Q3 2023 Wix.com Ltd Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the Wix Q3, 2023 conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising you your hand is right.
To withdraw your question. Please press star one one again, please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today, Emily Liu with Investor Relations. Emily. Please go ahead.
Thanks, Stacy and good morning, everyone and welcome to the Wix is third quarter 2023.
Joining me today to discuss our results are RV Sabra Hot our CEO and cofounder, Nir Zohar, President and COO and Dr. Shemesh our CFO.
During the call we may make forward looking statements and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent form 20-F that could cause our actual results to differ materially from these forward looking statements.
We do not undertake any obligation to update these forward looking statements.
In addition, we will comment on non-GAAP financial results and key operating metrics you can find all reconciliations between our GAAP and non-GAAP results in the earnings materials and in our interactive Analyst Center on the Investor Relations section of our website investors <unk> dot com with that I will.
Turn the call over to all be shy.
Thanks, Emily and good morning, everyone.
We delivered to them.
Amended good quarter that exceeded both growth and profitability expectation for another consecutive quarter. So everything Jeffrey grew to $394 million, which is $3 million above the high end of our guidance we.
We generated more than $62 million of free cash flow was 16.
Rent over revenues ahead of our expectations.
As a result of our.
Outperformance year to date, we are again, raising our revenue and free cash flow guidance for the year and we now expect to finish 2023 and have the margin target set at our analyst day in August.
As we begin to wrap up an outstanding year I want to spend more.
Most of my time today talking about product that week.
I expect will be our primary growth engine going into 2024 and they used to come.
With studio and AI.
Like prior quarters, our partners business was a meaningful driver of our strong topline performance in Q3's, drawing 38% year over year.
We continue to find success with professionals through ongoing dialogue to better understand their needs.
And best in class product innovation.
Visiting with the community.
As we spoke about at our analyst day, we took all that we have let some partners over the year, a jaded weak studio our new cornerstone product for park, the reception and feedback and early Kpis has been incredible did he sounding consensus is that studio provide industries.
With everything they want and more for all of their web creation and project management mix.
Uhm users, particularly love.
Video responsive AI technology that simplifies high touch time, and time sensitive costs, such as ensuring consistent decline of course web pages on different screen sizes.
I'll also enjoying the AI quota system.
Inside the new weeks, eight I E, which allowed them to write any.
Cause any take tables easily.
Most importantly studio optimize partners workflow and productivity.
Elevating their own client offering.
Ultimately, helping them scale their business.
Features like workflow management dashboard a neighbor.
Agencies to easily manage all of their clients projects and teams in one place and client keeps a lot of partners to provide seamless handoff experienced with built in tutorials for the <unk>.
And clients selling time and resources.
We already have thousands of studios sites live in many active generating GPP.
Total number of registered studio comps and conversion of existing site to studio have exceeded our own expectations.
All of this early sign of success could not have been possible without the team that traveled across 12 cities over two months to bring studio to life for countless educational workshop Q&A forms and Onboarding sessions.
This tool will give us the opportunity to hear directly from hundreds of partners around the globe and it allows partners to learn from each other.
<unk> studio.
Fully alive to all partners.
Drunk team that continues to execute well and a growing community of professionals excited about tweaks. This factors.
What gives me confidence in the long period of growth in this business, we did not like off the guys in terms of product innovation as we continue to add our own industry, leading generic product offering.
Spoke about it.
Analyst day, we have nearly a decade, working with AI and machine learning to reduce friction and enable better creation by leveraging AI for cocreation for users.
Yes.
Earlier this week, we released our latest AI products. The first was.
I met the tact creator and groundbreaking issue to par.
First.
AI powered full feature with our collection of SCO tools, both Cepheid is.
Looking to generate ACO <unk> for each of the pages and.
And professional looking to enhance the efficiency and make real time adjustments with benefits from these products.
The second was our conventional AI chat experience for businesses.
Feature which is now live paves the way to access it and bought it gives an AI in order to get business businesses online more quickly and efficiently.
These new tools continue to demonstrate our leadership and utilizing AI to help users of all types.
To succeed online.
