Q1 2024 Model N Inc Earnings Call

Operator: Good afternoon, and welcome to Model N's first quarter of Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Good afternoon and welcome.

To model N first quarter of fiscal 2024 earnings conference call. At this time, all participants are in a listen only mode.

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Operator: If anyone should require operator assistance during the conference, please press star 0. As a reminder, this conference is being recorded. With that, I would like to turn the call over to Carolyn Bass in Vested Relations. Please go ahead.

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As a reminder, this conference is being recorded with that we'd like to turn the call over to Carolyn bass Investor Relations. Please go ahead.

Good afternoon, welcome to model N's first quarter of fiscal 2020 earnings call. This is Carolyn bass Investor Relations for model N.

Carolyn Bass: Good afternoon. Welcome to Model N's first quarter of fiscal 2024 earnings call. This is Carolyn Bass, Investor Relations for Model N. With me on the call today are Jason Blessing, Model N's President and Chief Executive Officer, and John Ederberg, Chief Financial Officer. Our earnings press release was issued at the close of market and is posted on our website.

With me on the call today are Jason blessing.

<unk>, President and Chief Executive Officer, and John Edmunds, Chief Financial Officer.

Our earnings press release was issued at the close of market and is posted on our website.

Carolyn Bass: The primary purpose of today's call is to provide you with information regarding our first quarter performance and offer a financial outlook for our second quarter and fiscal year ending December 31, 2024. The commentary made in this call may include forward-looking statements. These four forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlooks.

Primary purpose of todays call is to provide you with information regarding our first quarter performance and offer a financial outlook for our second quarter and fiscal year ending December 31 2024.

The commentary made on this call may include forward looking statements.

These forward looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date.

We disclaim any obligation to update any forward looking statements or outlook.

Carolyn Bass: Actual results may differ materially; please refer to the risk factors in our most recent form, PEN-Q, filed with the SEC. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or isolation from, GAAP results.

Actual results may differ materially please.

Please refer to the risk factors in our most recent Form 10-Q filed with the SEC.

In addition, during today's call, we will discuss non-GAAP financial measures.

These non-GAAP financial measures should be considered in addition to not as a substitute or in isolation from GAAP results.

Carolyn Bass: Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in the earnings release issued today, which is available on our website. I encourage you to visit our investor relations website at investor.modeln.com to access our first quarter fiscal 2024 press release, periodic SEC report, and the webcast replay of this call. Finally, unless otherwise stated, all financial comparisons in this call will be made to our fiscal 2023 results. And with that, I will turn the call over to Jason.

Conciliations of the non-GAAP metrics to the nearest GAAP metrics are included in the earnings release issued today, which is available on our website.

I encourage you to visit our Investor Relations website at Investor Dot model N dot com to access our.

Our first quarter fiscal 2024 press release.

Periodic SEC reports.

The webcast replay of this call.

Finally, unless otherwise stated all financial comparisons in this call will be made to our fiscal 2023 results.

And with that let me turn the call over to Jason.

Jason Blessing: Thank you, Carolyn. And welcome to our call today. I am pleased to report that our first quarter results exceeded guidance for total revenue, subscription revenue, professional services revenue, and adjusted EBITDA. We also generated over $20 million in incremental cash flow from operations in Q1 versus the first quarter of last year. This metric is another proof point that demonstrates the overall health of our business and the progress we've made on our business model transformation. Our Q1 SAS ARR grew by 16% year over year, while our SAS net dollar retention was 115%. As we have said on the last two calls, we faced tough comparables this year in the first few quarters when compared to last year's record-setting SAS metric.

Thank you Carolyn and welcome to our call today I am pleased to report that our first quarter results exceeded guidance for total revenue subscription revenue professional services revenue and adjusted EBITDA. We also generated over $20 million in incremental cash flow from operations in Q1.

Versus the first quarter of last year.

This metric is another proof point that demonstrates the overall health of our business and the progress we've made on our business model transformation.

Our Q1, SaaS <unk> grew by 16% year over year, while SaaS net dollar retention was 115% as.

As we have said on the last two calls we faced tough comparable this year in the first few quarters when compared to last year's record setting SaaS metrics.

Jason Blessing: That said, we expect our SAS growth metrics to improve as we exit the year, and we are pleased with our start to 2024. Next, I'd like to share select business highlights from the quarter. I am encouraged by Q1 because we signed one of our last remaining large fast transitions. But more importantly, we saw meaningful contribution from our long-term growth drivers. The bookings mix included new logos and numerous customer-based deals, including transactions involving recently released products. I was also pleased to see a strong order from Business Services. In Q1, our new logo team posted a strong start to the year. In Life Sciences, I am pleased to announce a marquee win with the signing of Bayer Pharmaceuticals, a top 20 global pharma company that is currently going through its own transformation. Bear's broad portfolio includes many world-famous products that have shaped their iconic brand.

That said, we expect our SaaS growth metrics to improve as we exit the year and we are pleased with our start to 2024.

Next I would like to share select business highlights from the quarter I am encouraged by Q1, because we signed one of our last remaining large SaaS transitions, but more importantly, we saw a meaningful contribution from our long term growth drivers.

The bookings mix included new logos and numerous customer base deals, including transactions involving recently released products.

I was also pleased to see a strong quarter from business services.

In Q1, our new logo team posted a strong start to the year.

In life Sciences, I am pleased to announce a marquee win with the signing of bare pharmaceuticals, a top 20 global pharma company that is currently going through its own transformation.

<unk> broad portfolio includes many world famous products that have shaped their iconic brand.

Jason Blessing: This was a competitive win and included our full suite of cloud offerings, including all commercial, government pricing, and Medicaid solutions. Bayer sought a best-of-breed solution to address their revenue management challenges, which included many manual and outsourced processes. Additionally, Bayer is looking to establish a robust platform to support multiple upcoming product launches. Model N will be instrumental in supporting these new launches, while also delivering several operational improvements, resulting in a strong ROI when the system is fully deployed.

This was a competitive win and includes our full suite of cloud offerings, including all commercial government pricing and Medicaid solutions.

<unk> saw a best of breed solution to address their revenue management challenges, which included many manual and outsourced processes.

Additionally, bears looking to establish a robust platform to support multiple upcoming product launches.

Model N will be instrumental in supporting these new launches while also delivering several operational improvements, resulting in a strong ROI when the system is fully deployed.

Jason Blessing: In life sciences, we also continue to see solid growth within our customer base, led by new products that we're releasing. Novartis, a prominent Model N SAS customer, recently implemented Model N Engage, an innovative in-application guidance tool specifically designed to help users navigate the system, while also helping to enforce key operational and compliance controls.

In life Sciences, we also continue to see solid growth within our customer base led by new products that we're releasing.

Novartis, a prominent model and SaaS customer recently implemented modeling engaged in support of their focus on operational excellence.

Engage is model and innovative in application guidance tool specifically designed to help users navigate the system, while also helping to enforce key operational and compliance controls.

Jason Blessing: Engage also provides real-time analytics to customers and Model N to help identify where users are having challenges with system usability. This helps us to improve our user experience and empowers customers to streamline user procedures. The adoption of Engage at Novartis demonstrates this new product's ability to help companies be more successful with their models and investments, while also improving overall operational excellence. Also in Q1, Appellus Pharmaceuticals selected Global Launch Excellence to augment their existing deployment of Model N's global pricing management. Appellus is a global biopharmaceutical company that develops transformative medicines for people living with rare retinal and neurological diseases.

Engage also provides real time analytics to customers and model N to help identify where users are having challenges with system usability.

This helps us to improve our user experience and empowers customers to streamline user procedures.

The adoption of engaged at Novartis demonstrates this new products ability to help companies be more successful with their model and investments while also improving overall operational excellence.

Also in Q1 of <unk> Pharmaceuticals selected global launch excellence to augment their existing deployment of model Ns global pricing management.

<unk> is a global biopharmaceutical company that develops transformative medicines for people living with rare retinal and neurological diseases.

Jason Blessing: Model N's Global Launch Excellence Module will allow Apellis to create complex launch sequences by combining accurate price data, volume forecasts, and optimization algorithms to ensure that their therapies efficiently reach the patient populations that need them most. Turning to business services, during the quarter, we signed several customer expansions. One I'd like to highlight is at Moderna.

