Q3 2023 Palantir Technologies Inc Earnings Call

Management's expectations for future financial and operational performance and other statements regarding our plans prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results information concerning those risks is available in our earnings press release distributed before the market opened today and in our SEC.

Filings, we undertake no obligation to update forward looking statements, except as required by law.

Further during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from GAAP measures.

Additional information about these non-GAAP measures, including reconciliation of non-GAAP to comparable GAAP measures is included in our press release and Investor presentation provided today, our press release Investor presentation, and our SEC filings are available on our Investor Relations website at investors Dot <unk> Dot com.

Over the course of the call we will refer to various growth rates when discussing our business. These rates reflect year over year comparisons unless otherwise stated.

But again todays call are Alex Karp, Chief Executive Officer, Sean sink, our Chief Technology Officer, Dave Glaser, Chief Financial Officer, and Ryan Taylor, Chief revenue Officer, and Chief Legal Officer.

I'll now turn it over to Ryan to start the call.

We are pleased to report that our company achieved GAAP profitability for the fourth consecutive quarter and we continue to drive strong results across our company.

In Q3, we closed 80 deals of $1 million or more across 30 industries 29 deals of $5 billion or more across 16 industries and 12 deals of $10 million or more across 11 industries.

Our U S commercial business accelerated last quarter growing 33% year over year excluding.

Excluding strategic commercial contracts grew 52% year over year, and 19% sequentially and three fourths of our quarter over quarter growth is from customers that started with us in 2023.

Our U S commercial customer count rose, 12% quarter over quarter and is now 10 fold what it was just three years ago.

Deal count for our U S. Commercial business is two point Forex what it was in Q3 of last year and U S. Commercial T. C V closed at $252 million up 55% year over year on a dollar weighted duration basis.

We're also seeing the acceleration of larger deals and shorter times to conversion and expansion, including a multiyear deal in excess of $40 million with one of the largest home construction companies in the U S to start a pilot and converted all within Q3.

This growth is in part due to Aip's continued transformation of the way, we partner with and deliver value for our customers and we expect aip's impact to continue to intensify.

The rapid expansion of AIP at both our existing and new customers and the impact it is having on their operations is nothing short of remarkable in the last quarter. We reoriented. Our go to market approach around AIP boot camps, which has allowed us to deliver real workflows on actual customer data in five days or less versus our traditional pilots.

Which generally take one to three months we're.

We're seeing different stakeholders at the table, including tangible engagement from my T. A quicker time to value for customers a wider range of organisations partnering with us and the ability to have multi organization boot camps.

Early indications point to vast improvements on our unit economics from initial contact to customer conversion, all while accelerating new customer negotiations boot camps are also driving contract expansions.

We're on track to conduct boot camps for more than 140 organizations by the end of November.

Nearly half of those are taking place this month alone which is more than the number of U S. Commercial pilots, we conducted all of last year.

In these boot camps, our customers' attack problems that have immediate impact and learn how to deploy AI into their unique operating environment in a matter of days or.

Our customers results speak for themselves one attendee said that we achieved more in one day for them with AIP and one of the top three hyper scaler had accomplished over the last four months and then presented their work with pound here instead of the hyper scaler to the CEO the very next day.

Another attendee said, we basically build tenex faster with three X less resources and yet another claimed we've built in a day, what they wouldn't be able to get internally in months and then it probably still wouldn't meet the requirements.

AIP is being used for a multitude of workflows that customers across the globe.

Just a few examples include the following.

Our partners in the health care space, including Tampa General HCA, and Cleveland Clinic are using AIP for dynamic scheduling turning software from a place of data entry into a provider of operating leverage.

Aramark is using AI to procure more efficiently generating custom proactive negotiating strategies.

Panasonic North America is easy and AIP to scale, its workforce and accelerate how quickly new engineers can level up.

Eaton is using AIP to more efficiently deploy fixes by identifying available materials across different plants or assembly patterns.

<unk>, Brazil is increasing the fill rate of online grocery orders with higher accuracy.

The energy and engagement around AIP is unlike anything we've ever seen that.

The potential market for AIP and the trajectory of possible AIP growth for our business is massive we almost tripled the number of VIP users last quarter and nearly 300 distinct organizations have used AIP since our launch just five months ago.

