Q1 2024 Udemy Inc Earnings Call

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I'd now like to turn the call over to Dennis Walsh, Vice President of Investor Relations. Please go ahead.

Good day and welcome to <unk> first quarter of 2024 earnings Conference call.

Dennis J. Walsh: Thank you Joe joining.

Dennis J. Walsh: Joining me today are <unk>, Chief Executive Officer, Greg Brown, and Chief Financial Officer, Sarah Blanchard.

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Dennis J. Walsh: During this call we will make forward looking statements within the meaning of federal Securities laws.

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Dennis J. Walsh: These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated.

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Dennis J. Walsh: For a complete discussion of risks associated with these forward looking statements. We encourage you to refer to our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

Please also note that today's call is being recorded.

Now I'd like to turn the call over to Dennis Walsh, Vice President of Investor Relations. Please go ahead.

Dennis J. Walsh: Thank you Joe joining.

Dennis J. Walsh: Our forward looking statements are based upon information currently available to US we caution you to not place undue reliance on forward looking statements and we do not undertake and expressly disclaim any duty or obligation to update or alter our forward looking statements, except as required by applicable law.

Joining me today are <unk>, Chief Executive Officer, Greg Brown, and Chief Financial Officer, Sarah Blanchard.

Speaker Change: During this call we will make forward looking statements within the meaning of federal Securities laws.

Speaker Change: These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated.

Dennis J. Walsh: In addition, during this call certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with U S. Generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures.

For a complete discussion of risks associated with these forward looking statements. We encourage you to refer to our most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.

Speaker Change: Our forward looking statements are based upon information currently available to US we caution you to not place undue reliance on forward looking statements, we do not undertake and expressly disclaim any duty or obligation to update or alter our forward looking statements, except as required by applicable law.

Dennis J. Walsh: We believe that these non-GAAP financial measures support management and investors in evaluating our performance and comparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings news release.

Dennis J. Walsh: A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release.

Dennis J. Walsh: These reconciliations together with additional supplemental information are available on the Investor Relations section of our website.

Dennis J. Walsh: A replay of today's call will also be posted on the website with that I will now turn the call over to Greg.

We believe that these non-GAAP financial measures support management and investors in evaluating our performance and comparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings news release.

Greg: Thank you Dennis and good afternoon to everyone on the call.

Greg: It was a good start to the year for you to me and we continue to be excited about the significant opportunity in front of us.

Speaker Change: A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release.

Greg: During Q1, we further expanded our global enterprise customer base and executed on our strategy to meet customers evolving needs with our innovative intelligent skills platform.

Speaker Change: These reconciliations together with additional supplemental information are available on the Investor Relations section of our website.

Greg: Looking at our results for the first quarter, we met expectations for revenue and adjusted EBIT margin.

A replay of today's call will also be posted on the website with that I will now turn the call over to Greg.

Greg: Total revenue increased 12% year over year, while we grew unit business revenue by 24% compared to Q1 2023.

Gregory Scott Brown: Thank you Dennis and good afternoon to everyone on the call.

Greg: These results reflect the increased global demand for Reskilling and Upskilling as.

Gregory Scott Brown: It was a good start to the year for you to me and we continue to be excited about the significant opportunity in front of us.

Greg: As the pace of change driven by advancements in technology, such as generative AI continues to shape the way, we learn and work.

Gregory Scott Brown: During Q1, we further expanded our global enterprise customer base and executed on our strategy to meet customers evolving needs with our innovative intelligent skills platform.

Greg: Today I'd like to discuss the current demand environment and how we are positioning <unk> to meet to more effectively capture market share in our category.

Gregory Scott Brown: Looking at our results for the first quarter, we met expectations for revenue and adjusted EBIT margin.

Greg: I will then discuss the actions we're taking to address the short term challenges to our business in order to deliver on our growth expectations for the year and beyond.

Speaker Change: Total revenue increased 12% year over year, while we grew unit business revenue by 24% compared to Q1 2023.

Greg: We continue to see solid demand across most sectors and regions as companies seek a partner to support their workforce learning and development needs in all capacities.

These results reflect the increased global demand for Reskilling and Upskilling.

Speaker Change: As the pace of change driven by advancements in technology, such as generative AI continues to shape the way, we learn and work.

Greg: <unk> is differentiated by the high quality immersive and localized learning experiences we provide.

Speaker Change: Today I'd like to discuss the current demand environment and how were positioning you to meet to more effectively capture market share in our category.

Greg: Our comprehensive solution is purpose built to provide three essential learning modalities on demand immersive and cohort based.

Speaker Change: I'll then discuss the actions we're taking to address the short term challenges to our business in order to deliver on our growth expectations for the year and beyond.

Greg: This combination allows us to offer an end to end solution, where professional learners and organizations around the world can easily identify and quickly develop the skills they need to deliver better business outcomes today and in the future.

Yeah.

Speaker Change: We continue to see solid demand across most sectors and regions.

Speaker Change: As companies seek a partner to support their workforce learning and development needs in all capacities.

Greg: The benefits of our approach are reflected in our results and some of the milestones we hit this quarter.

Speaker Change: Your enemy is differentiated by the high quality immersive and localized learning experiences we provide.

Greg: During Q1, we entered into new or expanded existing relationships with enterprise customers, including Pepsi.

Speaker Change: Our comprehensive solution is purpose built to provide three essential learning modalities on demand immersive and cohort based.

Greg: Flutter Entertainment and the South African Reserve Bank.

Greg: In total we now have more than 16000 <unk> business customers in over 150 countries.

Speaker Change: This combination allows us to offer an end to end solution, where professional learners and organizations around the world can easily identify and quickly develop the skills they need to deliver better business outcomes today and in the future.

Greg: Notably we have more than doubled our enterprise customer base in the past three years.

Greg: This is a testament to the value we provide and the continued innovation we're building into our comprehensive platform.

Greg: For example, a leading global it consulting company based in Europe expanded their relationship with us during Q1.

Speaker Change: During Q1, we entered into new or expanded existing relationships with enterprise customers, including Pepsi.

Greg: By leveraging the <unk> business platform to prepare for internal it certifications the customer experienced a 17% increase in certifications per consult which in turn allows them to charge a higher rate for their services.

Speaker Change: In total we now have more than 16000, you to me business customers in over 150 countries.

Speaker Change: Notably we have more than doubled our enterprise customer base in the past three years.

Greg: More recently in order to support their business objectives related to certification and generative AI upscaling the company expanded their deployment of <unk> business Pearl.

Speaker Change: This is a testament to the value we provide and the continued innovation we're building into our comprehensive platform.

Greg: By assessing and guiding learners capabilities <unk> business pro enables technical professionals to achieve their desired learning and business outcomes more quickly and effectively.