Model Ns Global launch Excellence module will allow a palace to create complex launch sequences by combining accurate price data volume forecast and optimization algorithms to ensure that their therapies efficiently reach the patient populations that need them most.

Turning to business services during the quarter, we signed several customer expansions.

One I'd like to highlight is that Madonna <unk> expanded their business services consumption to handle their membership contracted administration and rebates processing to support their growing business.

Jason Blessing: Moderna expanded their business services consumption to handle their membership, contract administration, and rebate processing to support their growing business. Moderna is also a case study of how business services allows us to engage with an emerging pharmaceutical company and quickly provide fully outsourced revenue management to enable them to deliver their life-changing products to the world. Another terrific example of business services enabling a growth company is at United Therapeutics. United Therapeutics is an existing Model N customer and needed help dealing with the increasing complexity of state price transparency regulations.

<unk> is also a case study on how business services allows us to engage with an emerging pharmaceutical company and quickly provide fully outsourced revenue management to enable them to deliver their life changing products to the world.

Another terrific example of business services, enabling a growth company is that United Therapeutics.

United Therapeutics has an existing model and customer and needed help dealing with the increasing complexity of state price transparency regulations to.

Jason Blessing: To address this need, this customer selected our newly released State Price Transparency Management Business Services offering. This solution will enable United Therapeutics to accelerate their path to compliance and to ensure that their future state price compliance needs will be properly managed, regardless of the changes in regulation. Moving on to SAS transitions, during the quarter, we signed one of our few remaining SAS transitions with Teva Pharmaceuticals. Teva is the global leader in generic drug manufacturing, supplying affordable medicines to nearly 200 million people across six continents every day.

To address this need this customer selected our newly released state price transparency management business services offering.

This solution will enable United therapeutics to accelerate their path to compliance and to ensure that their future state price compliance needs will be properly managed regardless of the changes in regulations.

Moving on to SaaS transitions during the quarter, we signed one of our few remaining SaaS transitions with Teva pharmaceuticals.

Teva is the global leader in generic drug manufacturing supplying affordable medicines to nearly 200 million people across six continents every day.

Jason Blessing: This deal extends the 20-plus-year revenue management partnership between our two companies. Our SaaS platform will allow Tabit to more easily take advantage of innovations and to operate more efficiently while maintaining compliance. Turning to high tech, this segment continues to show green shoots and posted a strong Q1 that included customer expansions and two new logo wins. The first new logo is Taiwan Semiconductor, a multinational semiconductor design and manufacturer that also owns the world's first dedicated semiconductor foundry.

This deal extends the 20 plus year revenue management partnership between our two companies.

Our SaaS platform will allow cabot to more easily take advantage of innovation and to operate more efficiently while maintaining compliance.

Turning to high Tech. This segment continues to show Green shoots and posted a strong Q1 that included customer expansions and two new logo wins.

The first new logo is Taiwan semiconductor a multinational semiconductor design and manufacturer that also owns the world's first dedicated semiconductor foundry tayo.

Jason Blessing: Taiwan Semiconductor is planning to grow its business globally, especially through its distribution channel, but it is limited by a combination of manual and homegrown systems. It needed a platform to build a consistent global approach to pricing, quoting, and point of sale integration. After a thorough evaluation, Taiwan Semiconductor chose Model N's Channel Data Management and Revenue Cloud to automate these key processes to support their future growth. We also signed another new logo in high tech with a company that designs and manufactures power conversion, measurement, and control solutions that are used by a wide variety of industries. During our sales cycle, we worked with the customer to identify significant operational improvements using Model N that would result in efficiencies in pricing strategies and a meaningful reduction in revenue leakage.

Taiwan semiconductor is planning to grow their business globally, especially through their distribution channel, but they are limited by a combination of manual and homegrown systems.

They needed a platform to build a consistent global approach to pricing quoting and point of sale integration.

After a thorough evaluation, Taiwan semiconductor chose model N channel data management and revenue cloud to automate these key processes to support their future growth.

We also signed another new logo and high Tech with a company that designs and manufactures power conversion measurement and control solutions that are used by a wide variety of industries.

During our sales cycle, we worked with the customer to identify significant operational improvements using model N that will result in efficiencies and pricing strategies and a meaningful reduction in revenue leakage.

Jason Blessing: This customer also plans to use Model N as an enabler for future acquisitions, given that Model N will allow them to quickly implement key channel incentive and pricing strategies into the newly acquired business. It is gratifying to see both of these new high-tech customers turn to Model N as a strategic partner to enable their growth strategies. Turning to professional services, our team exceeded expectations with another strong quarter.

This customer also plans to use model N as an enabler for future acquisitions, given that model and will allow them to quickly implement key channel incentive and pricing strategies into the newly acquired business.

It is gratifying to see both of these new high Tech customers turned to model N as the strategic partner to enable their growth strategies.

Turning to professional services, our team exceeded expectations with another strong quarter with.

Jason Blessing: The results of our professional services organization symbolize the strong demand for our mission critical solutions as companies seek to drive top and bottom line improvement. Our professional services team continues to do a terrific job of getting new customers live on time and on budget. One project that I'd like to call out is Genentech and their successful fast transition to support their pharma business. Genentech is the latest example of our team working closely with a longtime customer with a very complex configuration and successfully moving them to our cloud platform. This project also includes the implementation of our proprietary testing suite that helps pharma companies more easily maintain compliance with internal audits while also being able to quickly adopt innovation and regulatory updates.

The results of our professional services organization symbolize the strong demand for our mission critical solutions as companies seek to drive top and bottom line improvements.

Our professional services team continues to do a terrific job of getting new customers live on time and on budget.

One project that I would like to call out as Genentech and their successful SaaS transition to support their pharma business <unk>.

<unk> is the latest example of our team working closely with a longtime customer with a very complex configuration and successfully moving them to our cloud platform.

This project also includes the implementation of our proprietary testing suite that helps pharma companies more easily maintain compliance with internal audit, while also being able to quickly adopt innovation and regulatory updates.

Jason Blessing: Again, congratulations to Genentech and our services team for achieving this important milestone in our relationship. As we focus on future growth, we continue to build new products in collaboration with our customers. One recent example is price management for Hitech, a new product that enables manufacturers to simultaneously manage price execution across direct and indirect channels globally. This new module is fully integrated with our deal management product and streamlines pricing updates to enable tight pricing control and real-time market execution of changes. Finally, earlier today, we issued our new 2024 State of Revenue Report.

Again, congratulations to Genentech and our services team for achieving this important milestone in our relationship.

As we focus on future growth, we continue to build new products in collaboration with our customers.

One recent example is price management for high Tech and new product that enables manufacturers to simultaneously manage price execution across direct and indirect channels globally.

This new module is fully integrated with our deal management product and streamlines pricing updates to enable tight pricing control and real time market execution of changes.

Finally earlier today, we issued our new 2024 state of revenue report. This marks our sixth annual report, which identifies the top challenges and opportunities for pharmaceutical Med Tech and high Tech manufacturers.

Jason Blessing: This marks our sixth annual report, which identifies the top challenges and opportunities for pharmaceutical, medtech, and high-tech manufacturers. This report is based on the results of a survey of more than 300 C-suite executives directly responsible for revenue management. Three themes stand out to me in the 2024 report because they reflect the dynamic operating environment that has become the new normal. And each is something that Model N can help our customers address. The three themes are executives naming process efficiency and cost savings as top priorities in this operating environment and are increasingly looking to advanced analytics and AI to achieve these priorities. For a second year in a row, supply chain disruption emerged as one of the top obstacles across all industries. And finally, pharmaceutical executives do not see the pace of regulatory change slowing down anytime soon.

This report is based on the results of a survey of more than 300 C suite executives directly responsible for revenue management.

Three themes stand out to me in the 2024 report because they reflect the dynamic operating environment that has become the new normal and each are something that modeling can help our customers address.

The three themes are executives named process efficiency and cost savings as top priorities in this operating environment and are increasingly looking to advanced analytics and AI to achieve these priorities.

For a second year in a row supply chain disruption emerged as one of the top obstacles across all industries.

And finally pharmaceutical executives do not see the pace of regulatory change slowing down anytime soon.

