Q3 2023 Alteryx Inc Earnings Call

Greetings and welcome to the old parents third quarter 2023 earnings conference call.

Speaker 1: Greetings and welcome to the old parrots third quarter 2023 early

Speaker 1: At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation.

This time, all participants are in listen only mode.

Great question and answer session will follow the formal presentation. How do you. Once you require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker 1: If anyone should require operating assistance during the conference, please press star zero on your telephone.

Speaker 1: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Goodman, Head of Investor Relations. Thank you, Ryan. You may be

As a reminder, this conference is being recorded.

Now my pleasure to introduce your host Ryan Goodman head of Investor Relations. Thank you Ryan you may begin.

Speaker 2: Thank you, operator. Good afternoon, and thank you for joining us today for our Altrix's third quarter of 2023 earnings conference call. I'm Ryan Bittman, Altrix's head of investor relations. With me on the call today, our Mark Anderson, Chief Executive Officer, and Kevin Rubin, Chief Financial Officer. Additionally, Paula Hanson, our president and Chief Regan Officer, and Sir Eschbeth Talala, our Chief Product Officer, will be joining us for the question and the answer session after prepared remarks.

Thank you operator.

And thank you for joining us today for <unk> third quarter 2023 earnings Conference call I'm, Ryan Goodman, <unk> head of Investor Relations.

With me on the call today are Mark Anderson, Chief Executive Officer, and Kevin Rubin, Chief Financial Officer.

Italy, all of Hanson, our president and Chief revenue Officer interested.

You talked officer will be joining us for the question and answer session. After the prepared remarks.

Speaker 2: This afternoon, we issued a press release announcing our results for the third quarter and did September 30, 2023, as well as our shareholder letter with key metrics and commentary on the results. If you would like a copy of the release and shareholder letter, you can access both online on our Investor Relations way.

Good afternoon, we issued a press release announcing our results for the third quarter ended September 32023, as well as our shareholder letter with key metrics and commentary on our results. If you would like a copy of the release and shareholder letter you can access both online and on our Investor Relations website.

Speaker 2: During this call, we will make forward-lippin statements related to our business.

During this call we will make forward looking statements related to our business.

Speaker 2: including statements about our financial guidance for the fourth quarter in full year 2023.

Statements about our financial guidance for the fourth quarter and full year 2023.

Speaker 2: These statements are not guaranteed to future performance. They are subject to a variety of risks and uncertainties, some of which are beyond our control.

These statements are not guarantees of future performance are subject to a variety of risks and uncertainties some of which are beyond our control.

Speaker 2: Our actual results could differ materially from the expectations reflected in any forward-lippin' statement.

Our actual results could differ materially from expectations reflected in any forward looking statements.

Speaker 2: For a discussion of additional forward-looking statements made during this call and the material risks and other important factors that could affect our actual results, please refer to our SCC filings available on the SCC's website and our Investor Relations website, as well as the risks and other important factors discussed in today's earnings release.

For a discussion of additional forward looking statements made during this call and the material risks and other important factors that could affect our actual results. Please refer to our SEC filings available on the Sec's website, and our Investor Relations website as well as the risks and other important factors discussed in today's earnings release.

Additionally, non-GAAP financial measures will be discussed on today's call. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's earnings release and shareholder letter.

Speaker 2: Additionally, non-guet financial measures will be discussed on today's call. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's earnings release and shareholder letter. With that, I'd like to turn the call over to Chief Executive Officer Mark Danderson. Thank you, Ryan. Thank you.

With that I'd like to turn the call over to Chief Executive Officer, Mark Anderson.

Thank you Ryan and thank you all for joining us today.

Speaker 1: Q3 was a solid quarter for Alterix across the board. Our product team made significant progress with our generative AI infused offerings that we believe will bring high value to our customers.

Q3 was a solid quarter for ultra it's across the board.

Our product team made significant progress with our generative AI infused offerings that we believe will bring high value to our customers.

Speaker 1: Our distance execution improved from the fire quarter with key financial metrics above the high end of our guided ranges.

Our business execution improved from the prior quarter.

Key financial metrics above the high end of our guided range.

Speaker 1: annualized the Korean revenue or ARR came in at $914 million, up 21% year-over-year.

Annualized recurring revenue or a R. R.

In at $914 million up 21% year over year.

Speaker 1: This includes a currency headwind of approximately $6 million due to rate changes since we established the out...

This includes a currency headwind of approximately $6 million due to rate changes since we established the outlook.

Speaker 1: revenue came in at $232 million, up 8% year-over-year.

Revenue came in at $232 million up 8% year over year.

Speaker 1: that non-gap operating income of $36 million exceeded the high end of our guided range by $30 million.

non-GAAP operating income of $36 million exceeded the high end of our guided range by $30 million driven by both revenue upside and disciplined cost management.

Speaker 1: These results reflect improved sales execution, despite considerable demand trends relative to Q2.

These results reflect improved sales execution.

Consistent demand trends relative to Q2.

Speaker 1: Our customers continue to demonstrate a deep growing commitment to the Altar Explorer's platform.

Our customers continue to demonstrate a deep growing commitment to the ultra platform.

Speaker 1: We believe the quest to digitize government entities and businesses around the world is intensifying. As we hear our customers look the way to improve efficiencies and drive automation and analytics across their user community.

We believe the quest to digitize government entities and businesses around the world is intensifying as we hit our customers look for ways to improve efficiencies and drive automation and analytics across their user communities.

Speaker 1: We also believe Alterix is uniquely positioned as the data analytics orchestration layer of an increasingly fragmented data ecosystem.

We also believe ultra is uniquely positioned as the data analytics orchestration layer of an increasingly fragmented data ecosystem.

Speaker 1: Customers are leveraging our solutions to automate analytic prophecies to do more with less. And our EEDDU solutions enable this with improved governance and security.

Customers are leveraging our solutions to automate analytic processes to do more with less.

Easy to use solution enabled us with improved governance and security features.

Speaker 1: These are substantial competitive modes that have enabled us to win for years.

These are substantial competitive moats that have enabled us to win two years.

Speaker 1: Again, I am so proud of our R&D team as they work to incorporate generative AI throughout our cloud connected platform.

Again, I am so proud of our R&D team as they work to incorporate generative AI throughout our cloud connected platform.

Speaker 1: Reinforcing this differentiated market position to customers and prospects alike.

Reinforcing this differentiated market position to customers and prospects alike.

Speaker 1: 80, our brand of generative AI and machine learning technology is uniquely suited for this kind of place.

Aiding our brand of generative AI and machine learning technologies.

He can be suited for this claim in place.

Speaker 1: We recently announced several new A.V. capabilities, more on that shortly.

We recently announced several new agent capabilities more on that shortly.

Speaker 1: I'm also encouraged that the progress we're making with our sales strategy.

I'm also encouraged with the progress, we're making with our sales strategy.

Speaker 1: on our Q2 earnings call, we committed to improving ourselves execution and enhancing the visibility of our business, particularly in the context of the couple of macro environments.

And our Q2 earnings call, we committed to improving our sales execution and enhancing the visibility of our business, particularly in the context of the tougher macro environment.

We quickly adapted to some personnel and process changes to do just that.

Speaker 1: We quickly adapted this impersonal and process changes to do just that.

First we made significant progress enhancing our pipeline management.

Speaker 1: First, we made significant progress enhancing our pipeline management.

Speaker 1: Paul Henson has driven more rigor in discipline into deal qualification, stage assessment, and forecast management.

Paul Hudson has driven more rigor and discipline into deal qualification stage assessment and forecast management.

Speaker 1: This visibility improving, we are better able to optimize our go-to-market reason.

With visibility improving we are better able to optimize our go to market resources.

Second we improved our in quarter linearity the.

Speaker 1: Second, we improved our in-quarter linearity. The nature of our renewal cycle leads to a back-end-weighted quarter, but we did much better capitalizing on opportunities to secure wings earlier in the quarter.

The nature of our renewal cycle needs to a back end weighted quarter.

We did much better capitalizing on opportunities to secure wins earlier in the quarter.

Speaker 1: And third, we incorporated these changes into our sales and ablment takeability.

And third we incorporated these changes into our sales enablement capability.

Speaker 1: We are providing new training programs and tools to sound leaders throughout the organization to help them better monitor opportunities and deliver coaching actions needed to drive success with their team.

We are providing new training programs and tools to sales leaders throughout the organization to help them better monitor opportunities and deliver cookie actually needed to drive success with their teams.

We have more work ahead of us, but we're pleased to see an early impact from our efforts.

Speaker 1: We have more work ahead of us, but we're pleased to see an early impact from our

Speaker 1: We saw our best pipe conversion in recent quarters, plus delivered meaningful improvement in sales and marketing efficiency.

We saw our best type conversion in recent quarters, plus delivered meaningful improvement in sales and marketing efficiency.

Speaker 1: As discussed on last quarter's call, we're excited to welcome two new senior leaders to the sales organization, both reporting directly to Paula Hens.

As discussed on last quarter's call. We're excited to welcome two new senior leaders to the sales organization, both reporting directly to Paul a handset.

Speaker 1: First, our new SPP of sales for the Americans, Mark Dorsey, joins us from Oracle, for he served as SPP of enterprise cloud sales, rolling Oracle's cloud business and transforming the sales team into a skilled cloud sales organization.

First our U S E T S sales for the Americas, Mark Dorsey joins us from Oracle, where he served as SVP of enterprise cloud sales growing oracle's cloud business and transforming our sales team into a skilled cloud sales organization.

Speaker 1: Mark has held several leadership positions at Oracle and most recently would be SDP of the retail vertical Pernod of America.

Mark has held several leadership positions at Oracle and most recently was the SVP of the retail vertical for North America.

Speaker 1: And second, our new SPP of Global Alliance in general, Scott Van Balkenberg brings over 25 years of partner leadership experience working with Global Channel Organization.

And second our U S E T a global alliances and channel Scott Vanvalkenburg brings over 25 years of partner leadership experience working with global channel organizations.

Speaker 1: Got joined this from GenPact, where you ran their global channel in Alliance to...

Scott joined Us from Genpact, where he ran their global channel and alliance business.

Speaker 1: Prior to which she held a high performing global alliance team at SAS Institute, where he managed over 1,400 partners.

Prior to which he held a high performing global alliance team at SAP.

