Q1 2024 Intapp Inc Earnings Call
Leveraging our strategic Microsoft partnership we also delivered our first generative AIC chair using Microsoft Azure Open AI services.
The feature in this release create content based on context and historical firm data applied to help streamline email marketing for busy professionals.
It is the first step in a series of generative AI releases, featuring increasingly advance contextual content generation and marketing automation via the use of large language models.
These are just two examples of applying our industry expertise to build industry specific solutions that help our clients realize practical immediately usable advantages from AI, continuing generational technology advances.
Speaker 1: I really see featuring increasingly advanced contextual content generation and marketing automation via the use of large language models.
In September we showcased our applied AI capabilities at our client conference in Boston.
The feedback validated our applied AI strategy and its capability to drive tangible results in positive outcomes for our clients.
Speaker 1: These are just two examples of applying our industry expertise to build industry-specific solutions that help our clients to realize practical, immediately usable advantages from AI's continuing generational technology advances.
As an example, Jack Scinto manager of application development at law firm better price said.
Speaker 1: In September , we showcased our applied AI capabilities at our client conference in Boston.
I am excited that <unk> has made strides in expanding their already robust and powerful AI tools by incorporating generative AI at large language models.
Speaker 1: The feedback validated our Apply Day I strategy and its capability to drive tangible results and positive outcomes for our clients. The feedback validated our Apply Day I strategy and its capability to drive tangible results and positive outcomes for our clients.
I believe these tools will empower our fee earners to focus more on the billable hour than on the repetitive, but necessary daily administrative tasks.
Speaker 1: As an example, Jack Jacinto, Manager of Application Development at law firm Better Price said,
Thereby freeing them up to better service our clients.
Still providing the organization what it needs.
Speaker 1: I am excited that Intapp has made strides in expanding their already robust and powerful AI tools. I am excited that Intapp has made strides in expanding their already robust and powerful
We're very excited to be working with Jack and his team at better price.
Speaker 1: by incorporating generative AI and large language models.
We're also investing in our industry solution strategy.
Speaker 1: I believe these tools will empower our P-Earners to focus more on the bill of the hour than on the repetitive but necessary daily administrative tasks.
Which incorporates built in best practices for the various markets that we serve via our pre populated industry blueprints.
Speaker 1: thereby freeing them up to better service our clients while still providing the organization what it needs.
Designs using our teams deep industry experience. These blueprints provide specific deal cloud configurations that suit a range of specific application needs for each type of firm that we serve.
Speaker 1: We're very excited to be working with Jack and his team at better price.
Speaker 1: We're also investing in our industry solution strategy.
Our field team uses our industry solution to clearly showcase our industry specific fit for each of our prospects.
Speaker 1: which incorporates built in best practices for the various markets that we serve via our pre-populated industry blueprints.
And our services team uses them to deliver fast and clear time to value for each of our clients.
Speaker 1: Designed using our team's deep industry experience, these blueprints provide specific deal cloud configurations that suit a range of specific application needs for each type of firm that we serve.
We released updates regularly using some of our most recent industry blueprint, we're seeing clients ready to go live with their new solution in just one to two weeks.
Speaker 1: Our field team uses our industry solution to clearly showcase our industry specific fit for each of our prospects.
And our portfolio of industry solutions continues to expand.
Speaker 1: And our service is team using them to deliver fast and clear time to value for each of our clients.
In our most recent release, we're now providing industry blueprints for 15 different sub verticals, such as transaction Advisory services Fund formation and M&A with more on the way.
Speaker 1: We release updates regularly using some of our most recent industry blueprints. We're seeing clients ready to go live with their new solution in just one to two weeks.
I'll turn now to partnerships, where I have some exciting news to share.
Last quarter I mentioned that our solutions are now available on the Microsoft Azure marketplace.
Speaker 1: and our portfolio of industry solutions continues to expand.
Speaker 1: In our most recent release, we're now providing industry blueprints for 15 different sub-writicles.
This step prepared us well for a major strategic change that Microsoft made this quarter, specifically, Microsoft co sell incentives for sellers are now tied to solutions that are available on the marketplace.
Speaker 1: such as transaction advisory services, fund formation, and M&A, with more on the way. Bye.
Speaker 1: I'll turn now to partnerships.
Speaker 1: where I have some exciting news to share.
We were ready for this change and Microsoft seller incentives.
Speaker 1: Last quarter, I mentioned that our solutions are now available on the Microsoft Azure Marketplace.
And we are positioned very well to garner additional interest and support from Microsoft field team to further accelerate the growth of our business.