We will continue investing meaningfully in boot camps as our go to market strategy for AIP.

Through all of this we never forget that we are a company built on a foundation of counterterrorism.

In response to recent world events, we continue to be dedicated to our founding principles of supporting the most important missions in the world, including providing intelligence and defense capabilities to global allies.

In that vein, our impact has never been more compelling.

We have the products now that the world needs.

We expect our U S government business to Reaccelerate beyond the current growth rate of 10% year over year, given increasing demand for those products to support our allies around the world.

While we continue to expect near term uncertainty given budgetary environments. We were encouraged by the pickup in activity at the end of the U S government fiscal year, and we feel well positioned for long term growth through our evolving strategy, which Sean will speak to further.

Just several weeks ago. It was announced that the army awarded us a new contract worth up to $250 million over three years to provide additional capabilities in support of Coke homes Armed services intelligence community and special forces as they continue to test utilized and scale AI and ml capabilities.

As we enter the final months of the year, we are steadfast in our focus on AI and unlocking the impact it can have for our customers. We look forward to continued business momentum through year end and are excited for the opportunities to continue delivering unmatched impact for our customers into the new year.

I'll now turn it over to Sean.

Thanks Ryan.

At AIP onto this past September I unpack some of the foundational engineering challenges that we've solved to deploy LLM that are anchored in your data on your private network and to safely orchestrate your enterprise with tools actions and other AI models.

The core concept of the K L. O M kernel enables you to reliably harness llm's for critical workflows to manage the risks in the underlying models changing out from underneath you and to create the shortest and safest path to put your own fine tuned models into production.

Why use one L O M. When you can use K.

The art is in synthesizing the outputs from this committee of experts to create a rich topology of answers to the prompt.

Hello, Ms. Our statistics not calculus, it's more like predicting the weather than predicting the eclipse and that's why we're focused on proof not proofs of concept.

AIP gives our customers the infrastructure they actually need to ship production use cases quickly. This.

This difference has been so profound that we shifted the entire commercial organization to focus on one to five day long customer boot camps, where organizations exit with a scalable use case on their actual data that they built for themselves.

Customers leave so excited with this definite optimistic view of what can be accomplished and how they'll drive transformation in their organizations and these boot camps have created enormous tailwind with attendees for two reasons first we're defining the most advanced and valuable reference architecture for Gen AI in the enterprise and <unk>.

With the release of virtual tables in foundry Ite's primary objection of data duplication is eliminated.

We're running more boot camps per month than we had U S. Commercial pilots all last year. These boot camps really allow the customer to experience three magic moments for themselves.

First that you really can't use llm's without tools that elegant integration of algorithmic reasoning to unlock the full potential.

That the object in other words, the rich representation of your enterprise and its state and not chat is the prompt or said differently. The bootcamp experience enables them to transcend chat.

And finally, the power of live integration of expert feedback through the AIP infrastructure to efficiently generate adaptive models.

At the end of the boot camp customers say things like once you see it you can't Unsee. It as Ryan mentioned, it's common to hear attendees expressed that they could do in days, what they couldnt previously with other AI technologies in months.

In September we also launched pounds your government web services to expand pounders mission by supporting and growing today's nascent, but inspiring defense tech ecosystem through passenger gws, we're providing emerging and existing companies in the defense industrial base with the enabling software to quickly operationalize their mission critical capabilities at scale.

All aimed at minimizing the valley of death, and bringing the best of America's greatest advantage software to the fight.

That started on Pollo are the first offerings in Gws fed starts platform accreditation as a service offering radically compresses the timeline and cost of unlocking IL five markets and beyond Apollo's autonomous software delivery platform as the most technically mature and sophisticated approach to continuously delivering complex.

Modern software to the thousands of edge environments required to deter and defeat threats in the Pacific <unk>.

Bad start customers like Kalypso, AI and primary I and Apollo customers like Lockheed shared their acceleration journeys at our software for government conference hosted in our D. C offices in September the reaction to pounder Gws has been amazing Vcs defense Tech entrepreneurs and government Pms are responding to the investments in our big tent.

