Q2 2024 Intapp Inc Earnings Call
Operator: Thank you for standing by, and welcome to Intapp's fiscal second quarter 2024 webcast. At this time, all participants are in a listen-only mode.
Thank you for standing by and welcome to <unk> fiscal second quarter 'twenty 'twenty four and webcast. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
Operator: After the speakers' presentations, there will be a question-and-answer session. To enter a question at that time, please press star 1-1 on your telephone. Please be advised that today's call has been recorded. I would now like to turn the call over to your host, Mr. David Trone, Senior Vice President, Investor Relations. Please go ahead.
She and her question at that time, Please press star one on your telephone please.
Please be advised that today's call is being recorded I would now.
The conference over to your host Mr. David Trone Senior Vice President Investor Relations. Please go ahead.
David Trone: Thank you. Welcome to Intapp's fiscal second quarter 2024 financial results. On the call with me today are John Hall, Chairman and CEO of Intapp, and David Morton, Chief Financial Officer. During the course of this conference call, we may make forward-looking statements regarding trends, strategies, and the anticipated performance of our business, including guidance provided for our fiscal third quarter and full year 2022. These forward-looking statements are based on management's current views and expectations, involve certain assumptions made as of today, and are subject to various risks and uncertainties, including those described in our SEC filings and other publicly available documents, that are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward-looking studies.
Thank you welcome to <unk> fiscal second quarter 2020 for financial results on.
On the call with me today are John Hall, Chairman and CEO of <unk>, and David Morton Chief Financial Officer.
During the course of this conference call. We may make forward looking statements regarding trends strategies and the anticipated performance of our business.
<unk> guidance provided for our fiscal third quarter and full year 2024.
Forward looking statements are based on management's current views and expectations until certain assumptions made as of today's date.
And are subject to various risks and uncertainties.
Including those described in our SEC filings and other publicly available documents.
That are difficult to predict and could cause actual results to differ materially from those expressed or implied by such forward looking statements.
David Trone: Intapp disclaims any obligation to update or revise any forward-looking statements except as required by law. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial... As a reminder, all of our financial figures we will discuss today are non-GAAP, except for revenue and revenue growth, remaining performance obligations. Our GAAP financial results, along with reconciliations of GAAP to non-GAAP financial measures, can be found in today's earnings release and its supplemental financial table, which is available on our website and as an exhibit to the Form 8K furnished with the SEC prior to this call, or a supplemental financial presentation, which is available on our website. With that, I'll hand the conversation over to John. Thank you, David. Good afternoon, everyone.
<unk> disclaims any obligation to update or revise any forward looking statements, except as required by law.
Further on today's call. We will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results.
As a reminder, all of our financial figures, we will discuss today are non-GAAP, except for revenue and revenue growth.
<unk> performance obligations.
Our GAAP financial results, along with reconciliations of GAAP to non-GAAP financial measures can be found in today's earnings release, and a supplemental financial tables.
Which is available on our website and as an exhibit to the form 8-K furnished with the SEC prior to this call where a supplemental financial presentation, which is available on our website.
With that I'll hand, the conversation over to John.
Thank you David.
Good afternoon, everyone. Thank you for joining us today as we share the results of our fiscal second quarter.
John Hall: Thank you for joining us today as we share the results of our fiscal second quarter. I'm pleased to share our strong results, supported by innovation, new logos, and expansion of our existing accounts around the world. In Q2, our cloud ARR grew to $256.1 million, up 34% year over year. CloudNow represents 70% of our total ARR of $365 million. In the quarter, we earned SAS and support revenue of $77.1 million, up 25% year-over-year, and total revenue of $103.9 million, up 23% year-over-year. We released new applied AI capabilities... And we built on the initial success of our industry solution strategy during the quarter, and we announced that our inaugural investor day will take place February 22nd. The date also marks our Intelligence Applied Launch Day.
I am pleased to share our strong results supported by innovation, new logos and expansion of our existing accounts around the world.
In Q2, our cloud <unk> grew to $256 1 million up 34% year over year.
Cloud now represents 70% of our total IRR of $365 million.
In the quarter, we earn SaaS and support revenue of $77 1 million up 25% year over year.
In total revenue of $103 9 million up 23% year over year.
We released new applied AI capabilities, and we built on the initial success of our industry solutions strategy during the quarter.
And we announced that our inaugural Investor Day will take place February 20 <unk>.
The date also marks our intelligence applied launch there.
John Hall: When we'll unveil a host of new applied AI capabilities, as well as our AI roadmap and a new brand identity to our clients, partners, and investors. We're excited to share these developments with all of you. Now, I'll share a few highlights from our fiscal second quarter. First, I'll talk about innovation.
When we will unveil a host of new applied AI capabilities as well as our AI roadmap and a new brand identity to our clients partners and investors. We're excited to share these developments with all of you.
Now I'll share a few highlights from our fiscal second quarter.
First I'll talk about innovation.
John Hall: As I've mentioned, Intapp has been embedding industry-specific AI throughout our platform and solutions for more than 10 years. We've infused our solutions with AI technology, including automation, machine learning, deep learning, and now generative AI, to help our clients use their data to improve critical processes and make better, faster decisions. During this quarter, we enhanced our relationship intelligence feature with new AI capabilities that automate contact and company creation within DL Cloud. The feature captures key contacts and companies directly from client interactions. Enriches and validates information via third-party data and then adds it directly to the platform. This helps professionals prioritize and act on their most promising opportunities, and helps keep the entire firm's latest insights and relationships up to date. It's another example of our zero entry philosophy.
As I've mentioned in Tampa has been embedding industry specific AI throughout our platform and solutions for more than 10 years now.
We've infused our solutions with AI technology, including automation machine learning deep learning and now generative.
To help our clients use their data to improve critical processes and make better faster decisions.
During this quarter, we enhanced our relationship intelligence feature with new AI capabilities that automate contact and company creation within deal cloud.
The feature captures key contacts and companies directly from client interactions enriches and validate information via third party data and then adds it directly to the platform.
This helps professionals prioritize and act on their most promising opportunities and helps keep the entire firm's latest insights and relationships up to date.
It's another example of our zero entry philosophy.
John Hall: We're delivering greater value to busy professionals while relieving them from manual tasks or tight deadlines. We're now deploying this at firms ranging from 10 to 5,000 seats, including one of the largest firms in the world, who is using the solution across 40 countries. A great example from this quarter is McCabe's Lawyers, who added relationship intelligence to their DealCloud instance to support their lawyers as they deepen their relationships with clients. As I mentioned at the start of the call, we'll be revealing a broad set of AI capabilities at Intelligence Applied Launch Day on February 22nd.
We're delivering greater value to busy professionals, while leaving them from manual tasks or typing.
We're now deploying this at firms ranging from 10 to 5000 seats, including one of the largest firms in the world who is using the solution across 40 countries.
A great example from this quarter is Mccabe lawyers, who added relationship intelligence to their deal Cloud instance to support their lawyers as they deepen their relationships with clients.
As I mentioned at the top of the call will be revealing a broad set of AI capabilities at intelligence applied launch day on February 20 <unk>.
John Hall: We will showcase how generative AI can help our clients drive incremental productivity, enable broader firm-wide transformation, and do so with compliance and trust. During Q2, we worked closely with firms in our AI early adopter program to use and provide feedback on these new features, which we're excited to now bring to all our clients. Working closely with our clients to understand their needs has always been integral to Intapp's product development approach.
We will showcase how generative AI can help our clients drive incremental productivity enabled broader firm wide transformation and do so with compliance and trusts.
During Q2, we worked closely with firms in our AI early adopter program to use and provide feedback on these new features which we're excited to now bring to all our clients.
Working closely with our clients to understand their needs has always been integral to <unk> product development approach.
John Hall: We're ensuring that new applied AI capabilities are purpose-built for our client firms' most pressing and industry-specific needs. We're also continuing to expand our portfolio of industry solutions. We're growing our capabilities for each of the sub verticals that we serve with specific deal cloud blueprints that enable best practices using applied AI. We delivered new blueprints for legal, private equity, and fund-to-fund. The latest release also included several enhancements to existing blueprints, as well as an accelerated deployment path for clients seeking best practices and an even faster time to value. We have also extended our Blueprint strategy to our Data Cortex technology, which supports faster integration with our many data partners, helping both new and existing clients enrich their data with critical market and contact intelligence. Our initial win rate...