Its institute, where he managed over 1400 partners.

I'm excited to welcome both Mark and Scott to the mission and look forward to building on recent progress and our go to market strategy.

Speaker 1: I'm excited to welcome both Mark and Scott to the mission and look forward to building on recent progress in our go-to-market strategy.

Speaker 1: On that note, we continue to see strong validation that our executive facing enterprise focus failed motion is working.

On that note, we continue to see strong validation better executive facing enterprise focused sales motion is working.

Speaker 1: Level 2000 penetration came in at 49%. That's up three points from Q3 last year.

Global 2000 penetration came in at 49% that's up three points from Q3 last year.

Speaker 1: Over 2000 net expansion rate helps strong at 150% and remains well above our overall net expansion rate of 119%.

Global 2000, net expansion rate held strong at 130% and.

It remains well above our overall net expansion rate of 119 per se.

And we continue to attract marquee additions to our partner ecosystem.

Speaker 1: And we continue to attract marquee additions toward rolling-punner ecosystem. We announce a great new partnership.

We announced a great new partnership with Sada.

Speaker 1: a leading business and technology consultancy and Google Clio's top global part.

Leading business and technology consultancy, and Google Cloud top global partner.

Speaker 1: Our ELA strategy has provided a streamline, land and expand motion that is revenue with larger organizations. ELA. ELA.

Our strategy has provided a streamlined land and expand motion that is resonating with larger organizations.

A simplified pricing.

Speaker 1: bundle features and often include a component of trial suits. What we refer to as burst lights.

Bundled features and often include a component of trials.

What we referred to a burst licenses.

Speaker 1: This flexibility encourages exploration and removes the friction that software vendors often impose on customers.

Ability encourages exploration and remove the friction that software vendors often posed on customers.

Speaker 1: Of course, we support these projects with our customer success team and partners, which we believe accelerates upsell opportunities.

Of course, we support these projects with our customer success team and partners.

We believe accelerates upsell opportunities.

Speaker 1: We had a great Q3 win with a Fortune 500 Bio-Farmaceutical Company that demonstrates the value of the ELA.

We had a great Q3 win with a fortune 500, biopharmaceutical company that demonstrates the value of the E. L. A.

Speaker 1: This customer adopted its first burstable ELA with Altrix in 2022.

This customer adopted its first burst of boat E L. A with ultra it's a 2022.

Speaker 1: Early users quickly generated significant cost savings by automating time-consuming tasks across finance and operations teams.

Early users quickly generated significant cost savings by automating plenty consuming tasks across finance and operations teams.

Speaker 1: This resulted in a strategic poster brought in user engagement with the birth licenses. We thought dramatic.

This resulted in a strategic push to broaden user engagement with the burst licenses. We saw dramatic use case expansion in Q3 2023.

Speaker 1: In Q3 2023, the customer signed on for a new larger ELA with burst to drive momentum into next year.

Customers signed on for a new larger E L. A with burst to drive momentum into next year.

Speaker 1: And we are selling more and more ERA's every quarter.

And we are selling more and more elas every quarter.

Speaker 1: In Q3, we more than doubled the number of ELA soul versus the same quarter last year.

In Q3, we more than doubled the number of easily sold versus the same quarter last year.

Speaker 1: In Vidya, a leader in accelerated computing in AI is leveraging alterants to automate tasks and orchestrate data within finance and beyond.

In video the leader in accelerated computing and AI is leveraging alternates to automate tasks and orchestrate data, we can finance and beyond.

Speaker 1: One of the largest private companies in America signed on for a 1,000 CELA with 500 bursts.

One of the largest private companies in America signed on for a 1000 C E L. A with 500 Bruce seats.

Speaker 1: This customer is establishing a flexible framework for increased engagement and automation across finance, tax, accounting, and HR. Plus, this exploring use case is in manufacturing and supply chain management.

This customer is establishing a flexible framework.

Engagement and automation across finance tax accounting and HR plus is exploring the use cases in manufacturing and supply chain management.

Speaker 1: Our snowflake partnership and integration will key differentiators here.

No quake partnership and integration with key differentiator here.

I have a lora.

Speaker 1: Avalora, a beneath provider of tax compliance automation software, meaningfully expanded with an ELA, and they are finding incremental opportunities to save cost by automating more within finance.

Abide or tax compliance automation software meaningfully expanded with an L. A and they are finding incremental opportunities to save cost by automating more within finance.

Speaker 1: And a Fortune 500 global marketing and communication company adopted a new multi-year ELA. And they expand their usage of designer.

And a fortune 500, global marketing and communications company adopted a new multi year E L. A and they expand their usage of designer.

Speaker 1: using designer for years to enhance marketing analytic processes for their clients. The customer is now exploring opportunities to automate financial processes and unlock savings within their very own organization.

After using designer for years to enhance marketing analytic processes put their clients the cost.

We're now exploring opportunities to automate financial processes and unlock savings within their very own organization.

Speaker 1: We now have a forehold in nearly half of the year 2000, many of which remain early in bringing scale and accessibility to their data staff.

We now have a foothold in nearly half of the global 2000, many of which remain early in bringing scale and accessibility to their data stack.

Speaker 1: With our top down executive level engagement, we believe these companies are establishing alterates as a key pillar of their data and analytics journey.

It's our top executive level of engagement. We believe these companies are establishing alternates as a key pillar of their data analytics journey.

Speaker 1: Pacific Dental, a leading national dental and medical support organization is a great example.

Pacific Dental a leading national dental and medical support organization is a great example of this.

Speaker 1: After beginning with a relatively small implementation of ultra-its-designer a few years ago, we established multiple workflows that generated significant time savings throughout the financial organization.

After beginning with a relatively small implementation of ultra design or a few years ago, we established multiple workflows that generated significant time savings throughout the finance organization.

Speaker 1: If the ROI potential well established and strong executive engagement and support, Pacific Dental expanded to a much more comprehensive, first-able ELA package this quarter, as they look to empower new users and introduce altrix to adjacent teams.

E R Y potential well established and strong executive engagement and support.

They tend to expand it to a much more comprehensive forcible E. L. A package this quarter I think look to empower new users and introduced ultra adjacent genes.

We're also seeing traction with the technical executive leadership teams of our customers.

Speaker 1: We're also seeing traction with the technical executive leadership teams of our customers.

Speaker 1: She confirmation officers, she technology officers, and she data analytics of.

She information officers, Chief technology officers, and chief data and analytics officers.

Speaker 1: This dynamic is most prominent with our larger customers and we believe is validation of the governance and enterprise readiness of the Altered Plan.

This dynamic is most prominent with our larger customers and we believe is validation of the governance and enterprise readiness of the Ultra X platform.

Additionally, C. I O endorsement is often an important milestone on the path to broader cloud adoption.

Speaker 1: Additionally, CIO endorsement is often an important milestone on the path to broader cloud adoption.

Speaker 1: On that note, our platform focus strategy of creating cloud connected data analytics experience is resonated.

One that though our platform focused strategy of creating cloud connected data analytics experience.

Its resonating.

Speaker 1: We provide customers with the ability to design analytic workflows anywhere. And then implement and automate workflows in the Alterix Analytics Cloud Platform.

We provide customers with the ability to design analytic workflows anywhere and then implement and automate workflows in the ultra <unk> analytics cloud platform.

Speaker 1: Some users will create workflows in design or on a desk.

Some users will create workflows and desire on desktop.

Speaker 1: Some will leverage our analytics cloud offering for model creation. And some will tap into adjacent offerings with machine learning, auto insights and location intelligence.

Some will leverage our analytics cloud offering for model creation.

And some will tap into adjacent offerings with machine learning auto insights and location intelligence.

This multifaceted democratization of data analytics, all built on a single unified platform.

Speaker 1: This multi-faceted democratization of data analytics all built on a single unified platform is what we'll need when we say cloud is an end, not an or.

What we mean, when we say cloud is an and.

Not an or.

We've seen many of our early ultra rich analytics cloud platform adopters also expanding their flagship designer implementations in parallel.

Speaker 1: We're seeing many of our early alterates analytics cloud platform adopters also expanding their flagships, presenter, implementations, and parallel.

Speaker 1: West Rock Company is Fortune 500 Packaging Solutions Company is a great example.

Restaurant company, a fortune 500 packaging solutions company.

Great example of this.

Speaker 1: in collaboration with our customer success team and the partner. That's what identified opportunities to create value through automation across a broad range of use cases.

In collaboration with our customer success team and the partner.

That's the walk identifying opportunities to create value through automation across a broad range of use cases.

Speaker 1: We found we were able to best meet the needs of new users by meaningfully expanding the design implementation with a new designer and server ELA bundle. Plus, add a new cloud ELA to enable use cases across designer cloud machine learning and data links.

We found we were able to best meet the needs of new users.

Annually, expanding the design or implementation.

With the new designer and server E L a bundle.

Plus at a new cloud E L. A to enable use cases across designer cloud.

Sheen learning and data insights.

Speaker 1: While it's also opening up access to new customer opportunities.

Well, it's also opening up access to new customer opportunities.

Speaker 1: For example, KeyBank National Association, one of the nation's largest bank-based financial services companies, selected DesignerCloud as a foundational component to accelerate their analytics program.

For example, Keybank National Association, one of the nation's largest bank based financial services companies.

Lucky designer cloud as a foundational component to accelerate their analytics program.

Designer club's ease of use scalability and native integration with Google Cloud platform were key differentiating factors and key bank's decision to expand with altra.

Speaker 1: to ThunderClaude's e-videos, scalability, and native integration with Google Cloud Platform for key differentiating factors in key-based decisions to expand with ultra-

Speaker 1: Advancing the cloud connected analytics experience is certainly an important R&D priority for all

And then seeing the cloud connected analytics experience is certainly an important R&D priority for all tricks.

Speaker 1: Another top innovation focus is generative AR.

Another top innovation focus is generative AI.

Speaker 1: We envision a world where gendered of AI influences all aspects of software and see opportunities to incorporate AI throughout our entire platform and breadth of awkwardness.

We envision a world where generative beihai influences all aspects of software and see opportunities to incorporate AI throughout our entire platform and breadth of offerings.

Speaker 1: Earlier this year we introduced Aden and we're already seeing great traction with Aden features by existing auto-infacts customers.

Earlier this year, we introduced Aden.

We're already seeing great traction with Eaton features by existing auto insights customers.