Speaker Change: For example, a leading global I T consulting company based in Europe expanded their relationship with us during Q1.

Speaker Change: By leveraging the unique business platform to prepare for internal I T certifications the customer experienced a 17% increase in certifications per consult which in turn allows them to charge a higher rate for their services.

Greg: Also during the quarter a customer that's been with us since 2017, and as a global leader in AI computing expanded their relationship with us.

Greg: This is another example of a customer that has been effectively leveraging <unk> to me for AI training and certification breath.

Speaker Change: More recently in order to support their business objectives related to certification and generative AI upscaling the company expanded their deployment of Ub business Pearl.

Greg: The expansion of seats from 3000 to 9000, almost one third of their total employees underscores the tangible impact of our platform has had on their business.

Speaker Change: By assessing a guiding learn capabilities Ub business pro enables technical professionals to achieve their desired learning and business outcomes more quickly and effectively.

Greg: We see this use case for AI training and certification preparation as a long term driver of demand going forward.

Speaker Change: Also during the quarter a customer that's been with you and me since 2017 and it is a global leader in AI computing expanded their relationship with us.

Greg: And just over a year since <unk> launched we've seen more than 4 million enrollments in the 2000, plus AI courses and the <unk> catalog.

Speaker Change: This is another example of a customer that has been effectively leveraging your enemy for AI training and I T certification Brett.

Greg: This massive surge in interest from individuals and organisations demonstrates the rapidly growing need to upskill talent on generative AI.

Speaker Change: The expansion of seats from 3000 to 9000.

Speaker Change: One third of their total employees underscores the tangible impact our platform has had on their business.

Greg: Based on what we've seen in the past year, we believe generative AI will have a significant lasting impact across nearly every industry region and professional overall.

Speaker Change: We see this use case for AI training and certification preparation as a long term driver of demand going forward.

Greg: Organizations will require employees to cultivate new skills to adapt to change and certain roles maybe replaced entirely.

Speaker Change: And just over a year since chat G. P. T launched we've seen more than 4 million enrollments in the 2000, plus AI courses and the Union catalog.

Greg: A key reason why <unk> unique marketplace model is so compelling is how quickly we can expand and adapt our content catalog.

Speaker Change: This massive surge in interest from individuals and organisations demonstrates the rapidly growing need to upskill talent on generative AI.

Greg: This enables organizations to stay ahead of trends and technology, enabling them to better understand and apply these advances.

Speaker Change: Based on what we've seen in the past year, we believe generative AI will have a significant lasting impact across nearly every industry region and professional role.

Greg: For example, within a few days of <unk> launch we were the first platform to have of course instructing learners on the topic.

Speaker Change: Organizations will require employees to cultivate new skills to adapt to change and certain roles maybe replaced entirely.

Greg: In less than two months, we had over 100 courses on chat GPT available as compared to only one course available across all other competitive offerings.

Speaker Change: A key reason why you'd amaze unique marketplace model is so compelling is how quickly we can expand and adapt our content catalog.

Greg: This is the perfect example of our marketplace in action and how we can effectively leverage our expert instructor network to quickly meet our customers' needs.

Speaker Change: This enables organizations to stay ahead of trends and technology, enabling them to better understand and apply these advances.

Greg: As generative AI alters the way we work the development of soft skills, ranging from strategic thinking to effective in a personal communication is becoming more critical than ever.

Speaker Change: For example, within a few days of chat G. P. Cheese launch we were the first platform to have of course instructing learners on the topic.

Greg: At <unk>, we recognize the pivotal role that developing leadership soft skills plays and harnessing the full potential of generative AI.

Speaker Change: In less than two months, we had over 100 courses on chat GPT available as compared to only one course available across all other competitive offerings.

Greg: Our intelligence skills platform is designed to not only enhance technical proficiency, but also to cultivate these essential soft skills.

Greg: By integrating advanced technology skills with soft skills development, our platform ensures that leaders are well equipped to implement new technologies effectively and lead their teams through the organizational changes.

Speaker Change: I generally I alters the way we work the development of soft skills, ranging from strategic thinking to effective interpersonal communication is becoming more critical than ever.

Greg: This helps organizations achieve better business outcomes and also enhances engagement on our platform.

Speaker Change: I mean, we recognize the pivotal role that developing leadership soft skills plays and harnessing the full potential of generative AI.

Greg: As engagement increases on a platform that generates a virtuous cycle, where the more learners engage the more data we can collect.

Speaker Change: Our intelligent skills platform is designed to not only enhance technical proficiency, but also to cultivate these essential soft skills.

Greg: That data in turn translates into valuable insights to customers can then leverage to make more informed business decisions.

Speaker Change: By integrating advanced technology skills with soft skills development, our platform ensures that leaders are well equipped to implement new technologies effectively and lead their teams through the organizational changes.

Greg: As organizations increasingly rely on our platform to develop their workforce. The increased engagement unlocks long term growth opportunities enables us to provide more effective learning experiences.

Speaker Change: This helps organizations achieve better business outcomes and also enhances engagement on our platform.

Greg: Ultimately, we see <unk> platform is mission critical for fostering a more agile resilient and skilled workforce that is better equipped to tackle the challenges of today and the opportunities of tomorrow.

Speaker Change: As engagement increases on our platform generates a virtuous cycle, where the more learners engage the more data we can collect.

Greg: Further illustrating this growing opportunity a recent KPMG survey found that nearly 75% of business leaders ranked generative AI at the top of our emerging technology that will impact our business over the next year and a half.

Speaker Change: As organizations increasingly rely on our platform to develop their workforce increased engagement unlock long term growth opportunities enables us to provide more effective learning experiences.

Greg: However in a recent study conducted by <unk>, we found that only 55% of employees are confident and their management teams ability to seize the opportunities and mitigate the risks brought upon by generative AI.

Speaker Change: Ultimately, we see your enemies platform is mission critical for fostering a more agile resilient and skilled workforce that is better equipped to tackle the challenges of today and the opportunities of tomorrow.

Greg: Yeah.

Greg: At <unk>, we are committed to bridging this gap by supporting our customers and strengthening the skills of their leadership teams.

Speaker Change: Further illustrating this growing opportunity a recent KPMG survey found that nearly 75% of business leaders ranked generative AI at the top of our emerging technology that will impact our business over the next year and a half.

Greg: Our comprehensive skills development programs, including the cohort based unit business leadership Academy are tailored to equip leaders with advanced technical knowledge as well as the soft skills needed to innovate and lead confidently in an increasingly competitive and evolving environment.

Speaker Change: However in a recent study conducted by you to me we found that only 55% of employees are confident and their management teams ability to seize the opportunities and mitigate the risk brought upon by generative AI.