We're ensuring that new applied AI capabilities are purpose built for our client firms most pressing and industry specific needs.
We're also continuing to expand our portfolio of industry solutions.
We're growing our capabilities for each of the sub verticals that we serve with specific deal cloud blueprints.
It enabled best practices using applied AI.
We delivered new blueprints for legal private equity and fund of funds.
The latest release also included several enhancements to existing footprints.
As well as an accelerated deployment path for clients seeking best practices at an even faster time to value.
We also extended our blueprint strategy to our data cortex technology, which supports faster integration with our many data partners, helping both new and existing clients enrich their data with critical market in contact intelligence.
Our initial win rates accelerated deployments and increased client satisfaction show us that our industry solution strategy of packaging best practice blueprints will serve us well and drive growth.
John Hall: Accelerated deployments and increased client satisfaction show us that our industry solution strategy of packaging best practice blueprints will serve us well and drive growth. As an example, this quarter, Roan Group, a transatlantic private equity firm, selected DealCloud to replace its aging, homegrown CRM using our private equity blueprint. Clients leveraging these blueprints deploy in roughly half the time and gain access to the best practices we have learned over thousands of them. With dozens more blueprints in the pipeline, we intend to build on our successes with continued expansion and enhancement of this office. Okay, moving to Q2 Wins and Implementation.
As an example, this quarter Rone group, a transatlantic private equity firm selected <unk> cloud to replace its aging homegrown CRM using our private equity blueprint.
Clients leveraging these blueprints deploy in roughly half the time.
And gain access to the best practices, we have learned over thousands of deployments.
With dozens more blueprint and the pipeline, we intend to build on our successes with continued expansion and enhancement of this offering.
Okay, moving to Q2 wins and implementations.
John Hall: I'll share some examples of how we're continuing to grow our client base and expand existing relationships. I'm pleased to share that we again welcomed new clients across every vertical that we serve. Here are just a few highlights from our investment banking client base. Global Investment Banking Firm, Livingstone Partners, replaced a legacy cloud-based CRM with DealCloud due to lack of adoption among their profession.
I'll share some examples of how we're continuing to grow our client base and expand existing accounts.
I am pleased to share that we again welcomed new clients across every vertical that we serve.
Here are just a few highlights.
In our investment banking client base global investment banking firm Livingstone partners replaced our legacy cloud based CRM with deal cloud.
Due to lack of adoption among their professionals.
John Hall: They were impressed by DL Cloud's tailored platform and numerous Microsoft integrations, as well as the Anticipated Significant Efficiency Gap. We saw an expansion in our consulting client base, with new logos that included these two. Global Consulting Firm Alex Partners selected DealCloud to replace a legacy CRM, with technology purpose-built for the complexity of their work, and the firm's corporate development team will have greater visibility into pipeline and be better able to execute deals. Private equity-focused consulting firm Accordion also recently selected DL Cloud to support their growth strategy and promote collaboration among teams. They chose us over a generic cloud-based CRM because of our expertise in the market and our software's ability to suit their specific needs. We have also seen Mark's growth in the legal market this quarter, with the addition of several new clients, including Panama-based Galindo, Arias, and Lopez, time to take advantage of our automated time capture functionality. UK-based Marriott Harrison selected Intapp Time after deciding they required a more efficient, reliable, cloud-based time tracking solution, and U.S.-based Porzio, Bromberg, and Newman selected Intapp Conflicts to help automate the processes associated with managing the firm's high volume of conflicts.
They were impressed by deal clouds tailored platform and numerous Microsoft integrations.
And we anticipate significant efficiency gains.
We saw expansion in our consulting client base with new logos that included these two firms.
Global consulting firm Alex partners.
Selected deal cloud to replace a legacy CRM.
With technology purpose built for the complexity of their work.
The firm's corporate development team will have greater visibility into pipeline and be better able to execute deals.
And private equity focused consulting firm accordion.
Also recently selected deal cloud to support their growth strategy and promote collaboration among teams.
They chose us over a generic cloud based CRM because of our expertise in the market and our software is the ability to suit their specific needs.
We have also seen marked growth in the legal market. This quarter with the addition of several new clients, including Panama.
Panama based galindo ARIA and Lopez.
We selected in Tat time to take advantage of our automated time capture functionality.
UK based Marriott Harrison selected in tap time after deciding they required a more efficient reliable cloud based time tracking system.
And U S based Pourciau Bromberg Newman selected in tap conflicts to help automate the processes associated with managing the firm's high volume of conflicts checks.
John Hall: Additional, cross-selling, and up-selling successes in our existing, continue to drive net revenue retention. Let me go through a few examples: global law firm, and longtime Intapp risk and compliance client, Baker Bots, recently replaced a large legacy CRM with DealCloud. The firm selected DealCloud to support its strategic growth plans in the tech and energy sectors. DLcloud's intuitive interface, and Relationship Intelligence Capabilities helped drive their selection
Additionally.
Cross selling and Upselling successes in our existing accounts continuing to drive net revenue retention.
Let me go through a few expansion examples.
Global law firm and longtime in tap risk and compliance client Baker Botts recently replaced a large legacy CRM with deal cloud.
The firms selected deal cloud to support its strategic growth plans in the tech and energy sectors.
Deal clouds intuitive interface and relationship intelligence capabilities helped drive their selection.
John Hall: The firm believes it'll help its lawyers develop new business, deepen client relationships, and take market share from its competitors. Investment Banking Firm and DealCloud client Union Square Advice selected our Employee Compliance Office to replace their previous solutions.
The firm believes they'll help its lawyers developed new business deepen client relationships and take market share from its competitors.
Investment banking firm and deal cloud client Union Square advisors selected our employee compliance offering to replace their previous solution.
John Hall: They chose our software as it offered an easier, more modern way to automate personal compliance tasks and monitor trade activity, and we continue to see success at the world's largest accounting and consulting firms. One of our existing global accounting clients uses Intapp solutions across multiple geographies and has now expanded its use of FieldCloud to its Ireland and UK-based corporate finance. DealCloud will replace the division's legacy CRM, which proved challenging to maintain and lacked adoption. DL Cloud was selected over two large horizontal CRM options based on our ability to deliver capabilities tailored to their transaction advisory needs. This is a great example of the power of our industry solution blueprint to meet the specific needs of even the largest and most complex professionals.
Chose our software as it offered an easier more modern way to automate personal compliance tasks and monitor trade activity.
And we continue to see success at the world's largest accounting and consulting firms.
One of our existing global accounting clients users and tap solutions across multiple geographies and has now expanded its use of deal cloud to its Ireland and U K based corporate finance team.
Deals that will replace the division's legacy CRM, which had proved challenging to maintain and lacked adoption.
Deal cloud was selected over two large horizontal CRM options.
Based on our ability to deliver capabilities tailored to their transaction advisory business.
This is a great example of the power of our industry solution blueprint to meet the specific needs of even the largest and most complex professional firms.
John Hall: Finally, CloudWinds and implementations continue to affirm our strategy as shown through a number of new Intapp time migrations. These include an AMLA top 10 firm that purchased Intapp Time in the cloud to benefit from features like automated data capture, mobile time entry, and compliant time. Allen and Over, one of the world's top law firms that typically uses on-prem solutions, completed a straight-to-cloud implementation for Intapp, and one of the world's largest international law firms completed its migration of Intapp Time from on-prem to the cloud.
Finally, cloud wins and implementations continue to affirm our strategy as shown through a number of new intact time migrations in the quarter.
These include an analogue top 10 firm.
Which purchased tap time in the cloud.
To benefit from features like automated data capture mobile time entry and compliance Todd.
Allen and overy.
One of the worlds top law firms, which typically uses on Prem solutions.
Completed a straight to cloud implementation for <unk> time.
Hi.
And one of the world's largest international law firms completed its migration of intact time from on Prem to the cloud.
John Hall: In conclusion, we're proud of our strong second quarter performance, and we're optimistic about our continued growth. As our Q2 highlights illustrate, we continue to grow by adding new purpose-built capabilities to our platform, positioning us to help lead our industries to harness the power of generative AI. And we can't wait to share our new applied AI capabilities, AI roadmap, and new brand identity in greater detail just a few weeks from now.
