Q2 2024 Yext Inc Earnings Call
Good afternoon, and welcome to the yet physical second quarter 'twenty 'twenty four earnings conference call.
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Note. This event is being recorded.
I'd now like to turn the conference over to Nils Erdmann Senior Vice President Investor Relations. Please go ahead.
Thank you operator, and good afternoon, everyone welcome to <unk> fiscal second quarter 2024 earnings Conference call with me today are CEO and chair of the board, Mike Wallrath, President and CLO, Mark Ferron, Tino and CFO Darrell bond.
During this call we will make forward looking statements, including statements related to our future financial performance expect patients regarding the growth of our business our outlook for the third quarter and fiscal year 2020 for our strategy and estimates of financial and operating metrics capital expenditures and other indications of future opportunities as further described in our second quarter earnings press release.
These forward looking statements are subject to certain risks uncertainties and assumptions, including those related to the X growth the evolution of our industry, our product development and success, our management performance and general economic and business conditions. These forward looking statements represent our beliefs and assumptions only as of the date made and we undertake no obligation to revise.
<unk> or update any statements to reflect changes that occur after this call for.
For further information on factors and other risks that could cause actual results to differ materially from these forward. Looking statements is included in our reports filed with the SEC, including in the section titled Special Note regarding forward looking statements and risk factors in our most recent quarterly report on Form 10-Q for the three months ended July 31 2023.
In our press release that was issued this afternoon.
During the call. We also refer to certain metrics, including non-GAAP financial measures reconciliations with the most comparable historical GAAP measures are available in the earnings press release, which is available at investors thought Yexed Dot com.
We also provide definitions of these metrics in the earnings press release.
I will now turn the call over to Mike.
Thanks, Nils and thanks, everyone for joining us today.
I'll start by highlighting our continued momentum in Q2, followed by a discussion of progress, we're making with our sales and marketing initiatives and then I'll cover some of our expectations for the back half of the year.
In Q2, we delivered results that were consistent with or slightly ahead of our expectations. We generated revenue of $102 6 million non-GAAP EPS of <unk>.
And $11 8 million of adjusted EBITDA.
Our performance in the second quarter demonstrated a balance of operating efficiency and profitability consistent with the strategy, we outlined last year.
In Q2 total <unk> grew 3% year over year and direct air was up 5%.
Sales productivity and execution are continuing to show improvement and I'm pleased with the progress we're making in our end to end demand generation efforts.
Our go to market transformation remains a work in progress, but we are executing well and beginning to see increases in total and qualified pipeline production.
Our mid market team, who calls on smaller enterprise customers continues to execute well consistent with the progress we saw from this group in Q1.
We continue to believe this momentum will eventually carryover to larger enterprises. So it is likely to take longer than the current macro environment customer buying trends budget scrutiny and prolonged close processes with multiple decision makers are still the norm and the larger the enterprise the more of these factors and Pete the sales cycle.
Interest in our digital experience. This solution is building, we see measurable increases in total pipeline year over year. However, we have not yet seen buying trends from larger enterprise customers re accelerating.
Our assumption is that enterprise deal cycles budget pressures and close rates will remain challenged through the rest of the year.
Further this budget scrutiny and caution impacts every renewal as well.
Rfps large buying committees and procurement engagement are more prevalent and in some cases cost cutting efforts within customer accounts are severe.
This coupled with headwinds in shedding unprofitable services revenue and the decisions. We made last year to de prioritize direct SMB sales in Japan market will continue to challenge our air our growth and retention through the end of the fiscal year.
A different dynamic as it play with our reseller channel.
We are seeing some positive indicators from our reseller partners and there continues to be interest from resellers in our non listing solutions.
At the same time, there was a drop in IRR from a reseller business in Q2 that was attributable to a single customer churn from an M&A event.
Absent this customer churn our reseller IRR would have ticked up slightly from the first quarter.
We continue to believe that there is an opportunity over the long term to grow <unk> in this channel.
Our primary focus for the time being remains to optimize and accelerate our direct business.
As we discussed in March we expected to see improvement in our go to market execution first in sales productivity then in qualified demand generation, which creates a framework for accelerating growth.
We are encouraged to see both an improvement in sales productivity and an increase in qualified demand.
We will use these signals to determine the right time to invest in sales capacity as of today, we do not feel constrained by our sales capacity and continue to be laser focused on improving the performance of that organization.