Ecosystem and the efficiency and scale that we're providing we also launched our mixed reality service and immersive <unk> an application that was built on the mixed reality service at the Army's a USA conference in October It was met with rave reviews, our immersive CTO application showed how command and control could be done.

On the move in the back of the vehicle leveraging mixed reality headsets built on gws infrastructure and our mixed reality service will mean that any application that builds on our integrates with gws can instantly enable their own mixed reality offering.

Finally, our products could not be playing a more central role for real world events.

It's incredibly rewarding to see the products that we've built over the last 20 years meet their moments, often a new and impactful ways from meta constellation, which is enabling tactical overhead imagery in the field to Gaia for mission planning to even foundry for complex video imagery in audio analysis and automation from the mission data platform and its real time cross domain collaborations.

Asian across Allied nations to Maverick for target effector pairing and advanced fires execution.

These real world events validate the investments that we've made over the last five years and strengthens our conviction in what we're building now for the future.

And with that I'll hand, it over to Dave to talk us through the financials.

Sean we had an exceptional quarter revenue growth re accelerated on the back of our U S commercial business driven by our intense focus on AIP, while margins continue to expand demonstrating the transforming unit economics of our business. We beat the high end of our guidance range on both topline and bottom line and increase our rule of 40 score 800 basis points quarter over.

Quarter to 46, while simultaneously delivering our fourth consecutive quarter of GAAP profitability. The first time ever that we were GAAP profitable on a trailing 12 month basis. We also delivered our third consecutive quarter of GAAP operating profit and over a $5 billion in adjusted free cash flow over the last four quarters.

Turning to our global top line results.

Third quarter revenue re accelerated to $558 million up 17% year over year, and 5% sequentially exceeding the high end of the range of our prior guidance, excluding the impact of revenue from strategic commercial contracts third quarter revenue grew 21% year over year and 6% sequentially.

Revenue from our largest customers continues to expand trailing 12 month revenue per customer from our top 20 customers increased 13% year over year to 54 million per customer customer count grew 34% year over year and 8% sequentially to 450 through customers as we remained focused on landing new accounts.

Now moving to our commercial segment third quarter commercial revenue grew 23% year over year, and 8% sequentially to $251 million I'd like to congratulate the entire commercial org for reaching a $1 billion annualized run rate milestone this quarter, it's quite an achievement, excluding the impact from strategic commercial contracts commercial revenue grew 34% year.

Year over year and 11% sequentially.

In the third quarter U S commercial revenue re accelerated to $116 million up 33% year over year, and 13% sequentially, excluding revenue from strategic commercial contracts U S. Commercial revenue grew 52% year over year and 19% sequentially. We continue to see the impact of our intense focus on AIP on our commercial business both through.

The adoption of new customers and the expansion of opportunities at existing customers, we booked $252 million of U S. Commercial T. C V representing growth of 55% year over year on a dollar weighted duration basis.

Our U S commercial customer count grew to 181 customers, reflecting 37% growth year over year, and 12% sequentially benefiting from the increase in velocity of our AIP go to market motion. This represents a 10 fold increase in U S commercial customer count from when we went public just three years ago.

And the 8 million bolstered by our continued work and health care and events.

Moving the bookings T. C V booked was 830 million up 29% sequentially.

<unk> attention was 107% impacted primarily by headwinds from our commercial business in Continental Europe.

Net dollar attention does not include revenue from new customers that we acquired in the past 12 months and is therefore, not reflective of the recent acceleration and R. U S. Commercial business. We ended the third quarter with 3.7 billion in total remaining deal value and $988 million and remaining performance obligations. As a reminder, R. P. O is primarily comprised of our commercial business as it does not take into account.

Contracts with initial term of less than 12 months and contractual obligations step all beyond termination for convenience causes both of which are common and most of our government business.

Are you as commercial business. So a total remaining deal value growth of 23% year over year, and 27% sequentially when it screwing impact from strategic commercial contracts hunting the acceleration over go to market motion.

Turning to margin and expense adjusted gross margin, which excludes stock based compensation expense was 82% for the quarter <unk>.