Greg: Recently, a multi product unit business customer added additional leadership Academy cohorts after seeing positive results following their first engagement.

Greg: Insurance provider Blue Cross Blue Shield of North Carolina, with seeking new ways to help their customer service leaders better connect with and coach their direct reports in a hybrid work environment.

Speaker Change: Our comprehensive skills development programs, including the cohort based Union business leadership Academy are tailored to equip leaders with advanced technical knowledge as well as the soft skills needed to innovate and Lee confidently in an increasingly competitive and evolving environment.

Greg: To support this effort to customer pilot leadership Academy and noticed immediate changes among the pilot group of leaders, including improved communication skills and additional leadership traits that we're not exhibited prior to the pilot.

Speaker Change: Recently, a multi product business customer added additional leadership Academy cohorts after seeing positive results falling their first engagement.

Greg: Additionally, many of the leaders felt that they were able to connect better and interviews with candidates.

Greg: The team also saw significant value in analytics and data from this program that <unk> provided.

Speaker Change: Insurance provider Blue Cross Blue Shield of North Carolina was seeking new ways to help their customer service leaders better connect with and coach their direct reports in a hybrid work environment.

Greg: Because of the success of the program. The company added two additional cohorts within six weeks of the delivery of our insights.

Speaker Change: To support this effort the customer pilot leadership Academy and noticed immediate changes among the pilot group of leaders, including improved communication skills and additional leadership traits that we're not exhibited prior to the pilot.

Greg: During Q1, we also launched our Gen AI skills pack to enable unit business customers to upskill their workforce on generative AI in order to achieve better business outcomes.

Greg: The skills pack supports leaders and other workers in establishing a fundamental understanding of the technology and how to apply it responsibly to enhance productivity communication and project management.

Greg: Since its launch the skills pack has driven meaningful pipeline generation further validating the growing demand for developing generative AI skills for companies of all sizes sectors and regions.

Speaker Change: Because of the success of the program. The company added two additional cohorts within six weeks of the delivery of our insights.

Speaker Change: During Q1, we also launched our journey I skills back to enable you to me business customers to upskill their workforce on generative AI in order to achieve better business outcomes.

Greg: The use cases are highlighted provide you with a snapshot of the value we're delivering for our customers every day.

Greg: However, we recognize that we can do better in certain areas of the business.

Speaker Change: The skills pack supports leaders and other workers in establishing a fundamental understanding of the technology and how to apply it responsibly to enhance productivity communication and project management.

Greg: We are committed to addressing the execution challenges that impacted our outlook for the year.

Greg: As we mentioned on our last earnings call, we identified issues with two reseller partners in the APAC region, and we experienced some softness in EMEA as.

Speaker Change: Since its launch the skills pack has driven meaningful pipeline generation further validating the growing demand for developing generative AI skills for companies of all sizes sectors and regions.

Greg: As well as some underperforming cohorts within larger markets.

Greg: Since that time, we began taking action to address these issues, including hiring general managers on the ground in South Korea, and Vietnam to oversee our reseller partners in those markets.

Speaker Change: The use cases that highlight it provides you with a snapshot of the value we're delivering for our customers every day.

Greg: In addition, we have commenced the search for a chief revenue officer to lead you to me business as.

Speaker Change: We are committed to addressing the execution challenges that impacted our outlook for the year.

Speaker Change: Our current leader will be leaving the company in June.

Speaker Change: As we mentioned on our last earnings call, we identified issues with two reseller partners in the APAC region, and we experienced some softness in EMEA.

Greg: We made good progress with our search for a new leader with strong go to market leadership experience scaling global businesses from $500 million to $1 billion in revenue and beyond.

Speaker Change: As well as some underperforming cohorts within larger markets.

Greg: The current year to be business leader will support the transition and I will be actively involved while the new leader ramps into their role.

Speaker Change: Since that time, we began taking action to address these issues, including hiring general managers on the ground in South Korea, and Vietnam to oversee our reseller partners in those markets.

Greg: We expect to have more to share on this soon.

Greg: Altogether. These actions will address the short term challenges leading to improved long term performance.

Speaker Change: In addition, we have commenced the search for a chief revenue officer to lead you to me business as our current leader would be leaving the company in June.

Greg: To wrap up the innovative capabilities, we're embedding in our intelligent skills platform, coupled with the demand from the global transformation to a skills based economy and the rapid advancements of generative AI.

Speaker Change: We made good progress with our search for a new leader with strong go to market leadership experience scaling global businesses from $500 million to 1 billion in revenue and beyond.

Greg: Are expected to drive meaningful momentum and engagement on our platform.

Greg: Over the long term. These trends are also poised to unlock substantial opportunities for our business.

Speaker Change: We expect to have more to share on this soon.

Greg: As the corporate world increasingly adopts a culture of continuous learning aimed at future proofing. The workforce, we anticipate <unk> platform will become even more mission critical.

Speaker Change: Altogether. These actions will address the short term challenges leading to improved long term performance.

Speaker Change: To wrap up the innovative capabilities, we're embedding in our intelligent skills platform, coupled with the demand from the global transformation to a skills based economy and the rapid advancement of generative AI.

Greg: Now I'll turn the call over to Sarah for a financial review.

Sarah Walter Blanchard: Thank you Craig I'll start with comments on the key financial highlights and then provide our outlook you can find the complete set of financial tables in our news release, which is available on our Investor Relations website.

Speaker Change: Are expected to drive meaningful momentum and engagement on our platform.

Speaker Change: Over the long term. These trends are also poised to unlock substantial opportunities for our business.

Sarah Walter Blanchard: The fifth consecutive quarter, our results exceeded the high end of our guidance range on both the top and bottom line.

Speaker Change: At the corporate World increasingly adopts a culture of continuous learning aimed at future proofing. The workforce, we anticipate your enemies platform will become even more mission critical.

Sarah Walter Blanchard: Revenue increased 12% year over year to $197 million.

Sarah Walter Blanchard: With more than 60% of our total revenue coming from outside of the U S. We did have a negative impact from FX to our year over year growth rate up two percentage points.

Speaker Change: Now I'll turn the call over to Sarah for a financial review.

Greg: <unk> revenue for the quarter was $180 million, an increase of 24% year over year, including a two percentage point headwind from changes in FX rates.

Sarah Walter Blanchard: Thank you Craig I'll start with tenants and the key financial highlights and then provide our outlook you can find the complete set of financial tables in our news release, which is available on our Investor Relations website.

Greg: We ended the quarter with annual recurring revenue or <unk> of $479 million up 21% from a year ago.

Greg: Our consolidated net dollar retention rate, our LDR at the corner and with 104%.