Speaker 1: Over the last three months, more than half of active auto-insides accounts have leveraged magic documents. That's strong engagement for our solution we introduced last week, six months ago.

Over the last three months more than half of active audio insights accounts.

Average magic documents that strong engagement for a solution, we introduced less than six months ago.

At our inspire conference in Europe, we had several exciting announcements.

Speaker 1: At our Inspire Conference in Europe , we had several exciting AI notes.

Speaker 1: First, AI Studio, previously codenamed AI Workbench, is designed to enable altered platform users to securely manage, tune, and consume, customize large language models based on their proprietary data.

Hey, I studio previously code named AI Workbench is designed to enable ultra platform users to securely manage tune and consume.

Customized large language models based on their proprietary data.

Speaker 1: a similar integration with all of the designer for enable customers to use those LLMs in existing designer workflows and construct applications with a conversational interface.

Our seamless integration with the ultimate desire will enable customers to use those L. L M and existing designer workflows and construct applications with a conversational interface.

Speaker 1: Second, Playbooks is a new AI feature plan for auto insights that automatically recommends high value use cases tailored to a customer's industry vertical, job function, or company.

Second Playbooks as a new AI teacher plan for auto insights that automatically recommends high value use cases tailored to our customers' industry vertical job function or company.

Speaker 1: This will enable users to quickly generate synthetic data sets and build a proof of concept deliverable.

This will enable users to quickly generate synthetic datasets and built.

Intercept deliverables.

Speaker 1: And third, AI Power Brushing is a new designer cloud picture that is designed to provide predicted transformation suggestions for workflows as users explore workflow results real time.

And third AI powered brushing is a new designer club feature that is designed to provide predictive transformation suggestions for workflows as users explore workflow results real time.

This allows users to automate the creation of data pipeline.

Speaker 1: This allows users to automate the creation of data pipelines and get some data.

And get some data insights faster.

Speaker 1: One more platform launch I want to highlight is the Alterix Market Plane.

One more platform launch I want to highlight is the ultra market place.

Speaker 1: Launched in early October , the Alteryx Marketplace has already gained significant traction with over 2,000 add-on downloads and a rapidly expanding collection of verified, expert-built, and supported add-ons, including connectors and macros.

Launched in early October the ultra marketplace has already gained significant traction with over 2000 AD on downloads and a rapidly expanding collection of verified expert bill and supported add ons, including connectors and macros.

Speaker 1: The Altrix Marketplace is designed to provide our users with a platform for extending their analytic capabilities with confidence. Again, it's about helping our users increase efficiency with their analytics and get to insights fast.

The ultra marketplace designed to provide our users with a platform for extending their analytic capabilities with companies again, it's about helping our users increased efficiency with their analytics and get insights faster.

In conclusion, we're encouraged with the Q3 operational performance and results relative to our expectations entering the quarter.

Speaker 1: In conclusion, we encourage with the Q3 operational performance and results relative to our expectations entering the quarter. Our differentiated, easy-to-use platform enabled our customers to rapidly scale a data-driven culture throughout their organization.

Our differentiated easy to use platform enables our customers to rapidly scale data driven culture throughout their organizations.

Speaker 1: and the new cloud connected experiences and our generative AI Aden innovations will find ways to further enhance and accelerate the analytic journey.

And with new cloud connected experiences and our generative AI Aden innovations.

Any ways to further enhance and accelerate the analytic journey.

We certainly face some challenges in Q2 and I am so proud of how quickly the team adapted and improve execution this quarter.

Speaker 1: We certainly face new challenges in Q2 and I am so proud of how quickly you team adapted and improved execution this quarter.

Speaker 1: And we did it while maintaining our focus, vision, and discipline cost to manage.

And we did it while maintaining our focus.

And disciplined cost management.

Speaker 1: I believe the business and this team is on a strong foundation and we are hard at work to carry forward the momentum as we close up the year. With that, I'll turn the call over to...

I believe the business and this team has built a strong foundation.

We are hard at work to carry forward the momentum as we close out the year.

With that I'll turn the call over to Kevin.

Thank you Mark we are pleased with the improved execution in the quarter, which enabled us to deliver key Q3 financial metrics above our prior outlook ranges.

Speaker 2: Thank you, Mark. We are pleased with the improved execution in the quarter, which enabled us to deliver key Q3 financial metrics above our prior outlook ranges.

Speaker 2: ARR came in at 914 million dollars, up 21% year over year, and 9 million dollars above the high end of our guided range.

<unk> came in at $914 million up 21% year over year and $9 million above the high end of our guided range.

While we don't provide constant currency I would note that currency rate changes since we established our guidance in early August resulted in a headwind of approximately $6 million removing the impact of this currency headwind our Q3, a R. R outperformed the high end of our guided range by $15 million.

Better than expected conversion rates on expansion opportunities plus a durable robust gross retention contributed to our total Q3 bookings tracking above our assumptions for the quarter.

Speaker 2: Better than expected conversion rates on expansion opportunities, plus durable, robust, gross retention, contributed to our total Q3 bookings, tracking above our assumptions for the quarter.

Speaker 3: Revenue came in at $232 million or $20 million above the high end of our guided range. This reflects the bookings upside and slightly higher contractoration.

Revenue came in at $232 million or $20 million above the high end of our guided range. This reflects the bookings upside and slightly higher contract duration.

Speaker 3: Finally, our non-GAP operating income was $36 million, $30 million above the high end of our guided range. We have been closely managing incremental spend and optimizing internal processes, which enabled the revenue upside to fall through to the bottom line.

Finally, our non-GAAP operating income was $36 million $30 million above the high end of our guided range, we have been closely managing incremental spend and optimizing internal processes, which enabled the revenue upside to fall through to the bottom line.

In recent years, we decided to up level, our go to market strategy to target the largest organizations in the world.

Speaker 3: In recent years, we decided to up-level our go-to-market strategy to target the largest organizations in the world. In doing this, we hired experienced enterprise sales reps and leaders, enhance our partner programs, and build out an enterprise quality customer success team.

In doing this we hired experienced enterprise sales reps and leaders enhanced our partner programs and built out an enterprise quality customer success team.

Speaker 3: Over the past year, we've seen progress on this strategy and our financial results. And that continued in Q3.

Over the past year, we've seen progress on this strategy and our financial results and that continued in Q3.

We're winning with larger organizations as evidenced by our growing global 2000 penetration now at 49%. That's an increase of 10 points from two years ago.

Speaker 3: We're winning with larger organizations as evidence by our growing global 2000 penetration now at 49%. That's an increase of 10 points from two years ago.

Speaker 3: or winning larger deals. Our average deal size for Q3 expansion wins increased meaningfully year over year.

We're winning larger deals or average deal size for Q3 expansion wins increased meaningfully year over year.

Speaker 3: And we're seeing our average customer size expand, as customers are increasing designer and server implementation, as well as exploring new use cases with our cloud-connected offering.

And we're seeing our average customer size expand as customers are increasing designer and server implementation as well as exploring new use cases with our cloud connected offerings.

Speaker 3: We grew our 250,000 plus ARR customers by 20% year-over-year to 706. And our 1 million plus ARR customer count increased over 30% year-over-year.

We grew our 250000 plus are our customers by 20% year over year to 706, and our 1 million plus are our customer count increased over 30% year over year.

Speaker 3: We are constantly working to optimize and refine our go-to-market strategy. And now, as we are moving beyond the heavier investment phase from earlier last year, we are starting to see improved leverage and profitability in the model.

We are constantly working to optimize and refine our go to market strategy and now as we are moving beyond the heavier investment phase from earlier last year, we are starting to see improved leverage and profitability in the model.

Speaker 3: Sales rep productivity as defined by new bookings per rep improved year-over-year. A function of both performance management and go-to-market enhancing effort.

Sales rep productivity as defined by new bookings per rep improved year over year.

Function of both performance management and go to market enhancing efforts.

Speaker 3: Both gap and non-gap sales and marketing expense came down as a percentage of revenue by over 5 points versus Q3 of last year.

Both GAAP and non-GAAP sales and marketing expense came down as a percentage of revenue by over five points versus Q3 of last year.

And we've effectively decreased GAAP, and non-GAAP general and administrative spend while increasing <unk> by more than 20% year over year.

Speaker 3: And we've effectively decreased gap and non-gap, general and administrative spend, while increasing ARR by more than 20% year over year.

Speaker 3: This underlying financial leverage is enabling us to improve profitability while still investing in a healthy level of research and development to fuel product innovation around generative AI, cloud connected offerings, and ultra-explatform integrations with adjacent enterprise systems.

This underlying financial leverage is enabling us to improve profitability, while still investing in a healthy level of research and development to fuel product innovation around generative AI cloud connected offerings and ultra <unk> platform integrations with adjacent enterprise systems.

Speaker 3: As we think longer term, many of the profit drivers for this business are still ahead of us.

As we think longer term many of the profit drivers for this business are still ahead of us.

Speaker 3: First, while landing large enterprise new logos is costly, expanding with an existing enterprise customer can carry a much lower go-to-market cost.

First while landing large enterprise new logos is costly expanding within existing enterprise customer can carry a much lower go to market cost.

Speaker 3: Second, our recent cost optimization initiatives have resulted in an organizational structure that we believe is more aligned with the current macro environment.

Second our recent cost optimization initiatives have resulted in an organizational structure that we believe is more aligned with the current macro environment.

Speaker 3: This means we expect to enter 2024 with a leaner cost structure than we've had for several quarters.

This means we expect to enter 2024 with a leaner cost structure than we've had for several quarters.

Speaker 3: Third, we've established a strong partner ecosystem, and now under the leadership of Scott Van Volkendur, we look to expand our partner-source contributions to drive additional scale and efficiency.

Third we've established a strong partner ecosystem and now under the leadership of Scott Van Vulcan Burn, we look to expand our partner source contributions to drive additional scale and efficiency.

Speaker 3: BORF are portfolio of cloud connected offerings, creates new opportunities to cross-sell, and engage with new types of users.

Fourth our portfolio of cloud connected offerings creates new opportunities to cross sell and engage with new types of users.

Speaker 3: And finally, as we've demonstrated throughout 2023, we are approaching our cost structure with greater discipline and expect to unlock additional efficiencies with scale going forward.