Jason Blessing: These insights help us better understand how to tailor our solution to empower our customers to create and bring their life-changing products to the world. I encourage all of you to read the 2024 State of Revenue Report by downloading it from our website at modeln.com. Let me conclude by saying that I'm pleased with our continued execution, and I am proud of the leverage we're showing on our bottom line as we navigate the end of our business model transition. We are also posting tangible proof points that our long-term growth levers of new logos, customer expansion, and product innovation continue to mature and are materially contributing to our bookings. I'd also like to thank Model N'ers around the world that continue to focus on customer success, our Darapora values, and driving profitable growth.

Insights help us better understand how to tailor our solutions to empower our customers to create and bring their life changing products to the world.

I encourage all of you to read the 2024 state of revenue report by downloading from our website at model N Dot com.

Let me conclude by saying that I'm pleased with our continued execution and I am proud of the leverage we're showing on our bottom line as we navigate the end of our business model transition.

We are also posting tangible proof points that our long term growth levers of new logos customer expansion and product innovation continued to mature and are materially contributing to our bookings.

I'd also like to thank model centers around the world continue to focus on customer success are their core values and driving profitable growth because of you. We kicked off the year with a solid Q1 and I am excited about the year ahead.

Jon: Because of you, we kicked off the year with a solid Q1, and I am excited about the year ahead. With that, I'll turn the call over to Jon to discuss our Q1 financial results and offer our outlook for Q2 and fiscal 2024. Jon?

With that I'll turn the call over to John to discuss our Q1 financial results and offer our outlook for Q2 and fiscal 2024.

John.

Jon: Thank you, Jason. And good afternoon to everyone on the call today. As Jason noted, we had a very solid start to fiscal year 2024, with Q1 results exceeding our expectations for revenue, adjusted EBITDA, and free cash flow. I was particularly pleased by our free cash flow performance, which hit $43.5 million for the trailing 12 months ending Q1, and was up 172% on a year-over-year basis. Looking specifically at our financial results for the first quarter, total revenue grew 7% to $63.5 million, which exceeded the high end of our guidance range, driven by upside on both subscription and professional services revenue. Subscription revenue increased by 8% to $47.7 million, while professional services revenue grew by 6% to $15.8 million, both above guidance. In terms of our profitability, please keep in mind that we'll be discussing non-GAAP numbers, and a full reconciliation of our results is provided in our earnings release. For the first quarter, total non-GAAP gross profit was $38.3 million, representing a gross margin of 60.3%.

Thank you, Jason and good afternoon to everyone on the call today is <unk>.

Jason noted we had a very solid start to fiscal year 2024, with Q1 results exceeding our expectations for revenue adjusted EBITDA and free cash flow.

Particularly pleased by our free cash flow performance, which at $43 5 million for the trailing 12 months, ending Q1 and was up 172% on a year over year basis.

Looking specifically at our financial results for the first quarter.

Total revenue grew 7% to $63 5 million, which exceeded the high end of our guidance range driven by upside on both subscription and professional services revenue.

Subscription revenue increased by 8% to $47 7 million, while professional services revenue grew by 6% to $15 8 million and both were above guidance.

In terms of our profitability. Please keep in mind that we'll be discussing non-GAAP numbers and a full reconciliation of our results is provided in our earnings release.

For the first quarter total non-GAAP gross profit was $38 3 million, representing a gross margin of 63%.

Jon: Non-GAAP subscription gross margin was 68.4%, and non-GAAP professional services gross margin was 35.8% in Q1, in line with Q1 of last year. Adjusted EBITDA was $9.9 million, representing a margin of 15.5% and above the high end of our guidance range for the quarter. And finally, non-GAAP earnings per share was $0.28 based on a fully diluted shares outstanding of $39.1 million.

non-GAAP subscription gross margin was 68, 4% and non-GAAP professional services gross margin was 35, 8% in Q1 in line with Q1 of last year.

Adjusted EBITDA was $9 9 million, representing a margin of 15, 5% and above the high end of our guidance range for the quarter.

And finally non-GAAP earnings per share was 28 based on a fully diluted shares outstanding of $39 1 million.

Jon: This was slightly below our guidance due to some variance on below-the-line items, including interest income and foreign exchange. Turning to our SAS metrics for Q1, our SAS ARR reached 134.8 million, which was an increase of 19 million or 16% versus Q1 of last year. In addition, trailing 12-month fast net retention was 115% in Q1. These results were right in line with our expectations. As we discussed on our last call, we are facing difficult comparisons for our SAS metrics over the first two to three quarters of this year due to the SAS transition activity last year. Next quarter, our fiscal Q2 is expected to be the most difficult comparison. However, we do expect growth to trend back up at the end of fiscal 2024 when we get back to more normal year-over-year comparisons. In terms of the balance sheet, we ended Q1 with $303 million in cash and equivalents, which was up $2 million sequentially from September.

This was slightly below our guidance due to some variance on below the line items, including interest income and foreign exchange.

Turning to our SaaS metrics for Q1, our SaaS <unk> reached $134 8 million, which was an increase of $19 million or 16% versus Q1 of last year.

In addition, trailing 12 month SaaS net retention was 115% in Q1 these.

These results were right in line with our expectations.

As we discussed on last call, we are facing difficult comparisons for our SaaS metrics over the first two to three quarters of this year due to SaaS transition activity last year.

Next quarter, our fiscal Q2 is expected to be the most difficult comparison.

However, we do expect growth to trend back up at the end of fiscal 2024, when we get back to more normal year over year comparisons.

In terms of the balance sheet, we ended Q1 with $303 million in cash and equivalents, which was up 2 million sequentially from from September <unk>.

Jon: We also had sequential increases in accounts receivable at $83 million for Q1 and deferred revenue at $74 million for Q1, all due to a record quarter of invoices. Finally, as mentioned, Q1 was a very strong quarter from a free cash flow standpoint, with trailing 12-month free cash flow increasing to $43 million from $23 million last quarter. Turning to remaining performance obligations, our total RPO for Q1 was $349 million, which is up 3% on a year-over-year basis. The current portion of our RPO balance was up to $160 million, representing growth of 11% year-over-year and up 8% sequentially from Q4. As I have previously noted, our total RPO growth has been impacted over the last few years by long-term SAS transition deals, many of which had contract lengths well in excess of three years.

I also had sequential increases in accounts receivable at 83 million for Q1 and deferred revenue at 74 million for Q1.

Due to our record quarter of invoicing.

Finally, as mentioned Q1 was a very strong quarter from a free cash flow standpoint, as trailing 12 months free cash flow increased to $43 million from $23 million last quarter.

Turning to remaining performance obligations or total RPM for Q1 was $349 million, which was up 3% on a year over year basis. The current portion of our RPM balance was up to $160 million representing growth of 11% year over year and up 8% sequentially from Q4.

<unk>.

As I previously noted our total RPM growth has been impacted over the last few years by long term SaaS transition deals.

Many of which had contract lengths well in excess of three years.

Jon: As renewals and other non-SAS transition bookings become a bigger proportion of the total, we are seeing our average contract length and RPO return to a more normalized level. Looking ahead, as we said on our last call, we are still in a period of business model transition during fiscal 2024, where solid growth in SAS revenue will be partially offset by declines in maintenance revenue. Once we are completely through the SAS transitions and the business model normalizes, we believe that we can return to double-digit total subscription growth over the medium term. And I would refer you to the investor deck on our website for more details on our midterm financial targets, which we outlined on our last earnings call. In terms of our guidance for the remainder of fiscal 2024, we are raising our outlook for subscription revenue and total revenue, reflecting our subscription performance in Q1, and maintaining our guidance for adjusted EBITDA and non-GAP earnings per share, which calls for continued margin improvement versus last year.

As renewals and other non SaaS transition bookings become a bigger proportion of the total we're seeing our average contract length and <unk> returned to a more normalized level.

Looking ahead as we said on our last call. We are still in a period of business model transition during fiscal 2024, our solid growth in SaaS revenue will be partially offset by declines in maintenance revenue.

Once we are completely through SaaS transitions in the business model normalizes, we believe that we can return to double digit total subscription growth over the medium term and I refer you to the investor deck on our website for more details on our mid term financial targets, which we outlined on our last earnings call.