In conclusion, we're proud of our strong second quarter performance and we are optimistic about our continued growth opportunities.
As our Q2 highlights illustrate we continue to grow by adding new purpose built capabilities to our platform positioning us to help lead our industry to harness the power of generative AI.
And we can't wait to share our new applied AI capabilities.
AI roadmap and new brand identity in greater details just a few weeks from now.
John Hall: We see continued opportunity to drive growth, adding new clients across a broad TAM and expanding within our existing clients. We're serving a durable end market with our subscription revenue model and industry-specific cloud platform. We have a great growth opportunity to drive AI, cloud adoption, and modernization across all the industries. As always, I'd like to thank our clients, our partners, our investors, our board, and our global Intapp team for their teamwork and dedication. We hope you can all join us on the 22nd for our Investor Day. You can find the link to the webcast on our website at investors.intapp.com.
We see continued opportunity to drive growth, adding new clients across a broad tam and expanding within our existing client base.
We're serving a durable end market with our subscription revenue model and industry specific cloud platform.
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 and our global intact team for their teamwork and dedication.
We hope you all join us on the 22nd for our Investor Day.
You can find the link to the webcast on our website at investors starting to tap dot com.
David H. Morton: Thank you all very much. With that, I will turn it over to Dave to share our Q2 results. Thanks, John. And thanks, everyone, for joining us today. I'm pleased to report our solid second quarter performance, driven by strong revenue growth, an expanding customer base, and enhanced operational efficiency during the quarter. These achievements collectively position us to extend our leadership as we embark on an exciting market opportunity in fiscal Q3 and Q4 of 2024 and beyond. Fast and Support revenue was $77.1 million, up 25% year-over-year, reflecting sales to new clients and expansion of existing clients for both cross-selling and up-selling sales. Subscription license revenue was $14.1 million, up 29% year-over-year, largely due to several large clients opting for multi-year on-premises renewal. Total recurring revenue was $91.3 million, a 26% year-over-year increase. Professional Services revenue was $12.7 million, experiencing a modest 5% year-over-year increase.
Thank you all very much.
With that let me turn it over to Dave to share our Q2 results.
Thanks, John and thanks, everyone for joining us today.
I am pleased to report our solid second quarter performance, driven by strong revenue growth expanding customer base and enhance operational efficiency within the quarter.
These achievements collectively position us to extend our leadership as we embark on an exciting market opportunity in fiscal Q3, and Q4 of 2024 and beyond.
That's in support revenue was $77 1 million up 25%.
Year over year, reflecting sales to new clients and expansion of existing clients from both cross selling and Upselling sales motions.
Subscription license revenue was $14 1 million up 29% year over year.
Largely due to several large clients opting for multiyear on premises renewals.
Total recurring revenue was $91 3 million up 26% year over year.
Professional services revenue was $12 7 million experienced a modest 5% year over year increase.
David H. Morton: This growth rate is in line with our deliberate strategic shift to de-emphasize professional services and opt instead to better leverage the strength of our partner network. The success of our industry solutions further contributes to clients realizing quicker time to value through an expedited implementation process. Total revenue was $103.9 million, a 23% year-over-year increase driven primarily by sales of our cloud solutions and growth of subscription license revenue. Our international businesses provide a growth opportunity to further expand and invest in the use of our platform outside of the U.S. revenue from our international operations remain strong, contributing approximately 30% of total revenue for fiscal Q2. Q2 non-GAAP gross margin was 73.4%, as compared to 71.5% in the prior year period. Non-GAAP operating expenses were $68.6 million, a $10.9 million increase year-over-year as we continue to invest in go-to-market and product development to support our growth.
This growth rate is in line with our deliberate strategic shift the deemphasize professional services opting instead to better leverage the strength of our partner network.
The success of our industry solutions further contributes to clients realizing quicker time to value through an expedited implementation process.
Total revenue was $103 9 million up 23% year over year, driven primarily by sales of our cloud solutions and growth of subscription license revenue.
Our international businesses provides a growth opportunity to further expand and invest in the use of our platform outside of the U S revenue from our international operations.
Maine's strong contributing approximately 30% of total revenue for fiscal Q2.
Q2, non-GAAP gross margin was 73, 4% as compared to 71, 5% in the prior year period.
non-GAAP operating expenses were $68 6 million, a $10 $9 million increase year over year as we continue to invest in go to market and product development to support our growth.
As we continue to focus on our operational efficiencies non-GAAP operating profit was $7 6 million as compared to $2 $8 million in the prior year period.
David H. Morton: As we continue to focus on our operational efficiencies, non-GAAP operating profit was $7.6 million as compared to $2.8 million in the prior year period, non-GAAP diluted EPS was $0.11 in the second quarter of fiscal 2024, as compared to $0.03 in the prior year period. Free cash flow, which is defined as our cash flow from operations, less capital expenditures, was $11.8 million for the second quarter, or 11% of total We exited the quarter with $166.4 million of cash and cash equivalents. Turning to our key metrics, Cloud ARR was up 34% year-over-year, and total ARR was up 21% year-over-year. Total remaining performance obligations were $447.6 million, up 15% year-over-year.
non-GAAP diluted EPS was <unk> 11.
In the second quarter of fiscal 2024 as compared to <unk> in the prior year period.
Free cash flow, which is defined as our cash flow from operations less capital expenditures was $11 8 million for the second quarter or 11% of total revenue.
We exited the quarter with $166 4 million of cash and cash equivalents.
Turning to our key metrics cloud <unk> was up 34% year over year and total IRR was up 21% year over year.
Total remaining performance obligations were $447 6 million.
Up 15% year over year.
Overall, we continue to execute our land and expand model ending the quarter with more than 2400 clients 649 of which had.
David H. Morton: Overall, we continue to execute our land and expand model, ending the quarter with more than 2400 clients. 649 of which had ARR of at least 100k up from 561 in prior year period. Our net revenue retention rate underscores our ability to retain and steadily expand business with our existing customers. This key metric was 115%, which continues to track within our range of 113% to 117%, now turning to our Outlook, for the third quarter of fiscal 2024, we expect, staff and support revenue between $80 million and $81 million, total revenue in the range of $107.5 to $108.5 million, non-GAAP operating profit in the range of $6 to $7 million, and Nongap EPS results of $0.06 to $0.08 using a diluted share count weighted for the quarter of approximately 81 million common shares outstanding, for the full year, fiscal 24, we expect.
At least 100 K up from 561 and prior year period.
Our net revenue retention rate underscores our ability to retain and steadily expand business with our existing customers.
This key metric was 115%, which continues to track within our range of 113% to 117%.
Now turning to our outlook.
For the third quarter of fiscal 2024, we expect.
Vas and support revenue between 80 and $81 million.
Total revenue in the range of 107, five to $108 5 million.
non-GAAP operating profit in the range of $6 million to $7 million.
non-GAAP EPS results of <unk> to <unk> <unk>, using a diluted share count weighted for the quarter of approximately 81 million common shares outstanding.
For the full year fiscal 'twenty four we expect.
David H. Morton: We are increasing our SaaS and support revenue between $312 and $316 million. And due to our intentional shift in the revenue contribution mix, specifically reducing the emphasis on professional services, we are maintaining our total revenue in the range of $422.5 to $426.5 million. We also expect non-GAAP operating profit to be in the range of $27 to $31 million and non-GAAP EPS in the range of $0.31 to $0.35 using a diluted share count weighted for fiscal year 24 of approximately 81 million common shares outside.
We are increasing our SaaS and support revenue between 312 and $316 million.
And due to our intentional shift in the revenue contribution mix, specifically, reducing the emphasis on professional services. We are maintaining our total revenue in the range of $422 five to $426 5 million.
We also expect non-GAAP operating profit to be in the range of $27 million to $31 million.
And non-GAAP EPS in the range of 31.
35, <unk> using a diluted share count weighted for fiscal year, 'twenty, four or approximately 81 million common shares outstanding.
And as previously noted <unk> will be hosting our inaugural Investor day on February 20 <unk>.
During this event, we will discuss our key strategic imperatives metrics.
Operator: And, as previously noted, Intapp will be hosting our Inaugural Investor Day on February 22. During this event, we will discuss our key strategic imperatives, metrics, and financial targets while providing a comprehensive overview of our company's trajectory and future plans. We look forward to sharing valuable insights with stakeholders on this significant occasion. Thank you, and I will now turn the call back to the operator. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your telephone. Again, to ask a question, please press star 1-1. One moment for our first... Our first question comes from the line of Koji Akita of Bank of America. Your line is, Hey John, hey Dave, thanks for taking the questions. A couple from me.