And finally as we've demonstrated throughout 2023, we are approaching our cost structure with greater discipline and expect to unlock additional efficiencies with scale going forward.

Speaker 3: Now, before I turn to the outlook, I'd like to share how we are thinking about the near-term opportunity in our guidance philosophy. We have a-

Now before I turn to the outlook I'd like to share how we are thinking about the near term opportunity and our guidance philosophy.

We have a lot to be excited about in Q4.

Speaker 3: We have significant upsell opportunities given our large renewal base.

We have significant upsell opportunities given our large renewal base.

Speaker 3: We're lapping Q4 2022 ELAs, which creates opportunities for additional expansion as burst licenses expire.

We're lapping Q4, 2022 elas, which creates opportunities for additional expansion as burst licenses expire.

Speaker 3: And of course, we have our ramping portfolio of cloud connected solutions that are increasingly gaining customer interest.

And of course, we have our ramping portfolio of cloud connected solutions that are increasingly gaining customer interest.

And while our Q3 performance demonstrated solid progress in improving our execution, we're still cognizant of the macro dynamics that we encountered in Q2 as well as the time required to continue improving sales execution.

Speaker 3: And while our Q3 performance demonstrated solid progress in improving our execution, we're still cognizant of the macro dynamics that we encountered in Q2, as well as the time required to continue improving sales execution.

Speaker 3: As such, we're largely maintaining the prudent assumptions we incorporated in our prior guidance as it relates to customer buying behavior, conversion rates, and renewal rates.

As such we're largely maintaining the prudent assumptions, we incorporated in our prior guidance as it relates to customer buying behavior conversion rates and renewal rates.

Speaker 3: With this in mind, let's turn to the Q4 2023 Outlook.

With this in mind, let's turn to the Q4 2023 outlook.

Speaker 3: We expect ARR to be in the range of $942,948 million, representing your re- or growth of 13 to 14%.

We expect <unk> to be in the range of 942 million to $948 million representing year over year growth of 13% to 14%.

Speaker 3: This is based on current FX rates and incorporates the incremental $6 million currency headwind relative to the guidance we issued in August 2023.

This is based on current FX rates and incorporates the incremental 6 million dollar currency headwind relative to the guidance we issued in August 2023.

We expect GAAP revenue to be in the range of 334 million to $340 million representing year over year growth of 11% to 13%.

Speaker 3: We expect Gap Revenue to be in the range of $334,340,000, representing your career growth of 11 to 13%.

Speaker 3: We expect our non-gap operating income to be in the range of 112 million to $118 million.

We expect our non-GAAP operating income to be in the range of $112 million to $118 million.

Speaker 3: We expect non-GAF net income per share to be in the range of $1.10 to $1.17 per share. This assumes 77.2 million weighted average shares outstanding and an effective tax rate of 20%.

We expect non-GAAP net income per share to be in the range of $1 10 to $1 17 per share. This assumes 77.2 million weighted average shares outstanding and an effective tax rate of 20%.

Speaker 3: For the full year 2023, we are increasing our gap revenue range to $953 million to $959 million representing the year-over-year growth of 11 to 12%.

For the full year 2023 we are increasing our GAAP revenue range to 953 million to $959 million representing year over year growth of 11% to 12%.

Speaker 3: This is up from the prior growth range of 9 to 10%.

This is up from the prior growth range of 9% to 10%.

We expect non-GAAP operating profit to be $100 million to 106 million an improvement from our prior outlook for 70 million to $80 million.

Speaker 3: We expect non-GAP operating profit to be 100 million to 106 million and improvement from our prior outlook for 70 million to 80 million dollars.

Speaker 3: We believe we are executing well on recent cost optimization initiatives and are seeing savings earlier than originally planned.

We believe we are executing well on recent cost optimization initiatives and are seeing savings earlier than originally planned.

Finally, we expect non-GAAP net income per share to be in the range of 94 cents to a dollar one an improvement from our prior outlook for 62 cents to 72 sets.

Speaker 3: Finally, we expect non-GAP net income per share to be in the range of $0.94 to $1, an improvement from our prior outlook for $0.62 to $0.72.

Speaker 3: This assumes a 76.5 million weighted average shares outstanding and an effective tax rate of 20%.

This assumes a $76 5 million weighted average shares outstanding and an effective tax rate of 20%.

In closing improved execution, despite consistent macro conditions enabled us to outperform our assumptions entering Q3, we.

Speaker 3: In closing, improved execution despite consistent macro conditions enabled us to outperform our assumptions entering Q3.

Speaker 3: We conferred on expansion opportunities at a higher than expected level. Plus, we're capturing cost savings faster than anticipated.

We converted on expansion opportunities at a higher than expected level, plus we're capturing cost savings faster than anticipated.

Speaker 3: While we are pleased with the results in the context of the challenging first half of the year, we are mindful that we continue to face challenging macroeconomic circumstances and there is more work to be done.

While we are pleased with the results in the context of the challenging first half of the year. We are mindful that we continue to face challenging macroeconomic circumstances and there is more work to be done.

Speaker 3: The team is focused on building on recent improvements and closing the year with strength, which we believe will put us in a position for a productive and profitable 2024. With that, thank you all for joining us today, and I'll turn the call back to the operator.

The team is focused on building on recent improvements and closing the year with strength, which we believe will put us in a position for a productive and profitable 'twenty 'twenty four.

With that thank you all for joining us today, and I'll turn the call back to the operator.

Thank you we will now be conducting a question and answer session.

Speaker 1: If you would like to ask your question, please press star wall on your telephone keypad. The confirmation time will indicate or line up in the question queue. You may press star two if you'd like to remove your questions from the queue. The participants need to speak or equipment and they'd be necessary to pick up your hands, cut up the full press in the start seats. One moment please, while we fold for-

I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Press Star two if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star one moment. Please while we poll for questions.

Thank you. Our first question is from Koji Ikeda with Bank of America. Please proceed with your question.

Speaker 1: Thank you. Our first question is from Cogey Equino with Bank of America. Please proceed with your question.

Speaker 4: So I wanted to ask you a couple questions here. With the first one on the new SEPO sales for America's and then the SEPO sales for America's.

Yeah, Hi, So I wanted to ask just a couple of questions here with the first one on the new S. E. T. S sales for Americas, and then the SVP of Global Alliance and channels and just really thinking about any near term or long term changes to the overall growth strategy with them joining the team.

Speaker 4: I was really thinking about any near term or long term changes to the overall growth strategy.

Hi, Koji, it's Paul I'll take that question, we're very excited about both Mark and Scott joining us and in those cases, it's really about building on the progress that we've had in this business over the last couple of years are in the Americas Mark right.

Speaker 5: I'll take that question. We're very excited about both Mark and Scott joining us. And in both cases it's really about building on the progress that we've had in this business over the last couple of years.

Speaker 5: in the Americas, Mark will be helping us to continue our focus on operational discipline and rigor while obviously helping us with cloud becoming an increasing percentage of the business and the conversations that we'll be having with customers around that.

Helping us to continue our focus on operational discipline and rigor a while obviously are helping us with cloud, becoming an increasing percentage of the business and the conversations that we'll be having with customers around that and then with Scott and the alliance and channels businesses.

Speaker 5: And then with Scott in the Alliance and Channel's business, it's building on the foundation that we have there. As we've talked about, more than 50% of our new ACV, each quarter comes from partners. And we look to continue to build on that, accelerate that and help us continue to drive efficiency and scale. So I couldn't be more pleased with that than joining us.

Building on the foundation that we have there as we've talked about more than 50% of our new ACD each quarter comes from partners and we look to continue to build on that accelerate that and help us continue to drive efficiency and scale.

I couldn't be more pleased that with that them joining optics.

Speaker 4: just one follow up here for Mark Paula or Kevin.

Thanks, Paula and just one follow up here for Mark Paula or Kevin It's gonna be somewhat of a tough question, but I have to ask and it's around your frame framework.

Speaker 4: somewhat of a tough question, but I have to ask, and it's around your framework for creating shareholder value. Clearly, the third quarter results here are better than last quarter, and the stock reflects that being up after hours. But in the back of our minds, we keep thinking about the rumors of takeover. are.

For creating shareholder value you know clearly that the third quarter results here better than last quarter and the stock reflects that being up after hours, but in the back of our minds, we keep thinking about the rumors of takeover interests in.

Speaker 4: The question here is, I really realize you can't probably comment on that directly, but any sort of commentary on your framework for driving shareholder bells.

The question here is I I really realize you can't probably comment on that directly but any sort of commentary on your framework for driving shareholder value would be really helpful. Thank you.

Speaker 1: Yeah, thanks for the question, Koji. You know, listen, we think this business is a really important business for a very long time and given the...

Yeah. Thanks for the question Koji, Yeah listen we we we think this business is a really important business for a very long time and.

You know given the.

Yeah. The distributed you know kind of nature of the competitors in this space, we think there's going to be a couple of independent companies that over in the mid and long term that will build a platform that will take sizable share and we're running this business because we think.

Speaker 1: You know, the distributed, you know, kind of nature of the competitors in this space. We think there's going to be a couple of independent companies that over in the mid and long term that will build a platform that will take sizable share. And we're running this business because we think, you know, it's going to be all tricks. And so obviously can't comment on any rumors.

It's gonna be all tricks until obviously can't comment on any rumors but.

Speaker 1: But we feel really good about the improvements that we've made to execution and the focus that we've applied to bringing profitability and free cash flow to the business.

But we feel really good about the improvements we've made to execution and the focus that we've applied to.

Bringing profitability and free cash flow to the business.

Thanks, Mark I appreciate it thank you so much.

Okay.

Speaker 1: Thank you. Our next question is from Somjib Stingh with Morgan Sandman. Change the security for us.

Thank you. Our next question is from Sanjay <unk> with Morgan Stanley. Please proceed with your question.

Thank you for taking the questions and really encouraging trends on the sales force productivity.

Speaker 6: Thank you for taking any questions and really encouraging trends on the Salesforce productivity.

Speaker 6: To that end, as we go into Q4, which is obviously a big renewal quarter.

And as we go into Q4, which is obviously a big renewal quarter is there any sort of whether it's macro or any other sort of kpis that suggest that Q3 wouldn't play out in Q4, I'm just trying to get a sense Kevin in terms of when you. When you look at the Q4 guidance what assumptions you have sort of embedded in.