This has been a busy year at weeks filled with many product and financial milestones, but we are not done we expect to continue this strong momentum into the fourth quarter and accelerate profitable growth even further.
Finally, before I turn it over to Neil I'd like to end with a quick float.
The terrorist attack in Israel and months ago wasn't terrible beyond your imagination.
But with weeks of navigators.
President challenges before and ultimately emerge stronger from it.
This award is no difference even against the current backdrop.
I am more confident than ever in the strength of our global team and the execution of our strategy and growth trajectory.
With that I will hand, it over to Nick.
Thank you Avishai and thank you everyone for joining us today.
Following the strong performance that we've seen so far this year I want to revisit the key growth pillars, we spoke about at our analyst day, which we expect will drive our business in the coming years.
First is obviously I mentioned Q3 was another quarter of accelerating growth in partner revenue.
We expect growth in the partner business to continue with a long runway of opportunity ahead.
Particularly as Rick studio ramps.
The initial months weak studio has been fantastic with more partners coming two weeks and the increase in projects per partner. We also continue to see partners adopting more business solutions products and driving meaningful growth in GP vision combined these behaviors give us confidence that the compare.
Adding grocery partners courts and revenue will continue.
Compounding partners growth is complemented by re accelerating growth in our stable and profitable self created business.
So once again this quarter, we expect our market leading product innovation as well as our powerful AI products and technology to drive higher conversion monetization and retention as we maintain our leadership position in the website building space.
Vishal I spoke about the AI chat experience for business and its early weeks.
And its early weeks, we have already seen positive impacts on conversion and revenue.
We have more AI products in our pipeline that we believe will continue to strength and I'm confident that our innovation paired with macro recovery will return, our south creators business to double digit growth.
The third pillar of our strategy is business solutions growth.
We saw outstanding transaction revenue growth in Q3, increasing 22.
<unk> year over year, highlighting higher GPU as well as increased adoption of wix payments.
We expect continued increases in transaction revenue and <unk> as well as better adoption of business applications will drive growth across both partners and south creators.
This quarter was a continuation of the momentum in growth we experienced in the first half of the year.
It increases our excitement about what's to come in the years ahead.
Finally, I'd like to briefly address our operations amidst the ongoing war in Israel.
With all of our employees accounted for in our business continuity plan in place there has been no disruption to our business and we do not anticipate any significant impact on operations going forward, even as the world continues.
As a reminder, all of our infrastructure and internal.
Networks are cloud based and located completely outside of Israel.
Importantly, our users have not experienced any disruptions to performance or support throughout this period.
As we have shared lesson.
5% of our global workforce were called up to military duty and we have already implemented contingencies to take on the responsibilities.
In the immediate weeks following October seven.
As we focused on the well being of our employees and their families. We experienced slight delays to some product development timelines and response, we shifted priorities in efforts to successfully mitigate impact on our products pipeline.
We intend for these delays not to impact our overall product development plans.
Over the last several weeks and successfully launched successfully launched a number of products, including the full global rollout of studio.
As well as our newest AI capabilities.
We will continue to introduce new products and features in the coming quarters as planned.
Our people in Israel are obviously adjusting to a new work environments.
Supporting them in any way, we can including with the implementation of our work routines that prioritizes, the physical safety and mental wellbeing of our team and their families.
In addition to supporting a week's teammates our global team has implemented multiple initiatives to support our users and broader community. During these times this time as well.
Leveraging our robust platform global footprint and technological expertise to connect dosing need with vital resources assist small businesses impacted by the war and ensure the reliability of our platform for those who are depending on it the most.
The resiliency of this incredible team along with the support of a community of users and partners gives me confidence in our growth strategy as we all look forward to better times.
With that I will hand, it over to Leo to walk through our financials and outlook and progress against our refreshed three year plan.
Sure.
Thanks, Neil we carried forward our positive momentum into Q3 with another quarter of results that exceeded both growth and profitability expectations.
Our exceptional performance year to date enable us to increased full year guidance again and provides increased confidence in our ability to achieve and even exceed the milestone the altria plan provided at all.
Analyst day in August.
We now expect to exit the year with free cash flow margin of 20% to 21%, which is within striking distance of the minimum of 25% free cash flow margin targeted for 2025.