Greg: <unk> was 111% of our large customers are those with 1000 or more employees.

Greg: As expected we continue to see small decreases in net dollar retention as upsells continue to take longer than historical norms.

Greg: Gross salary attention with unchanged once again.

Greg: In aggregate, we grew our customer base by 12% year over year to more than 16000 customers globally.

Greg: Our large customer cohort is growing at a faster rate or 16% year over year.

Greg: Today more than 30% of our customers, our large customers and the number of contracts with IRR of more than $100000 increased 16% year over year.

Greg: We're also clothing longer term deals, which means that approximately 50% of our era is from multiyear contracts up from 44% a year ago.

Greg: Gross margin for our European business segment came in at 72% for the quarter up 700 basis points from the prior year, primarily due to the instructor revenue share change that went into effect on January one of this year.

Greg: First quarter consumer revenue was down 2% on a year over year basis, including a negative two percentage point impact from FX. During Q1 average monthly visitors grew 7% year over year to $37 million.

Greg: As we move down the P&L note that all financial metrics are non-GAAP unless stated otherwise.

Greg: Q1, gross margin was 62% a 400 basis point improvement from Q1 2023, driven by the instructor revenue share change as well as the continued revenue mix shift here to meet business, which accounted for approximately 60% of total revenue in Q1, an increase of 600 basis points year over year.

Greg: Total operating expense was $122 million or 62% of revenue and 200 basis points lower than Q1 of last year. Thanks to our focus on company wide cost efficiency.

Greg: On the bottom line, we delivered net income of approximately $5 million or 3% of revenue adjusted.

Greg: Adjusted EBITDA was positive for the fourth consecutive quarter at approximately $6 5 million or 3% of revenue, representing a 700 basis point expansion year over year.

Greg: The better than expected adjusted EBITDA result was driven by revenue outperformance and our disciplined approach to ensuring operational efficiency throughout the organization.

Greg: Moving on to key cash flow and balance sheet items, we ended the quarter with $434 million of cash cash equivalents restricted cash and marketable securities.

Greg: Free cash flow for the quarter was positive $18 million.

Greg: Our solid cash position enabled us to return capital to shareholders.

Greg: During Q1, we spent approximately $55 million of our $100 million share repurchase program to buy back nearly 5 million shares.

Greg: Consistent with our disciplined capital allocation strategy, we are committed to continuing to grow the company, while returning capital to shareholders through opportunistic share repurchases.

Greg: To that end our board has approved the expansion of our share repurchase program to $150 million up from $100 million.

Greg: We will remain prudent in deploying capital and the increased buyback reflects the confidence our board and management team have in the business and the opportunities ahead.

Greg: Now for our outlook for Q2 and full year 2024.

Greg: As a volatile macroeconomic environment continues to process and as we work to address the short term execution challenges, we're taking a prudent approach to our outlook for the remainder of the year.

Greg: As a result, we expect Q2 revenue to be between 192 and $195 million or approximately 9% year over year growth at the midpoint.

Greg: Assuming exchange rates remain constant FX is expected to negatively impact Q2 revenue growth by one percentage point.

Greg: On the bottom line, we are targeting negative 50 to positive 50 basis points for Q2 adjusted EBITDA margin.

Greg: For the full year, we have narrowed our revenue range to $795 million to $805 million or nearly 10% growth at the midpoint.

Greg: As we were re calculating the impact of FX on our full year outlook. We realized there was an issue with our prior estimate we now expect an estimated negative one percentage point impact from FX on our full year growth rate.

Greg: As Greg mentioned, we are in the process of identifying a liter for you to meet us and expect that once the leaders in place and ramped up we will be well positioned to deliver on our growth projections.

Greg: We still expect you to be possessed revenue will account for more than 60% of total revenue for the full year.

Greg: On the consumer side, given the stronger than expected performance in Q1, we now anticipate consumer revenue to be down 2% to 4% year over year on a full year basis.

Greg: Looking ahead, we are focused on delivering efficient growth. We are actively managing our expenses to ensure that every expense is aligned with our core objectives to support the long term health of our business.

Greg: Our commitment to maintaining a solid financial foundation for you to me is a top priority as we continue to optimize our operations and make strategic investments to secure sustained growth.

Greg: With all of that in mind, given the outperformance on adjusted EBITDA in Q1, we are raising our full year 2024, adjusted EBITDA margin guidance.

Greg: We now expect full year 2024, our adjusted EBITDA margin to be in the range of 200 to 300 basis points.

Speaker Change: Before we open up the call for your questions I want to express our excitement about the future of <unk>.

Speaker Change: Despite the short term challenges we've encountered the long term opportunity ahead of us is more compelling than ever before our strategic investments in product brand and global expansion are set to extend our leadership position in this category we.

Speaker Change: We thank you for your continued support and look forward to keeping you updated on our progress so with that we'll open up the call for your questions moderator.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Again to ask a question you May Press Star then one on your telephone keypad and if youre using a speakerphone. Please pick up your handset before pressing the keys.

Speaker Change: If you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: And our first question will come from Stephen Sheldon with William Blair. Please go ahead.

Stephen Hardy Sheldon: Hey, Thanks for taking my questions first one here I just wanted to make sure I understood the FX commentary.

Stephen Hardy Sheldon: I think last quarter, you said it was going to be a 3% drag and just to make sure I heard that correctly.

Stephen Hardy Sheldon: Now youre thinking for the year, it's going to be a 1% drag in can you talk about that.

Stephen Hardy Sheldon: That change.

Stephen Hardy Sheldon: Hi, Stephen it's Sarah Thanks for the question listen.

Sarah Walter Blanchard: Listen we did previously announced that we expected about three points of headwinds from FX. The updated estimate is 1% one point.

Sarah Walter Blanchard: And it really was just an unfortunate error. These things happen. It has been remediated and we put additional checks in place to make sure that that doesn't happen again.

Stephen Hardy Sheldon: Okay got it and so with consumer coming in above expectations.

Speaker Change: Yes. Thank you.

Speaker Change: You up the guidance just a little bit there on the revenue side. I mean are you effectively bringing down the <unk> segment growth I guess can you just talk about expectations for <unk>.

Speaker Change: Yeah, Let me walk through are some of the puts and takes of our 2024 outlook.

Speaker Change: First thing I want to mention is we remain very excited about the long term opportunity, which is unchanged we.

Speaker Change: We did narrow our range and the midpoint is still at approximately 10%.

Speaker Change: We're taking a prudent approach to the year, we continue to be in a volatile macro economic environment.

Speaker Change: You just heard US talk about we are going through a leadership change and we're still in the process of addressing those execution issues that being said, we did bring consumer up we're now expecting that to be down two to four points as that continues to outperform our expectations, which means that <unk> will dip slightly below 20.