In terms of our guidance for the remainder of fiscal 2024, we are raising our outlook for subscription revenue and total revenue, reflecting our subscription performance in Q1, and maintaining our guidance for adjusted EBITDA and non-GAAP earnings per share, which calls for continued margin improvement versus last year.

Jon: Specifically, for fiscal 2024, we expect total revenue to be in the range of $260.5 to $263.5 million, with subscription revenue in the range of $193.5 to $195.5 million, and professional services revenue to be in the range of $67 to $68 million. We expect adjusted EBITDA to be in the range of $48 to $51 million and non-GAAP EPS to be between $1.25 and $1.32 per share based on a fully diluted share count of approximately 40.1 million shares. For the second quarter of fiscal 2024, we expect total revenue to be in the range of $63.5 to $64.5 million, with subscription revenue in the range of $48.5 to $49 million, and professional services revenue in the range of $15 to $15.5 million. We expect Adjusted EBITDA to be in the range of $9 to $10 million, and for non-GAAP EPS, we are expecting a range of $0.24 to $0.27 per share based on a fully diluted share count of approximately 39.7 million shares. As a reminder, there is some seasonality in our business, and our second fiscal quarter is the period when we see increased expenses for payroll taxes and other benefits. As a result, the second quarter is typically the low-water mark for Adjusted EBITDA margin during the year.

For fiscal 2024, we expect.

Total revenue to be in the range of $2 65 to $2 $63 5 million with.

With subscription revenue in the range of 193 5 million to $195 5 million and professional services revenue to be in the range of $67 million to $68 million.

Expect adjusted EBITDA to be in the range of $48 million to $51 million and non-GAAP EPS to be between $1 25, and $1 32 per share based on a fully diluted share count of approximately $40 1 million shares.

For the second quarter of fiscal 2024, we expect.

Total revenue to be in the range of 63, 5% to $64 $5 million with subscription revenue in the range of 48, 5% to $49 million and professional services revenue in the range of 15% to $15 5 million.

We expect we expect adjusted EBITDA to be in the range of $9 million to $10 million and for non-GAAP EPS. We are expecting a range of 24 to <unk> 27 per share based on a fully diluted share count of approximately $39 7 million shares.

As a reminder, there is some seasonality to our business in our second fiscal quarter as the period. When we have seen increased expenses for payroll taxes and other benefits as a result, the second quarter is typically the low watermark for adjusted EBITDA margin during the year.

Jon: To summarize, Q1 was a strong start to fiscal 2024, and we continue to execute well. We are getting through the final stages of our business model transformation, while at the same time still driving top-line growth, margin improvement, and strong free cash flow. With that, I'll turn the call over to the operators for any questions.

To summarize Q1 was a strong start to fiscal 2024, and we continue to execute well we're getting through the final stages of our business model transformation, while at the same time still driving topline growth margin improvement and strong free cash flow with that I'll turn the call over to the operator for any questions operator.

Thank you we will now be conducting a question answer session if you'd like to ask a question. Please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. The first question comes from Ryan MacDonald with Needham and Company. Please go ahead.

Robert Please while we poll for questions.

First question comes from Ryan Macdonald with Needham <unk> Company. Please go ahead.

Ryan Macdonald: Hi, thanks for taking my questions. Jason, maybe to start, you know, great to hear about the bookings commentary and, obviously, the continued progress on the SAS transition. You noted in your remarks sort of this confidence in returning to double-digit growth, you know, and sort of growth improvements as we get into the later parts of the year. Once some difficult comps sort of pass through, I guess early in the year as you're sort of having pipeline building discussions and start to see some of that progression, can you talk about what the environment, in terms of spending, is that gives you confidence sort of in that trajectory? And, you know, in regards to the SAS transitions, as we've now passed over the end of support date, how has the conversation shifted with the remaining customers? www.microsoft.com.

Hi, Thanks for taking my questions, Jason maybe I'll start.

Great to hear about the bookings commentary and obviously the continued progress in the SaaS transition you noted in your remarks sort of this <unk>.

Confidence in returning.

The double digit growth.

And sort of growth improvement as we get into the later parts of the year.

And once the once some difficult comps sort of pass through I guess early in the year as youre sort of having pipeline building discussions and starting to see some of that progression can.

Can you talk about what the environment in terms of spending environment is that gives you confidence sort of in that trajectory in.

In regards to the SaaS transitions as we've now passed over the end of support date.

Has the conversation shifted with the remaining customers.

Yes.

Jason Blessing: Thank you for listening. We'll see you next time. Yeah, a good series of questions in there, Ryan. Thanks. Let me unpack that.

A good series of questions in there right.

Jason Blessing: So first of all, on the macro environment, I think we were one of the first companies in our space in fiscal Q2 last year to call out some deal elongation cycles and delayed fast transitions and a little bit of softness in discretionary spend. And as the year went on, we subsequently followed up that commentary with statements indicating that we didn't see the demand environment deteriorating anymore, and I think as we come into this year, you know, we feel like we're in a more stable environment, particularly as we have a better sense of things like invested interest rates and some of the other key metrics. So I would say that the backdrop has not deteriorated, and I also think in our particular corner of the world, things like regulatory changes continue to drive demand.

So first of all on the macro environment I think we were one of the first quarter.

<unk> in our space in our fiscal Q2 last year to call out some deal elongation cycles of delayed SaaS transitions.

A little bit of softness in discretionary spend as year wed be subsequently followed up that commentary with statements.

Didn't we didn't see the demand environment deteriorating anymore, I think as we come into this year.

We feel like we're in a more stable environment, particularly as we have a better market has a better sense of things like this.

Interest rates and some of the other key metrics. So I would say the backdrop has not deteriorated and I also think our particular corner of the world things like regulatory changes.

Continue to drive demand.

Jason Blessing: And then in terms of, you know, as I look at our pipeline this year, one of the things that I'm encouraged about, you see in our reported results, we are expecting to have a nice contribution from new logos as well as our customer base, and you certainly see that with some of the new logos posted in Q1, and we have a good pipeline as we look forward this year, and I would say a great team on the new logo side. And then I mentioned this on our last call as well; into the last year, we had a lot of customers that were in a little fast transition. As we end this year, we have essentially the full base starting to come back to us and really presenting the full opportunity to sell into the base for $50,000.

And then in terms of.

Look at our pipeline this year one of the things that I'm encouraged about it.

Our reported results.

We are expecting to have a nice contribution from new logos as well as our customer base.

We certainly see that with some of the new logos posted in Q1.

Pipeline as we look forward share.

Great team on the new logo side.

We mentioned this on our last call as well.

Last year, we had a lot of customers.

Past transitions.

And this year, we have essentially the full base starting to come back to us and really presenting the full opportunity to sell into the base.

Jason Blessing: And then in terms of, now that we're officially past end of life on December 31st, you know, when I look at our customer base now, as we reported on our last call, we're, you know, more than 80% converted or in the process of converting. I mean, literally talking about a handful of customers. And we have really good visibility into when those customers will convert. And we're also a strong partner with customers who said, hey, we've got a roadmap and a path to move forward. We'll continue to support you even while you're in transition, even though the support for on-premise has lapsed. And that's been a message well-received by our few remaining customers that are transitioning. Great to hear.

Okay.

And then in terms of now officially passed in late December 31.

When I look at our customer base now as we reported on our last cohort yet.

More than 80% converted.

We're in process payments, I mean, literally talking about a handful of customers.

We have really good visibility into when those customers will convert and we're also partnering.

Okay.

The path to move forward, we will continue to support even better.

While you're in transition.

The support for on premise edge labs and Thats.

Our message well received by our few remaining customers that are transitioning.

That's great maybe just as a follow up on product great to see the launching of price management.

Jason Blessing: Maybe just as a follow-up on the product, great to see the launch of price management, you know, within sort of the semiconductor and high-tech arena. I'm just curious, as you think about the rollout of this offering to that segment of the customer base and the adoption curve, how do you expect that to compare relative to pricing management that you had on the life sciences side? And forgive me if we're not knowing, but is there any sort of regulatory impetus on the high-tech side that you might lend support like you got on the core life sciences business? Thanks. A good question,

Within the sort of the semiconductor and high Tech Arena.

I'm just curious as you think about the rollout of this offering to that segment of the customer base in the adoption curve. How do you expect that to compare relative to pricing management that you had on the life Sciences side and forgive me if for not knowing but is there any sort of regulatory impetus on the high tech side.