<unk> targets, while providing a comprehensive overview of our company's trajectory and future plans.
We look forward to sharing and valuable insights with stakeholders on a significant occasion.
Thank you and I'll now turn the call back to the operator.
Thank you again, ladies and gentlemen, if you like to ask a question. Please press star one on your telephone again to ask a question. Please press star 111 moment for our first question.
Our first question comes from a line of Kodiak heater of Bank of America. Your line is open.
Hey, John Hey, Dave Thanks for taking the questions a couple from me.
First one on AI excited to hear about the AI launch day.
And wanted to actually follow up on the monetization question I asked you last year at our Tech conference. So thinking about this AI launch day, how are you planning on monetizing these new AI products, sorry are you introducing new premium Skus I mean are they add on skus or something else and any sort of color there would be helpful.
John Hall: First one on AI, you know. I'm excited to hear about AI launch day. And I wanted to actually follow up on a monetization question I asked you last year at our So, thinking about this AI launch day, how are you planning on monetizing these? Are you introducing new premium SKUs? I mean, are they add-on SKUs or something else, you know, any sort of color?
Alright, thank you.
Yes, we will have a mix.
So some of the capabilities will be included in our offerings that people have subscriptions today, but we will also be introducing additional skus based on some of the more advanced capabilities that clients have been asking for so we're going to do both.
Got it got it and.
Wanted to shift the next question over to net revenue retention once again in the range here.
David H. Morton: Hi Koji, thank you. Yes, we will have a mix. So some of the capabilities will be included in our offerings that people have subscriptions for today, but we will also be introducing additional SKUs based on some of the more advanced capabilities that clients have been asking for. So we're going to do both, and I wanted to shift the next question over to net revenue retention, you know, once again in the range here of 113 to 117, just trying to triangulate a little bit of the contributions of net revenue retention, maybe split between a couple of vectors, professional services versus financial services, and then maybe of the cross-sell of DioCloud versus anything else and how all those are playing in. Dave
113 to $1 17, just kind of trying to triangulate a little bit of the contributions of net revenue retention maybe split between a.
A couple of vectors professional services versus financial services, and then maybe of the cross sell of deal cloud versus anything else and how all of those are playing into net revenue retention.
Okay got you got it Steve.
Yes.
Some additional color to that at our upcoming Investor day, I don't want to front run any of US keeping metrics will also be articulating what that looks like spur off premise as well.
Albeit not everything is created equal and clearly those that are advancing.
At a quicker rate of pace on the off Prem cloud solution native solution, obviously that should have a higher clip rate.
Got it. Thank you looking forward to the Investor day. Thanks, so much.
Thank you one moment please.
Our next question comes from the line of Steve Enders of Citi. Your line is open.
Okay, great. Thanks for thanks for taking the questions and for having me on the call today.
Operator: Yeah, we'll give some additional color to that at our upcoming investor day. But I don't want to front run any of those key metrics. We'll also be articulating what that NRR looks like for off-prem as well. You know, albeit not everything's created equal, and clearly those that are advancing at a quicker rate of pace on the off-prem cloud solution, native solution, obviously, that should have a higher clip rate for tuning in to Best Day. Thanks so much.
I guess, maybe just Steve.
Okay.
Intrigued to hear more about what's coming down the pipe on the AI side as you think about the opportunity within your customer base.
Yes.
As you may have.
Rachel Ann for AI use cases, and what ends up becoming a differentiator for <unk>.
It plays versus other providers that might be.
We are targeting in the use cases that youre going after.
Yeah, Thanks, Steve and welcome we're excited to be working with you.
John Hall: Thank you. One moment, please. Our next question comes from the line of Steve Enders of Citi. Your line is open. Okay, great. Thanks for taking the questions and for having me on the call today. I guess, maybe just to start, you know, I'm intrigued to hear more about what's coming in the pipeline on the AI side. As you think about the opportunity within your customers, how do you feel about what gives you the right to win for those AI use cases? And what ends up becoming the differentiator for Intapp in the marketplace versus other providers that might be targeting the use cases that you're going after?
<unk>.
Positioning of the company overall.
And the positioning.
Of our applied AI strategy are the same which is we.
Specialize in these professional and financial services firms the way that they work the uniqueness of the partnership model and the high end.
Pfizer's and investors that work in these firms in the way that they work on complex deals engagements matters.
And our whole angle.
On applied AI is to build all the capabilities of AI technologically into specific industry solutions that meet the needs of each of the practice areas. Each of the deal types each of the investment strategy teams in a way that feels.
David H. Morton: Yeah, thanks, Steve, and welcome. We're excited to be working with you. The positioning of the company overall and the positioning of our Applied AI strategy are the same, which is we. Specialized in these professional financial services firms, the way that they work, the uniqueness of the partnership model, and the high-end advisors and investors that work in these firms and the way that they work on complex.
Compelling to the professional because somebody has really taken the time to understand how they work and it's a huge differentiator for us that we've built the whole company with both technologists from Silicon Valley, but also a huge population of people who have come from these firms themselves. So that the solutions that we designed for the end users really speak.
John Hall: Deals, Engagements, Matters. And our whole angle on applied AI is to build all the capabilities of AI technologically into specific industry solutions that meet the needs of each of the practice areas, each of the field types, each of the investment strategy teams in a way that feels, compelling to the professional because somebody has really taken the time to understand how they work and it's a huge differentiator for us that we've built the whole company with both technologists from Silicon Valley But also a huge population of people who have come from these firms themselves So that the solutions that we design for the end users Really speak directly to them when they see it for the first time and the same thing for the applied AI generation of our industries, Okay, perfect. That's a helpful context there.
Directly to them when they see it for the first time and the same thing for the applied AI generation of our industry solutions.
Okay perfect.
A couple of contracts there.
And then maybe just on the outlook here just to make sure that we're thinking about the puts and takes in the right way. It seems like there's a shift going away from prime services.
The main headwind or impact, but how should we be thinking about.
What that shift would be looking like over time, and then how conservative that effort is.
To drive I guess more margin out of that as well.
No for sure Steve I think over the long term as we continue to model out obviously, we'll be looking at.
Partner more and more with the economy that we continue to build up with the likes of.
David H. Morton: And then, Dave, maybe just on the outlook here, I just want to make sure that we're thinking about the puts and takes in the right way. It seems like there's a shift going away from services, and that's the main, I guess, winter impact, but how should we be thinking about, you know, what that shift would look like over time, and how concerted that effort is to drive, I guess, more margin out of that as well? No, for sure, Steve.
Partners within our ecosystem and so I think you started seeing some early innings to that obviously, we're going to continue to be at the forefront touch point with our respective clients.
More of a longer term models of seats that versus a revenue driver.
And then we're also our path.
Breakeven margin within that specific.
Profile and so as we continue to look at the respective leavers both from growth factors as well as.
Operator: I think, you know, over the long term, as we continue to model out, obviously, we'll be looking to partner more and more with the economy that we continue to build up with the likes of partners within our ecosystem. And so I think you started seeing some early innings to that. Obviously, you know, we're going to continue to be at the forefront of touchpoints with our respective clients. But think of more of a longer term model, the CSAT versus a revenue driver. And then we're also on our path to, you know, break even margin within that specific profile. And so as we continue to look at the respective levers, both from growth factors as well as contribution margin, you know, that is something that we'll continue to work on longer term. But the overall value and narrative on, you know, this value asset is clearly our SAS growth, which continues to do very, very well and continues to be very, very durable. Okay, perfect.
Contribution margin that is something that we'll continue to work on longer term.
But the overall value and merit upon this value asset it's clearly.
On our SaaS.
Growth, which continues to do very very well and continues to be very very durable.
Okay perfect. Thanks for taking the question.
Thank you one moment please.
Our next question comes from the line of Doug <unk> of J P. Morgan Your line is open.
Hey, Thanks for taking my question and congrats on the results so looking at sales and marketing as being a bit of a <unk> growth here.
So maybe question how are you thinking about balancing investing in growth versus realizing profitability.
Okay.
Yes.