Adjusted income from operations, which excludes stock based compensation expense and related employer payroll taxes was $163 million, representing adjusted operating margin of 29% 400 basis points ahead of the high end of our prior guidance and worked in the fourth consecutive quarter of expanding adjusted operating margins Q.

Q3, adjusted expense was $395 million down, 1% sequentially and flat year over year <unk>.

In short, we've been able to flatline expenses for four consecutive quarters, while investing significantly in our products, including a happy and Reaccelerating, our revenue disk drives home the efficiency and operating leverage our software at scale.

Already adjusted expense was at 9% year over year, and 11% sequentially, demonstrating our commitment to continuously drive forward product innovation and invest in technical talent.

Over the past year, we have emphasized her unwavering dedication to sustain got profitability and gap operating income or four consecutive quarters of improving gap operating income enables to more aggressively invest in AIP looking ahead to the fourth quarter and beyond remained focused on calibrating expense growth below revenue growth, even as we increase investment and resourcing.

To AIP and in specific geographies around the world.

In the third quarter, we generate GAAP operating income of $40 million or third consecutive quarter of GAAP operating income.

We also generated got net income of $72 million, representing a 13 per cent margin or fourth consecutive quarter of got profitability.

This is the first time, we've ever cheap, but got net income and GAAP operating profitability on a trailing 12 month basis, while we continue to manage our stock based compensation expense as I mentioned in previous quarters, we expect it to trend up in queue for as we continue to invest in AIP.

Third quarter adjusted earnings per share with seven cents and GAAP earnings per share with three cents. Additionally.

Additionally, our combined revenue growth and adjusted operating margin accelerated to 46% and 800 basis point increase to a rule of 40 score from the prior quarter, we will strive to maintain as exceptional balance of top and bottom line performance.

Anything to our cash flow and the third quarter, we trying to $80 million to $141 million and adjusted free cash flow representing margin of 25% and $133 million in cash from operations, representing a margin of 24% over the past four quarters regenerated $490 million in cash flow from operations and 502 million and adjusted free cash flow working the first time you've acts.

A half billion dollars in adjusted free cash flow on a trailing 12 month basis. We ended Q3 with $3.3 billion in cash cash equivalents in short term us Treasury bills.

Routine access to additional liquidity of up to $500 million through a revolving credit facility, which remains entirely undrawn.

Now turning to our outlook for.

Q4, 2023, we expect revenue of between 599 and $603 million adjusted income for operations of between 184 and $188 million and GAAP net income.

For full year 2023, we are raising our revenue guidance to between 2.216 and 2.22 billion. We are raising our adjusted income proper ations guidance to between 607 and $611 million and we continue to expect got men income and each quarter of this year.

With that I'll turn it over to Alex for a few remarks.

Welcome.

I think the cameras working welcome.

To our earnings it.

Obviously current events and a performance of our business are absolute validation of our strategy of building the world's most world's most aligned and powerful enterprise products.

Years, sometimes decades before they're needed.

Before you could imagine their power AIP in U S. Commercial not only is disrupting the market. It's setting a standard that I don't believe any other software company will be able to reach.

Partly because they've misunderstood the value of a L M as in their relative importance and lack of importance, partly because they don't have decades of experience on the frontline as we do in the military with managing the corps ways in which you make these things precise the way in which you provide governance also because.

The playbook backed by venture capitalist and supported by analyst has always been make the thinness technology possible that is misaligned with your enterprise and hire the most and best salespeople. So the enterprise gets moderate value, while having it's high revenue exported.

[noise] parasitic manner to to to to the cheers of insiders and the the the the pain of retail investors and we obviously rejected that.

And then on the the mission side.

We have been saying in building products for a world that is violent disjointed irrational.

World in which you have to show strength.

World in which if you do not show strength people, who are biased xenophobic dare I say any somatic will rear their head a world in which you really have to pick sides. Pelletier is the first major company to in my view too said from the beginning I think that is obviously true there is no such thing anymore of being on all sides.

Balance here only supplies as products of Western allies, we've never supplied our products to enemies, we proudly support the U S government I am proud that we are supporting Israel and everywhere, we can and we <unk>. We also support plain English speaking so when when when people are massacre to the equivalent of <unk>.