That you might when support like you've got on.

Core life Sciences business.

Good question. So this particular new product on the high tech side, not something driven by regulatory.

Jason Blessing: So this particular new product on the high-tech side is not something driven by any regulatory changes. It's really to address the need that we partnered with a couple of customers to build where oftentimes the price book and market the price book of where prices are stored and some of the dynamics of the time of the market where competitors are discounting cash, and it can take a customer some time to get up to the front line and enable sales reps to be in compliance with internal policy, yet also address some of the real-time competition that they see out there. So, this is a product that you can think of it as a complement to our deal management product and was built in conjunction with a couple of customers.

Chambers.

Really to address that need.

Partnered with a couple of customers to build where oftentimes the private book and market. The price spoke of workplaces, historically and some of the dynamics Mark.

Sure.

Discounting Ashton.

And there is some time to get to.

So the frontline and enable sales reps to be in compliance with internal policies. Yet also address some of the real time competition.

Out there. So this is a product that is.

Think of it as a complement to our deal management.

Correct.

<unk> was built in conjunction with a couple of customers.

Jason Blessing: And by the way, this is also something that has been asked for by other customers. So, I think it's going to be very well-received. We've got a customer advisory board coming up in a few weeks where we'll demonstrate this product. We've got Rainmaker coming up here in June, which will be here before we know it. And between that and the standard and the improvement we're doing with our sales force, I'm excited about this product, and I think it's really going to make a difference, particularly in these segments like semiconductors where margins are so reserved. I appreciate the color.

And by the way. This is also something that had been asked for by other customers. So I think it's going to be very well received we've got.

Advisory Board coming up with a few weeks, where we will demonstrate this product we've got rainmaker coming up here in June was up the year before we know.

I mean.

Standard enablement, we're doing with our sales force.

It's product that can truly make a difference particularly in these.

Segment, a conductor where margins are facilities.

I appreciate the color thanks for taking my questions.

Jason Blessing: Thanks for taking my questions. Drone. The next question comes from Joe Vruwink with Baird. Please go ahead. Great. Thanks for taking my questions. Jason, I wanted to go back to the BuyerWin.

Thanks Ryan.

Next question comes from Joe Hi, Joe <unk> with Baird. Please go ahead.

Great. Thanks for taking my questions, Jason I wanted to go back to the buyer when you mentioned in the comments there thinking about future pipeline.

Joseph D. Vruwink: You mentioned in the comments that they're thinking about future pipelines and wanting to ready the right technology around the business strategy for this pipeline. But I think over the past year, the feedback from a lot of vendors serving pharma has actually been kind of the opposite. We are hearing from customers that they don't know what the pipeline is going to bring, and so they're kind of delaying new tech decisions. Not to put words in your mouth, but this seems more like an offense to your customers. Is that maybe more pervasive?

Wanted to ready the right technology around the business strategy with us pipeline.

I think over the past year, the feedback from a lot of vendors serving pharma has actually been kind of the opposite.

We are hearing from customers. They don't know what the pipeline is going to bring and so theyre kind of delaying new tax decisions.

Not to put words in your mouth, but it seems more like offense at your customers is that maybe more pervasive is that beginning to become more of a offense of decision, making process and if thats true what sort of model N solutions might actually starts.

Jason Blessing: Is it beginning to become more of an offensive decision-making process? And if that's true, what sort of Model N solutions might actually start to register an uptick relative to what the prevailing experience has been? Joe. Thanks for the question. Can you hear me?

To register an uptick relative to what the prevailing experience has been.

Joe.

Thanks for the question Joe can you hear me I've just been told we're having some audio issues.

Jason Blessing: I've just been told we're having some audio issues. So far, so good. You were breaking up earlier, but I hear you now.

So far so good you were breaking up earlier, but I hear you now.

Jason Blessing: Okay, wonderful. Yeah. So, this question of the drug pipeline and customers playing offense or defense, I think, is an interesting one. Some customers certainly have robust pipelines and a unique growth opportunity in front of them. Bayer is certainly one of those.

Okay wonderful.

Yes so.

The question of drug pipeline and customers playing offense or defense I think is an interesting one some customers certainly have robust pipelines and energy.

Unique growth opportunity in front of them. There is certainly one of those obviously <unk> been selling there in general in the.

Jason Blessing: Obviously, if you've been following Bayer in general in the news, they're going through a bit of a business model transition on their own. And I think, you know, making strategic evaluations on different parts of the business, this isn't anything confidential. It's obviously been well reported in the business trade with Roundup and the Montanto acquisition.

It is theyre going through a bit of a business model transition on their own and.

Making strategic evaluations on different parts of the business. This isn't anything confidential, it's obviously been well reported in business trade.

With Roundup and the Monsanto acquisition.

Jason Blessing: But certainly, in terms of how they're partnered with us, they're really good at their pharma business, and you have a good pipeline. Maybe that differentiates them from some of their other partners in the industry, but they certainly do have a good pipeline of drugs coming up that they've been talking about. And Bayer's one of those companies that I guess had kind of neglected revenue management, and they're an SAP customer, and they had patched together a revenue management solution that was some SAP stuff, some custom stuff, some manual stuff. And I think they finally got to a point where they just said, hey, there's so much ROI here and so much leakage that's happening and so much infrastructure we're going to need as we're reinventing the company and refocusing on pharma and some of these launches. Let's turn to the industry leader. And so, of course, we were the beneficiaries of that.

But certainly in terms of how they're partnered with US they are really excited about their pharma business and.

Pipeline differentiates them from some of your other partners in the <unk>.

Industry, but they certainly do have a good pipeline of products coming up that <unk> been talking about.

There is one of those companies that I guess that kind of neglected revenue.

There.

SAP customer and they had growth and together our revenue management.

Solution that was some SAP stuff some custom stuffs Emmanuel stuff and I think they finally got to a point, where they just said hey, there is so much Roy here. So much leakage, that's happening and so much infrastructure, we're going to need as we're reinventing the company and refocusing on pharma and some of these launches, let's turn to the industry leader and so.

We were the beneficiary of that I think the other important point I would mention on there.

Jason Blessing: I think the other important point I would mention about Bayer is that they basically bought our core footprint to help with commercial and government pricing. And there's also, I think, a pretty interesting set of additional areas where we can help them after we get them live on this initial phase, additional modules in the U.S. plus potential international expansion. So we're excited to welcome Bayer to the Model N family, and I think we can really help this iconic brand. Okay, that's great.

They basically bought our core footprint to help with <unk>.

Commercial and government pricing and there is also I think a pretty interesting set of additional areas, where we can help them. After we get them live on this initial phase additional modules in the U S plus potential international expansion. So we're excited to welcome bear to the model and family I think we can really help this iconic brand.

Okay, that's great.

Jason Blessing: And I want John, you know, SAS ARR up 16% in 1Q, slower than that in 2Q just because of the comps and then trending back up towards year-end. Should we conclude that, therefore, 4Q SAS growth is faster than what you just did in 1Q? And, you know, so far in terms of your CRPO bookings and where the pipeline stands, you know, is everything still kind of supportive of that outlook for a stronger second half of the year? You're a bit, a bit quiet.

And then one for John.

Yes, SaaS AAR.

Up 16% and <unk> slower than that in Q2, just because of the comps and then trending back up towards year end.

Should we make the read that therefore, <unk> SaaS growth is faster than what you just said and what <unk> and <unk>.

So far in terms of your <unk> bookings and where the pipeline stands as everything is still kind of supportive of that outlook for a stronger second half of the year.

Yes.

Okay.

And with the audio connection.

Scott.

You are a bit a bit quiet.

Okay.

Okay.

Jon: All right, any better there? Yeah, much better. OK. So, yes, in terms of the SAS ARR metric for Q1, and then also the outlook for the year, the comments are correct. We did have a little bit of pressure on the year-over-year growth in Q1, and we expect that to be an even more difficult comparison in Q2. When you look at last year, I believe we were up 40 percent year-over-year on that number, and so it's a pretty tough comp for Q2. But then after Q2, we can see a path towards improving metrics over the second half of the year and closing out the year at a higher level. We'll still have to book some business between now and then, but we feel like we've got a decent line of sight in terms of how that metric is going to perform over the course of the year. Okay, great. Thank you very much.