Sarah Walter Blanchard: We did narrow our range and the midpoint is still at approximately 10%, but we're taking a prudent approach to the year, we continue to be in a volatile macro economic environment.

Speaker Change: We expect all.

Speaker Change: Overall, the low point of our growth to be a Q2 Q3 and for our revenues have been re accelerate on the back of all of these things I just spoke about such that we're ending the year at about 10% at the midpoint.

Speaker Change: Okay got it that's helpful and just one more for me I think you talked last quarter about planning to continue investing in the go to market team how is that progressing relative to plan and it'd be great just to get any additional color on where you are adding sales resources.

Speaker Change: Yeah, So we have been.

Speaker Change: Adding resources upmarket so in the strategic accounts enterprise accounts that is going according to plan. The newer reps are ramping very nicely.

Speaker Change: So we're going to continue to monitor closely we invested some additional funds in enablement to make sure that these new reps could come in and hit the ground running.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Speaker Change: And our next question will come from Curtis Nagle with Bank of America. Please go ahead.

Curtis Smyser Nagle: Great. Thank you.

Curtis Smyser Nagle: Thanks for taking the question.

Curtis Smyser Nagle: Maybe just first for Sarah apologies, if I missed this but what's driving the additional.

Curtis Smyser Nagle: 50 to 100 bps in terms of the.

Curtis Smyser Nagle: With regard to the year.

Sarah Walter Blanchard: Yesterday, we are bringing our expectations for EBITDA up due to the outperformance that we saw in the first quarter were being very balanced in our approach, which is continuing to invest in the product and the innovation the go to market.

Curtis Smyser Nagle: <unk>.

Curtis Smyser Nagle: <unk> and enablement that will allow us to capture this growth opportunity in front of us at the same time being really thoughtful about driving that operational efficiency. So just with this balance balanced approach that we continue to take we do expect it to be able to deliver another 100 basis points or so on the bottom line.

Curtis Smyser Nagle: Okay.

Speaker Change: And then just stepping over to you be business. So understanding the point you made about.

Curtis Smyser Nagle: So macro in nature.

Curtis Smyser Nagle: <unk> environment.

Curtis Smyser Nagle: Could you speak a little more specifically in terms of the slowdown in IRR.

Curtis Smyser Nagle: A little bit lower I guess revenue retention or are we seeing attrition pickup or I don't know.

Curtis Smyser Nagle: What's going on there and I guess, how much is that flowing through to the forecast of lower.

Curtis Smyser Nagle: Additionally, <unk> distributor.

Curtis Smyser Nagle: Yeah.

Curtis Smyser Nagle: We did expect the first half to be muted from a net new <unk> perspective due to some of these execution challenges that we saw again remediation is underway, we're very happy with the early signs that it's going to take some time, we also want to be really thoughtful about bringing a new leader in place giving that person.

Curtis Smyser Nagle: Time to ramp up.

Curtis Smyser Nagle: We are looking and we're in the late stages.

Curtis Smyser Nagle: Finding someone who has been.

Curtis Smyser Nagle: Able to scale global businesses from $500 million to $1 billion, plus we expect to have more to share with you soon.

Curtis Smyser Nagle: But we're just working through some of these short term challenges, what's really important again, a long term opportunity, which is the continued move to skills based organization and the growing demand.

Curtis Smyser Nagle: <unk> be able to adapt to and adopt AI capabilities both.

Curtis Smyser Nagle: For your internal use as well as your product capabilities as an organization that continues to grow.

Speaker Change: Got it thanks.

Speaker Change: Okay.

Speaker Change: And our next question will come from Ryan Macdonald with Needham <unk> Company. Please go ahead.

Ryan Michael MacDonald: Hi, Thanks for taking my questions, maybe not to harp too much on <unk>, but maybe just as a clarifying question there as youre looking at maybe what's coming in below expectations, or maybe where the lack of performance or execution was is it more concerns in terms of top of the funnel development.

Ryan Michael MacDonald: And generating pipeline or perhaps that progression through the pipeline just trying to understand maybe what.

Ryan Macdonald: What wasn't developing as you expected sort of first.

Ryan Macdonald: From fourth quarter earnings call to now through first quarter. Thanks.

Speaker Change: Yeah. So.

Ryan Macdonald: There were some different.

Speaker Change: Pieces that came to play here. The first thing I'll say is we had identified the issues.

Speaker Change: Back in the last quarter. Some of those were more pronounced as we continue to dig in and put those remediation efforts in place there were areas of pipeline generation that we are doing very well for instance, our AE and some of our STR side of things, but then we had some other areas where certain pieces of our marketing.

Speaker Change: Fine werent going as well as we would've liked especially on the commercial side I think that's probably not as surprising given that smbs have been hit.

Ryan Macdonald: Pretty hard in this environment.

Ryan Macdonald: On the execution side. There are there were pockets of execution from a sales perspective that we're going really really well we spoke about a very large.

Ryan Macdonald: Geographic region that over performs for the second half of last year and then we saw some pockets where frankly, they're just needed to be more accountability around the sales process. So there were puts and takes across the organization. Greg has done extensive deep dive maybe Greg you want to talk a little bit Ron I'll jump in a little bit on this one.

Gregory Scott Brown: On the enterprise side globally right now we.

Gregory Scott Brown: Are very encouraged by the pipeline development that we're seeing and supporting the productivity improvements that we're seeing on the enterprise side as well so feel very good about the work that our teams are doing.

Gregory Scott Brown: That not only drive pipeline, but also execute on the enterprise side as you all know enterprise for US is 80% of our revenue. So that's a big mover for us as Serge alluded to down market in our commercial segment.

Gregory Scott Brown: Where we're focused right now bolstering our pipeline generation capability in and that work will be ongoing and feel.

Gregory Scott Brown: Feel good about the plans in place, but we do you need to bolster the SMB segment, because what we're saying is smbs. There has been a protracted slowdown and that's something we've talked about so anyway, we're working hard on that.

Gregory Scott Brown: At the same time, we've got a number of programs in place right now that we're starting to see very positive impact from one is the partnership that we've talked about with Mclaren, We just had a significant.

Gregory Scott Brown: For us activation event.

Gregory Scott Brown: In the U K and within the last two weeks, where we had well over 100 senior executives attend.

Gregory Scott Brown: Our power up event at the innovation center at the Mtc.

Gregory Scott Brown: The results of that remain obviously youre going to matriculate through the pipeline and we're going to start to see the results of that as far as productivity in our business close over the next couple of quarters, but the early early feedback has been tremendous both from our customers as well as our team theres more of those types of things coming as we activate around the world. These partnerships as well as the programs and plans that are mark.