50000 people in Israel, we view it as a tear act we call. It terrorism, we supply our product to people are fighting terrorism, and we have no problem with describing as it is or sticking up for our allies and.

And and we don't provide false context, all of a sudden you need a lot of contacts for describing what it means to kill Jews are persecuted choose across the world.

I believe in context, and where we and in in in places, where you need to actually provided but apparently chair we have seen that our view of the world, which is that there really are <unk>.

People that are violent and not in conformance with morality needs to be fought.

And we are supplying these products that we built over the last 20 years to our allies.

And we are proud of the results and I would say person also even commercially you are going to see that our alignment with our client or alignment with our society pays major dividends and for those of you who what are along for the ride we really celebrate you and we're going to bring our warrior culture to our products to our market.

<unk> and the results of which were going to bring to our allies.

[noise]. Our first question is from Christopher.

<unk> situation Israel has to open the eyes of other allied countries around the globe, specifically, either current or future plans supporting our Allied partners in Asia like Panic your product.

Absolutely. The short answer is yes, I think not only can we look at Israel, but we can look even before that Ukraine and the lessons that we've learned there and I would still that down simply to that you must preposition data software and hardware well ahead of the fight there and create a partner mesh network of command and control nodes to really provide.

A difference here so that that's one major thing and so we're spending a lot of our time and our energy thinking about how do we get as much mass west of the international Dateline as possible to be prepared to meet those moments and make no mistake. There's a lot to be done there. The other lessons specific from Israel is how much faster you can move when you create a big tent tech ecosystem.

That allows you to bring a lot of other defense Tech startups, along with you the capabilities that we were able to give the Israeli government by bringing in other Israeli startups as well as international startups was incredible and that's a key lesson that were taken forward with us as well and it's embodied in enabled by pounder government web services.

Thanks <unk>. Our next question is Orange County, Congrats and well executed at Kansas delivering tangible value very quickly could you kindly attempt to synthesize the top three observations from this the chance for enterprises to launch a I enabled decision management systems to power forward that credit card objected.

Sure I'll I'll take a first stab at this I would say one it's about the magic moments. So the first bit of this that I think people get out of it what does this really mean to understand that you can't really use these llm's without tools. So how do you bring that tool bench forward too. It's a realization that the semantics of your business ought to be.

The prompt and we are uniquely positioned there because the best way to do that is to serialize those semantics into your ontology do you use the object model that we have to do that and so we we we've already built and deployed.

One of the most interesting things about the commercial market is they're all of these tools, we built that basically not only allow you to manage all Ms. But they are they they basically pen test your enterprise.

Is de facto what in the past, where you were settling with missing aligned with your enterprise.

Hi forces in alignment with your enterprise and so you begin to ask really business relevant questions and then because of <unk>.

Essentially our ability to take the knowledge of your business and put it into the L. M. And then extract from the L M something relevant and and manage it you get both the power of L. M and you'll get the shock movement of the enterprise actually saying wait a minute you're providing me something that actually is good for my enterprise quite frankly, it's almost like taking it alcohol.

Pollock off alcohol, and saying, here's your health drink and it's like and and the reason why it just is very very hard to compete against that is because the other the other players in this space are actually built to take you away from what is good for your enterprise how do you make better margins, how do you make your products more safe safer.

<unk>, how do you take the tacit knowledge of a Japanese manufacturing company and built in America with all the advantages of America and the tacit knowledge of Jihad Japanese manufacturing like that's what we're actually doing with these things.

And then.

There's all these things we built that would take decades years and years and years to build even if you understood and that we'd already built.

And to add on David.

Japanese example shows it I think the third major magic moment that impactful. There is this incorporation of real time expert feedback and thinking about feedback as a data type unto itself not having to retrain or upgrade the parametric knowledge of the model, but actually being able to use feedback dynamically lie to create an adaptive model and then and I'm sure Ryan will talk.

About this the scale function of this it's like one of the logical question is is if you're doing well why are you. So happy that you are 40 million in operating income well, it's because the unit economics are so good moving from boot camp from pilots. It took six months to boot camps that take officially two days I was in one that took six hours.

Are so efficient we don't it's like we're just like there's a limit to how much resources. We can pour into this so we'd like doing all these things and we're educating people and we're doing at a scale that is equivalent to already one month is as much as we did all year last year.