Alright, any better there.

Yes, much better.

Okay.

So.

Yes in terms of the SaaS AAR metric and in Q1, and then and then also the outlook for the year.

The comments are correct, we did have.

A little bit of pressure on the year over year growth in Q1, and we expect that.

To be.

Even more difficult comparison in Q2, when you look at last year I believe we're up 40% year over year for that number and so it's a pretty tough comp for Q2.

But then after Q2, we can see a path towards improving metrics over the second half of the year and in closing out the year at a higher level.

We will still have to we will still have to book some business between now and then but we feel like we've got decent line of sight in terms of how that metric is going to perform over the course of the year.

Okay, great. Thank you very much.

Jon: Yep. Next question is from William McNamara with BTIG. Please go ahead.

Yep.

Next question William Blake Nomura with BPI. Please go ahead.

Hi, guys. This is bill on for Matt I wanted to follow up on the price management tool and Tech question is there any insight you can give us about kind of the total addressable market you are seeing for this product.

Bill: Hi guys, this is Bill on for Matt. I want to follow up on the price management tool and tech question. Is there any insight you can give us about kind of the total addressable market you're seeing for this product? Yeah, so I mean, we've talked about our high tech Pam being around.

Yes, so I mean, we've talked about our high tech.

And being around.

Jason Blessing: And what we've found as we've been rolling out some of these new add-on products, they have the opportunity to provide anywhere from 10 to 30 percent uplift based on what a customer, an existing customer, is paying us. So these smaller, you know, quote, smaller products that we're rolling out are add-on products, probably a better way to characterize them, really do have a meaningful impact on our TAM. And they also give us fresh new things that we can bring to our customers and address issues that are top of mind. So we're excited about this. And, you know, as I've said in past calls, and this is no exception, every new product that we build, we're actually building it in conjunction with a handful of customers to make sure we get the usage patterns and functionality correct.

$1 billion and what we've found as we've been rolling out some of these new add on products.

They have the opportunity to provide anywhere from 10% to 30% uplift based on what our customer existing customers is paying us. So these these smaller both smaller products that we're rolling out or add on products is probably a better way to characterize them really do have a meaningful impact on our Tam.

They also give us fresh new things that we can bring into our customers.

And address address issues that are that are top of mind. So we're excited about this.

As I've said I think in past calls and this is no exception.

New product that we build we're actually building it in conjunction with a handful of customers that make sure we get the usage patterns and functionality.

Jason Blessing: For this product, we don't have the name rights to be able to actually say those customers, but rest assured, this is being battle-tested with some customers. I think it's going to be really well received as we share it with some of our customer advisory board companies that would be great candidates for it, as well as bring it to Rainmaker in a few months and demonstrate it.

Correct for this product we don't have the name rights to be able to actually say those customers, but rest assured this is being battle tested with with some customers I think it's going to be really well received as we share it with some of our customer Advisory board.

Companies that would be great candidates for it as well as bring at the rainmaker in a few months and and demonstrate it.

Great. Thanks for taking my questions.

Adam Hotchkiss: Thanks for taking my questions. Next question, Adam Hotchkiss with Goldman Sachs. Please go ahead.

Thanks, Laura.

Next question, Adam <unk> with Goldman Sachs. Please go ahead.

Jason Blessing: Great, thanks for taking the questions. I'd be curious how you're positioning the salesforce now that you're mostly past the SAS transitions. Do you see a significant amount of capacity that's being freed up here for customer success and other expansion activities? And then how do you think that piece will impact net revenue expansion, if at all, over the next few quarters and into the next fiscal year? Yeah, thanks for the question, Adam. I'll take the first part of that.

Great. Thanks for taking the questions I'd be curious how you are positioning the sales force now that you're mostly passed the SaaS transitions do you see a significant amount of capacity that's being freed up here for customer success and other expansion activity and then how do you think that piece impacts net revenue expansion if at all over the next few quarters.

Into next fiscal year.

Yeah. Thanks for the question Adam I'll take the first part of that so.

Jason Blessing: So, the same sales force that's been selling SAS transition then transitions on and sells add-on products or cross-sell, up-sell. And the three motions that we've, sales motions that we've talked about for cross-sell, up-sell are adding new products or expanding the footprint, moving into other divisions, or moving into new geographies. And so, you know, as I kind of said, in response to one of the other questions at the top of the call, that team, the relationships that they've built going through SAS transitions, I think uniquely positions them to identify these opportunities. And then, particularly as customers get live and are stable in the cloud, it really opens up the full customer base to resell. Because we had a sales force that was really load balanced to handle the SAS transition and now some of the up-sells, we haven't anticipated, or we don't see the need for large investments in the customer-based sales force.

We have the same sales force thats been selling SaaS transition, then transitions on and cells add on products or cross sell up sell and the three motions that we sales motions that we've talked about for cross sell up sell or adding new products are expanding the footprint moving into other divisions or moving into new gene.

Graffiti.

So as I kind of said I think in response to one of the other questions at the top of the call that team the relationships that they've built going through SaaS transitions I think uniquely positioned them to identify these opportunities and then particularly as customers get live and are stable in the cloud it really opens up the.

The full customer base to resell.

Because we had a sales force that was really load balance to handle SaaS transition.

And now some of the Upsells, we haven't anticipated or we don't see the need for.

Large investments in the customer base sales force.

Jason Blessing: One of the things I have talked about is that, you know, if you go back a couple of years ago, most of our resources, or let me put it this way, our sales resources, were disproportionately aimed at the customer base to make sure we didn't get stuck in the middle of the SAS transition. We had to make some difficult trade-offs as a result of that.

One of the things I have talked about is that if you go back a couple of years ago most of our resources.

Put it this way our sales resources were disproportionately aimed at the customer base to make sure we didn't get stuck in the middle of the SaaS transition, we had to make some difficult trade offs as a result of that and so new logo did suffer a bit in terms of investments in 'twenty, one and 'twenty two but knowing as we went into 'twenty three that we work.

Jason Blessing: And so, New Logo did suffer a bit in terms of investments in 21 and 22, but knowing as we went into 23 that we were coming to the end of the SAS transitions, we did start to invest more in building out that New Logo team to bring a little more balance to our sales capacity. And it's nice to start the year with that team posting a great quarter and see that there's still a meaningful opportunity on the New Logo side. Adam, this is John.

Coming to the end of SaaS transitions, we did start to invest more in building out that new logo team to bring a little more balance in our sales capacity.

And it's nice to start the year with that team posting a.

Great quarter, and see that there is still a meaningful opportunity on the on the new logo side.

And Adam This is John I'll, just chime in quickly on the on the net retention numbers.

Jon: I'll just chime in quickly on the net retention numbers. Just as a reminder, that net retention metric is going to track very closely to the SAS ARR growth rate number. So, if you look historically, you'll see that's the case.

As a reminder, that net retention metric is going to track very closely to the SaaS are our growth rate numbers. So if you look historically you will you'll see that's the case and so this year, we're going to have tough comparisons for the net retention number just like we do on the <unk> growth rate if I look out a few years and if we look at the midterm target that we talked about on the <unk>.

Jon: And so, this year, we're going to have tough comparisons for the net retention number, just like we do for the ARR growth rate. But if I look out a few years, and if we look at the midterm target that we talked about on the last call, where you have SAS growth in the 15 to 20 percent range, in that scenario, I would expect net retention to normalize in the low to mid-teens. So, call it kind of the 110 to 115 percent range, with the remainder of growth coming from new logo activity. Great, that's really helpful.

Last call, where you have SaaS growth in the 15% to 20% range in that scenario I would expect net retention to normalize in the low to mid teens, so call. It kind of the 110% to 115% range with the remainder of growth coming from new logo activity.

Great. That's really helpful. And then just on the high Tech side, it's good to see the momentum there with Taiwan semi could you just remind us how we should think about the long term mix of that business compared to life Sciences, and what the path forward looks like from here, given you're a little less penetrated there.