Gregory Scott Brown: <unk> team has put in place so feel good about where we're at as far as the planning going forward. This is a short term situation for us down market and the SMB side.

Speaker Change: That's really helpful color I really appreciate it.

Speaker Change: Jumped on the call late so I apologize if I missed this and it was said already but within the consumer business great to see some of the.

Speaker Change: Maybe success relative to expectations. There, obviously, a competitor of yours had talked about about a week ago. Some softness in north American consumer and maybe lack of conversion just curious as what youre seeing geographically within the consumer business or any concerns of sort of softening conversion trends.

Speaker Change: Within North America at all thanks.

Speaker Change: Yes. Thanks.

Speaker Change: So we do continue to see and this has been happening for many many quarters.

Speaker Change: Our <unk>.

Speaker Change: Conversion and business mix really moving overseas from North America, but that is theres nothing new that I would call out what I'll say is our stocks continue to perform well we continue to rollout to new geographies.

Speaker Change: We're excited to continue to see that and what we've spoken about it and we have some capabilities that we will be able to bring into our personal implant subscription over time that will allow us to drive higher LTV and then on the back of that actually start to invest again into the customer acquisition side. So.

Speaker Change: I would say our trends that we have been seeing are very consistent with what we've seen quarter after quarter.

Speaker Change: And we haven't seen anything unusual of late.

Speaker Change: Thanks for the color I appreciate it.

Speaker Change: And our next question will come from Terry Tillman with Truest. Please go ahead.

Speaker Change: Great. Thanks, Dan This is Scott <unk> on for Gary.

Terry Tillman: To start with one on the instructor base as you've rolled out some changes that impact that that group over the past few quarters, whether it be the Rev share agreement or integrations with AI tools onto the platform.

Scott: You can speak to about the feedback you're getting from those constructors, maybe what seems to be a top lines for them when you're talking about the direction of your to me. Thanks.

Scott: Thanks.

Speaker Change: Yeah. Thanks for the question.

Speaker Change: Yes, we remain.

Speaker Change: Very connected with our instructors.

Speaker Change: A number of.

Speaker Change: Communication channels right now that are open that we're all engaged with to ensure that not only are they.

Speaker Change: Able to provide meaningful feedback to us, but we're able to clearly articulate and communicate how the investments we're making in product.

Speaker Change: That impact in a very positive way the ability to develop learning capability bring that into the marketplace and be able to monetize that falls in the marketplace and within UV.

Speaker Change: And.

Speaker Change: But effectively what we did is the same thing we did for you all just a couple of months ago, which is we have given them a deep dive demonstration into the three capabilities, we're bringing online.

Speaker Change: The excitement.

Speaker Change: <unk>.

Speaker Change: Moreover from them from the group was palpable.

Speaker Change: Be more fired up about what.

Speaker Change: What we're bringing into market and the impact of that really is the net of it is is that no top instructors have opted out of our platform.

Speaker Change: And I think.

Speaker Change: More now than ever.

Speaker Change: We're increasingly excited about the earnings potential that we're going to provide as a result of the investments, we're making and their ability to develop and transform the learning experience. So all to say really pleased with how our team has managed the communications with our instructors and the response from our instructors.

Speaker Change: Great. That's really helpful. Maybe just one quick follow up just strong cash flow numbers. This quarter I wanted to ask if there is any seasonal or timing impacts around the results and maybe how we should think about operating cash flow free cash flow for the year. Thanks, guys. Appreciate it.

Speaker Change: Yeah, Great question, we do see some seasonality Q1 tends to be a great quarter for collections on the back of Q4 bookings and we've also been doing some work internally around driving our days' sales outstanding down until we saw.

Speaker Change: Some improvements there as well so really great collections quarter, there will be pluses and minuses on cash flow quarterly because we have different seasonality both from a revenue perspective, a gross margin perspective, and a cash flow perspective between our consumer business and our <unk> business side of things where.

Speaker Change: Sure.

Speaker Change: Cash in Q1.

Speaker Change: Sorry, Q4, and Q1 on the consumer side around some of our bigger promotions.

Speaker Change: Where the heavier cash outflow is Q1 Q2 from a consumer and then like I, just said UV tends to have a pretty good Q1.

Speaker Change: Collections. So those are the biggest drivers, but again, just there will be timing noise here and there between the quarter overall focus on driving that cash flow margin to be a little bit better than the EBITDA margin.

Speaker Change: And our next question will come from Josh Baer with Morgan Stanley. Please go ahead.

Joshua Phillip Baer: Great. Thanks for the question.

Joshua Phillip Baer: For Greg just wondering with the.

Joshua Phillip Baer: The skills based future as far as the workplace hiring how far along are we in that journey.

Joshua Phillip Baer: And what needs to happen in order to really reach an inflection point as far as the focus on skills and scaling in the corporate world.

Gregory Scott Brown: Thanks, Josh I appreciate the question.

Speaker Change: Right now we're in early innings, we are seeing.

Joshua Phillip Baer: More progressive companies, starting to take action and implementing strategies to develop the skills based organization, especially with respect to generative AI, but BCG came out with a report recently.

Joshua Phillip Baer: State of the 90% of organizations are still in the observation mode.

Joshua Phillip Baer: And which is in the process of determining what their strategy is going to be.

Joshua Phillip Baer: With respect to not only transitioning to skills based order, but also how they're going to transform the organization to take advantage of generative AI, both internally to create operating leverage as well as externally and to the products and services. They are delivering so it's early innings and a lot of the work we're doing right now with our enterprise customers is on the <unk>.

Joshua Phillip Baer: Strategy side.

Joshua Phillip Baer: And one of the things we're doing that.

Joshua Phillip Baer: We're uniquely positioned to be able to execute against because of the resources. We have in our customer success organization as spend the time and that strategy development phase.

Joshua Phillip Baer: While we are starting to work on the various I would say verticals within organizations as well as functions with the organizations to develop skills past purpose built skills past, we talked about in our announcement Gen. AI skills packs that we've released that all supports our ability to in a very systematic way.

Joshua Phillip Baer: Able to start to operationalize, what our skills based organization is going to look like and we are in early phases with a lot of customers right now it's early innings.

Joshua Phillip Baer: And we're excited about the folks that are out in front because those are the case studies and the references we are able to use in conversations with prospective customers, but the vast majority is still to come. This is a multi multi year opportunity for us to.

Joshua Phillip Baer: To help organizations through this transition to a skills based work.

Speaker Change: Thank you that's great.

Speaker Change: And our next question will come from Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Speaker Change: Hi, This is Tommy <unk> on for Brett Congrats on the solid quarter I guess from the APAC standpoint.

Tommy: The weakness last quarter have.