Speaker 1: This step prepared us well for a major strategic change that Microsoft made this quarter, specifically Microsoft's co-cell incentives for accelerates are now tied to solutions that are available on the marketplace.
For example, as a result of this change in Q1, we successfully sold a large intact collaboration and content deal in the consulting vertical.
Speaker 1: We were ready for this change in Microsoft's seller incentives.
The azure marketplace with the support and assistance of Microsoft team.
Speaker 1: And we are positioned very well to garner additional interest and support from Microsoft's field team to further accelerate the growth of our business.
Furthermore, our partnership with Microsoft with increasingly supporting our global growth.
Speaker 1: For example, as a result of this change, in Q1, we successfully sold a large intact collaboration and content deal in the consulting vertical.
We have grown into a global partner and Microsoft has grown our team to include both global and U S partner managers to help us identify win and grow large global accounts together.
Speaker 1: via the Azure Marketplace with the support and assistance of Microsoft Teams.
Turning to our broader partner ecosystem, we also launched impact new partner program with more than 100 active partners.
Speaker 1: Furthermore, our partnership with Microsoft is increasingly supporting our global growth.
Speaker 1: We have grown into a global partner. The Microsoft has grown our team to include both global and US partner managers to help us identify, win, and grow large global accounts together.
The program expands our clients access to trusted technology data and services providers, who are helping our clients to drive innovation and grow their business.
Our new program supports the development marketing sales and delivery of joint solutions with our partners driving new revenue opportunities for <unk> and its partners together.
Speaker 1: Turning to our broader partner ecosystem, we also launched IntaX new partner program with more than 100 active partners.
I'll turn now to Q1 wins and implementation.
Speaker 1: The program expands our clients' access to trusted technology, data, and services providers.
And share some examples of how we're continuing to grow our client base and expand our global reach.
Speaker 1: who are helping our clients to drive innovation and grow their business.
First I'm pleased to share that we are growing through the addition of new clients.
Speaker 1: Our new program supports the development, marketing, sales, and delivery of joint solutions with our partners, driving new revenue opportunities for INTEP and its partners together.
Including National CPA and advisory firm for this.
Who selected didn't have employee compliance to improve their quality control system, better address regulation and prepare for upcoming regulatory changes.
Speaker 1: I'll turn now to Q1, wins and implementation.
And store slogan.
<unk> home based international group of businesses across trade industry. It services.
The selected deal cloud to strengthen their sourcing and origination efforts via end to end support for their M&A and corporate development processes.
This client is a great example, showing how our industry solution blueprint for the corporate development function helped us to better showcase our value and landed new relationship.
Additionally, cross selling and up selling success in our existing accounts continued to drive strong net revenue retention.
For example.
Global law firm Mayer Brown.
Selected in tap workspaces to modernize and improve collaboration.
In tap Workspaces will help manage Microsoft teams governance, workspace provisioning matter lifecycle management and client <unk>.
Operation.
And Warner Norcross, Jud, a longtime law firm clients.
Added to their entire portfolio by selecting <unk> risk and compliance is there a new cloud based risk management and compliance solution.
As the executive director at Warner said.
When it comes to risk and compliance it's essential that we provide our attorneys and staff with the resources to make smart and efficient decisions on our client intake.
This quarter. We also had a number of notable go lives.
<unk> UK based accounting firm.
Yeah.
Which went live this quarter, an intact collaboration and content.
Our solution has streamlined aab's process for saving retrieving and sharing E mail and documents by aligning with familiar Microsoft 365 applications.
Aab's professionals are now efficiently accessing information related to their engagements and collaborating with peers and clients more effectively.
Additionally, prominent Japanese law firm Nishimura and Asahi wet.
Went live on multiple in tap solution aimed at modernizing their risk management and Timekeeping practices.
At Gmail now the firm's Chief Technology Officer said.
With the move to intact. We're building a foundation of contemporary products that will enable us to compete on a global scale continue our trajectory of international growth and maximize profitability.
In conclusion, we're proud of our strong performance in our first quarter and we're optimistic about our continued growth opportunities.
As our Q1 performance as shown we continue to grow by adding new capabilities to our platform and increasing our global reach.
We see continued opportunity both to add new clients across a broad Tam.
Deliver greater value by expanding within our existing client base.
We're serving a durable end market with our subscription revenue model.
Industry specific cloud platform and applied AI and compliance capabilities.
We have a great growth opportunity to drive AI cloud adoption and modernization across all the industries we serve.