Jason Blessing: And then just on the high-tech side, it's good to see the momentum there with Taiwan Semi. Could you just remind us how we should think about the long-term mix of that business compared to life sciences and what the path forward looks like from here, given you're a little less penetrated there? Yeah, so the revenue mix today is about 15% high tech, and the balance is on life science. Life sciences. And, you know, my guess is that mix doesn't shift materially over time, just because of the flywheel that's spun up in life sciences, with fast transitions, and then some of the add-on customer-based sales, and, of course, new logos piling on top of that. That's not to say we're not excited about the high tech business.

Yeah. So the revenue mix today is about.

15% high Tech and the balances on life Science Life Sciences, and my guess is that mix doesn't shift to materially over time, just because of the flywheel that spun up in life Sciences.

With SaaS transitions and then some of the add on customer base sales and of course, new logos piling on top of that that's not to say, we're not excited about the hi Tech business we.

Jason Blessing: You know, we talked over the last couple years during COVID and raised rising interest rates, that the market did seem to get disproportionately more conservative relative to life sciences. But it's exciting to see the performance in Q1. And I'm very optimistic about this segment of the business as we look forward to the second half. We've got great products, and we've got a really good high-tech team. So I think they're set up to have a great year.

We did talk over the last couple of years during COVID-19 and raising and rising interest rates that market did.

Seem to get disproportionately more conservative relative to life sciences, but it's exciting to see the performance in Q1 and I'm very optimistic about this segment of the business as we look forward to the second half we've got great products, We've got a really good high tech team.

I think they are set up to have a great year.

Okay really helpful. Thanks, Jason Thanks, John.

Jason Blessing: Okay, really helpful. Thanks, Jason. Thanks, John. Thank you. Next question, Craig Hettenbach with Morgan Stanley, please go ahead. Yes, thank you.

Thanks, Adam.

Next question, Craig and back with Morgan Stanley. Please go ahead.

Yes, Thank you, Jason and just going back to the cloud transition can you give a rough sense of how many customers are remaining and then importantly, what type of indications to discussion do you hear from these customers in terms of visibility that they'll move over the course of the year.

Craig Hettenbach: Jason, just going back to the cloud transitions, can you give a rough sense of how many customers are remaining? And then, importantly, you know, what type of indications through discussions do you hear from these customers in terms of visibility that they'll move over for the course of the year? Yeah, thanks. Thanks for that one, Craig. Good question.

Yeah. Thanks, Thanks for that one Craig good question. So we have committed to updating invest.

Jason Blessing: So, you know, we have committed to updating investors on the status of SaaS transitions at the beginning of each year. So, you know, 85% at the end of last year. And that kind of implies we're down to roughly a handful of remaining customers. And of that remaining handful, there's really only a couple of very large ones in there.

Investors on the status of SaaS transitions at the beginning of each year. So 85% at the end of last year and that kind of implies we're down to roughly a handful of remaining customers and of that remaining handful. There is really only a couple of very large ones in there and so the number is small enough that we can play NAND demand <unk>.

Jason Blessing: And so, the number is small enough that we can play man-to-man defense and have a really good sense for each one of these accounts when they're going to move. And I think we've got great visibility into how these customers will move over through the remainder of this fiscal year. And as I said, in response to one of the past questions, a good point to clarify it again or reemphasize it, for these customers that are actively engaged and working with us post-end of life in December, we are continuing to be a great partner to them, support them, and make sure we've got a great roadmap ahead. But we feel really good about the handful of remaining customers to convert. I got it.

And have a really good sense in each one of these accounts when theyre going to move.

And I think we've got great visibility into how these customers move over through the remainder of this fiscal year and as I said in response to one of the past questions that get good point just to clarify it again reemphasize that for these customers that are actively engaged in working with us.

Post end of life in December we are continuing to be a great partner to them to support them and make sure. We've got a great roadmap ahead, but we feel really good about the handful of remaining customers to convert.

Jason Blessing: And then, just as a follow-up, I wanted to touch on data and analytics. At RayMaker, you talked about some new product developments in tandem with customers. I know it was early stages back last summer, but just, you know, kind of where things stand today, and what are your thoughts in terms of commercializing some of these products? Yeah, that's also a great question, Craig.

Got it and then just as a follow up I wanted to touch on data and analytics at Rainmaker, you talked about new product developments in tandem with customers I know, it's early stages back last summer, but just kind of where things stand today and what are your thoughts in terms of commercializing some of these products.

Yes. That's also a great question, Craig I think it's an interesting question in that some people say what are we going to start to see data and analytics products being sold and we already have great. Examples of products that fit that category for us today things like global price management Global launch excellence $3 40 be vigilant that our product.

Jason Blessing: I think, you know, it's an interesting question in that some people say, when are we going to start to see data and analytics products being sold? And we already have great examples of products that fit that category for us today. Things like Global Price Management, Global Launch Excellence, and 340B Vigilance are products that are getting a lot of attention from prospects and customers today. But specific to your question, last year, last summer at Rainmaker, we announced two new products, Formulary Access and Syndicated Customer Master. And we're well on our way to delivering those products. We've got them slated for release in Q3 of this year.

They are getting a lot of attention from prospects and customers today.

But specific to your question last year last summer at Rainmaker, We announced two new products formulary access and syndicated customer master and we're well on our way to delivering those products. We've got them slated for release in Q3 of this year and both of those products.

Jason Blessing: And both of those products are also being co-developed with us by top 20, top 50 pharma companies. So, I think, you know, we're getting really good insight into the problem statement and what really matters to these customers. Formulary Access is just ensuring that the hundreds of millions of dollars of patient access fees that pharma companies pay ensure that they're actually getting that access. It's remarkable today. This isn't really being audited. It's manually spot checked for some of the bigger therapies.

So are being co developed with us by top 20 top 50 pharma companies.

We're getting really good insight into the problem statement and what really matters to these customers formulary access is just ensuring that the the hundreds of millions of dollars of patient access fees that pharma companies pay that theyre actually getting that access is remarkable today. This isn't really being audited it is manually.

<unk> check for some of the bigger therapies, but.

Jason Blessing: But we'll provide a solution that'll provide full coverage on the Formulary Access audit. And then the second is what we're calling the Syndicated Customer Master. And think of this as an industry gold copy of the payers and the providers and the different purchasing programs that they're eligible to participate in with the manufacturers. Solves another big, big pain point as well.

But we will provide a solution that will provide the full coverage on formulary access audit and then the second is.

What we're calling syndicated customer master and think of this as an industry gold copy of payers and the providers and the different purchasing programs that.

But they are eligible to participate in with the manufacturers solves another big Big pain point.

Jason Blessing: So, we're on track to deliver those two products and looking forward to it. And thanks to our customers, we've had a great group guiding us through the development life cycle over the last three, four quarters. Great. Thanks a lot. Questions, the Mod Seminar. With Jeffrey, please go ahead. Hi, good evening.

As well so we're on track to deliver those two products and looking forward to it and thanks to our customers. We've had a great group guiding us through the development lifecycle over the last three four quarters.

Alright, Thanks, a lot.

Thanks, Greg.

Question for Mark <unk> with Jefferies. Please go ahead.

Okay.

Hi, Good evening, Thanks for taking my question maybe first on.

Jason Blessing: Thanks for taking my questions. Maybe first on just the QQ guidance, and if you could remind us, I think it implies that professional services revenue will be kind of flattish quarter over quarter. If I look back at historical seasonality, you get a bit more of an uptick. Can you just remind us about the seasonality and if there's something that we're missing, just thinking through the guidance? Yeah, no, this is John. I'll take that one.

Just the <unk> guidance and if you can remind us I think it implies that professional services revenue will be kind of flattish quarter over quarter. If I look back at historical seasonality get bit more of an uptick can you just remind us about the seasonality and if there is something that we're missing just thinking through the guidance.

Yes.

This is John I'll take that one and it's a good question. So.

Jon: And it's a good question. So, you are correct. Typically, in Q2, we see a little bit of an uptick from a seasonal standpoint in this business. However, this quarter, we're having a little bit of a challenge with a small handful of projects that we can't get underway. And so, we're ready to go, but the customers aren't quite ready. And so, we've had a few delays in Q2. And so, it's basically some timing issues that we think we can fix over the course of Q3 and Q4.

You are correct typically in Q2, we see a little bit of an uptick from a seasonal standpoint in this business. However.

This quarter, we're having a little bit of a challenge with a small handful of projects that we can't get underway and so we're ready to go but the customers arent quite ready and so we've had a few delays in Q2 and so it's basically some timing issues that we think we can fix over the course of Q3 and Q4.

