really be prudent over the remainder of the year.
And and factor that into our the remaining guidance.
Okay, great. Thank you congratulations on a great quarter.
Thank you.
Thank you and once again. Please press Star then one if you would like to ask a question.
And the next question comes from Jason Ader with William Blair.
Yeah. Thanks.
I just wanted to clarify on the.
Comments on demand shift things are not getting worse and I just wanted to.
See if you meant for all three segments of your business enterprise.
Our SMB and mid market.
Because you talked about SMB and mid market being.
B seeing good grocery channel.
Prices seen elongation is the enterprise.
Piece of the business stabilized or is that also or is that actually getting a little bit worse quality SMB and mid market are getting better.
Yeah, Hi, Jason Yes, so enterprise segmentation, it's steady as she goes no not no different than Q1, so that's where we see however, we do we are remaining cautious.
On the mid Mark S. M B, a continuous a faster growth rate just ask we've seen before.
So everything is pretty much.
We are being cautious because of the macro.
Factors.
However, we are not seeing a deterioration that's why we talk about stabilization. Okay. So and then Jim your comment on bookings.
Is the implication that bookings actually.
Bookings growth ticked up in Q2 versus Q1.
Or it was a similar bookings grocery it is because Q1.
Okay.
We actually saw an uptick to your point.
We did see significant improvement in bookings in Q2, which was kind of our expectation we expected Q1 to be on the lighter side.
And that was right in line with expectations for Q1, and Q2 was definitely a stronger quarter.
Great. Okay, and then T. J when you think about your product portfolio and 30 plus products.
Maybe could you call out a few products right now that are seeing a lot of interest were you know either existing customers or adding that product on or it's it's a key part of some of your wins some for new customers.
Yeah, Great question, Jason So I called out our call records product, it's something that continue to gain.
King more traction not only does it save our customers from a storage cost perspective from.
Archiving optimization, but also leaning to leveraging.
Machine learning AI to actually do much better data classification and lifecycle management, that's a high performance product. The other one is tie graph, we talk about sentiment analysis and employee engagement management every C level today worried about that from a hybrid work scenario perspective and third one.
And I would call out is entrust.
Which is basically entitled Med management and operations management.
Your cloud deployments again goes to in terms of the optimization cycle right customer wanted to know how are these licenses are being used how can I reduce costs on operations.
Yeah.
Great, Great and and when you talk about Gen AI.
Understand that there is.
Element of you know.
Incorporating it into your products and maybe even having separate skus around gen AI going forward.
But can you talk at all about how internally you're using some of the Gen III.
Technology is out there and things like.
Like co co pilot from kit hub and other.
Tools.
Related to Gen AI that might help you guys, just kind of accelerate development and lower costs.
Yeah, absolutely. So I think we mentioned even in the last earnings we already utilize a gift hub co pilot on the Dev side.
We are using them more for the senior developers who see.
Material efficiency boost up to 30%. The your developers who are still learning the ropes or are less so so because to be a sophisticated user you actually need to know whatever it's generated is actually truly efficient and.
Useful for that segment of the feature that you were working on it as a developer but for the other side is again, it's not just for Dev Jenny I work, leveraging and deploying across customer success across customer support across marketing content marketing too.
Do you actually make things more efficient so.
So for example in.
In customer support we have decades of.
Yeah user use case.
Case, K support tier one through five tier one to three and then go into Premier support and of course, we can also ingest all of our user guides into.
Intelligent chop out that can actually interface and do even tier one support for our customers to alleviate the load to.
To level up the tier one responsiveness and of correspond the content side of as well be able to generate a much more intelligent content as a drafting tool to make our content Margaret M product marketing folks much more efficient so overall leveraging general AI.
Allow us to bring up the overall quality of work as well as to shorten the timeline to Delever result. So these are various aspects of our company. We think we can really.
Level up ultimately is to improve the bottom line.
Awesome. Thank you.
Yeah.
Thank you and the last question comes from Brett in a rough with Cantor Fitzgerald.
Hi, guys. Thanks for taking my question.
I guess a lot of software companies that reported in the back half of June as being kind of like a material.
Slowdown is.
It appears that something that you guys didn't see given the strength that you're talking about in the quarter am I right in and help frame that.
That's right, we don't see a slowdown.
And I guess, you guys talked about being a very uncertain macro year, but <unk> was stronger than the first quarter.
And I guess, the full year, our growth guidance of about 21% you guys held.
They are growing pretty nicely in <unk> and <unk> at 26%. So I guess, what's baked into the guidance that we're going to expect to see that no call. It T cell over the over the coming quarters to 21%.
Larger numbers or.
Conservatism.
Yes, I think it's it's maybe a little bit of both right. It's I think we're still thinking that this year, although it's T. J just said, we don't we don't see.
Any deterioration in the pipeline, but we're sitting here in August .
And we're looking out for the rest of the year and I still think there is some uncertainty out there in terms of the macro environment and although right now what we can see looks good I think it's it's prudent for us to we've raised guidance but.
To manage that accordingly, and I think we feel real comfortable with the guidance, we've put out there and we don't really see it as a deceleration.
We think we're just trying to plan accordingly, and be again be prudent and be thoughtful in terms of the guidance we're providing.
Understood and then just helps frame how we should think about when you kind of announced new.
Functionality for example, you know what he did was kind of a cloud backup for Salesforce.
Is that something that used to be like an immediate demand kick up for is that something that yourselves force goes out and targets I guess when you announce stuff like that how should we think about that maybe adding to the pipeline.
Yeah, so clarity the multi cloud support continue to be a focus for us so.
So when we do announce the support for our sales force, especially on fat ramped datacenters being able to sell to more secure oriented government clients that will help strengthen our pipeline built.
There is different flavors.
Different depends on these sector, we support there's some learning curve for our sellers also to sell to a different audience for example.
The records section right, we're not just selling to traditional Ah I T, but we're actually selling to retro managers, so theres a bit of that training and onboarding are ramping for our sellers to be able to familiar rise in the new features and deploy them out there, but overall you're absolutely right are these new products goes a long way to strengthen.
The pipeline, but ultimately the goal is to improve and our for us to be able to do the cross sell and upsell of our existing customer base.
Perfect. Thanks, guys congrats on the quarter.
Thank you. Thank you.
Thank you.
And this concludes our question and answer session I would like to turn affords Zhang for any closing comments.
Thank you first I want to thank the entire alpine team for their dedication to advancing the digital workplace, capturing growing markets and prioritizing profitable growth I.
I've been meeting with our regional management teams EMEA APAC North America in person. This last few weeks during our quantity business overviews and I'm confident we're well positioned to continue capitalizing on the opportunity in front of US Lastly, as I shared during our Investor day, we're excited to host our upcoming shift has.
Oppens Conference in Washington D C in October where he especially thrilled to return to an in person format and I encourage you to attend.
And two our continued innovation around AI, you'll hear more from our team and other industry leaders about experiences strategies and best practices that defined the digital workplace transformation.
We're really smart information about topics and speakers in the coming weeks. Thank you for joining us today.
Thank you.
France has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.