As always I'd like to thank our clients our partners our investors our board at our global impact team for their teamwork and dedication. Thank.
You all very much.
And finally before I turn things over to our CFO, Dave Morton.
I am pleased to share that in Caf will hold its first investor day.
It will be held at NASDAQ in times Square in New York City on February 20 <unk>.
In the coming weeks, we will post more details and links to the broadcast on our website at investors starting to tap dot com.
We hope you can join us.
Okay, Dave over here.
Thanks, John and thanks, everyone for joining us today.
Yes, one of the things we benefit from Bobby is the key.
Consistent demand as these firms that we've targeted who historically have been pretty underserved by the technology industry because people were not building purpose built.
Solutions for them, but we are is that they are marching through this modernization effort that they're kind of left out us for many years, but the cloud is happening and they're moving and applied AI is a key interest for them. So we have very consistent demand each and every quarter and we're excited about that we think it's a hallmark of the long term growth.
The opportunity of the company generally I think we have put some additional purposeful spend into our go to market to help take advantage of the growth opportunity. There. So we're seeing that.
I think on the customer wins side, we're seeing strong <unk>.
First four wins in a variety of segments.
In the market that give us confidence that we've got a very compelling value proposition for response, both the folks who are focused on the cloud transition and the folks are who are focused on the acquired AI opportunities that are a little bit more forward looking.
That's great. Thank you and then how the opportunities expanded with maybe more non traditional verticals like corporate development in house legal teams are you seeing traction there or anything to call out and emerging use cases. Thank you.
Yes definitely.
There is a broad ecosystem of firms and companies who participate in both the private capital markets and all the advisory services that go with them and.
And we've seen good traction in several of the additional sub verticals, we talked about.
Corp, Dev specifically with one of the examples on the call. Today. We also have shown a lot of progress and private credit, which is a relatively newer area for us, but as everybody has talked about that's a big.
Booming space right now so several of the industry blueprints that we brought out more recently have been intentionally focused on addressing some of these additional new sub verticals for us and represent great expansion opportunity for us.
Thank you.
Thank you one lung for next question.
And our next question coming from the line of Alex Sklar with Raymond James Your line is open.
Great. Thank you John.
The Microsoft go to partner go to market partnership it in some of those changes there can you just elaborate on your prepared remarks in terms of what you've seen from a rep enablement standpoint, so the idea of how many Microsoft sellers.
Our familiar within tap now versus a year ago and what are you doing on the <unk> side to kind of drive further rep enablement and arm those kind of Microsoft reps.
Thanks, Alex So we're very excited about the progress that we're continuing to make with Microsoft we have been working with them for 18 months or so now as you all know and it's been a steady program starting with the product and then more recently several steps in the go to market, including this most recent one where Microsoft has shifted.
Seller incentives too.
Reward people for selling things from the actual marketplace, which includes all of <unk> solutions now.
<unk>.
Review meeting between our go to market team and the Microsoft go to market team quarterly or more frequently so that kind of connection I think is an increase in the <unk>.
Volume of conversations deal by deal. We're also successfully getting into some of the larger accounts, where we can bring Microsoft into the Mac agreement that we've talked about earlier and there's a lot of excitement about that because of the clients have already committed to spending X with Microsoft and they can soak that up by buying.
Solutions from Permian chat now.
Okay, great color there.
Dave maybe then one.
Follow up for you just with IRR kind of re accelerating versus the fourth quarter can you just provide some more context is that the result of kind of better expansion activity I know, it's a wide range at $1 13 to 117, but did you see that step up or is that new logo <unk> pick.
Pick up.
Okay.
So to get some color on that yes, we did see a small step up in our IRR.
I would say we over indexed.
Indexed on our expand motion then on.
Net new and so.
For us we have both of those motions.
Barely but those expands we continue to earn our way into these respective clients and we continue to move just far beyond that original land and so we had a quite good success this past quarter with that.
Great Alright, thank you both.
Thank you.
And our next question coming from the line of second <unk> with Barclays. Your line is open.
Okay, Great Hey, John Hey, Dave Thanks for taking my questions here and nice solid print for the quarter.
Okay.
Sure John maybe for you I think.
One of the questions that I get often is just the cyclicality of the of the deal call business right just given the end customer there with private capital can you just talk to that at all just given the volatility and some financial markets, how does sort of that thought maybe compare to what you actually see.
In the deal cloud business.
That makes sense.
Okay.
Obviously, I think we benefit from the larger <unk>.
Structural trend.