The value proposition of our DXP is resonating with customers as we mentioned in previous quarters. Our campaigns are helping open the door, it's smaller and large enterprises.
<unk> are interested in finding AI enabled solutions to enhance their digital experiences yet many businesses lack the highly specialized technical expertise to realize its transformational power.
Yes summer release features DXP enhancements that leverage AI within chat content reviews, which mark will discuss in more detail shortly.
Our continued focus on margin improvement has enabled us to grow our bottom line and execute with a greater level of consistency.
Total of our expenses in the second quarter, including both non-GAAP cost of revenue and operating expenses decreased roughly 9% year over year.
Overall, we experienced business conditions in Q2 that were similar to the previous several quarters, if not a bit more challenging.
We achieved year over year growth with the smaller sales organization, which indicates that our emphasis on productivity is having the desired effect.
We made steady progress in Q2, despite a continuing cost conscious demand environment and as our go to market and demand Gen engines begin to ramp we're looking forward to picking up momentum, but remain very cautious about the environment in the back half of the year.
Our team remains committed to growing our business profitably and managing efficiently.
<unk> the continued macro uncertainty our outlook remains the same as it was when we reported our first quarter results, but given the improvements we've made across the organization. We remain confident in our long term growth opportunities.
Please to announce that our board has approved an increase of $50 million to our share repurchase program. This is in addition to the $100 million that we have been utilizing to buyback our stock since March of last year.
Our ability to manage the growth of our business, while also generating value for our shareholders highlights the strength of our balance sheet and our ability to generate cash flow.
11, again, I would like to thank our entire global team for their commitment and bringing about these results and I'm grateful to our customers partners and our shareholders for their ongoing trust and support with that I'd now like to turn the call over to Mark.
Thanks, Mike we continue to innovate and deliver powerful solutions across our digital experience platform to new and existing customers looking to meet new market demands and customer expectations, a big accomplishment during the quarter was a summer 'twenty three release, which featured DXP enhancements to simplify.
How companies generate experiences for any customer across both owned and third party channels at scale.
As part of the summer release, we changed the name of the knowledge graph to Yexed content. We believe Yexed content is the first had this CMS built on a foundation of AI and knowledge graph technology content includes enhancements to expand how companies can use AI to <unk>.
Generate any experience across both owned and third party channels all from a single headless content management system.
We also added AI generated responses to reviews.
Consumers make buying decisions based on reviews and search engines use them as a critical inputs of ranking results.
AI generated review response is a new capability within the product that enables businesses to use AI to scale small teams and respond to reviews.
Now using their own unique data cut.
Companies can automatically generate individualized responses that are on brand and contextually appropriate according to analyzing tone and sentiment of posts across any channel.
The general availability of the summer 'twenty three release was announced on July 31.
While still early the responses from customers across a range of verticals and regions has been extremely positive.
Interest in our suite of AI enhanced services as open doors, with new and existing customers and awareness of our DXP platform and its capabilities continues to build.
To add to this during the second quarter, our marketing team launched the new annual global campaigns targeting key personas and marketing support.
The three fully integrated global campaigns focused on the importance of having a modern composer Bowl best in breed architecture powered by our had this CMS and showing the possibilities of what customers can build with our AI led digital experience platform.
We are already seeing a positive impact for instance, we've seen 500% more event registrations in the first six months than we had all of last year and over 70% of the contacts engaging with our campaigns our new TX.
Initiatives such as these campaigns are driving measurable impact on our marketing pipeline, while also creating more efficient alignment across our various teams to deliver content with coordinated messaging and targeting.
On the go to market side in the second quarter, we closed several significant upsells and had several boomerang customers returning to yes. Here are a few examples benefit cosmetics, which is an existing gx customer, who we began renewal conversations with over nine months ago to help understand how we.
Could help them get the most out of the Gx platform leveraging <unk> analytics, we were able to show them increased value from their locations using reviews and ultimately expanded a relationship globally across the X platform with an upsell that included a combination of listings pages and reviews.
Guaranty Bank and Trust is another terrific example of our team starting conversations months in advance to identify and solve customer pain points, we were able to win back the listings and reviews business of guaranteed bank and trust from our competitor with a full platform solution that also includes <unk>.
<unk> and search.