Great question I would tell you we're already started our FY 'twenty five planning.
As we continue to look at the envelope and the scope that we're under today as well as looking at productivity in areas for continued opportunity going forward and so it's always going to be a balance.
Driving that additional leverage and we think we can continue to scale not only with the investments that we've made over.
Over the past year or two and then continue to monetize that and hopefully see the rate of pace go from there.
Operator: Thanks for taking the question. Thank you. One moment, please. Our next question comes from the line of Doug Brewer of J.P. Morgan. Your line is open.
Great. Thank you so much.
Thank you one moment please.
Our next question comes from a line of Alex scholar.
Of Raymond James Your line is open.
Great. Thank you John and Dave two part question on deal Cloud you did some brand consolidation efforts last year. There was some nice wins that you announced in the prepared remarks. This quarter. So John first for you can you just talk about how much deal cloud drove those wins versus kind of what your prior offering was to the professional services.
Operator: Hey, thanks for taking my question. And congrats on the results. So looking at sales and marketing, we're seeing a bit of a decline in growth here. So maybe the question, how are you thinking about balancing investing in growth versus realizing profitability? Yeah, it's a great question.
The market in the past.
And David any financial benefit you've seen so far in the model from that brand consolidation.
David H. Morton: I would tell you, we've already started our FY25 planning, you know, as we continue to look at the envelope and the scope that we're under today, as well as looking at productivity and areas for continued opportunity going forward. And so it's always going to be a balance driving that additional leverage. And we think we can continue to scale, not only with the investments that we've made over the past year or two, but also continue to monetize that, and hopefully, see the rate of pace go from there. Great, thank you so much.
Thanks, Alex.
Yes, we consolidated our brands at the time of our IPO, we had a branded professional services called one place that had a history that a lot of firms new.
But the technology that even it represented was dual cloud technology and we got we started getting a lot of inbound calls.
From folks in the legal accounting consulting industry is asking for deal clouded by name so.
So we just made a pragmatic decision to say Oh, we can simplify branding here and get some leverage word of mouth on deal cloud across our whole market.
And so it was a change for some of the people who had gone with the one place brand initially, but it wasn't a technology change it was a branch.
And there is a lot of excitement now because we have a broader community appeal cloud to users that are coming together at our events. Our user conferences are advisory boards, who are all sharing best practices across these terms and theres been a lot of enthusiasm that we actually have uncovered an underserved.
Operator: Thank you. One moment, please. Our next question comes from the line of Alex Scholar of Raymond James in Atlanta. Great, thank you. John and Dave, a two part question on DealCloud. You did some brand consolidation efforts last year. There were some nice wins that you announced and prepared remarks this quarter. So, John, first for you, can you talk about how much DealCloud drove those wins versus kind of what your prior offering was to the professional services market in the past? And David, any financial benefit you've seen so far in the model from that brand consolidation? Thanks, and Alex.
Immunity here, who have different professional specialties with a lot of deep expertise in each area, but if you actually step back and look at the way that the firms go to market they pursue opportunities in the marketplace. We pursue clients the huge network of relationships. Among all of these people it's not a linear sales model all of these firms.
John Hall: Yes, we consolidated our brand at the time of our IPO; we had a brand and professional services called OnePlace that had a history that a lot of firms knew, but the technology that even it represented was DealCloud technology, and we started getting a lot of inbound calls from folks in the legal, accounting, and consulting industries asking for deal cloud bind. So we just made a pragmatic decision to say, oh, we can simplify branding here and get some leverage, word of mouth, on DealCloud across our whole market. And so it was a change for some of the people who had gone with the OnePlace brand initially, but it wasn't a technology change; it was a brand change.
Sure, a very networked model going to market and uncovering opportunities through referrals and each other they love talking to each other so I actually think the brand consolidation has turned out to be a net positive for deal cloud and we were excited to be able to name a bunch of firms this quarter, who I am very grateful said, Hey, you can talk about us because there is a.
Growing community of folks who really see this as the next generation and now that we are bringing the applied AI in getting relationship intelligence, which I talked about specifically, but more broadly to the deal cloud platform and the rest of the offerings that we have there is a lot of enthusiasm for Geo cloud coming in so youll see some more work.
On the brand simplification as we as we come out on February 22nd because we really want to help everyone chair and that word of mouth across the marketplace. That's working for us.
And I would say, that's probably where you're going to see that manifest in the P&L amongst is that opportunity cost of winning and being able to focus all your efforts as we continue to cross sell and up sell across our various industries that we serve using the same technology.
John Hall: And there's a lot of excitement now because we have a broader community of field cloud users that are coming together at our events, our user conferences, our advisory boards, who are all sharing best practices across these firms. And there's been a lot of enthusiasm that we actually have uncovered an underserved community here who have different professional specialties with a lot of deep expertise in each area. But if you actually step back and look at the way that firms go to market, they pursue opportunities in the marketplace, they pursue clients, and the huge network of relationships among all these people, it's not a linear sales model. All these firms share a very networked model of going to market and uncovering opportunities through referrals and each other. They love talking to each other.
Okay, that's great color.
For more they're all in the coming quarters then.
John the other thing you mentioned on the new blueprint strategy or the somewhat new blueprint strategy initial win rates is something that youre seeing track higher.
One of the few positive early development talked about the prepared remarks can you just elaborate on what you saw in terms of win rates versus prior quarters from that strategy.
The experience when you come in and you show a blueprint that specialized.
The previous quarter, we talked about private credit in this quarter, we expanded our fund of funds blueprint.
John Hall: So I actually think the brand consolidation has turned out to be a net positive for deal cloud. And we were excited to be able to name a bunch of firms this quarter that I'm very grateful for. Hey, you can talk about us because there's a growing community of folks who really see this as the next generation. And now that we're bringing applied AI in for relationship intelligence, which I talked about specifically, but more broadly to the deal cloud platform and the rest of the offerings that we have, there's a lot of enthusiasm for deal cloud coming. So you'll see some more work on the brand simplification as we come out on February twenty-second because we really want to help everyone share in that word of mouth across the marketplace that's working for us. And I would say that's probably where you're going to see that manifest in the P&L the most, is that opportunity cost of winning and being able to focus all your efforts as we continue to cross-sell and up-sell across our various industries Okay, that's a great color.
Getting more and more <unk>.
Specific to each of the.
Professional teams and the way that they talk in the way that they work and recognize they see that you have a solution that really understands them and not only do you have a broad universe of 20 per 100 clients, which are about 100 clients just like them in the types of work that they do and it just makes a huge psychological impression at the <unk>.
First moment to really appreciate our industry expertise, but then it also gives confidence that we're going to be able to deploy and get them up and running quickly.
And so a lot of it is time to value for them as.
As well as the confidence that we're going to have to support them and enable them over time. So we have seen stronger sponsors both at the early end of the funnel and in any competitive conversations to come in later in the process when people need to show that they have shops, there's just nothing like what we are.
Showing to this type of.
Professional as we deploy so were very enthusiastic about this blueprint strategy and we're going to do more at <unk>.
On win rate helps on time to value. It helps on services and getting our costs down to help people be successful and thats part of the model here. So we're big believers that where this is going and then now the whole applied AI strategy is rolling under this blueprints idea. So we really want to bring applied AI out specifics for each of the professionals.
John Hall: We'll look for more there in the coming quarters then. John, the other thing, you mentioned on the new blueprint strategy or the somewhat new blueprint strategy, initial win rates is something that you're seeing track higher as one of the few positive early developments talked about in the prepared remarks. Can you just elaborate on what you saw in terms of win rates versus prior quarters from that strategy? The experience when you come in and you show a blueprint that specialized, You know, in the previous quarter, we talked about private credit and this quarter we expanded our fund to fund, Blueprint, you're getting more and more, specific to each of the professional teams and the way that they talk and the way that they work and recognize they see that you have a solution that really understands them and not only do you have a broad, you know, universe of 2400 clients, but you've got 100 clients just like them and the types of work that they do.
Close.
Okay.
Super helpful context, Thank you both.
Thank you one moment please.
Yes.
Our next question comes from the lineup Sakic clear.
Barclays. Your line is open.
Okay, Great Hey, guys. Thanks for taking my questions here how are you.
It's good to talk to you.
Hey, John Hey, Dave I apologize in advance if some of these questions have been asked us to kind of kind of hopped on a couple of calls, but John maybe for you.