Toward private capital.
That has happened for us over many years and continues to happen. So there is a general demand.
For these firms who have raised.
Small medium or large funds or one or many funds to need infrastructure to run the firm and to need purpose built infrastructure. That's designed specifically for the way to the private capital operation runs and historically those firms have been relatively underserved with technology. So I think theres, just an underlying modernization opportunity that's independent.
Of the cycle that you're describing which is obviously true, but I think we benefit from being pretty early in our penetration of the space. The fact that most firms have not gotten to the cloud and not gotten the applied AI.
Technology is deployed that really fit their business in the way that <unk> does so I think theres just an underlying trend that's helped US and then we have moved up.
Into the multi strategy category, now, which has taken us awhile to get there, but a lot of our opportunity is in these large multi strategy private capital firms that are pretty diversified and what you see them doing is very analogous to what professional services firms have done as well for many years, which is to shift their emphasis on where they raised.
<unk> funds all the types of funds and strategies that they're deploying into areas that fit the current economic cycle. So for point of economic cycles. So I think where we see a lot of growth generally on top of that we get surges in demand across different strategies in categories and Thats one of the reasons. The industry solutions strategy is working for us because we're able to develop.
Specifically for the segments of the market that are really in growth mode.
So I think it's a pretty stable foundation with some great opportunistic.
Sales opportunities on top.
Got it got it that makes a lot of.
Not a lot of sense.
Dave maybe for you.
I think maybe this is to the other question is just on Q4 Q1, I think one of the questions kind of coming out of Q4 at least that I got was was just around the lower net new <unk>, then somewhere maybe expecting rate given given the seasonally strong Q4.
And clearly you've accelerated the cloud AOR growth here in Q1, so well done.
Wonder if now sort of 90 days later, if there was any sort of deal timing consideration here.
Help explain sort of the <unk> growth between between Q4 and Q1, there is always kind of deal slippage for any enterprise software business right, but I'm just kind of curious as you've had more time to look at it if that's something to consider here as we sort of look at sort of the.
The Q4 performance and then the Q1, the Q1 acceleration and IRR.
I wouldn't say there is any new news there I do think if we go back and.
Digests that Q4 once again.
Comparing FY2023 of FY 'twenty, two I think we forget about how some of those comps were for FY 'twenty two.
And there were some material deals that fell into that timeframe and so when youre looking at it from a year over year perspective.
Think there was.
Proceed.
<unk>.
As we think about go forward and obviously, there's going to be a lot of numbers some of that noise gets zeroed out and so I think we're on the right rate of pace.
And we like what we see in the back half of this year.
Very helpful. Thanks.
Thank you.
And our next question coming from the line of Parker Lane with Stifel. Your line is open.
Hey, guys. Thanks for taking the questions here John I'm curious if you could give us a sense of the contribution that's coming from the channel today and those partnerships with KPMG and Microsoft for only formed over the last year, plus and where do you expect that could trend with these changes that Microsoft has made on the cross selling side.
Thanks Parker.
So obviously, it's still early in our relationship we're getting to know the folks in the Microsoft field were getting to do some.
Joint selling deals with them in a variety of reasons, but we have not done it in all the spaces.
Of our territories that we could do a lot of it is getting to know each of the people out there and getting the relationship formed between our sellers and theirs and I think we have.
We have made excellent progress, but there's more opportunity in front of us to go do that so I think there's space in front of us for us to grow similarly, with KPMG and we've had some very exciting.
Large wins with KPMG built up more of a practice around in test platform and technology that helped us win some of the large investment banks and deploy there which is a great opportunity space for us, but similarly, it's still early and they're just ramping up so I think the.
Majority of the opportunities ahead of us for really getting some leverage on the channel.
Got it Okay, and then on the AI applied AI developments you talked about there.
When I look at that should we think about that as something that's only available to your cloud based customers.
Is that enough of an incentive I guess down the road for people to actually switch if you're only providing some of that functionality as part of the cloud offering.
Yes, that's the case the AI capabilities are available in our cloud and as you know we're not doing.
Meaningful R&D on our on premises software and where we're supporting the clients that we haven't been with us for a long time, we're grateful and most of them have already talked to us about migrating to the cloud. It's more practical question about what's the right timing is for them within their overall I can project portfolio.
Sheridan some of the previous calls a very large percentage of our clients are now working with us.
In the cloud.
So.
Most of our clients do something that way already and it's just the remaining portion of their overall business that they need to migrate but to your point about AI I do think that absolutely as an incentive for people to move.