Additionally, we also expect to generate more than $3 $5 of free cash flow per share in 2023 above the $3 per share anticipated in August.
As a result of robust free cash flow generation and careful dilution management throughout the year.
Notably following the second consecutive quarter of positive GAAP net income in Q3, we expect to achieve positive GAAP net income for full year 2023, with GAAP profitability expected to be achievable in 2024 as well.
Im incredibly proud of this achievement puts us ahead of the GAAP target in our three year plan.
Moving on to the details of the third quarter.
Total revenue of 394 million was up 14% year over year and exceeded the top end of our guidance range by $3 million.
As we continue to execute on our strategic initiatives.
Bookings were $390 million up 10% year over year.
Strong topline growth was again driven by our polymers business problems revenue grew 38% year over year in Q tweaks, marking our third consecutive quarter of accelerating growth.
With VAALCO is now contributing to more than 40% of overall GPC total GPC in Q3 grew 14% year over year. These royalty GPC, coupled with increased take rates as merchants continued to adopt we experiment resulted in transaction revenue growth accelerating to 22% year over year this quarter.
Before I move onto profitability I want to take a moment to highlight our b to b business. After three years since the signing of our first partnership our B to B business a scaled tremendously.
He is now profitable on a standalone basis to date, we're able to integrate with any large business looking to bring the power of weeks to their customers without additional meaningful technological investments from our end.
As a result of deferred shipment as well as the uncertain macro environment. We are now able to offer our partners pay as you grow and will no longer recognize unbilled contractual obligation in bookings beyond.
12 months. While example of diesel evolution is our b to B to our <unk> model is the strategic partnerships, we signed with each week earlier. This quarter. This partnership represents significant potential in the future, but will be recognized based on usage on an ongoing basis, we believe.
This shift to open our pipeline to more partnership opportunities going forward.
Moving on now to the profitability improvements made this quarter non-GAAP gross margin of 68% was up approximately 280 basis points compared to the prior year quarter, we continue to benefit from a more optimized cost structure as well as better gross margin in our payments business.
We generated a fourth consecutive quarter of positive non-GAAP operating income, which was 16% of revenues Q3 included nonrecurring increases to compensation as well as increased marketing activities associated with weak studio.
According to our annual budget these increases in <unk>.
Operating expenses were partially offset by continued execution on our streamline marketing strategy as well as the lower headcount and overhead expenses compared to the prior year quarter.
As a result of our continued growth and cost structure, we generated stronger free cash flow than expected. This quarter free cash flow grew 28% year over year to over $62 million or 16% of revenue.
And accelerates our path to achieving the targets in our three year plan note that this excludes capex related to the build out of our headquarters.
Now I want to finish with our outlook for Q4 and 2023.
We expect total revenue in Q4 to be 400 to 405 million, representing 13% to 14% growth year over year.
Following our revenue outperformance year to date, we are increasing our full year outlook again, we now expect total revenue to be approximately $1 five 8 billion to $1 563 billion, representing approximately 12% to 13% year over year growth an increase from our previous expectation of <unk>.
<unk> to 12% year over year growth.
We also expect accelerating profitability as we exit 2023.
We're increasing our outlook for free cash flow for 2023 to 235 million to $240 million.
Approximately 15% of revenue.
Indicates an exit free cash flow margin of 20% to 21% this year, putting us much closer to a minimum 25% of free cash flow margin anticipated for 2025.
This compares to our previous free cash flow outlook of 200 to 210 million or approximately 13% of revenue and then exit rate of approximately 15%.
This updated free cash flow outlook, along with careful dilution management throughout the year also enables us to increase our free cash flow per share targets for the year.
Following the incredible performance so far this year.
More confidence than ever in our ability to achieve our three year plan as we accelerate our logo expect us back at <unk> with a free cash flow margin target.
Also at least 25% in 2025.
Operator, we are now ready for questions.
Yes.
Okay.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
To withdraw your question.
Please press Star one again, please limit to one question and one follow up.
<unk> by while we compile the Q&A roster.
Okay.
Our first question comes from Trevor Young with Barclays. Please go ahead with your question.