A preeminent international postal service provider expanded their relationship with yet for new direct repay just following a pages rebuild new store locator and a new pages launch.
We were able to help a global provider of diagnostic information enhance their customer experience by upgrading our partnership to include location pages over a period of 12 months our team showcased how <unk> could provide incremental value by enabling them to optimize their pages enhance their search.
<unk> and help their customers more easily identify the right providers and facilities.
And International CPG Company was another renewal that developed into full platform adoption through our unique integration of search we were able to show how our DXP platform can help the customer expand into new markets enhance communication across the organization and.
And quantify the business value driven by X through our analytics tools.
Kalitta health and existing healthcare clients, leveraging <unk> solutions to help customers find providers and facilities expanded their relationship with <unk> to include a third division. After we won two divisions earlier this year and added Universal search as part of their increased adoption of our platform.
In addition to these upsells, we had several new logo wins during the quarter.
Columbia sportswear needed a more accurate listings provider and.
And we were able to create a full solution and win the business by providing additional data driven insights and analytics to help improve their customer experience.
In another instance, we went head to head with two competitors in a bid for the listings business of a European leader in electric vehicle solutions.
<unk> ultimately won the business due to our understanding of their back end systems, and our ability to submit accurate data to our leading publisher network.
A code hosting platform for version control and collaboration was a unique new logo deal during the quarter. They ran their own search evaluation via a free trial and self direct implementation via our hitchhikers training community.
<unk> was selected out or out of a number of competitors due to the clear and easy to follow documentation and low friction sales process.
And finally, a large public University medical school I was working with a different listings provider, but switched gx because of our ability to improve their current patient experience through our superior technology transparency and control.
I am very pleased with how our teams are executing particularly given the pace of innovation. We are prioritizing the development of solutions that will help companies keep abreast of the latest and digital experiences, enabling our customers to provide best in class services now I'll turn the call over to Darryl.
Thanks, Mark I'll start with a review of our second quarter results before moving on to our guidance for Q3 and the full year of fiscal 'twenty four revenue for our second quarter grew to $102 $6 million up 2% on an as reported basis or 1% in constant currency.
Our growth in Q2 was driven by continued demand in our direct business as of the end of Q2, our customer count for direct excluding SMB was approximately 2980.
Annual recurring revenue or <unk> was $397 7 million up 3% year over year or 2% in constant currency drag.
Direct customers represented 82% of total air or direct.
Correct. They are at the end of Q2 totaled $327 2 million, an increase of 5% year over year or 4% in constant currency.
Third party resellers, which represented 18% of total air or at the end of Q2 delivered a or are a $70 5 million a decrease of 6% year over year or 7% in constant currency.
As Mike mentioned earlier, a significant portion of the decrease was the result of the merger of two of our reseller partners.
This accounted for roughly half of the year over year decrease in without this churn are our would've increased sequentially compared to the first quarter.
As of the end of Q2, our net retention rate, which is calculated on the basis of a R was 98% for direct customers and 92% for our third party resellers.
Turning to non-GAAP results, which are reconciled to GAAP in our earnings press release Q2 gross profit was 81 million representing a gross margin of 78, 9% compared to 74, 5% in the year ago quarter.
As we've mentioned previously the improvement relative to last year was largely attributable to the organizational changes within our services organization, which was a process we kicked off in Q4 of last year.
We expect our gross margins for the remainder of this fiscal year to remain at the high end of our 75% to 80% range.
Our operating expenses in Q2 were $73 6 million or 72% of revenue compared to $78 6 million or 78% of revenue in the year ago quarter. The key part of our operating expense discipline has been the realignment of our sales and marketing team and our sales and marketing costs as a percentage of revenue.
42% in Q2 compared to 48% in the second quarter of last year.
Our Q2 net income was $8 1 million compared to a net loss of $3 9 million in the year ago quarter.
Our Q2 net income per basic share was seven cents.
Compared to a net loss of <unk> <unk> per basic share in the second quarter of last year.
Cash and cash equivalents were $201 million at the end of Q2 compared to $217 million at the end of the first quarter the.
The decrease in our cash balance was driven in part by continued share repurchases in Q2, which totaled $6 $4 million or 700000 shares.
Since the commencement of the program our share repurchases have totaled $88 million or $15 1 million shares.