I guess I Wonder how you think about the seasonality here in the cloud business, particularly as we look at net new IRR.
We have a really strong start to the year.
Net new or AOR was down a little bit sequentially does that sort of in line with kind of the shape that you think about in the business are in line with sort of.
Your customer spending cycles, just a little bit a little bit of color on how you think about the shape of that based on kind of typical seasonality does that makes sense.
Yes, absolutely.
So <unk>.
Generally speaking.
John Hall: And it just makes a huge psychological impression on the first moment to really appreciate our industry expertise. But then it also gives confidence that we're going to be able to deploy and get them up and running quickly. And so a lot of it is time to value for them, as well as the confidence that we're going to be able to support them and enable them over time. ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, So we're very enthusiastic about this Blueprint strategy, and we're going to do more. It helps with win rate, it helps with time to value, it helps with services, and it helps with getting our costs down to help people be successful. And that's part of the problem here.
Our year ends in June and some of the clients and figure that out so we tend to have.
Different patterns across the quarters some of their years and now some of them in the U K in April so there is some fluctuation from quarter to quarter.
I think in this quarter.
Had strong results. We also saw a little bit of a mix.
Evolution.
The professional services firms like legal accounting consulting were strong.
We were very interested to see the economic reports about the hiring there that kind of match when we saw it come out. We also saw in investment banking, a little bit of a budget management from some of the large firms.
And we saw the economic reports and some of the news about that and that makes sense sweat factor the quarter was over so I think we've benefited from some of our.
John Hall: So we're big believers in where this is going, and now the whole Applied AI strategy is rolling under this Blueprints idea. So we really want to bring Applied AI out specifically to each of the professionals. Okay, that's super helpful context.
Diversification across these firms we've talked about that as a durable model that we've grown through lots of different parts of the economic cycle consistently because of this but there was some of that in this quarter's results that we worked through.
Got it got it.
That makes sense, maybe for my follow up for you.
Operator: Thank you both. Thank you. One moment, please.
Really looking forward to February 22nd I think there is a lot a lot of fun stuff to talk about.
Operator: Our next question comes from the line of Sackett Kalia. Barclays, and a lot of... Okay, great. Hey guys, thanks for taking my questions here. How are you?
And so if this is if this is too much of a teaser you let me know but.
John Hall: Hey, John. Hey, Dave. Apologies in advance here if some of these questions have been asked before, just to kind of hop into a couple calls. But, John, maybe for you, I guess I wonder how you think about the seasonality here in the cloud business, particularly as we look at net new ARR. You know, we had a really strong start to the year, but net new ARR was down a little bit sequentially. Is that sort of in line with kind of the shape that you think about in the business or in line with sort of, you know, your customer spending cycles? Just a little bit of color in how you think about the shape of that based on kind of typical seasonality. Does that make sense?
Based on I guess.
Given your background coming from so many different SaaS business in the past could you sort of aspire to who do you sort of benchmark in caps business model to based on where you are in kind of the lifecycle, where you are from a scale perspective, if that makes sense.
It does and there is a lot of.
Great compress that we aspire to be in the vertical SaaS.
And there is a reason for that right because they are very purposeful built and they've had many years.
Access.
And so we follow and some of those footsteps as we look at kind of our evolution and kind of where we're headed to.
Clearly, we have very unique base and that and the top couple of hundred could be billions of worth of sand with our respective clients, but we also have.
Somewhat of a longer tail and uniqueness about us that.
We've got the opportunity to go and serve those respective markets as well and so it's kind of going through that evolution as we apply resources and we serve these greater clients.
John Hall: Yes, absolutely. Generally speaking, our year ends in June, and some of the clients have figured that out, so we tend to have different patterns across the quarters, some of their years end now, some of them in the UK in April.
So we're pretty excited to talk more about that coming on the 22nd and kind of where we're putting more of that wood behind that arrow.
John Hall: So there is some fluctuation from quarter to quarter. I think in this quarter, we had strong results. We also saw a little bit of a mix.
<unk> seen the resiliency within our model across both ends of that spectrum that we've articulated in some of these customer examples where client examples.
Got it very helpful. Thanks, guys looking forward to the 22nd.
John Hall: Evolution, the professional services firms like legal, accounting, and consulting were strong. We were very interested to see the economic reports about the hiring there, and it kind of matched what we saw come out. We also saw, in investment banking, a little bit of budget management from some of the large firms, and we saw the economic reports and some of the news about that, and that made sense to us after the quarter was over. So I think we've benefited from some of our diversification across these firms. We've talked about that as a durable model, and we've grown through lots of different parts of the economic cycle consistently because of this, but there was some of that in this quarter's results that we worked through. I got it.
Okay.
Thank you one moment please.
Our next question comes from the line of Parker Lane of Stifel. Your line is open.
Yeah, Hi, guys. Thanks for taking the questions here John you guys have been doing applied AI for a while but clearly you are bringing a lot more AI solutions to the market. We will see those later this month curious if you could talk about I.
I guess, the acceptance or willingness of your different end markets to leverage AI in their workflows.
Feedback, they're generally positive do you think there is a big opportunity in the near term or is it going to take some time for people to really.
Just what's going on behind the scenes get their hands on these tools before you see budgets starting to free up around AI.
There are some early adopters, who are really enthusiastic because they just feel how big a potential there is for AI to make its way into these knowledge based professionals. So much of their work is about serving large sets of data regardless of their area of expertise.
David H. Morton: That makes sense. Dave, maybe for my follow-up for you, I'm really looking forward to February 22nd. I think there's going to be a lot of fun stuff to talk about. And so, if this is too much of a teaser, you let me know.
They're looking across large areas of data to try to develop a point of view either for a deal investment decision for advice to their clients and then from a daily workflow standpoint, so much of what they do is unstructured information processing to come back to clients and orchestrate deals and all these different types of advisory activities that they do that there's a lot of it.
David H. Morton: But, you know, based on your background coming from so many different SaaS businesses in the past, who do you sort of aspire to? Who do you sort of benchmark Intapp's business model against, based on where you are in kind of the lifecycle, where you are from a scale perspective, if that makes sense? It does, and there are a lot of great compras that we aspire to be in the vertical SaaS. And there's a reason for that, right?
The excitement about the broad potential, particularly now of degenerative AI.
Store.
So there is some early folks who are in and then theres. Some more pragmatic folks who are saying. This is all great I believe it but what are we going to do about the compliance questions. What are going to do about the information access questions Big organization globally with a lot of knowledge buried in our systems. If we point AI at that how are we going to make sure that we.
David H. Morton: Because they're very purposefully built, and they've had many years of success. And so we follow in some of those footsteps as we look at kind of our evolution and kind of where we're headed. You know, clearly, we have a very unique base and that in the top couple hundred could be billions of worth of fam with our respective clients. But we also have, and a lot of longer story and uniqueness about us that, you know, we've got the opportunity to go and serve those respective markets as well. And so it's kind of going through that evolution as we apply resources and serve these greater clients. So, you know, we're pretty excited to talk more about that on the 22nd and kind of where we're putting more of that wood behind that arrow. But clearly, you've seen the resiliency within our model across both ends of that spectrum that we've articulated in some of these customer examples or client examples.
Slide with all the regulatory obligations and the client obligations that we have and so this is an area that we're very focused on because we've had such a strong position in the compliance aspect.
Of these industries and their information for so many years, we think we can bring a unique val.
The value proposition that has all the potential of AI applied and industry specific ways, but one of the core issues and industry specific applications rounding out here is the compliance and trust set of concerns. So this is a theme you're going to hear from US. This is where we're going is to bring a more compliant.
Sorry to the whole AI opportunity and we think that will lower the barriers of the concern for anybody might have and so in terms of timeline.
Specific commitments.
Commitments today, but I think we can do all the work to get the fastest AI deployment in these firms through that.
Perspective.
Got it Thats really great feedback thanks for that.
Operator: Very helpful. Thanks, guys. Looking forward to the 22nd. Thank you. One moment, please.
I'm just curious if you could talk about the <unk> time.
Time migration, specifically the large law firms are the ones that have held out and been on premise in the past why now is the simple question.
John Hall: Our next question comes from Yolana Parker-Lane of Stiefel. Hi, guys. Thanks for taking the questions here. John, you guys have been doing applied AI for a while, but clearly, you're bringing a lot more AI solutions to the market. We'll see those later this month.