Great. Thanks, guys first just any insights on the slight deceleration bookings, particularly in light of the easier compare it looks like at <unk>, both on a reported basis and ex FX and then second question on a geo basis, what drove that market acceleration in Europe, and Asia, and what drove the slowdown in north.
America that partially offset that.
Okay.
So I would ask them both of the questions. This is <unk>. So with regards to the bookings came in where we expected.
I think that.
Whats mentioned in B to B partnership and I spoke about briefly.
Before.
We see actually a very positive changes to this business as I mentioned before.
Completed.
Product and integration.
Wheat previous customer of their previous partner. So we don't have to do it again it means that it's not necessary for us to demand.
Any kind of commitment from our partners going forward.
So you know when you look at the macro environment.
People are our partners, obviously, we look to provide a long term commitment by the way.
Im not willing to do that with regard to my my vendors.
So from now on we are not going to recognize.
A multiyear commitment to spot of bookings at least that is more than one year.
So it's going to have.
Kind of a negative effect on booking short term, but not long term.
But it's not going to have any impact on revenue.
It is important to mention.
Second reason to your question, we had a slightly higher percentage of monthly plan.
Partly driven by new subs will need to be balance sheets as well as in other specific geographies again, there is no impact on revenue just about the bookings.
So the reason I believe it's because of the fact that that was the first full quarter of slapping price increase.
From spring 2022, however, we benefited from compounding growth in policy of course, driven by business solution.
So, it's even kind of more than compensated for that.
I believe that you know going forward, we need to remember that we have not yet benefited from strong growth engines that we have for example studio that we just launched but also.
Towards that we order to see the contribution in terms of increased conversions, but also increasing revenue.
<unk>.
With regard to your second question about about the Geo growth.
So in the slide of last quarter, we had we had the mistake, meaning that Europe was not 2% it was a 9% going up to 11%.
This quarter actually accelerating.
So that kind of explain part of the confusion is that we have in <unk>.
Okay.
Alright, thank you for that clarification.
Yes.
Standby for our next question.
Okay.
Okay.
Our next question comes from Eagle erroneous with Citi. Please go ahead.
Go ahead with your question.
Hey, good morning, guys.
First of all.
Best wishes to you guys' families and everyone and hope you guys are.
Okay and wishing for.
Better times.
And as Robin region.
I have two questions.
First just on the acceleration and partners and studio.
And the impact that that's.
Driving there I think typically when you guys launched new products. It feels like it takes a little bit more time until you start seeing a more meaningful impact coming through the numbers.
Are you seeing it is that then.
A notable driver of the acceleration in third quarter or is it really more still to come so you're seeing some good early signs but.
It is not contributing a lot to the numbers yet and then on the AI side, just a follow up on the comments around <unk>.
Driving better conversion, so a lot of new AI products coming through can you just expand on that comment on conversion and what youre seeing in the kpis around conversion and monetization and retention.
Yes.
So I will start with the first question about about partner, so you're absolutely right.
We still don't see a significant impact of studio because we just launched it.
This is why we.
We are so excited about it the entire growth as we see right now are coming from al <unk>.
Previous.
No.
Previous.
Product and everything that we've done with partners.
Including editor X.
Not necessarily studio.
And we need to remember that we still see the compounding effect of it meaning that any agency that joining back to in a few quarters ago, we see the benefit of it right now.
Thank murat using both payments for example, or ups or Google. So we see a tremendous increase in business solution, a big bulk of it is because of partners.
The reason why we're so excited because we believe that studio is a great.
Engine for us to continue and increase growth.
Our partners in the future we are going to see some of it.
Next year.
Yes.
I believe your second question was in regards to what kind of effect, we're seeing from different AI products that we're launching.
In regards to improvement in conversion.
And we do actually see an improvement in conversion, which is probably the most important API by which we measure.
Our success in decline and new products.
The reason for that is that with AI, we're able to actually use it better questions and to understand in a smarter way why it is that the user is trying to achieve.
Some that were able to generate a better starting point for that business.
On top of Wix and that is not just the skeleton. We're also able to fill in a lot of information and Lauderdale.
Content deck.
The user would normally have to feel Manuel.