With a relentless execution were seen the ability and how much easier it is lowering the barrier for customers to see.

Our product applied against their data and rail workflows and so we're seeing the network effects of that we're seeing customers, who have used AIP and one contacts going into new companies adopting it at new companies and converting quickly we're seeing customers that were with this year's ago, who are coming back to us because we have the product now that works for what they need and we're seeing that and Oh.

Where where they may be tried to build themselves and failed in there now able to implement it effectively and quickly in that environment and the vast kind of expansion and and advancements of our products are showing that at her and one of the things that I mean, I'm very bullish on the U S and quite frankly, a little bit less bullshit every place else, but one of the thing.

It's amazing about the U S is people change jobs and people know how good our products that are in the minute they change their job they call us and some of the results of that if you do few disambiguate and normalize the results to take out specs US Grew 50 is growing 52 per cent, 52% off of a large base, which is why I think we can accelerated to a billion dollar run right by.

25, but it's because the the <unk>.

Dynamited.

Dynamic America isn't people moving around taking the product combined with our ability to execute in a new commercial motion that is just literally.

A game changer for how we go to market and by the way, we always kind of neglect to mention this it's also a game changer internally like culturally right now partly because we are on the frontline fighting what amounts to evil, partly because a lot of people don't agree with us and those that do realize that they need to stand up and stand with us.

And partly because we were right about what you should just apply to U S. Commercial it's just a really good vibe internally.

It's just it's like we're really you know, it's really fun to crush it.

And quite frankly, it's Ah occasionally fun to watch your you know apparently perfect at faked competitors deliver things that don't work and to watch us walk in with our Crazy show and deliver things that too.

Thank you and next question is from Saint <unk>, who asks just tell interviewed a U S. T hardware primes as allies our competitors we've.

We view the prizes allies and.

In government counter government web services. It really enables so two of the primes our customers of Apollo two of the primes are using foundry to improve internal production and systems integration. Another prime Northrop has joined our tightened team and I think from our perspective America needs. Your prime so like our national security depends on them, there's a <unk>.

Lot of talk and defense Tech circles without disrupting the prime So I think there is incredible opportunity to transform what's possible software, which in my opinion were leading but fundamentally there they're crucial to our national security and that's because production does matter you have to bend metal at the end of the day.

And using 10 years of munitions in 10 weeks in Ukraine, really underscores that point, but increasingly production is itself software to find an optimized in fact, that's most of our commercial business, helping Airbus at the 850 and single aisle ramp up helping b P produce more hydrocarbons, helping Panasonic dillmore batteries for Tesla cars like.

That sort of transformation efficiencies, what we want to bring to the prime as as well as they bent metal.

Maybe which shames done a really magnificent Java is.

It's fair to say the primes thought we were competitive with him until recently and and and not just price, but others, but.

Because really to get access to the kinds of data that the Pentagon has you're going to be able to you're going to need either pound you or be able to build something like pound here.

I think in all modesty people realize is pretty damn hard to do what we've done and so there was this kind of perceived misalignment and what sharm has been building out fedramp is giving people a way to partner with us where they can extend what they're doing without having to try which.

Everybody's still doesn't it but it's commonly known one at work the ability to have access to the underlying data for reasons that are highly.

Highly technical it's it's crazy hard to do and so getting that full alignment is both much better for pound here and much better for the nation.

And and then were of course interested in it because we are pretty mission focused on we want the nation to function better and we're also realistic it's not good for us to be fighting battles. We know we're much better at software we have no interest in going into hardware I think increasingly they know they should not fight us on software, although some still do which is largely stupid.

Thinking about our next question is from Miami with Bank of America. Diana. Please turn on your camera and then you'll receive a prompt tangney Elaine.

I mean, everyone. So I have two questions for you.

Number one S. <unk> all these geopolitical events, we have seen all these countries moving really fast <unk> readiness. Another organization is a key asset what is your expectation for the us actually moving at this <unk> Oh, that's paid off the need.

And there are more bureaucratic usually more important that the environment.

And the other one is AIP.

You have discussed alrighty.

I'll change how realistic companies for our customers to be able to adopt daytime <unk> data infrastructure.