Well I think what incentives are people seeing to move to the cloud and what drives that inside of the laggards that you still have.
The remaining on premise.
John Hall: Curious if you could talk about, I guess, the acceptance or willingness of your different end markets to leverage AI and their workflows. Is the feedback there generally positive? Do you think there's a big opportunity in the near term? Or is it going to take some time for people to really trust what's going on behind the scenes and get their hands on these tools before you see budgets starting to free up around AI? I think there are some early adopters who are really enthusiastic because they just feel how big a potential there is for AI to make its way into these knowledge-based professionals. So much of their work is about surveying large sets of data, regardless of their area of expertise.
Yes, its been interesting I think.
We've talked a little bit about the fact that when everybody had to go home for Covid.
Lot of these firms have to wake up moment, because people could get access and have the right experience for all of our traditional in house built or on Prem solutions. So I think that was a permanent change in the mindset and the firms who've made a cloud first or a cloud only commitment coming out of that even the most.
Yes.
Sort of legacy environments that made that commitment what's happening now as firms have had a couple of years to get their prop.
Projects organize their priorities rolling through clear everything out and actually start making a meaningful moves to the cloud. So we do encourage our firms to do that we haven't gotten.
John Hall: They're looking across large areas of data to try to develop a point of view, either for a deal investment decision or for advice to their clients. And then from a daily workflow standpoint, so much of what they do is unstructured information processing to go back to clients and orchestrate deals and all these different types of advisory activities that they do, so there's a lot of excitement about the broad potential, particularly now, of the generative AI store. So there are some early folks who are in, and then there are some more pragmatic folks who are saying, This is all great, I believe it, but what are we gonna do about the compliance questions? What are we gonna do about the information access questions?
Really prescriptive that they must do it on a particular timeline, yet and yet a lot of them have slipped it started pulling us into the market and I think it's just a great sign I think the firms are going cloud and we're getting into a stronger and stronger position to.
To help them benefit from from all the new technology, and particularly all the AI technology that you've been really only get in a cloud platform. So it's just the normal development of the market and I think this is going to go faster here.
Makes sense I appreciate you guys, taking my questions. Thank you.
Thank you one moment please.
Our next.
Question comes from the line of Terry Tillman.
Choice Securities Your line is open.
John Hall: We're a big organization globally with a lot of knowledge buried in our systems. If we point AI at that, how are we gonna make sure that we comply with all the regulatory obligations and the client obligations that we have? And so this is an area that we're very focused on because we have had such a strong position in the compliance aspect of these industries and their information for so many years. We think we can bring a unique value proposition that has all the potential of AI applied in industry-specific ways, but one of the core issues in industry-specific applications around AI here is the compliance and trust set of concerns. So this is a theme you're going to hear from us. This is where we're going to bring more compliant commitments today, but I think we can do all the work to get the fastest AI deployment in firms through that. I got it.
Yes, Hey, John Dave and David Congratulations from me as well on the solid results in the quarter just two questions first as it relates to just the ongoing relationship but at multiple levels with Microsoft So whether it's azure marketplace.
And being able to use prepaid cloud spend and just them influencing business. How is that shaping up and then I had a follow up question for Dave.
Yeah. Thanks, Terry the Microsoft relationship is continuing to grow and develop reforming more and more relationships on the ground.
In each of the accounts and we had some really exciting wins here in this quarter were some firms already had minimum azure commitment contracts with Microsoft and they use that to.
Buy from US and then we even had some firms that realize they could do that and they signed up for contracts because they were going to buy it or they could get some additional benefits from Microsoft So theres a lot of positive feedback going between our field.
John Hall: That's really great feedback. Thanks for that. I was curious if you could talk about the Intapp time migration, specifically the large law firms or the ones that have held out and been on-premise in the past. Why now is the simple question.
And Microsoft field on this point and I think it is helping us.
That's great to hear thanks for that John and I guess, maybe the follow up question for Dave.
John Hall: What incentive are people seeing to move to the cloud, and what drives that inside of the laggards that you still have remaining on-premise? Yeah, it's been interesting. I think, you know, we've talked a little bit about the fact that when everybody had to go home for COVID, a lot of these firms had a wake-up moment because people could get access to and have the right experience for all their traditional in-house built or on-prem solutions. So I think that was a permanent change in the mindset, and the firms have made a cloud-first or a cloud-only commitment coming out Even the sort of legacy environments that made that.
Any way to think about seasonality or just free cash flow the rest of the year as we move into the next couple of quarters.
Second half and then.
Or maybe what's the relationship of EBIT to free cash flow conversion I'm, just trying to understand a little bit more how we should think about our free cash flow. Thank you.
Yes.
First and foremost Terry I still think we're working on some continued operational efficiencies.
Just normal course.
I have been here for six months and we're just trying to get a little more cadence and cyclic.
Some constants around just normal things such as our receivables and simple things like that right, which at.
Value doesn't really.
Come up with a lot, but then there's still a lot of opportunity for us to move forward. So I would say that seasonality.
John Hall: What's happening now is firms have had a couple years to get their IT projects organized, their priorities rolling, clear everything out, and actually start making the meaningful moves to the cloud. So we do encourage our firms to do that. But we haven't gotten to be really prescriptive, that they must do it on a particular timeline yet.
Well in theory come more apparent when we get into.
FY 'twenty five about midway through the year and then we can look at.
On a normal course house, our respective business that Lisa and John already oriented around June.
For EMEA and others as well as December here for U S and so as we continue to look at some of those bigger accounts that may move the needle with the standard pay.
John Hall: And yet, a lot of them have flipped and are starting to pull us into the market. And I think it's just a great sign. I think that the firms are going cloud, and we're getting into a stronger and stronger position, uh, to help them benefit from all the new technology and, particularly, all the AI technology that you can really only get on a cloud platform. So it's just the normal development of the market. And I think this is going to go faster here.
Payment terms of 30 to 60 days.
Clearly that would follow in the following quarters, so something we can come back and talk a little bit more.
A little more in detail here.
A quarter or two.
Understood. So you guys soon.
Thank you one moment please.
Our next question comes from a lot of Matt Vanvliet of BTG. Your line is open.
John Hall: I appreciate you guys taking the questions. Thank you. One moment, please. Our next question comes from the line of Terry Tillman, of Truist Securities. Your line is open. Yeah, hey, John, Dave, and David.
Yes, good afternoon, and thanks for taking the question maybe.
Maybe a quick follow up on the Microsoft partnership.
<unk> question here, but as you think about sort of the overall contribution margin when youre getting customers to come through that channel and really leverage some of those existing contracts or prepaid spend.
Operator: Congratulations from me as well on the solid results in the quarter. I had just two questions. First, does it relate to just the ongoing relationship at multiple levels with Microsoft? So whether it's Azure Marketplace, you know, and being able to use prepaid cloud spend, and just them influencing business, how is that shaping up? And then I had a follow-up question for Dave.
Is there a specific margin uplift, we can think about or is it.
More of it over time as more of the workloads move to Azure that you're just getting the leverage on the gross margin side.
Just help us think about sort of a dollar for dollar on a direct sale versus one that comes through the Microsoft channel.
John Hall: Thanks, Terry. The Microsoft relationship is continuing to grow and develop. We're forming more and more relationships on the ground in each of the accounts, and we had some really exciting wins here in this quarter where some firms already had minimum Azure commitment contracts with Microsoft, and they used that to buy from us. And then we even had some firms that realized they could do that. And they signed up for contracts because they were going to buy Intapp, and they could get some additional benefits from Microsoft.
So I think generally I'll give some color and then Dave you can.
Talk about.
Anything you want to add.
The relationship.
So far has had a relatively small fraction of our overall business coming through this channel.
And that sort of way around the azure commitments. It is something thats, causing us to win in certain large accounts that already have those and then as I mentioned, we started to see some more firms come on board its not our overall model today, but I think there's opportunity to continue to grow.
John Hall: So there's a lot of positive feedback going between our field and Microsoft's field on this point, and I think it is helpful. That's great to hear. Thanks for that, John. I guess maybe the follow-up question for Dave, you know, any way to think about seasonality or just free cash flow for the rest of the year as we move into the next couple quarters of the second half? And then, you know, what or maybe what's the relationship of EBIT to free cash flow conversion? Just trying to understand a little bit more how we should think about our free cash flow.