With the additional $50 million authorization, we intend to continue buying back our stock at attractive prices.
Net cash used in operating activities for Q2 was $7 million compared to $25 2 million cash used in the year ago quarter, and our Capex was 600000 compared to $2 2 million in Q2 last year.
Turning to our outlook for the third quarter and full fiscal year 2024, our guidance assumes that the challenging macroeconomic environment and its effects will persist throughout this year.
As of today for the third quarter, we expect revenue in the range of $101 5 million to $102 5 million.
Adjusted EBITDA in the range of $11 5 million to $12 5 million and non-GAAP EPS in the range of six to seven times.
Which assumes a weighted average basic share count of approximately $125 1 million shares.
For the full year fiscal 'twenty four we expect revenue in the range of 405 million to $407 million adjusted EBITDA in the range of 50 to 52 million and non-GAAP EPS in the range of 29 to 30.
Which assumes a weighted average basic share count of approximately $124 8 million shares.
We are now ready to open up the line for questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our first question is from Tom White with D. A Davidson. Please go ahead.
Oh, that's great. Thanks for taking my questions two if I could I guess first off on the on the direct business.
So our our growth slowed a bit versus last quarter, but it looks like net retention kind of improved a bit sequentially.
Mike can you maybe just provide.
A bit more color on.
You know your initiatives to kind of sell into new logos, just curious to what extent, you're seeing elongated sales cycles or reticence from from enterprises.
Due to the macro.
And and kind of what's the balance between that.
Potential dynamic versus you know the various operational initiatives you guys are implementing around are kind of changing the.
Changing the sales force to go to market et cetera, and then I have a follow up on the on the reseller channel.
Sure no problem. So thanks for the question.
So.
I think there's a couple of things at play there. So obviously, we talked earlier when we a couple of quarters ago about the changes we made in the expected headwinds.
<unk> and revenue growth and things like that from services changes, Japan, SMB and I think we're seeing those and I think we pointed out last quarter as well that the vast majority of those impacts are in the renewal book.
And.
As we've talked about before the vast majority of the book.
Second half of the year.
It's not surprising.
<unk>.
Those impacts starting to starting to land.
As we get into the second half of the year.
Ramps as we go through the year.
As far as the macro goes I mean, we're seeing it with new logos. We're also seeing it with existing existing customers, particularly on the larger enterprise side of things, but really throughout the market.
Theres just more scrutiny there is more budget pressure I think there is more conservatism coming out of the enterprises and it causes more discussions about whereas the budget for incremental opportunities coming from whether those are new logo upsell and in some cases.
Seeing.
Cost cutting pressure within within existing customers.
We're reacting to that buy.
Making sure that we're positioning ourselves as the best possible partner opportunity that consolidated services.
And even even within the broader landscape we're seeing.
Even even within a specific industry. We're seeing some companies are taking the opportunity to be much more aggressive about expanding their digital experiences some are being more cautious than others are being.
Things that they acknowledge are probably.
Long term the wrong things for there.
For their digital experience customer experiences but.
They are just understanding some of these visits are under extreme cost cutting pressure and so it's a mixed bag of all those things I think as I said earlier, we were probably seeing it if anything a little bit worse in Q2 than it was in the last couple of quarters.
But we're really just kind of expecting that it stays this way.
More more scrutiny more pressure longer sales cycles.
Through the end of this year.
Okay. That's helpful. Thanks, Thanks for the color and then just a follow up on on the reseller business. So.
You mentioned that excluding that kind of M&A event.
Our our would have ticked up.
Versus the last quarter, but.
Obviously, it's still kind of down considerably.
Considerably year over year is that just a broader kind of pressure that smbs are experiencing or anything else to kind of call out there and like what what is it that you guys can do to maybe help mitigate or sort of you know limit the amount of kind of deterioration in that business.
So we talked about this.
When we initially came in six or seven quarters, I guess six quarters ago that there was a lot of pressure on the SMB segment at the time I think it was hitting.
A lot of this environmental.
Environmental stuff at the Smbs earlier so.
Without without this M&A transaction that really caused the sequential quarterly downtick I think what we would what we'd be talking about it as a real stabilization in that IRR and feeling that we are at least seeing seeing that stabilize I think the mitigating factor and the thing that we're excited about.
It is that we're starting to see the the.