It's not the only reason some people want to go to the cloud because they won't go to the cloud that's the pattern.
Model and Covid really helped them understand they didn't get all of their local on premises systems into a cloud based system.
And Theres a lot of benefits on that alone, but AI is a further incentives, but I think it's really helping people to make that decision.
Yep understood perfect I'll jump back in thanks.
Thank you.
And our next question coming from the line of Matt <unk>.
<unk> with <unk> Your line is open.
Hey, good afternoon, thanks for taking the question.
John You mentioned a couple of larger investment banks that you have won deals with curious on how that corner of the financial services market has been trending what the pipeline maybe it looks like given the lack of capital markets activity.
As training some of the revenue there but.
Just curious on how much demand there is for modernizing around your solution.
Yeah, Hi, Matt Thanks, so the.
The large banks for midsize and large banks have been a great market for us where early it's one of the.
More recent additions, particularly for large and that we've been able to get some.
Real wins in.
I think theres, a couple of opportunities for us one.
These are large diverse flip banks and they are bringing us in to replace often in house built.
Custom applications that we've seen many times across the market, but each of them has built their own and they're really moving to a more.
Standardized.
E architecture, where they want to work with a supplier like us if we have a purpose built solution that can replace those traditionally in house built and maintained systems. So there's just a natural.
Division of Labour economic rationality argument to work with a partner like us coming from the I T Department and I think as they scrutinize their budgets and try to figure out what they wanted to do there is actually a natural reason for them to come to us and so I think that's a nice baseline of modernization demand. I also think there are several parts of the banks that have really grown they've each got the roadster.
<unk>, where theyre trying to explore opportunities across a range of products and we've been able to build applications to help them launch those new groups successfully.
So there's no question, we've said across all of the segments that we serve if there is a group that might feel more of the economic tensions probably the investment banks, but we have been doing well despite that reality as we've grown so we're watching it but we've been very excited about some of the deals that we've won.
Alright, very helpful. And then the subscription revenue came in quite a bit ahead of I think where we and most of the street wear on this.
Should we expect that there's still potential for some of these larger lumpier deals coming through.
And any thoughts on when you may be stopped selling new term licenses and sort of insist on everyone moving to the cloud in the future.
Well it is an option for us we've talked about the fact that we want to make sure that we get everybody to be working with our cloud platform.
Because there is no reason not to support them and have them move and we've had very good success moving people. So we haven't talked about.
A moment like that yet, but I think as.
As we get more of our clients onto the cloud platform, we're going to have an opportunity to help folks make them make the shift.
Alright, great. Thank you.
Thank you.
Next question coming from the line of from.
Ryan <unk> with Oppenheimer. Your line is open.
Thank you for taking my questions. This afternoon, John wanted to ask you about what youre seeing in terms of the different geographies I realize they are different size businesses.
Can you talk about the bookings and maybe the top of the funnel or the demand that youre seeing from North America versus the rest of the World and then I have a follow up.
Yeah.
So we've been growing pretty steadily actually the international portion of our business is about 30%.
Of the overall revenue and it's been growing pretty much in line. So we havent seen a big distinction between the North America growth rate and the rest of the world.
Yeah.
Thank you. So so even though north America is much bigger size than Europe that that's continuing to grow strongly I guess, that's my read through.
On that which sounds great and the follow up question I wanted to ask you was just on the topic of landing the bigger deals out there.
Is there a difference in terms of the concentration of those deals where they're coming from from your professional service says end market versus the financial services end market.
<unk>.
Yeah.
Thanks, Brian.
There are very large firms.
In both the financial services space and the professional services space.
And we have more in less time in some of the sub verticals that we've called on but the large firms are a huge opportunity that is newer for us as an organization and we've done a lot of work over the past few years to develop the technology to the point that we really are getting positive.
Feedback from some of the very largest firms out there. So I think that the growth opportunity both to land and expand significantly inside the very large firms whether it's the big four in accounting or the investment banks or the large multi strategy private capital firms or.
The big global consulting firms and law firms, where we have some very significant cross sell upsell opportunity I think we've got a deep space to sell into across those.
Thank you.
And I see we have no further questions in the queue. At this time I will now turn the call back over to Mr. John Hall for any closing remarks.
Okay.
I'd like to say, thank you to everyone. We appreciate your attention and your questions.
And we have a great Q1 behind us and we're excited about our start to the fiscal year.
Thanks for your time today, we look forward to talking to you next quarter.
Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.
Okay.
[music].
Okay.
[music].
[music].
Yes.