Tommy: Have you seen any early positive impacts from the new hires in South Korea, and Vietnam or do you expect this to.

Speaker Change: To see continued weakness in the 2024.

Speaker Change: Yeah.

Speaker Change: Alright.

Speaker Change: I'll start there and then you can jump in.

Speaker Change: Sure.

Speaker Change: Was involved in the process of Onboarding, the new leaders very encouraged by the level of talent.

Speaker Change: Brent we brought into the company and early days as far as the approach that I'm seeing in both of those markets I'm staying very close to it.

Speaker Change: Uh huh.

Speaker Change: Im very encouraged by the approach that we're taking and some of the early indicators as far as.

Speaker Change: The.

Speaker Change: Not only pipeline build but.

Speaker Change: Our measures of execution I won't get into the specifics, but as far as sales productivity I'm just productivity in general So yes early innings. It's early days, we have to give these leaders' time to get their feet underneath them.

Speaker Change: And.

Speaker Change: Start the execution process, but I like what I'm seeing so far Sara I would just add from a when we expect the new leaders to actually impact.

Speaker Change: That's in the back half. So you have to give people time to come in and really make these changes and then that those changes have to really progressed through the pipeline. So like Greg said, we're really excited with what we see it is early days and we expect that to start to add to net new <unk> in the back half of the year.

Sarah Walter Blanchard: Not only pipeline build but measures of execution I won't get into the specifics, but as far as sales productivity I'm just productivity in general so yeah early innings. It's early days, we have to give these leaders' time to get their feet underneath them.

Speaker Change: I will just add that in parallel with Onboarding those new leaders I mentioned in the last call that we.

Speaker Change: We've taken immediate action.

Speaker Change: And a number of areas one was leveraging the expertise we have in Japan with respect to process productivity.

Speaker Change: Sales engagement field engagement.

Speaker Change: To both Korea and Vietnam.

Speaker Change: And that in parallel with the Onboarding of new leaders is why we have the optimism that we have.

Speaker Change: Awesome sounds great and then one more if I may.

Speaker Change: That's great to see you guys are expanding the stock buyback program.

Speaker Change: Now with valuations contracting a bit across the marketplace and there have been any thoughts about this point in cash to fund inorganic growth opportunities.

Speaker Change: Yes.

Speaker Change: I'll take that we are obviously always evaluate evaluating regularly our capital allocation strategy, we've spoken about our interest in a prudent and.

Speaker Change: M&A and so what that means for us is finding the right opportunities at the right time at the right price. So while we remain active we are sitting on over $400 million of cash we are executing share repurchase because it's a great investment, especially at these prices in comparison to the business and the opportunity.

Speaker Change: We have in front of US we will still even after execution of that share repurchase program have plenty of cash left to allow us to continue to be opportunistic on the M&A side.

Speaker Change: Awesome. Thank you.

Speaker Change: And our next question will come from Noah <unk> with Jpmorgan. Please go ahead.

Noah: Hey, thanks for taking the questions.

Noah: First of all can you maybe just.

Noah: Unpack some of the changes youre, making up the leadership position for <unk> I think you actually mentioned about.

Noah: Disposition actually encompassing.

Noah: CRM as well.

Noah: Is there any change of scope to the position.

Noah: Hi.

Speaker Change: No change in scope.

Speaker Change: Normalizing the title.

Noah: With the balance of the titles on my staff, So no change in scope.

Noah: The first thing I'll say is that our current leaner Stephanie has made significant contributions.

Noah: So this business over the eight plus years that she has been on board with you to me. She was one of the founding leaders for <unk> business and.

Noah: Look we all heard tremendous debt of gratitude and wish her well both personally and professionally.

Noah: She moves on to the next step in her career.

Noah: As we mentioned earlier.

Noah: Looking forward, we're going to be bringing on a leader that has demonstrated experience in scaling global multichannel software as a service businesses from $500 million to 1 billion and beyond and we're excited about that because as companies go through different phases of growth.

Noah: That does require.

Noah: In many cases different skill sets in and that is something that.

Noah: We're going to be layering in as we move forward. So.

Noah: As I mentioned earlier, we expect to have more on this soon but that's really the impetus behind it is is really preparing us for that next phase of growth as an organization.

Speaker Change: Got it no that's really clear and then just maybe quickly on the guidance.

Noah: It sounds like you might be layering in slightly a bit more prudence within the guidance. So just curious to see or did you experience a step down sequentially worsening conditions in the macro environment, just trying to get a sense for what sort of being layered into the guide now at this point. Thank you.

Speaker Change: Yeah, I'll take that I wouldn't say that we have seen a step down in the macro conditions I will say that it continues to be volatile that we we have a pretty large business in EMEA EMEA continues to.

Speaker Change: Have those macro challenges.

Speaker Change: That being said we saw the issues that we identified some of them are a little bit more pronounced but we are working through those we're really happy with the progress. The early indicators are very positive. We're just trying to be really thoughtful that theres a lot going on between macro new leadership and working through these.

Speaker Change: <unk> short term challenges, but like we said all is going well the long term opportunity remains.

Speaker Change: We are continue to grow our business from multi year deals. We continue to grow the number of accounts that we have over 100000, so lots of really good things still happening as we manage the business through that now.

Speaker Change: Now I'll just add briefly that we're seeing now and some enterprises optimism to the point to where we have one large.

Speaker Change: Bank in Africa that not only signed a three year contract but.

Speaker Change: Sign up and bought licenses not just for where they are today as far as <unk>.

Speaker Change: Demand in employees, but what they expect to be Onboarding over the next 12 months basically buying for the future and purchasing upfront.

Speaker Change: With the level of optimism and foresight.

Speaker Change: Associated with that and they will not be doing that if they didn't number one belief.

Speaker Change: And the value and impact of investing to upskill their employees as they are on boarding and growing and developing our organization and number two if they didnt believe that the environment was going to support that level of investment. So that's just one example of we're starting to see some green shoots and some examples of organizations kind of coming back to where we've been normal.

Speaker Change: <unk> buying ahead and projecting ahead and planning ahead versus where it has been in 23 more.

Speaker Change: <unk> and.

Speaker Change: In terms of buying behalf of buying behavior and patterns so anyway.

Speaker Change: Cause for some optimism here, but again, we're still we're still not completely out of it.

Speaker Change: And again.

Speaker Change: If you have a question. Please press star then one to join the queue.

Speaker Change: Our next question will come from Brent Thill with Jefferies. Please go ahead.

Speaker Change: Hey, Thanks, so much this is David Lafitte gone for brand.

David Marshall Lustberg: Wanted to ask about net dollar retention it was down 800 basis points among Q last year down another 800 basis points in <unk>. This year I know you guys don't disclose gross retention, but maybe if you could just provide some color around the dynamics there.