Speaker 6: Is there any sort of, whether it's macro or any other sort of KPIs that suggests that Q3 wouldn't play out in Q4? I'm just trying to get a sense Kevin in terms of when you look at the Q4 guidance, what assumptions you have sort of embedded in and it's just sort of a continuation of the assumptions that we entered this corner. And if the

And is it just sort of a continuation of the assumptions that we entered this quarter and if the sort of productivity trends play out where we were in first quarter in Q4 as we did it. This good quarter in Q3, just wanted to get some context around how you can check the Q4 guidance I. Appreciate it yeah, great Great question Sanjay It's Mark here. Thanks for thanks for that Yeah listen I think you know where we're at.

Speaker 6: Sort of put a kitty trans play out where we're in for a similar quarter.

Speaker 6: in Q4 as we did in this good quarter in Q3. You just want to get some context around how you constructed the Q4.

Speaker 1: Yeah, great question, Sanjee. It's Mark here. Thanks for that. Yeah, listen, I think, you know, we're happy with what we did in Q3. We feel it's prudent and responsible to be conservative, if you will, around Q4 guidance, but we also know that Q4 is...

With what we did in Q3, we are we feel its prudent and responsible to you know to be a conservative if you will around our Q4 guidance, but we also know that Q4 is.

Speaker 1: you know, by far for us, the biggest cohort of renewals in the fiscal year. And we've had the full year sales teams around the world have had the full year to build campaigns to build expansion on top of those those renewals. And so, you know, with that said, I think, you know, we, we took...

By far for us the biggest cohort of renewables in the fiscal year end and we've had the full year. Our sales teams around the world have had the full year to build campaigns to fill the expansion on top of those those renewals and so.

With that said I think we.

Yeah, we we took a.

Speaker 1: You've got taken out to the wood shed in Q2 for resetting Q3 and Q4. And we want to make sure that we can predict our top line so that we can, you know, measure how much we're going to spend on the bottom line and do that responsibly for all shareholders. But also for our customers and our customers.

Yeah got it got taken out two of which had in Q2 for reset in Q3, and Q4 and and we want to make sure that we can predict our topline so that we can.

We measure how much we're going to spend on the bottom line and do that responsibly for all shareholders, but also for our customers and our people.

Speaker 6: makes sense, Mark. I guess my follow-up question is just sort of on the burstable ELAs, we've had that sort of contract vehicle out for a while now. And just in terms of what you guys are seeing in terms of yield, you mentioned a couple of customers.

It makes sense a sense Mark I guess my follow up question is just on the first of all Elas, we've had that sort of contract vehicle out for a while now and just in terms of what you guys are seeing in terms of the yield you mentioned a couple of customers expanding quite nicely leveraging the trial users.

Speaker 6: spanning quite nicely, leveraging the trial users and the burstable ELA, a burstable ELA features of the contract. In terms of point Q4 or just more broadly, what type of yield are you seeing in converting trial users into paid users with the burstable ELA?

First of all El Lakey, Oh, especially Ely features of the of the contract.

In terms of going into Q4, or just more broadly what type of yield are you seeing in converting trial users into into paid users with the Oh, what's the basketball Elis.

Speaker 5: I'll take that one, Sanji, thanks for the question. So in Q3, we saw continued interest from our customers in our ELA bundles. In fact, we more than doubled the number of ELAs in Q3 versus Q3 of 2022. And we also saw a number of customers that did uplift and expand with us.

I'll take that one Sanjay thanks for the question.

So in Q3, we saw continued interest from our customers in our I E. L. A bundle in fact, we more than doubled the number of Elas in Q3 versus Q3 of 2022.

And we also saw a number of customers that I did uplifting and expand with us as an outcome of their their utilization of the burst from 'twenty 'twenty. Two so we continue to be encouraged by the trends that we're seeing there and Q4 is gonna be.

Speaker 5: as an outcome of their utilization of the burst.

Speaker 5: from 2022. So we continue to be encouraged by the trends that we're seeing there. And Q4 is going to be an even bigger opportunity for us. It relates to ELA up south because we'll be lapping our biggest quarter of ELA's historically in Q4 last year.

And even bigger opportunity for us as it relates to yellow upsell, because we'll be lapping our biggest quarter of the L. A is a historically and in Q4 of last year.

I appreciate the color Paul Thank you.

Yeah.

Speaker 1: Thank you. Our next question is from Garakwin with Katie Coulon. Please be sure to give questions.

Thank you. Our next question is from Derrick Wood with Cowen. Please proceed with your question.

Speaker 7: Great, thanks. First one for Mark. Nice to see the execution against targets. And you mentioned better linearity and the strongest pipeline conversion in several quarters. I guess just what were you able to solve for to improve these motions? And I know last quarter, one of the main challenges was to sell outside of a renewal event.

Great. Thanks, first one for Mark nice to see the execution against targets and you mentioned better linearity and the strongest pipeline conversion in several quarters.

Just what were the what were you able to solve for to improve these motions and I know last quarter. One of the main challenges was to sell outside of a renewal of that.

Speaker 7: Did you see improvement in selling that way or did you drive earlier or do you just try to understand how Some of the sales engagements change in the quarter Hey Derek, thanks for the comment

Did you see improvement in selling.

Selling that way or did you drive earlier renewals just trying to understand how some of the sales engagements that changed in the quarter.

Yeah, Hey, Derik, thanks for the comment and question.

Speaker 1: You know, I think for Q3 and for sure for Q4, you know, what we wanted to get back to was, was what we've been doing for, you know, 11 of the past 12 quarters, that's meeting our commitments or beating our commitments that we make to the streets.

You know I think for Q3 and for sure for Q4, you know what we wanted to get get back to was was what we've been doing for 11 of the past 12 quarters. That's meeting our commitments are beating our commitments that we make to the street.

Speaker 1: that we make internally. So I think it was a bit of getting back to basics on the operating frameworks side of things. You know, Paula really built a lot more rigor and discipline into the forecasting process. You know.

And that we make internally.

So so I think it was a it was a bit of getting back to basics on on the operating framework side of things you Paula really built a lot more rigor and discipline into the forecast forecasting process you know.

Speaker 1: where in the stage is the opportunity. And it pretty heavily discounting deals that weren't attached to renewals because we did see in Q2, Kevin mentioned that there was greater than 10 deals that weren't attached to a renewal that

We're in the stage of the opportunity and is it pretty heavily discounting deals that were attached to renewals because we did see in Q2. It Kevin mentioned that there was a greater than 10 deals that.

That weren't attached to a renewal that that.

Speaker 1: that didn't happen in Q3 or excuse me in Q2. So it was really sort of getting back to those basics and that really went up and down the organization. So the weekly forecast calls really drilled into how people were doing for the week, for the month and for the quarter. And I think this really worked across the board.

That didn't happen in Q3 or excuse me in Q2. So it was really sort of getting back to those basics and that really went up and down the organization. So the weekly forecast calls really drilled into how people are doing for the week for the month and for the quarter and I think this really worked across the board.

Speaker 1: The other thing I'd say is, we really took a number of different looks with the finance team under Kevin's leadership on getting back to making sure that we can hit our pipeline metrics and hit our pipeline conversion metrics. And I think we did a nice job there as well.

The other thing I'd say is yeah, we really took a you know a number of different looks a with the finance team under Kevin's leadership on you know getting.

Getting back to it.

Making sure that we can hit our pipeline.

Ah metrics and hit our pipeline conversion metrics.

I think we did a nice job there as well.

Speaker 5: I'll just add that we've also put increased focus on our enablement across the organization and leveraging of tools to help managers with coaching and to provide clear visibility up and down the organization to what's happening with the pipeline and where opportunities exist. So I think that that gives me confidence that this is something we'll carry forward in our execution in Q4 and beyond.

I'll just add that we've we've also put an increased focus on our enablement across the organization and leveraging our tools to help managers with coaching and should provide clear visibility up and down the organization to what's happening with the pipeline and where opportunity.

These exist. So I think that that gives me confidence that this is something that will carry forward in our execution in Q4 and beyond.

Speaker 7: Great, thanks for that color, baby one for Kevin on the

Great. Thanks for that color and maybe one for Kevin on the.

Coming out of last quarter, I think you've talked about 500 bps of margin expansion in fiscal 'twenty four but that was off of a lower number you've you've raised your your operating margin target this year you've talked about.

Savings happening earlier.

Than planned so how should we think about that target for next year is that.

Based off kind of the original point margins last quarter or would you expect to be seen 500 bps of expansion off of whatever your clothes in fiscal 'twenty three.

Speaker 3: Yeah, thanks, Derek. I appreciate the question. And yeah, you were called correctly. My commentary on the last call was that we would expect to see about five points plus from the guide at the time, which was an 8% op margin. So I have an updated that particular metric will do so on the next earnings call. So for now, I would continue to signal that 13% implied leverage point going into 24. Ok, thank you.

Yeah. Thanks, Derik I appreciate the question and Yeah, you recall correctly my commentary on the last call was that we would expect to see about five points plus from the guide at the time, which was an 8% op margin. So I haven't updated that that particular metric will do so on the next earnings call. So for for now.

I would continue to signal that 13th that 13% implied a leverage point going into 'twenty four.

Okay. Thank you.

Yeah.

Speaker 1: Thank you. Our next question is from Tyler Radtice with Philly. Please include your questions.

Thank you. Our next question is from Tyler Radke with Citi. Please proceed with your question.

Speaker 7: Thanks for taking the question. So the gross retention and never tension rate both overall and at the G2K held in pretty nicely this quarter. I guess if you think about Q4 where you're processing a bunch of these single year and multi year renewals, what's your confidence level that those can sustain the level that you saw this quarter and any early indication?

Yeah. Thanks for taking the question so the gross retention and net retention rate both overall and at the G. T. K held in pretty nicely. This quarter I guess as you think about Q4, where you're you're processing a bunch of these single year and multi year renewals, what's what's your confidence level that those can sustain.

And.

You know the level that you you saw this quarter and any early indications in terms of the linearity of the quarter compared to what you saw in Q4 a year ago. Thank you.

Speaker 7: in terms of the linearity of the quarter compared to what you saw in Q4 year ago. Thank you.

Speaker 5: Thanks Tyler for the question. So we're really pleased with the retention rates and expansion rates that we saw in Q3. We obviously took a conservative approach to the guidance and I'm happy to see that we exceeded on those. And I believe that we'll continue to see that here as we go into Q4 as Mark mentioned. These are...