Qualified demands and the pipeline show up on <unk>.
Non listings opportunities to our reseller partners, which as we've talked about is historically been almost exclusively with us.
That is something that we're looking at as you know in the longer term as a real opportunity to grow those relationships and to make them more strategic and really to help our partners consolidate the different offerings.
To our best in class digital experience offering.
And so you know I I would call it X X that one particular thing.
We'd probably be talking more about just the stabilization in that IRR with the same idea that we're seeing the demand built but we're not going to get.
Too aggressive about forecasting that demand until we actually see it starting to convert into a into bookings and commitments in that channel.
Great. Thank you very much.
The next question is from Rohit Kulkarni with Roth M. Cam. Please go ahead.
Oh, Hey, thanks, So just a big picture question on AI, and what are you feeling and you're getting from the market and your customers has been Oh, you're pitching your ear products be it.
Just the overall Conkin management sustain malls and.
In the Uinta basin versus like Chatbot, So yeah agenda Gpus and so there do you see.
That's opening doors in existing customers and new wins.
And how is the how are those conversations are one thing I've been wrong before.
Hey that right I'm happy to talk about that a little bit so.
I think we need to separate two things here. So there's a tremendous amount of interest in AI.
It's a great door opener today to talk about being able to bring a more.
More robust AI capabilities to enterprises of all sizes.
Including things like like chat and AI review response and content generation.
The larger the enterprise will longer its going to take for them to be ready to use those technology, particularly when it comes to things that face to the customer and if you think about.
Hi.
The majority of what we do it's customer facing digital experiences and so one of the reasons why you've heard us be excited about this but also be relatively tempered is that the the legal compliance regulatory processes inside larger businesses, particularly some of the regulated industries, where we have a lot of strength.
Financial services and health.
Care it means that the actual.
I think commercial opportunity with those businesses is going to take a lot longer to to show up then the excitement.
There is around the potential for these things.
I do think we'll see adoption more quickly than smaller enterprises and less regulated segments, but I still think business isn't going to be cautious around anything AI related that theyre exposing to the customer and with good reason so one of the things that we're very.
I think careful about making sure that our customers and.
I understand that.
Our digital experience solutions are not purely AI solutions, they're really robust digital.
Experience capabilities, including now content headless CMS.
And a number of others that.
That brings tremendous value without the AI plug and pieces when you plug the AI into it and use the AI. It just it just expands the value of those solutions.
Okay. Okay cool, thanks, Mike and then maybe on the hiring and just the Opex.
Side of things, maybe correct me if I'm mistaken did you Oh was hiring during the last 90 days did you change any plans.
It seems to me that kind of.
Hum Opex came in slightly above maybe just a tad bit but slightly about what expectations, but just would love to understand how long have you ever kind of hiring plans.
Some functions changed over the last 90 120 days.
So no I wouldn't say, there's any significant change to our.
So our approach there I think we're being very targeted with where are we where we add resources I think we're also being very thoughtful about where we are getting.
<unk> that we need from resources I think what you're I think what youre seeing there is probably a seasonal adjustment to our people related opex, which is obviously the majority of it.
As we do our compensation cycle in the second quarter and so if you historically, you'll you'll always see that second quarter compensation expenses are going to be.
Tick up because thats when we do our primary promotion compensation cycle.
Okay. Thanks, Mike Thank you.
Sure.
The next question is from <unk> Khan with B Riley Securities. Please go ahead.
Yeah, Hi, Thanks, a lot.
Just maybe are expense related items, so if I look into the sales and marketing line.
Picked up a little bit are there any campaign related costs in there that you might have done in Q2 or is it a is it.
Mostly around out of commissions on additional head count how should I think about increased sequentially.
And then I have follow up.
Yeah, I mean, we did launch some campaigns but.
I wouldn't call that.
The primary thing is what I was just mentioning that because of the compensation cycle because when it falls that's when we will typically see the seasonal uptick in our overall compensation expense, which obviously.
Sales and marketing is the largest piece of.
And so it's not a.
It's not a specific amount of hiring or a specific initiative that is causing that it's just the natural seasonality of when that.
Compensation cycle happens.
Understood.
Then.
With regard to your ability to leverage.
Packaging and pricing to basically do.
The new Oh on client retention and new wins, just maybe give us your thoughts there in terms of how.