Speaker Change: Is it more so pressure on your gross retention side or is it just slow expansion commentary there would be helpful. Thank you.

Speaker Change: Thanks for the question David our gross dollar retention has remained stable through the past six plus quarters of macro volatility, which we're really happy to see that customers continue to see the value that we bring to them. So it really is on the up selling side, taking longer and we did see.

Sarah Walter Blanchard: Hey, Thanks. So much this is David Lafitte gone for grant I wanted to ask about net dollar retention. It was down 800 basis points among Q last year down another 800 basis points in <unk>. This year I know you guys don't disclose gross retention, but maybe if you could just provide some color around the dynamics there.

Speaker Change: The net dollar retention come down two points, we expect that to continue to remain suppressed as we're working through the next quarter to the first half where we have been net new <unk> being lower than in the back half, but it's not a gross salary cuts and that has remained very stable for us.

Speaker Change: Got it and maybe as a follow up.

Speaker Change: You talked about <unk> being a low point of this year on the <unk> side, I think you've kind of hinted towards.

Speaker Change: More of an acceleration in 'twenty five on <unk>, maybe just talk about some of the signals you're seeing that give you confidence that you guys can really turn the growth rate of our non U b heading into next year. Thank you. So much guys I appreciate it.

Speaker Change: Yes, I'm happy to start there and feel free to jump in.

Speaker Change: So theres some tail winds that are that are definitely.

Speaker Change: Our sales right now.

Speaker Change: One of them is that transition to a skills based economy.

Speaker Change: With respect to generative AI as a primary driver.

Speaker Change: And as we've not only announced the capabilities were bringing into market, but the gin AI skills tax, we're seeing more and more organizations like the one we just mentioned earlier.

Speaker Change: Focused on developing capability in the organization such as digital learning academies around generative AI and as those are coming online and starting to see real quantifiable impact I E. A 17% increase in certifications.

Speaker Change: And bigger, allowing in this case, allowing them to bill at higher rates and our teams are doing a great job of quantifying value and impact and being able to package up these stories and use cases and bring these to the masses in terms of our go to market approach. So as we're getting better at positioning how we can help organizations transition.

Speaker Change: Two a skills based org and help them up level. The AI literacy across our company and functionally develop capability to leverage generative AI to transform how they are running their business as we get better at that and we're getting better every day, it's opening doors right now in the early phases that are going to continue to open at faster and faster rates as we move forward.

Speaker Change: Which is why we're very confident that we're in the early innings of a massive.

Speaker Change: Yes, if you will tailwind that's going to blow in our direction for years to come. So I don't know if there's anything want to add your thoughts just talk about some internal signals that we're seeing we have been adding to our go to market AE headcount over Q4 and Q1.

Speaker Change: And what we're seeing is those ramping reps are actually hitting over 100% of their quota that's up almost 40 basis points since last year and that is attributable to what Greg just spoke about our focus on sales enablement and continuing to make sure that we are able to.

Speaker Change: Articulate the value that we can provide to our customers. So we have some early indicators that are really good.

Speaker Change: These things will take time, but we're very confident in our ability to hit our protection.

Speaker Change: And our next question will come from Devin on with Keybanc. Please go ahead.

Devin: Hi, great. Thanks for taking my questions. The first one just in the quarter for <unk> for enterprise.

Devin: Any deals that might have shifted one or the other I'll got pulled in or slipped.

Devin: The second quarter second half.

Devin: I can answer that I mean, we always see some deals that are slipping in and out of quarter.

Devin: We saw that again in the first quarter, what I'll say is the team is getting better and better each quarter on managing those deals and giving us the visibility that we need but that's part of the business, where you do tend to see deals move in and out of quarter.

Speaker Change: Okay got it and then second question I have is I just wanted to ask about the competitive landscape in enterprise I believe a couple of months ago Accenture acquired Udacity as they are trying to build out a learning platform to offer to the customers.

Speaker Change: Any thoughts on this large global services getting into the space does that impact the competitive landscape in the near term.

Speaker Change: That's a good question I looked at it very much as a validated.

Speaker Change: But.

Speaker Change: The center jumped in in.

Speaker Change: <unk> made the acquisition.

Speaker Change: And it's making a big big bet.

Speaker Change: Where.

Speaker Change: The market is going so to speak with respect to skills.

Speaker Change: And it's very much in line with.

Speaker Change: Our point of view.

Speaker Change: And I just mentioned it where we believe the winds are blowing.

Speaker Change: Udacity by the way is not usual suspects that we see in competitive situations.

Speaker Change: But again, the fact that the central made that acquisition. It just again continues to validate the opportunity and really where organizations are headed in terms of their investment dollars from our learning and development standpoint. So.

Speaker Change: I view that very much as a positive.

Speaker Change: Got it and then from a competitive perspective, yeah, and I'll just add that from a competitive perspective at least on the enterprise side. What we're seeing is we still see the usual suspects that we've seen we have seen.

Speaker Change: Competition with respect to price.

Speaker Change: Start to ramp up a bit in the enterprise in terms of aggressive pricing.

Speaker Change: And in.

Speaker Change: In some respect I am not surprised.

Speaker Change: We've armed our teams with tools and Playbooks to address.

Speaker Change: Some of these situations and scenarios and as I've mentioned before we're never going to be the low price.

Speaker Change: Option in the market and we're always going to be the high value option and as we've learned more and more capabilities into our platform and we are having.

Speaker Change: Our broader and deeper impact on organizations ability to Upskill and Reskill. Our story continues to get stronger. So we're really focused on sales enablement and enabling our team to tell that story and substantiate the value that we're delivering to offset some of what we're seeing which is aggressive.

Speaker Change: <unk> and some of the deals that were in and the SMB side down market continues to remain a challenging environment for small businesses. It does.

Speaker Change: And I've run small businesses before.

Speaker Change: It's a different it's a different decision criteria set of criteria that they have to they.

Speaker Change: They used to.

Speaker Change: The monitor and they run their business by so.

Speaker Change: Again, SMB web, we're making investments to help our teams in that segment, but in the enterprise segment, where the majority of our revenue comes from our teams are doing a great job competing and substantially adding value and impact and we're seeing organizations continue.

Speaker Change: To allocate budget and spend those dollars to Upskill and Reskill.

Speaker Change: Great I appreciate the details.

Speaker Change: This concludes our question and answer session.

Speaker Change: I'd now like to turn the conference back over to Greg Brown for any closing remarks.

Gregory Scott Brown: I'd just like to thank you all for joining today and we look forward to connecting again for our Q2 call in August have a.

Speaker Change: Great day and evening everybody.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.