The contribution that comes from the Microsoft's.
Relationship in each and every deal as we grow the business. So I think it's early days.
Generally on this model at the same time, we're getting a lot of energy and visibility of buzz working with them and meeting a lot of the clients that they have and working together and a lot of the regions around the world, where they have a strong footprint and they have <unk>.
Her capabilities. So I think it is a net positive today, even though we're early in the place where that that model may be a major contributor.
David H. Morton: Thank you. Yeah, first and foremost, Terry, I still think we're working on some continued operational efficiencies, just the normal course. I've been here for six months, and we're just trying to get a little more cadence and cicatrion, some constants around just normal things such as our receivables and simple things like that, right? Which, you know, at face value, doesn't really come up with a lot, but then there's still a lot of opportunity for us to move forward. So I would say that seasonality will, in theory, come more apparent when we get into FY25, about midway through the year, and then we can look at, okay, on a normal course, how our respective business is faring.
Dave do you want to say more but.
Yes, no John is spot on.
When you think about some of the larger enterprise in our respective industries that we serve not only as a check the box, but it's also a great Avenue for additional conversations of what Ken foreshadow.
Opportunities on both ends and so I think that's been a great series of conversation points.
When you think about just overall impact in today's P&L as John had noted it's very immaterial and dollar for dollar it's the same.
And so like we're looking longer term and how we continue to evolve both of these relationships and get some materiality that we can give some additional color on it.
Okay very helpful. And then as you look towards the second half of the fiscal year here or out over a longer period of time.
David H. Morton: John already oriented around June for EMEA and others, as well as December here for the U.S. And so as we continue to look at some of those bigger accounts, I may move the needle with standard payment terms of, you know, 30, 60 days. You know, clearly that would follow in the following quarters, so something we can come back and talk a little bit more, a little more in detail here in a quarter. understood. See you guys soon.
Where do you stand in terms of your head count and the needs to continue to expand that what areas of the business do you expect to continue to sort of grow more or less in line with revenue growth and what areas do you have enough scale now that you can really kind of build into.
I don't think we're going to grow.
At the levels of revenue per se either expense or our head count so you're always going to see some natural leverage coming off the model.
Operator: Thanks. Thank you. One moment, please.
Operator: Our next question comes from the line of Matt VanVliet of BTIG. Yeah, good afternoon. Thanks for taking the question. Maybe a quick follow-up on the Microsoft partnership from Terry's question here, but as you think about sort of the overall contribution margin when you're getting customers to come through that channel and really leverage some of those existing contracts or prepaid spend, is there a specific margin uplift we can think about, or is it more of an overtime as more of the workloads move to Azure, where you just gain the leverage on the gross margin side Just help us think about sort of the dollar for dollar on a direct sale versus one that comes through the Microsoft channel.
As far as head count going forward, it's primarily going to be in your product and engineering as we talk about these different items that we continue to bring online. So we talked about the investment within.
AI.
As well as the.
Industry solutions that we've narrated on and so that's been a good series of early day investments and then moving back over we've narrowed it a little bit about our partner economy, and so we can see.
Some small incremental investments on that and then to the extent that.
When we go further international with a broader scale and this is a little bit down the road.
You could see some incremental investment in that and thats more in sales and marketing and addressing any concerns or any areas of opportunity that we would see there.
John Hall: So I think generally, I'll give some color, and then Dave, you can talk about anything you want to add. The relationship so far has had a relatively small fraction of our overall business coming through this channel. In that sort of way around the Azure commitments, it is something that's causing us to win in certain large accounts that already have those. And then, as I mentioned, we started to see some more firms come on board. It's not our overall model today, but I think there's opportunity to continue to grow the contribution that comes from the Microsoft relationship in each and every deal as we grow the business. So I think it's early days, generally speaking. But at the same time, we're getting a lot of energy and visibility and buzz working with them and meeting a lot of the clients that they have and working together in a lot of the regions around the world where they have a strong footprint and they have Azure capabilities. So I think it is a net positive today, even though we're early in the place where that model may be a major player. Dave, do you want to say more? Yeah, no, John is spot on.
Great. Thanks look forward to seeing everyone in a couple of weeks.
Thank you one moment please.
Our next question comes from the line of Brian Schwartz of Oppenheimer. Your line is open.
Hey, this is Ari Friedman sitting in for Brian Schwartz. Thanks for taking my question.
I had a question just on like International I know you guys had said about 30% of the revenue came from international.
Thank you.
Were there any geographies that came above your expectations or did all geographies kind of come in line.
Any color on that would be helpful. Thanks.
Yeah, everything pretty much came in line.
It's a good series of activities.
We have opportunities obviously going forward.
And so as we continue to expand on that I would say in the past some of those opportunities have been more opportunistic versus purposeful and I think you'll hear us start narrating some of the international.
Areas of opportunity more purposeful these.
These are the us.
Going direct versus being pulled in on some of our hub and spoke with accounts. So.
Hopefully that gives you some additional color on that.
Thank you.
David H. Morton: When you think about some of the larger enterprises in the respective industries that we serve, not only does it check the box, but it's also a great avenue for additional conversations of what can foreshadow opportunities on both ends. And so I think that's been a great series of conversation points. When you think about just overall impact in today's P&L, as John noted, it's, it's very immaterial, and dollar for dollar, it's, And so, like, we're looking longer term and how we continue to evolve both of these relationships and get some materiality that we can give some additional color on. Okay, very helpful.
Thank you.
Okay that does conclude our Q&A session I would like to turn the call over to John Hall for any closing remarks.
Okay. Thanks, everyone. We appreciate your attention and your questions and we have a great Q2 behind us and we're excited to talk to you again this month at Investor Day on February 20 <unk>.
So for now we'll let you go have a great day.
Ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.
Okay.
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David H. Morton: And then as you look towards the second half of the fiscal year here, or you know, over a longer period of time, where do you stand in terms of your headcount and the needs to continue to expand that? What areas of the business do you expect to continue to sort of grow more or less in line with revenue growth? And what areas do you have enough scale now that you can really kind of build into? Yeah, I don't think we're going to grow at the levels of revenue, per se, either expense, or headcount. So you're always going to see some natural leverage coming off the model.
Okay.
Okay.
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David H. Morton: As far as headcount going forward, it's primarily going to be in product and engineering as we talk about these different items that we continue to bring online. So we talked about the investment in AI as well as the industry solutions that we've narrated on. And so that's been a good series of early day investments. And then, moving back over, we've narrated a little bit about our partner economy, and so we can see, you know, some small incremental investments in that. And then to the extent that we go further international with a broader scale, and this is, you know, a little bit down the road, you can see some incremental investment in that. That's more sales and marketing and addressing any concerns that or any areas of opportunity that we would see there. Great, thanks. Look forward to seeing everyone in a couple weeks. Thank you. One moment, please. Our next question comes from the line of Brian Schwartz of Oppenheimer. Your line is open. Hey, this is Ari Friedman sitting in for Brian.
Okay.
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Operator: Thanks for taking my question. I have a question just on international. I know you guys said about 30% of the revenue came from international in F2Q. Were there any geographies that came above your expectations, or did all geographies kind of come in line? Any color on that would be helpful.
Okay.
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David H. Morton: Thanks. Yeah, everything pretty much came in line. You know, it's a good series of activities. We have opportunities, obviously, going forward, and so we should continue to expand on that. I would say in the past, some of those opportunities have been more opportunistic versus purposeful, and I think you'll hear us start narrating some of the international... areas of opportunity more purposefully vis-a-vis us going direct versus being pulled in on some of our hub-and-spoke with accounts. So hopefully that gives you some additional color on. Thank you.
Okay.
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Okay.
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Operator: Okay, that does conclude our Q&A session. I'd like to turn the call over to John Hall for any closing, Okay, thanks everyone. We appreciate your attention and your questions and we have a great Q2 behind us and we're excited to talk to you again this month at Investor Day on February 22nd. So for now, we'll let you go. Have a great day. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day. Go to www.mooji.org for the full interview with David Trone Interviewed by David Trone Interviewed by David Trone Interviewed by David Trone Interviewed by David Trone Interviewed by David Trone Interviewed by David Trone www.youtube.com or www.youtube.com or www.youtube.com, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??
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