Thanks, Tyler for the question. So we're really pleased with the the retention rates and expansion rate that we saw in Q3, and we obviously took a conservative approach to the guidance and and I'm happy to see that we are exceeded.

Exceeded on those and I believe that well continue to see that here as we go into Q4 as Mark mentioned these are.

Speaker 5: full-year campaigns that are account teams build an enterprise strategy around and preparation for this larger renewal base in Q4. And we expect to continue to see very similar reactions from our customers and positive endorsements around the portfolio, the contract duration and the future that they see with Altrix.

Full year campaigns that our account teams build an enterprise strategy around in preparation for this large renewal base in Q4, and we expect to add to <unk>.

Continue to see a very similar reactions from our customers in and add positive endorsements around the portfolio.

The contract duration and feature that they see with objects.

Yeah.

Speaker 1: Yeah, I'll add to that, if you don't mind Tyler, you know, Paula, Sarash, myself, we spent a lot of time with customers. And we continue to hear that they really need our tech to modernize and... And...

Add to that if you don't mind Tyler you know Paula thrashed myself was we spent a lot of time with customers and and and we continue to hear that they really need our tech to modernize and.

Speaker 1: automate their business as they digitize and really try to prepare for the world around us that we live in. And so I think it's just these retention rates just show kind of continued need for what we do for our customers. And...

Automate their their business as they digitize and really try to prepare for the world around us that we live in and so so I think it's just these these retention rates just to show you what kind of continued a.

Need for for what we do for our customers and.

Speaker 1: And that's really what gives us confidence as well and into Q4 and beyond. Great. And...

And that's really what gives us confidence as well into Q4 and beyond.

Great and.

Speaker 2: Kevin, I think you mentioned that you felt better rep productivity this quarter, which I think is defined as the number of reps against the new bookings. You know, new bookings were still down, I think, year over year. I guess, does that imply that, you know, the number of reps are down year over year. And I guess how far through that kind of performance management are you and kind of what you're outlook in terms of quote of carrying capacity growth from here? Thank you.

Kevin I think you mentioned that you saw better rep productivity.

This quarter, which I think is defined as the number of reps against the new bookings.

New bookings were were still down I think year over year, I guess does that imply that.

You know the the number of reps or are are down year over year, and I guess, how far through that kind of performance management are you in and kind of what's your outlook in terms of our quota carrying capacity goes from here. Thank you.

Speaker 3: Yeah, thanks Tyler. So as we talked last quarter, even part of the cost initiatives that we've executed on this year, it includes go-to-market resources. And so there are less.

Yeah. Thanks, Tyler so as we talked last quarter I've been part of the cost initiatives that we've executed on this year.

<unk> go to market resources, and so there there are less quota carrier reps today than there were in the prior year period. We also as Paul articulated made a number of execution related changes that we think contributed to the productivity improvements. So I'm really pleased with.

Speaker 3: Quoticaria reps today then there were in the prior year period. We also, as Paul articulated, made a number of execution related changes that we think contributed to the productivity improvements. So, you know, really pleased with how that came out in Q3 and you saw that.

How that came out in in Q3, and you know you saw that.

Thank you.

Yeah.

Yes.

Thanks Tyler.

Thank you. Our next question is from Mike <unk> with Needham and company. Please proceed with your question.

Speaker 1: Thank you. Our next question is from Mike Ticac with Needham and Company. Please continue to...

Speaker 2: Hey guys, thanks for taking the questions here, just a couple on my side. And the first, if I could just ask on the guided AR, we have, and really I've received a couple of in-bounds, so it'll be great to just get this out there for everyone. Looking at the Q3 guide versus what we have today, you guys have performed that midpoint by 11 million, and you're taking up the full year by 11 million. So essentially that met new AR build and Q4s is on chain.

Hey, guys. Thanks for taking the questions here just a couple on my side and the first if I could just ask on the guided a are we have and really I've received a couple of inbounds. So it'd be great to just get this out there for everyone looking at the Q3 guide versus what we have today you guys outperformed that.

That midpoint by 11 million and you're taking up the full year by 11 million, so essentially that that new way our billed in Q4 it is unchanged.

Speaker 2: would be great to hear. I know that you guys are assuming relatively consistent, which is prudent with the macro, but why not assume some portion of that improved sales execution at the first point, and the second point, which I'd really like you guys to hone in on is,

<unk> would be great to hear I know that you guys are assuming relatively consistent which is prudent with the macro.

But why not assume some portion of that improved sales execution is the first point and then the second point, which I'd really like you guys to hone in on is up.

Speaker 2: Was there any deal capture for those deals that were pushed out in Q2? Because again, just trying to get a sense of this out performance that we saw on Q3. I know we're attributing it to the enablement of pipe conversion, but how much of that was was built and made out in push from Q2 and the Q.

Was there any.

Deal capture for those deals that were pushed out in Q2, because again just trying to get a sense of this outperformance that we saw in Q3 I know, we're attributing it to the enablement the pipe conversion, but how much of that was with deals that may have gotten pushed from Q2 into Q3.

Yeah, Hey, Mike Mark here I'll take a crack at that.

Speaker 1: yeah hey mike mark here i'll take a crack at that you'll listen i eat their dot they're not given at any uh... any badges for uh... being aggressive on on guidance these days and i think to your point we're trying to be prudent and responsible and

They're not they're not given out any any badges for being aggressive on on guidance. These days and I think to your point, we're trying to be prudent and responsible and.

Speaker 1: And put a number out there that we feel confident that we can deliver on and all things consider we expect gross retention, that retention rates to be continued to be world class because I think this team is doing a really good job, especially in this market. In terms of the Q2 deals, we identified more than 10 deals in and around 10 deals.

And you put a number out there that we feel confident that we can deliver on and and you know.

All things considered we expect our.

Gross retention that retention rates to be continue to be world class because I think this team is doing a really good job.

Especially in this market in terms of the Q2 deals you know, we we identified more than more than 10 deals.

In and around 10 deals that were not attached to a to a renewal.

Speaker 1: that were not attached to a renewal. You know, I'd say about half of those came in in Q3, not necessarily massive deals.

I'd say about half of those came in in Q3.

Not necessarily massive deals.

Speaker 1: You know, some came in a little higher, some came in a little lower. And the remaining deals are deals that we're still working on. I'll tell you, none of these deals were impacted by any competition, anything like that, just mostly by customers appetite for spending priorities in quarter.

Some came in a little a little higher some came in came in a little lower and the remaining are.

The remaining deals are deals that we're still working on it I'll tell you. None of these deals were impacted by any competition or anything like that just mostly by customers our appetite for spending priorities are in quarter.

Yeah.

Speaker 2: Got it. Got it. Thank you for that. And if I could just, uh, I know you guys are highlighting the more than doubling of the ELA sold this quarter. I'll be sure on your

Got it got it thank you for that and if I could just.

I know you guys are highlighting that the more than doubling of the ele sold this quarter at least year on year.

Speaker 2: Just wanted to make sure I'm thinking about that properly, but the composition of that more than doubling is all that Or what's the breakdown between Telling of those ELAs between existing customers versus new customers who are coming to all tricks and just Immediately going for the ELA

Just wanted to make sure I'm thinking about that properly, but the composition of that more than doubling it is all of that.

Or what's the breakdown between selling of those delays between existing customers versus new customers, who are coming to old tricks and just immediately going for the L. A.

Sure Mike I'll take that.

Speaker 5: Sure, Mike, I'll take that. The ELA is very attractive for existing customers in particular because you can imagine the journey that those customers are on with us that they add on more departments, more teams and they.

Yeah, Les is very attractive for existing customers in particular, because you can imagine the journey that those customers are on with us as they add on more departments and our teams and they.

Speaker 8: They show interest in the full functionality of the platform. So a lot of it is with existing customers. It's not impossible to land a new customer with an enterprise license agreement, but probably not the first thing that we would try to do with a net new logo. Got it.

They show interest in the full functionality of the platform. So a lot of it is with our existing customers, it's not impossible to land a new customer with an enterprise license agreement that would probably not the first thing that we would try to deal with a net new logo.

Got it that makes sense. Thank you very much Paul.

Thanks, Mike.

Yeah.

Speaker 1: Our next question is from Joel Fishbeam with Curious Security. Please be seated with your questions.

Thank you.

Next question is from Joel Fishbein with <unk> Securities. Please proceed with your question.

Thanks for taking my questions and congrats on the great execution, I guess, one one for Paul and one for whoever else wants to answer this one Paul in terms of the the go to market.

Speaker 9: Thanks for taking my questions and congrats on the great execution. I guess one for Paula and whoever else who stands to this one. Paula, in terms of the go-to market, there are going to be ages to sales.

They're gonna be changes to sales incentives and I I I heard that there were some changes to your partner incentives and just see how youre getting traction there and then the second question is basically a lot of people are talking about AI initiatives you guys, obviously have a lot of products.

Speaker 9: incentives and I heard that there were some changes to your partners and as I'm just seeing how you're getting traction there and then the second question is basically a lot of people are talking about AI initiatives. You guys obviously have a lot of products around AI. I'm curious about if you can give us some specifics around how you're able to monetize the AI.

I'm curious about if you can just give us some specifics around how you're able to monetize them.

Yeah.

Thanks.

Speaker 5: Thanks Joel, I'll take the first two and then Suresh can talk about our innovation. So relative to sales comp as we go into 24, we will take a look at all of the levers like we do in any annual planning process to see what might make sense. I don't think any of it's going to be massively different from what we've got in place today.

Thanks, Joel I'll take the first two and then Suresh can talk about our innovation so relative to sales comp as we go into 'twenty four but we will take a look at all the levers like we do in in any annual planning process to see what might make sense I don't think any of its going to be.

Massively different from what we've got in place today.

Speaker 5: Relative to our partner program, we're always benchmarking ourselves against industry standards and looking to ensure that we are as aligned with our partners in terms of where we want them focused and where the opportunity exists, which is what you've seen us make some moves on in recent quarters. And we'll always do that to just make sure that we have really close alignment with our partner community.

Relative to our partner program, we're always benchmarking ourselves against industry standards and looking to ensure that we are as aligned with our partners in terms of where we want them focused and where the opportunity exists, which is which is what that you've seen us make some moves on in recent quarters.