But I mean interesting to understand beyond Blyth caps.

What else is change anytime Emily how you're faced customers you deal with AIP how that is.

Because they look like 30% operating margins now versus 25 that you are printed it before.

Maybe to start with the second one here it with a I P. I think you should really you know the.

Boot camp is more than just what's happening in the boot camp because you're exiting the boot camp with a series of use cases that are production ready or near production ready that you can go forward with your exiting the boot camp with as a customer and usually I T with enough hands on experience with the product that you can actually keep going a compounding it going forward. So there is this.

Exit velocity, that's fundamental to it where it's it's not just to go to market motion. It actually now becomes the implementation motion it becomes the way in which you engage with partners because now partners can run their boot camps partners can drive use case growth for themselves around and what came out of the boot camp and they exit velocity around that so I think it's it's quite profound and why.

Why you're seeing both our emphasis of it and the impact that it's having on the the financials and the operating reality of the business.

Yeah, as we mentioned on the last earning cause we were focused on usage and value of AIP and we're seeing that you know by the end of November 140 organizations will have delivered boot camps too and we're seeing that in and then the conversions that flow from that as well and to put that number of perspective, I think roughly 70 of those boo cancel happen. This month in November.

Which is more than the number of commercial pilot's we did all of last year.

The velocity and we're just starting so like we're ramping up to doing them. It's it's yep.

And then it gets on the on the mortgage inside what you're seeing is like we are investing pretty significantly R&D is up sequentially 11, and they said I think the thing that is confusing is.

Or a good emotion now in U S. Com is so efficient so as you can basically look at his tenex more efficient and we are ramping it up but this is the most efficient way for us to go to market. So it's like there's it's.

It is not constrained by dollars is constrained by do we have people that actually know the product do we have we trained them. There's there's not a way in which we can efficiently because if you're growing a business 52%. The obvious thing is you should be dumping money on it like a bonfire, especially if it's the only market that actually really matters in the world.

And by the way if you're Recalibrating. The standard one of the things we did with P. G. We did with Gaia, we did with medic constellation. It's not just that we wind clients is that we set a standard that the competition can never meet.

And that this is really important for our go to market strategy is like you can pretend you're going to build PJ. The French government announces they're going to rebuild it for $40 million you can't rebuild P. G for $40 million you can't rebuild it for one Bill you need US you can't rebuild foundry you can't program.

When we go to market with AIP. The clients are learning to things. They are learning Oh I could use this they're learning how to use. It. There are also now going to go to every other vendor and say, but I want my thing to provide operational results and Palin tears done. This in six hours I like you better I'll give you six days.

I prefer you your steak dinner is better.

Soon as better you're backing from the analysts is better you don't have the madman sticking up for things that are good and right in the world Despite them being unpopular and you get all that I'll give you an extra 10 days, we'll try that with P. G. It's ridiculous try it with foundry, it's ridiculous try with medic constellation no one even bothers trying that no one <unk>.

<unk> this on Gaia, and they're not gonna try it on AIP either.

And that's one of the most important things we do as a company because in the end it is actually very attached to our mission.

My view of what we should do is build products that are so good that the competition stops competing whether that's in commercial.

Or on the battlefield.

And that's what we're doing and that's what we're seeing an AIP and I haven't seen something like this since P. G, which is our first any terror product no. One bothers, even like currently PGS blocked in Germany, that's because somebody doesn't whatever dislike they're waiting for our terror attacks are off taken when it's like it's like insane. So any case no what bothers.

Saying, we should build another P. J you canceled it.

So you can just up to not have the product there'll be people, who do that and that's the aspiration for every single one of our products and that's what icmp in AIP.

Thank you off Alex is there anything you'd like to say before we end today's call.

As usual, it's a it's a.

A wild ride, if you're an investor or if you're an employee internally.

We there's this term mission driven culture, which I increasingly don't like because almost everyone, saying it is just waiting to get Tendies and then dropped their mission M. B S office, but in.

In fact, we are believers we are fighters and we are emission driven culture, and we welcome everybody who wants to participate that as an investor or S. A pound terrien or someone who follows us.

Thank you that concludes kunai for today's call.

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