The result is that the amount of effort and knowledge that you need to create a web site and for your business and lakes is dramatically reduced and some that we are able to see very good results in terms of improvement.
Of conversion.
Okay.
Thank you.
Standby for our next question.
Our next question.
From Andrew Boone of JMP Securities Andrew. Please go ahead with your question.
Good morning, and thanks for taking my question, we as well are also thinking about you guys.
Wanted to tie back the comment self created growth returning to double digit sales and marketing going forward.
Historically, you guys have had a very strong framework between those two items and so can you just talk about how we should expect your marketing and performance marketing specifically to either ramp as we think about self creators getting back to double digit growth or anything else you want to unpack there.
Andrew So this is a new York.
I believe that you know looking at the history of weeks.
We know almost the entire growth that we managed to deliver in the past was due to products obviously.
I mentioned for example, the AI tools that we just launched and we see a tremendous.
No increase and potential upside for the future to be more specific about our conversion for example.
We also see a much bigger usage of our business solution towards like payments. For example, so looking at everything again, including <unk> and hopefully the market the market in the macro recovery into future. We do believe that we'll be able to gain with double digit growth with sales creators.
Great. Thank you and then I just wanted to touch on gross profit margins can you just help us unpack the improvement there and how do we think about that.
Going forward any change from analyst day, thanks, so much.
So yes, certainly so we saw this year.
This improvement in margins in gross margin.
And it came mostly from our took place. The first one is a lateral saw improvements and savings that we had at our infrastructure. Most of you know the hosting activity. So we had that a lot of savings over there, but also about our care organization. So for example, benefiting from all kind of AI tools that the name.
It has to be more efficient.
So I believe that that was you know most of the improvement that we've seen this year I believe that next year, we are going to see some more improvement.
I'm not sure that it will be drastically dcs, but we're certainly going to see more improvement.
Especially around being more efficient.
But also from the fact that we see a much better gross margin coming from the business solution for example payments.
Take rate is increasing we are able to generate more margins out of transaction revenue I believe that this is something that will continue also next year and will drive gross margin up.
Again next year.
Yes.
Thank you.
Okay.
The question was just about the gross margin will be overall profitability for example, the operating expenses.
Yeah.
I was going to keep at gross profit margin I'll, let somebody else.
Thank you.
Standby for your next question.
Our next question comes from Chris Zhang with UBS, Chris. Please go ahead with your question.
Hey, good morning, Thanks for taking my question.
So.
The first question regarding the.
Marketing expense this year.
You lowered the guide for the.
Okay.
200 basis points as a percentage of revenue.
Can you maybe unpack the.
Drivers of the third.
How much how much from the more direct response channels how much from that.
Our partner spent that you previously expected.
To go up.
Also can you talk about.
The return environment right now.
Acquisition marketing.
Competitors mentioned leaning more into the market reacts head offices to partner spend.
Hey, Crystal clear I think I'll kick this off.
In New York and go into maybe a little more of the financial aspects if needed but.
Generally already last year, we communicated our change in marketing strategy to statically, that's worked extremely well for us we leveraged the strength of our of our of our brand.
Against buying traffic understanding that you.
We can get a better ROI simply because the brand is compensating because.
It strengthened so much while the last few years.
Throughout this year.
We communicated.
This strategy, but also.
Basically.
Deploying a lot of marketing dollars towards the relief and the launch of weak studio.
Now we know we explained and we could.
Most of that spend in the second half of the year.
But if you remember.
Let me share the kind of the cadence of the release of weak studio.
Q3 was about mainly about the Nintendo launch so we were launching to our.
Existing partners and therefore, we do need to spend.
To use most of the of the marketing budget for the plan was always to put more of it to use in Q4, even Q3 by the way within the plan of the internal the internal plan and you managed to create some savings which was great.
But the goal was to put more of it towards Q4.
That being said.
Looking at the first few weeks of the launch of <unk> the adoption is.
Fantastic.
Higher than we even expected so we believe that the actual deployment of the marketing dollars.
We'll be done more gradually between Q4 and heading into 2024.
Okay.
Alright, that's super helpful.
I guess, if you can also comment on the.
The return environment, and I think Thats also kind of related to.
The south creators the growth trajectory and how youre thinking about.