And well always do that to just make sure that we have really close alignment with our partner community.

On the on the AI front, our focus is on finding innovative ways to create value and widen our competitive moat for us.

Speaker 10: On the AI front, our focus is on finding innovative ways to create value and widen our competitive modes for...

Speaker 10: for the use of our products. So as we kind of embarked on the generative AI journey, you saw us release capabilities like magic documents, workflows summary, and more recently playbooks which just allows our customers and our users to get jump started on these analytics use cases based on their industry and based on the role.

Florida the use of our products.

So as we kind of embarked on the agenda to be a journey you saw its release capabilities like magic document workflow summary, and more recently playbooks with just allows our customers and our users to get Jumpstarted on these on these analytics use cases based on the industrial and based on the rules.

Speaker 10: We are also getting new offerings that are in

We're also working on new new offerings that are in.

Speaker 10: then private previews with dozens of customers, like AI, Studio, and Multimodal, and we see opportunities to monetize these initiatives independent.

They didn't private previews with dozens of customers like Hey, I studio multimodal and we see opportunities to monetize these initiatives independently.

Speaker 1: Yeah, I'm going to our customers are telling us, Joel, is, you know, in terms of broad-based adoption for generative AI, I think the preferences to do it in curated, like, bite-sized chunks, like we're offering, and in their existing stack work can really help them be, you know, more productive. They, in our case, to build better workflows than do it faster. And so far, the reception has been great. So I really take my hat off to the...

What our customers are telling us Joel as you know.

In terms of broad based adoption for generative AI I think the preference is to do it and curated like bite sized chunks like we're offering and in their existing stack, where it can really help them be more productive in our case to build better workflows into it faster.

And and so far the reception has been great. So I really I take my hat off to the R&D team around the world they've been working really hard on this and I think the results speak for themselves.

Speaker 1: Part of G team around the world, they've been working really hard on this and I think the results speak for themselves.

Great. Thank you.

Thanks, a lot Joel.

Okay.

Yes.

Speaker 1: Thank you. Our next question is from Brent Braythman with Piper Samuel. Please Thank you.

Thank you. Our next question is from Brent bracelet with Piper Sandler. Please proceed with your question.

Speaker 11: Good afternoon, and maybe one for Mark or Paula here. I wanted to go back to the external demand environment, clearly doing a lot better here on an internal execution, great to see. But if I look at NetNew ARR, we're kind of three quarters in where NetNew ARR is below the four-year quarterly average, the guide implies another environment where it's below the quarterly average.

Hi, Good afternoon, maybe one for mark or Paula here.

I wanted to go back to the the external demand environment clearly are doing a lot better here on internal execution, great to see but if I look at our net new <unk>, we're kind of three quarters are in where that new <unk> below the four year quarterly average the guide implies another environment, where it's below the quarterly average.

Speaker 11: Is the optimism here for Q4 tied to just improving execution, or are you seeing any sort of signs that maybe the external environment's getting better?

<unk> is the optimism here for Q4 tied to just improving execution or are you seeing any sort of signs that maybe the external environment is getting better.

Hey, Bryan Thanks for the question.

Speaker 1: Yeah, I think we've assumed that the environment kind of stays the same if you will. Our confidence is...

I think we've assumed that the environment kind of stays the same if you will our confidence is you know in fact that its Q4. The fact that I think we've got a really good team prosecuting opportunities that they've been working on for the better part of a year.

Speaker 1: you know, in fact it's Q4, the fact that I think we've got a really good team prosecuting opportunities that they've been working on for the better part of a year. And just, you know, seeing the execution improvements that we saw in Q3, we certainly feel those are going to be spilling over into Q4. You know, that said, it's not necessarily an easy space out there these days. With customers being very disciplined about where they're spending.

And and just seeing the execution improvements that we saw in Q3, we certainly feel those are gonna be spilling over into Q4.

That said it it's a it's not not necessarily an easy easy space out there. These days oh with customers being very disciplined about where they're spending and I'm really thankful that Paul as you know kind of executive led motion as really deeply rooted down when our sales motion.

Speaker 1: and I'm really thankful that Paul's executive lead motion is really deeply rooted down.

Speaker 11: Great to see it. And Kevin obviously seeing really good cost controls, driving up margins higher here. I guess the next question is, when do those higher margins turn to higher free cash flow? Historically, free cash flow margins were well below up margins. But that was when this was a much faster growing business. Do you think those could converge next year as you think about more modest growth?

Great to see that and Kevin obviously, seeing really good cost controls driving up margins higher here I guess the next question is when does those higher margins turned to higher free cash flow historically free cash flow margins were well below op margins, but that was when this was a much faster.

Growing business do you think those could converge next year.

As you think about a more modest growth.

Speaker 11: And up margins and free castle margins could start to narrow things.

And op margins and free cash flow Mark just could could start to narrow.

Speaker 3: Yeah, thanks Brent, appreciate it. As you may recall, the long-term model has free cash for the margin, about five points below our op margin from a long-term perspective. As we get a lot of the one-time cost initiatives behind us, I would expect those to converge and we'll provide more color on the next call relative to 2024 expectations.

Yeah. Thanks, Thanks, Brent I appreciate it.

As you May recall, the long term model has free cash flow margin about five points below our op margin from a long term perspective, as we get a lot of the one time cost initiatives behind us I would expect those to converge and we'll provide more color on the next call relative to 2024.

Patients, but keep in mind some of the cost initiatives that we've taken this year do have a trailing cost impact of a cash impact. Thanks Brent.

Speaker 3: But keep in mind some of the cost initiatives that we've taken this year do have a trailing cost impact. A cash impact. Thanks, Brett. Makes sense. Thanks.

Thanks.

Thanks Brent.

Speaker 1: Thank you. Our next question is from Michael Turbs with Keybank Capital Markets. Please see with your questions.

Thank you. Our next question is from Michael curves with Keybanc capital markets. Please proceed with your question.

Speaker 12: Hey, guys, congrats on a nice stabilization and solid execution on Creed C. So, to the RAM questions, thanks a lot. To the RAM questions, what on cloud 1 on AI, but I guess on cloud, you know, cloud designer seems quite strong and mature as a product now.

Hey, guys congrats on a nice stabilization and solid execution all great to see so there's some change in my own questions. Thanks, Mike.

Two demand questions one on cloud one on NII I guess.

On cloud cloud designer it seems quite strong and matures as a product now and this is a time when we've seen.

Speaker 12: And this is the time when we've seen stabilization in the growth rates of some of the hector scalars. Are those two things coming together in a sort of...

Stabilization in the growth rates of some of the Hyperscale or are those two things coming together.

Sure.

Speaker 12: positive way in the sense that you've got the right product right at the time that there seems to be a stabilization demand on the cloud side. Yeah, I mean.

Positive way in the sense that you've got the right product right at the time that there seems to be a stabilization of demand on the cloud side.

Yeah, I mean, we're about.

Three quarters of selling our cloud products and cloud solutions that the interest from our customers remains strong there's a lot of appetite for expansion based use cases around the cloud solutions.

Speaker 10: three quarters of selling our cloud products and cloud solutions. The interest from our customers remains strong. There's a lot of appetite for expansion-based use cases around the cloud solutions.

Speaker 10: But having done this journey a couple of times before, it takes multiple years for our customers to kind of embrace the cloud products and the cloud solutions. They have a significant estate with the on-premise product.

But having done this journey a couple of times before you know it takes multiple years for our customers to kind of embrace the cloud products in the cloud solutions there.

Have a significant state.

It stayed with the on premise products, they've got a lot of intellectual property built into these analytical workflows and apps and so we feel very comfortable that we've chosen an and strategy are they get access to all the innovation wherever they want it we don't kind of holding back on any access to any innovation.

Speaker 10: They've got a lot of intellectual property built into these analytical workflows and apps.

Speaker 10: And so we feel very comfortable that we've chosen an AND strategy. They get access to our innovation wherever they want it. We don't kind of hold them back on any access to any innovation. There's no limits to that access. If they want to consume this innovation in Google or in AWS or in Amazon.

There's no limits to that access if they wanted to consume. This these this innovation in Google or an AWS or an Amazon.

Speaker 10: In Azure, we want to give them the ability to do that. If they want to work in snowflake or data breaks or big query, we want to give them the ability to do that. And that was kind of really the intent of the investments we made over the past 18 months in cloud has been really strengthening our platform. We believe at the heart of the thing Mark said it before, there'll be a couple of independent platforms that win and capture market share. And we know there's a multi-year journey.

In Azure, we wanted to give them the ability to do that if they want to work in snowflake or data breaks are big quit or you want to give them the ability to do that and that was that was kind of really the intent of the investments. We made over the past 18 months and cloud has been really strengthening our platform. We believe at the heart of this thing Marc said before there'll be a couple of independent Platt.

Forms that wind and capture market share and we know there's a multiyear journey. So we're super happy with the interests of our customers are showing in and how we're delivering against them.

Speaker 10: So we're super happy with the interest that customers are showing and how we're dealing.

Speaker 1: Yeah, and Michael, I think in terms of revenue contribution, it feels to me like it's a bit more of a rolling thunder kind of a mentality. I think, you know, I think people in the past have read a few comments where people said, hey, we haven't really printed a lot of revenue with cloud. It's like...

And Michael I think in terms of revenue contribution like it feels to me like its a bit more of like a rolling Thunder kind of our mentality. I think you know I think people are in the past I've read a few comments, where people said hey, we haven't really printed a lot of revenue with cloud. It's like that's because the milestones for success that we've had internally.

Speaker 1: That's because the milestones for success that we've had internally have all been to knit together the back end of the trifact acquisition with, you know, basically a rewrite of the front ends of all of our applications in all three public cloud environments. So that's a lot of work and I think...

We have all been to knit together the backend of the Trifecta acquisition with basically a rewrite of the front ends of all of our applications are in it all three public cloud environments and so it's a lot of work in and I think you know it if I take it I take offense to the fact that when I know you haven't but others have said hey, we haven't been.

Speaker 1: you know it it i take it i take offense to the fact that when i know you haven't but others have said hey we haven't been successful we really have and you know our uh... all hands uh... all hands meeting is tomorrow and i'm gonna

Access, where we really have it and our Oh has oh, all hands meeting is tomorrow and I'm going to be.