I would note.

That business actually had a record quarter of bookings in Q1. So we exited Q1 with very strong backlog, but we just have a little bit of a timing issue in Q2 here.

Jon: I would note that that business actually had a record quarter of bookings in Q1. So, we exited Q1 with a very strong backlog. We just have a little bit of a timing issue in Q2 here, understood that that's helpful, and then maybe zooming out, just you mentioned bookings, and I was gonna ask it in a slightly different way. I know you said the revenue mix shouldn't change materially between Life Sciences and high-tech, but when you think about this year, do you think that high-tech will increase as a mix as a percentage of the booking Even if we're not thinking about revenue conversion yet, Yeah, when we take a look at the bookings mix, as well as the revenue mix, I don't see there being a tectonic shift in either, including bookings.

Understood. That's helpful. And then maybe zooming out just you mentioned bookings and I was going to ask.

Different way.

I know you said the revenue mix it shouldn't change materially between lifestyle.

Life Sciences, and high Tech, but when you think about this year do you think that hi Tech will increase as a mix as a percentage of the bookings just given the strength that you saw in the first quarter or any help that youre seeing versus what you'd normally see mix wise and how does the pipeline compare.

We're not baking into revenue conversion yet.

Yes.

When we take a look at it.

In terms of the bookings mix as well as the revenue mix I don't see there being.

A tectonic shift in either including bookings I will say this and you'll see it with our color commentary on Q1, we have definitely seen high tech.

Jason Blessing: I will say this, and you will see it with our color commentary on Q1, we have definitely seen high-tech improve as a market over the last 12 to 18 months. And we started, I would say a year ago, to see our existing customers expanding their relationship with us and expanding usage of Model N. And then it's been encouraging to see that new logo pipeline build and matriculate through to two new logos in the quarter. Great, thanks for taking my question. Thanks so much. Next question: Brian Peterson with Raymond James. Please go ahead. Hi team, this is Jonathan McCary on for Brian tonight.

Proof as the end market over the last.

In a 12 to 18 months and we started I would say a year ago, we started to see our existing customers expanding their relationship with us.

And expanding usage of model N and then it's up it's been encouraging to see that new logo pipeline.

Build and matriculate through the two new logos in the quarter.

Great. Thanks for taking my questions.

Thanks, so much.

Next question, Brian Peterson with Raymond James Please go ahead.

I think this is jonathan to carry on for Brian. Thanks for taking the question.

Jon: Thanks for taking the question. So I have a question on some of the midterm targets, so that 15 to 20 percent subscription growth in the midterm, which I think you mentioned low teams coming from expansion. I'm just kind of curious, do you think that's a reasonable goal with your current product portfolio, or is that going to require more organic or inorganic investment needed to drive that kind of longer term growth? Yeah, this is John.

Second question on some of the midterm targets.

20% subscription growth in the mid term was thinking about.

Awesome.

Low teens coming from expansion.

Okay.

What's a reasonable goal with your current product portfolio or as bumping require more organic or inorganic investment.

To drive that kind of longer term.

Yes. This is John I'll chime in that.

That is largely based on on what we have today.

Jon: I'll chime in that, you know, that is largely based on what we have today. You know, we're on the brink here of rolling out additional products, data, and analytics. And that would ultimately factor that into those numbers in a few years as well. But I would say it's predominantly selling what's on the truck today. Got it, got it. And then on the international opportunity, that's still kind of been in that mid single digit range. Would you expect that maybe to shift over time? And what are some of the key gating factors to expanding internationally? Well, so I guess this is actually a really interesting question.

We're on the brink here of rolling out.

Additional products in data and analytics and that would that would ultimately factor that into that those numbers in a few years as well.

I'd say, it's predominantly selling what's on the truck today.

Got it got it.

On the ore also opportunity.

Still kind of mid.

The mid single digit range would you expect that maybe to shift over time and what are some of the key gating factors capes.

Spending on expanding internationally.

Well, so I guess.

It's actually a really interesting question. So if you look at most of our customers today. They are global pharma companies and we've opened them in their U S. Operations. Some are headquartered here some are but.

Jason Blessing: So if you look at most of our customers today, they are global pharma companies, and we've opened them up in their U.S. operations. Some are headquartered here, some aren't, but nearly all of them have operations in Amina just by definition of being large global pharma companies. The thing that this has allowed us to do is to work with a number of these customers in partnership to build a couple of great products that I would say are functionally complete today, like global tender management and global price management. And then, I suppose you could add a third product, global launch excellence, which Appellas took this quarter to complement global price management. So this process of servicing and selling to North American global companies has allowed us to partner with them to build out products that are functionally complete for the European market. And I think, like most companies as they start to move into other geographies, sales coverage is always one of the things you have to tackle. We have started to invest in some headcount in the region. We also try and tag team the region with global accounts because a lot of the purchasing decisions do involve folks in the U.S.

But nearly all of them have operations in EMEA, just by definition of being large global pharma companies.

The the thing that this has allowed us to do is we have actually worked with a number of these customers in partnership to build a couple of great products.

I would say are functionally complete today like global tender management and global price management, and then I suppose you could add a third on global launch excellence, which Appel US took this quarter to complement.

Global price management. So so this this motion of servicing and selling to North American Global companies has allowed us to partner with them to build out products that are that are functionally complete.

The European market I think like most companies as they start to move into other geographies sales coverage is always one of the things you have to tackle we do we have started to invest in some head count and region. We also try and tag team the region with global accounts, because a lot of the purchasing decision.

Do involve <unk>.

Folks in the U S. So I'm excited about the products, we have and and really just overtime is about scaling and making sure that we've got the right selling motions and sales coverage in the region.

Jason Blessing: So I'm excited about the products we have and, really, just in time, it's about scaling and making sure that we've got the right selling motions and sales coverage in the region. Thank you. Next question, Pat Walravens with Citizens JMP, please go ahead. Hi, this is Aaron Kimson on behalf of Pat. Of the 15 customers that accounted for about 53% of your revenue on September 30, how should we think about where they are in their cloud transition relative to the long tail of customers that account for the other 47% or so? All right. Yeah, this is John. So, I think you're referring to the disclosures in the Qs and Ks about the top customers. I would say a high percentage of those have either completed or are in the process of fast transitions. And so that number is typically calculated on a total revenue number, which would include both subscriptions and services.

Thank you.

Thanks, John next question next question Pat Walraven.

JMP. Please go ahead.

Hi, This is Dan <unk> on for Pat.

Of the 15 customers that accounted for about 53% of your revenue on September 30, how should we think about where they are in their cloud transition relative to the long tail of customers that account for the other 47% of your revenue.

Yes. This is John.

So I think youre, referring to the disclosures in the Qs and K is about the top customers.

I would say a high percentage of those have.

Either completed or in process on SaaS transitions and so that number is typically calculated on a total revenue number which would include both subscription and services.

Jon: And so companies that are underway in a fast transition may be showing up on that as well. Transcribed by https://otter.ai. Thank you. I would like to turn the call over to Jason Blessing for closing remarks. Thank you, Operator, and thank you, everyone, for joining us today. As we discussed on today's call, we started out our fiscal 2024 with a good quarter and once again delivered strong, profitable growth. I really appreciate all of our employees, customers, and partners for supporting us, and thanks again for joining us today. And have a wonderful night. This concludes today's teleconference. You may disconnect your lines.

And so companies that are underway in the SaaS transition, maybe showing up on that as well.

Got it.

Thank you I would like to turn the call over to Jason blessing for closing remarks.

Thank you operator, and thank you everyone for joining us today as we discussed on today's call. We started out our fiscal 2024 with a good quarter and once again delivered strong profitable growth I really appreciate all of our employees customers and partners for supporting Us and thanks again for joining us today and have a.

Wonderful night.

This concludes today's teleconference. You may disconnect your lines.

Jason Blessing: Thanks for watching! https://www.youtube.com.au Thanks for watching! and many more.

Okay.

Okay.

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Operator: Thank you for watching. We hope you found this video informative. If you did, please like, share, and subscribe. We will see you next time. & & & & & & & & & & & & & https://www.facebook.com.com or www.instagram.com

Yeah.

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Yeah.