How much are you pulling on the flavor and maybe there is an ability to do even more there.
Yeah, you are talking about consolidated basically using using the renewal as an opportunity to consolidate.
No more about pricing and packaging in Nevada.
Is it going to drive either I know others have maybe even new wins.
So I think I think in this environment, where we where there is a lot of scrutiny around budgets and there is it's harder for again in the enterprise, particularly for our buying customers to just identify incremental budgets. There are a couple of conversations that we.
We want to.
Have there one is clearly how many different capabilities of the platform can we package together.
In order to create more value for the customer and potentially help them save money well.
Holding some of the pressure that we might be feeling or even expanding our relationships with those customers and that's the motion that I think we are focusing on improving.
And it's a big part of the focus and the channels and we need to be ahead of those renewal discussions in order to be in position to do that so those things don't come together at the at.
At the last minute I think Marc referenced one of the customers who was talking about was the nine months cycle, leading up to their renewal.
So we will get we will continue to focus on getting better at that motion is.
We really get the sales team structure and operating appropriately.
So like I say this every call and soon soon I won't be able to say this but Tom is still less than a year I think we're.
We're doing a lot of great work, we're seeing some of the productivity enhancements and things like that but we are still early in this transformation.
Got it and maybe one last one if I if I may.
I know there has been some impact from some sort of discontinuation of the lower margin services business, maybe you can just.
Quantify how much the impact was on the growth.
I then.
Yes.
What's organic versus inorganic.
Yeah, Hey, now that it's Darryl.
When we initially laid out the components of the the headwinds that we were going to see in the fiscal year. It was in the low single digit percentage point on growth.
And as Mike mentioned earlier, you know a lot of those renewals will come up as it relates to services a lot of those renewals will come up in Q3, and Q4, and that's where we will see.
The impact in revenue a R R and retention.
Got it so as far as debt.
Last quarter it goes up.
It was less than 1% is up there.
Oh, we haven't broken it out I mean, it's the the low single digits is really on a year over year growth rate.
But like we said, it's it's it's certainly backend loaded.
Understood.
You guys.
Thanks, Sean.
The next question is from Arjun Bhatia with William Blair. Please go ahead.
Hi, This is Chris on the garage and thanks.
Thanks for taking the question the.
First one for me.
Much more room do you have to continue driving margin expansion from here without a topline pick up are there still levers you can pull to continue improving.
Op margin without additional leverage from the top line.
Yes, I think there are always levers there I think the question that we're asking ourselves daily weekly monthly here is at what point does.
Extracting more.
Margin overall operating margin for the business cost the opportunity to get the revenue reaccelerate. So.
We think about this all the time, we talked about this at our Investor day.
When I talked in my comments about seeing sales productivity increase seeing qualified demand there.
If we did nothing more than continued to increase sales productivity and increase qualified demand. We would actually I think you would get you start to see that revenue growth.
That we are or that <unk> re acceleration we're looking for.
We could clearly cut expenses to get to get more but the question. Ultimately is do you do you sacrifice revenue growth there so.
I think we grapple with this question all the time and in a difficult macro environment.
It's a little it's probably a little harder question.
Especially when we have this kind of mixed signal, where the macro environment is very difficult, but the qualified demand and overall demand is clearly building.
We're seeing progress on that side and so on.
This is not not not an easy one.
We were.
We're going to keep we're going to keep evaluating it and we're going to keep looking at it.
We know we've made a lot of progress but.
Depending on how the environment develops and how much demand develops and we'll we'll be thinking about optimizing between incremental operating margin and revenue growth.
Got it yes, no that makes a lot of sense.
And the second question I had was on the revenue outlook. So it looks basically flat.
Each quarter from <unk> through the end of the year.
How much.
The growth recovery at this point is.
Directly tied to an improving macro environment.
What are you hearing from customers that gives you confidence that we'll actually see <unk> growth return when the macro starts to improve.
Yeah, I think look I think that's the hardest thing to predict and so.
In a world, where overall demand is improving which we've mentioned right.
What sort of total demand and qualified demand, which is really just refers to different stages.
We would.
And at a macro environment is improving what you'd anticipate is that close rates recover to what they were before we went and entered the challenging macro at least three or four quarters ago.
And you have more demand so that would indicate that youre going to that we're going to grow the book right.