<unk> put in some dollars in incremental dollars and the acquisition marketing.
So with regard to defense vehicles, there is not much of a change from the last quarter or the things that we showed that the.
The changes we've made these moves are consistent and stable.
We manage to.
Generate obviously the same amount of collection, we cliff impact investments in marketing.
And I think that it's great to see that the strategy is actually walking through to the fact that the brand become much much stronger.
Right now you know the return is.
Obviously has changed dramatically then compared to the beginning of last year.
We stood at less than one quarter I believe that and we see the strength of our brand. We believe that this is something that can continue and sustain also over the next couple of years.
So we do not see any significant change over there.
Set of creators.
Thank you very much.
And thank you our next question.
Our next question comes from Bernie Mcternan of Needham <unk> Company. Bernie. Please go ahead with your question.
Thanks for taking the questions and just reiterating the Oxford parish with you guys in the works team.
Maybe just on on self creator talking about getting back to double digit growth.
How much of that can you control versus waiting on the macro.
Anything that you can call out like technology, or maybe even just marketing wise.
You control to get that growth back to double digits.
Sure.
Hey, Bernie.
So I think on the <unk>.
Macro environment is something we cannot control and we don't anticipate to control.
But we do believe that allows us for product innovation is towards generating that growth in any environment and obviously.
There is a if there's a recovery that can be even.
Plus to that to that growth.
What we've seen already.
First and foremost I think that the AI.
Jason that we are aiming for and I wish I just explained how does.
The AI drives conversion and we have.
The first milestone our first part of a much deeper and wide product around AI and the creation for self created that we plan.
Obviously that.
Movement in conversion is can be a big driver for growth.
And marketing is something Thats follows.
So the conversion improves then obviously, we can we can consider what more do we want to do in terms of the marketing towards south creators, but from that standpoint alone. We think there is.
Significant.
Potential for growth.
The other side of it is the business solutions, Okay. The business solution.
Although they are growing much faster on the partner side. They are also growing significantly on the creative side.
And we've seen that both on the side of GPP and growth in adoption of that.
Okay.
Selling and e-commerce platforms, where it stores or scheduling or restaurants, or hotels, and we entered or event and we have a very widely.
<unk>, which is part a big part of our strength. So the GP growth is definitely a driver there as well as the other as to loosen that up a bit.
More business solution equal email marketing, Google advertising et cetera.
Our belief is yes, we can drive it that's in our control and hopefully recovery will come on top of it.
Understood and then just to follow up on with studios I know, it's really early days, but adoption higher than expected anything you can comment just in terms of like tangibly, what youre seeing whether its weather.
Whether it's the partners being more efficient or do you think youre taking share of their workload.
We'd love just to get some more tangible in terms just like exactly what is happening is the adoption curve with studios.
Well I think that team.
There is a variety there are many different kinds of partners that are using <unk> studio.
And I think that.
When you look at more of the freelancers because of it.
Part time then.
And then it is just more familiar user interface, which is very similar to a lot of design software.
So traditional design surplus easier to use.
It's very easy for you to adapt to weak studio.
And then because of the power of the AI tools, you can create very strong very professional websites because they I will continue and finish for you. The thing that would normally require specialized in different variations of web designs.
In the case of the more professional.
Companies.
Were they.
While we are seeing is that.
The way we built it.
Is that it's enabling you to finishing very quickly.
And kind of a scheduled and then take that sketch mode and make it into a real.
Live websites.
One having the ability to go really below the hood into the CSF into the cord and change it to the exact specification that you want.
What it means overall in terms of.
Operation you ship tremendous amount of time, you can do think that Europe product with required to hire very expensive people to do the specific things.
And then.
So.
So the overall theme is to increase efficiency, while even going into making better project. So we are seeing decent volumes to different kinds of partners of course.
Okay.
Okay.
Okay.
And by far our next question.
Our next question comes from Ken Wong with Oppenheimer and company Great go ahead with your question.
Thank you for taking my question.
Obviously I wanted to touch on the Intuit Mail Chimp agreement.
I think the earlier press releases seem to lean largely towards utilizing their CRM, there theyre marketing tools and as you mentioned, it's a bilateral agreement can you help us understand kind of how much of a commitment there is to potentially using the wix website builder.