Speaker 1: So be sure to recognize the work that the R&D team has done to, you know, it's not, it hasn't been the sort of, the sexy headlines that, that have dollar signs ahead of them, but those will come.

Be sure to recognize the work with the R&D team has done to it but.

It's not it hasn't been that sort of the sexy headlines that have dollar signs ahead of them, but those will come.

Yeah.

Speaker 12: Great. And I'll just leave it at that. Thanks. Some very full answers about Mark and Sarish. Yep. Thank you so much, Michael.

Great and I'll just leave it at that thanks, Jim Gray Palencia Martin Suresh.

Thank you so much Michael.

Thank you our next question with some <unk> Kidron with Oppenheimer. Please proceed with your question.

Speaker 12: Thanks. Maybe first question tomorrow, or maybe Paul.

Thanks, maybe first question tomorrow or maybe Paul.

Speaker 12: You had some execution issues through the year and it's nice to see things are getting better. I guess my question is, every time it goes through a process like this, there's some low-hanging fruit and then there's things that take longer and harder to execute on. So maybe you can talk about some of the longer and harder things that you still are working on here and now to continue to improve sales execution.

You had some execution issues through the year and it's nice to see things are getting better I guess my question is you know every time you go through a process like this there is some low hanging fruit and then there are things that take longer and harder to execute on so maybe you could talk about some of the longer and the hardest things that you're still.

We are working on here right now to continue to improve sales execution.

Speaker 1: Yeah, I'll start off you time to remind a good afternoon. And I appreciate the question that I'll pass it off to Paula. You know, I would submit, listen, this business is almost doubled in the last three years. And we're a very different company today. That's because that's what our customers are demanding. And I think you have to be careful what you wish for if you want to be bigger.

Yeah, I'll I'll start start off if you don't mind, a good afternoon and I. Appreciate the question then I'll pass it off to Paul are you know I would submit listen this business has almost doubled in the last three years and and we're a very different company today, that's because that's what our customers are demanding and I think you have to be careful what you wish for if you were.

To be bigger.

Speaker 1: All the things that come along with that really are in what what customers expect from you and that often requires

All the things that come along with that really are and what our customers expect from you and and that often requires different resources different competencies different experience sets and so so I would submit that as your assaulting this massive total addressable market that we have it regardless of whether it's good economic times or bad.

Speaker 1: different resources, different competencies, different experience sets. And so I would submit as you're assaulting this massive total addressable market that we have, regardless of whether it's

Speaker 1: good economic times or bad. You're always tinkering. You're always ensuring that we're tinkering with the enablement to make sure that you're the great people that we have here today are learning the kinds of things that are gonna help them be really relevant to our customers in the future. And sometimes that involves head count changes.

You're always tinkering, you're always ensuring that we're tinkering with the enablement to make sure that the great people that we have here today are learning the kinds of things that are going to help them be really relevant to our customers in the future and sometimes that involves head count changes were.

Speaker 1: We certainly made a couple of senior leadership changes in the last few quarters. And these people were very good people. It did some good things here for us. But we really needed people that brought a different set of competencies and experiences to the table. That's always on the surface, the hard thing to do. But I can assure you, Paula and her team are always tinkering.

Certainly made a couple of senior leadership changes in the last few quarters.

And and you know these people were very good people that did some good things here for us, but we really needed people that brought a different set of competencies and experience to the table I think that's always that's always on the surface. The hard thing to do but you know I.

I can assure you Paula and her team are always tinkering.

Speaker 5: That's right, Mark. And I'll add a tie a little bit more, which is that as we look to scale the business efficiently.

That's right, Mark and I'll add a little bit more of which is that.

As we look to scale the business efficiently. The opportunity ahead is to take what we are doing ourselves what we demonstrated with the execution in Q3 and federate that out across the rest of the G. T K the other 51%.

Speaker 5: The opportunity ahead is to take what we are doing ourselves, what we demonstrated with the execution Q3, and federate that out across the rest of the G2K, the other 51%, and with and through our partner ECO.

And with and through our partner ecosystem. So I look at it as an opportunity for us to take what we've done and are delivering and continue to drive scale and efficiency as we go forward.

Speaker 5: So I look at it as an opportunity for us to take what we've done and are delivering and continue to drive scale and efficiency as we go forward.

Speaker 12: appreciated it. Kevin, maybe you follow up for you.

I appreciate it then Kevin maybe a follow up for you.

Speaker 12: You're not providing 24 guides. That's fine. I guess you already alluded to improvement in margins that we should expect next year. But are there any other Voguees or things you'd like us to take into account as we think about the progression of the year in 24 that we should be considering. Appreciate any color there.

Youre not providing 24 a guide that's fine I guess, you already alluded to improvement in margins that we should expect next year.

Are there any other bogeys or things.

Things you'd like us to take into account as we think about.

The progression of the year and 24 that we should be considering I appreciate any color there.

Yeah. Thanks I. Appreciate the question look we're obviously not providing 2024 our guidance on this call. We'll do it on the Q4 call. However, look we're mindful of the macro and you know it takes time to continue to improve from an execution.

Speaker 3: Yeah, thanks a tie. Appreciate the question. Look, we're obviously not providing 2024 guidance on this call. We'll do it on the Q4 call. However, look, we're mindful of the macro. And it takes time to continue to improve.

Speaker 3: from an execution perspective as we've talked about. So as you guys are thinking about, you know, 2024, you have our Q4 guidance and implied growth rates by way of example. And so I think that does give you a sense of how we're baselining growth in this environment. So anyway, appreciate the question. Appreciate it. Good luck guys.

Perspective, as we've talked about so as you guys are thinking about you know 2024, you have our Q4.

Guidance and the implied growth rates by way of example, and so I think that does give you a sense of how we're baseline and growth in this environment. So anyway.

Anyway I appreciate the question.

Good luck guys. Thanks, Thanks for your time.

Yeah.

Speaker 1: Thank you. Our next question is from Penn-Gallon Borough with JP Morgan. Please proceed with your question.

Thank you. Our next question is from Queensland Gora with J P. Morgan. Please proceed with your question.

Oh, great. Thanks for squeezing me in.

Speaker 13: Oh, great, thanks for screening me. Just one question from me. Any feedback so far on the AI Studio and Multimodel? And more importantly, I'm trying to understand as you think about Gen AI capabilities, how much of these are or will be folded, mainly in the designer cloud slash auto insights? Trying to understand the bigger base of desktop customers, will they be able to take advantage of the AI capabilities or they have to...

Just one question for me any any feedback so far on the ask Judy on multimodal.

More importantly, I'm trying to understand as you think about Jennie O capabilities. How much of these are or will be folded mainly in the design of cloud slash auto insights trying to understand the bigger base of desktop customers will they be able to take advantage of the air capabilities or do you have to move to cloud. Thank you.

Speaker 10: Yeah, thank you, Benjamin, for that question. I'd like to answer your question. The.

Yeah. Thank you Benjamin for that question.

The drug now answering your question the.

All of our innovation is aimed at them, particularly in the journey and I spaces aimed at being available to our customers wherever they are so we have a couple of dozen customers in the desktop world with designer using generative yeah, I bought the multimodal capabilities, which allows you to build workflows through chat.

Speaker 10: All of our innovation is aimed at, particularly in the Jenny ice spaces, aimed at being available to our customers where they are. So we have a couple of dozen customers in the desktop world with designer using generative AI, both the multimodal capabilities, which allows you to build workflows through chat.

Speaker 10: Have a data engineer work on the same workflow to seek well and have a data sign this look at it to the lens of Python or Jupiter notebooks.

At have a data engineer work on the same workflow to sequel and have a data scientist to look at it through the lens of a python or a Jupiter notebook.

Speaker 10: That capability set will be available to customers in our desktop products and in our cloud products.

That capability set is available will be available to our customers in our desktop products and in our cloud products.

Speaker 10: But given the amount of data and the telemetry and the workflow patterns that we see in the desktop, clearly the desktop customer community will benefit.

But given the amount of data and the telemetric into workflow patterns that we see in the desktop clearly the desktop customers community will benefit from this cloud service of being able to do multimodal analytics and really collaborate and similarly, when we look at AI studio the ability for our customers too and it's a large pinpoint that customers have where there.

Speaker 10: from this cloud service of being able to do multimodal analytics and really collaborate.

Speaker 10: Similarly, when we look at AI Studio, the ability for our customers to, you know, it's a large pain point our customers have where they're being pressed for insight.

Being pressed for insights and the core trend that all things provide us this wealth of workflows that we create are on behalf of our customers with our partners and all the tricks itself at this point in time, it's millions of analytical building blocks and we feel this unique and have a collection of data.

Speaker 10: And the core strength that Altrix provided is this wealth of workflows that we create on behalf of our customers with our partners.

Speaker 10: At this point in time, it's millions of analytical building blocks.

Speaker 10: And we feel this unique collection of data is ideal to train generative models to produce personalized results.

Ideal to train generative models to produce personalized result for every customer.

Speaker 10: So AI Studio is aimed at helping the analysts create custom tuned LLMs directly into their analytics landscape, whether it's a designer cloud or designer desktop.

Tsuneo is aimed at helping them the analysts create custom tune llm's directly into their analytics landscape, whether it's a designer cloud our designer desktop.

Got it thank you.

Thanks pendulum.

Thank you there are no further questions at this time I would like to turn the floor back over to Mark Anderson for closing comments.

Speaker 1: Thank you. There are no further questions at this time. I would like to turn the floor back over to Mark Anderson for closing comments.

Speaker 1: Thank you, operator. And I'd like to say thank you again to our customers, partners, shareholders, and especially our team here at Alters.

Thank you operator, I'd like to say, thank you again to our customers partners shareholders and especially our team here at old tricks.

Speaker 1: We're pleased with the progress and execution we demonstrated in Q3 and are working hard to close out the year with solid momentum. Our unique platform of easy to use analytic and automation solutions continues to resonate with our customers. And we are reinforcing our differentiated market position with a breadth of new generative AI and machine learning capabilities.

Pleased with the progress and execution, we demonstrated in Q3 and are working hard to close out the year with solid momentum.

Our unique platform of easy to use analytics and automation solutions continues to resonate with our customers and we are reinforcing our differentiated market position with the breadth of new generative AI and machine learning capabilities. Thank you and have a good night.

Speaker 1: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Yeah.