And so we have the one signal that we are very happy with which is there is theres more opportunity. There's more demand there is more interest and we track that through all stages of the pipeline.
Yeah. We're responding campaigns are are creating responses and interest in all of those things so.
We.
We either need to see that continue to build to the point, where we can actually outrun the macro headwind or we see the macro headwinds subside and deals get easier to do particularly at the enterprise level, which is where we see the.
Sort of faster acceleration of the error.
Look I wish I could tell you when that's going to happen I think we were pretty clear that we don't that are our guide and our forecast doesn't anticipate that that.
Better in the back half of the year.
We think the caution.
It's tied to the macro uncertainty and really these businesses like the market hate uncertainty, we expect that to continue if it if it improves faster than we would expect to see benefit from that and if it gets worse, we would expect to see.
The impact of that as well.
Got it well thank you for taking my questions.
Okay.
Again, if you have a question. Please press Star then one.
The next question is from Ryan Macdonald with Needham. Please go ahead.
Hi, Thanks for taking my questions, Mike I appreciate the macro environment's a bit challenged but one of the hearing is that you seem to be continuing to have some nice successes with these boomerang customers can you just talk about what the dynamics are at play in that portion of the market.
From a competitive perspective, and whether there's a specific strategy that you've employed that seems to be you know.
Leading to the success in.
How large of a revenue opportunity should Ah shall we think about this boomerang customer opportunity being moving forward.
Yeah, So I'll say, some some high level things about that mark might want to jump in with some more specifics but.
Thank you know when you think about like what what the Boomerang customers typically look like.
Because of the relative newness of March many of the products. They are primarily going to be listings and reviews customers who are boomerang and.
Typically when we saw you know, which we've talked about we saw some of these listings and reviews customers.
Go elsewhere over the last you know two to three or four years, we've talked about this a lot.
They were promised.
Certain things by competitors.
And then a lot of cases, they moved for lower cost solutions and I think what they found was that.
Hey.
They're the ones that are coming back clearly didn't get the value that they were expecting elsewhere and so we're seeing them.
Them return I think it's safe to say like on the same token on the flip side of that when there is when there is significant budget pressure in the market the sort of.
The attraction to moving to a lower cost provider is going to be there as well. So I think we're we're happy to see the boomerangs happening and we're very focused on making sure that we.
<unk>.
Do everything we can to keep.
Companies like those that are now coming back from from leaving for what might appear to be greener pastures, or just cost savings and then turn out to have a product that really doesn't work very well or a set of services that don't work.
Yeah.
As Mike said the majority of the customers are really.
A lot of the lithium as customers.
What you see over the last few years as some of our competition doing some unnatural things from a deal structure standpoint.
And you know the old Adage is you get what you pay for.
So listings quality.
The support models the ability to resolve issues at scale are really all areas where.
Competition has fallen down really and when you are talking about mission critical data being out there in the Internet. When you were talking about you know your public presence and sort of driving top to top of the funnel.
You really cant go with a second rate solution and in some cases the customer has to go through that experience before they realize the overall value that we are providing for for years. So that's what we're going to see and I expect us to continue to see that in the future quarters.
No. That's helpful color there appreciate it and maybe as a follow up so I get that you know we have some sales cycle elongation is now but is there any strategies, you're unable to employ essentially nudge prospective customers along enough in the pipeline at this point, whether its utilizing pricing or flexible deal structures.
As maybe a way to take advantage of trying to gain some market share in a more difficult time or is it is it a pretty frozen end market at this point.
Yeah.
We're always looking for those opportunities and sometimes.
As I said before sometimes other consolidation opportunities sometimes those are we can do two or three things that they are that they are evaluating and we can do it all at a lower cost and that's how they can they can find some cost savings and so we're really happy to engage in those discussions we're obviously looking at.
Looking at pricing, we're looking at packaging, we're looking at different ways to address our customer needs to be efficient at the same way, we're addressing being efficient as a business as well and I think this kind of optimization will continue for a while.
And I anticipate that we'll get back to the business of building.
Really really.
Really high ROI.
Digital experiences as we get through this kind of malaise great.
Thanks for taking my questions.
Pleasure thanks.
This concludes our question and answer session I would like to turn the conference back over to Mike Wall Ross for any closing remarks.
Well, thanks, everybody for joining us and look forward to talking to you soon.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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