And then just following up on the shift to kind of shorter duration <unk> deal I mean should we assume the same level of exclusivity with these partners going forward.
Any comments on those two would be great.
Okay.
The first question and then hand it over to Dr.
No.
I think in terms of in terms of.
So we intend to do together on the <unk> side and maybe other also other functions.
The into the portfolio.
First I think it's very interesting for us.
From the conversations we've had.
They're a fantastic team over the last.
A few quarters.
Very clear that.
There is a lot of overlap in terms of the profile of the weeks users indeed to its users.
But very little overlap in terms of the offering meaning that we are complementing each other in many ways in many different places.
The idea is for us to map these playful.
And start hooking up.
The user flow in a way that.
That will be as seamless as possible for the end customer.
We will be able to deliver the core values of weeks than the core value of intuitive mail team.
To the best to the best possible way and the best possible experience for the end customer it means.
From our standpoint that eventually.
We will have better product offering.
Where they are spending a lot of effort and we're not and they'll have better.
A much better offering the digital president and the creation tools that where we're spending a lot and theyre not.
And the combined.
The combined upside will be.
Very very healthy experience for the end user who will be willing to pay for more services.
Our hope since youre going to generate something here, which is a win win win.
Intuit Wickes and the obviously and most importantly, the customers and the users.
You want to take a little bit.
Sure.
So come to a question there is no change in the type of the arrangements, meaning to that Q3 will have exclusivity. It will remain exclusive I believe that you know the only changes about the fact that we will not recognize bookings anything that is beyond one year I believe that it's first of all more conservative.
Second there is no need I believe that you know we have the best product right now with the market to serve partners.
They want to bring the pulse weeks video customers.
And we are the best alternative.
To do that I think that it is also saving them R&D cash R&D money and provide them with the best solution.
So.
This is something that will continue.
The second reason, obviously why it doesn't make sense through a recognize as a booking.
Any commitment that is longer than one year is because of the lumpiness.
You can have a huge agreements in one quarter or the other.
The following quarters no other no huge agreements so it's kind of you know.
Making this business kind of lumpy between the quarter and it doesn't make sense and in any case it doesn't involving any impact on revenue. So I believe that that would be you'll note the business vision and secondly, even though it's open more larger Tam for us. Because then you don't negotiate on the commitment to negotiate on the assets on what.
What is more important in order to make this partnership successful.
Perfect. Thank you.
Okay.
Standby for final question.
Our final question will come from Mark Djukanovic with the benchmark company.
Mark. Please go ahead with your question.
Thank you and good afternoon.
Just a follow up on the gross margin question just curious how much more runway you have over the next 12 months on customer care leverage there.
How meaningful that's been in terms of driving gross margin levers versus.
Other lever points like hosting efficiencies.
And then second question just curious how meaningful was the BV partnership contribution to <unk>.
<unk> partners revenue and any expectations as you look into 'twenty four in that in that regard.
So I'll start with the first question.
I'm not going to provide details about to know how.
More efficient we can be with care is always the case by the way, we always look for more ways to be more needs to be more efficient.
I did mentioned that we are going to see some contribution in some more efficiency around gross margin next year.
But it can be also from the fact that we are more efficient in payments, we are more profitable and payments as well.
We scale up of this business.
And obviously there will be more cases, where we can drive efficiency. So of course, we are going to do that but I'm not going to go into the details of it.
With regard to the contribution of partners or beat the beat to be partnerships with <unk>. So of course, it was more significant than than last year.
It's a SaaS business of any other sotheby's, but so it will be.
Most significant in the following deals this is like the nature of it but I must say that most of the improvement that we've seen a positive business actually coming from the fact that we are getting more and more agencies I did mentioned many times in the past that we see that as like the most.
The strongest growth.
Growth driver that we have.
It's mostly coming from more and more agencies, joining weeks and the compounding effect of it.
Thanks, so much that's helpful.
This concludes the question and answer session. Thank.
Thank you for participating in today's conference. This does conclude the program you may now disconnect.
Okay.
[music].
Okay.
Okay.
[music].
Yes.
[music].